Contents
1

An Outline of the Toshiba Machine Group
Corporate Information2

Foreword

4

Financial Highlights (consolidated)

5

Overseas Operations for Fiscal 2005

6

Overseas Offices
Financial Review

7
9Consolidated Balance Sheets

10

Consolidated Statements of Shareholders’ Equity

11

Consolidated Statements of Cash Flows12

Notes to Consolidated Financial Statements

20

Independent Auditors’ Report

21

Directors & Auditors

Consolidated Statements of Income

An Outline of the Toshiba Machine GroupA highly respected integrated machine building group, internationally respected
for its total capability in the production of quality plastic processing machinery, diecasting machines, machine tools, precision machinery, hydraulic equipment,
semiconductor manufacturing equipment, and electronic controls.

Based on their highly innovative technology, expertise, and experience nurtured
over decades as one of the world's leading machine builders, the Toshiba MachineGroup's global-type solution business provides customers in such various industries as
the automobile, data communications and semiconductors with total satisfaction by
the careful analysis and recommending of optimum-type solutions to theirrequirements.

Corporate Information (as of March 31, 2005)

1

Company name:TOSHIBA MACHINE CO., LTD.

Headquarters:

2068-3, Ooka, Numazu-shi,
Shizuoka-ken 410-8510, Japan

Established:

1938

Capital:¥12,484 million (US$116 million)

Shares of Common Stock
Issued and Outstanding:

166,885,530 shares

Number of Shareholders:

15,434

Number of employees:

1,529 (Consolidated: 3,310)

Foreword
Stimulated by an overall increase in private-sector plant and equipment investment andexports, the Japanese domestic economy for the fiscal year experienced relatively strong growth.
The IT (Information Technology) industrial field and some exports, however since the latter partof last summer have been undergoing a period of transition resulting in stagnant businessconditions. Overseas, China, despite its conservative fiscal policy, continued to lead the Asian
region with strong robust growth along with the United States, while Europe continued in its slow
rate of recovery.
Overall, the Japanese domestic machine industry, despite several signs of adjustment, enjoyedfavorable conditions due to increased exports and private-sector investment in plant andequipment.
Under such circumstances, the Toshiba Machine Group, based on their corporate CS(Customer Satisfaction) policy, continued in its concerted efforts to secure orders, develop new
products, new technologies, and pioneer new domestic and overseas growth markets for our diecasting machines, plastic extrusion machines, machine tools, and semiconductor manufacturing
equipment which resulted in an increase of 18.9% over the previous term in consolidated totalorders received, totaling ¥139,776 million (US$1,302 million), and an increase of 11.7% in
consolidated net sales over the previous term, totaling ¥123,572 million (US$1,151 million)(anexchange rate of ¥107.39=US$1.00 shall be used throughout this report).
In combination with the increased sales of our products, our business rationalization efforts
resulted in a pre-tax consolidated profit of ¥10,772 million (US$100 million), an increase of
93.6% over the previous term, and a net consolidated profit of ¥7,093 million (US$66 million),
an increase of 70.8% over the previous term, our third consecutive year of increased profits.
Hence, we are pleased to announce that a fiscal yearend dividend of ¥5.00(US$0.05) per share
was distributed to our stockholders for the period ending on March 31, 2005, an increase of ¥1(US$0.01) per share over the previous year, for a total annual dividend of ¥7 (US$0.07) per
share, up from ¥3 (US$0.03) for the previous term.
To strengthen and further improve the efficiency of our sales force and group management,
Toshiba Machine Selmac Co., Ltd. was merged into Toshiba Machine Co., Ltd. on October 1,
2004.
As for the general outlook, the Japanese domestic economy, despite several sectors still2

requiring adjustment, is expected to continue in its gradual recovery. However, uncertainties suchas volatile raw material costs and the risk of an international economic slowdown will continue tobe important factors influencing this somewhat guarded optimistic view.
Under such business conditions, on April 1, 2005, the Toshiba Machine Group implemented
their TOSHIBA MACHINE ACTION PROGRAM G1500 to help further promote and sell our
products in new markets along with continued implementation of our strategy based on various
reforms and advanced technologies for further enhancement of our business performance andprofitability, as well as continued emphasis on increased productivity through the promotion ofvarious rationalization and efficiency-minded measures, and the creation of environmentallyfriendly, quality products based on ISO9001 and 14001 standards, while as a responsible
corporate citizen, observe of all rules and regulations, fulfill of all social responsibilities.

Reiji Nakajima
President
July, 2005

3

FINANCIAL HIGHLIGHTS (consolidated)
In millions of yen (thousands of U.S. dollars) except for number of
employees and per-share data.

2005

2004

2003

2002

2001

¥123,573¥110,658¥97,297¥104,599¥127,359¥77,627¥68,455¥74,495¥92,048¥25,430¥25,786¥28,636¥30,883¥7,601¥3,056¥1,468¥4,428

Income (loss) before income ¥10,178
taxes and minority interests $94,776¥5,104¥1,239¥(2,010)¥2,123¥2,940

¥817

¥193

¥413

¥733

¥4,153¥1,052¥(1,924)¥1,558¥24.71¥6.29¥(11.53)

¥9.33

¥4.00

¥3.00

¥—

¥—

¥148,309¥136,278¥140,035¥166,588¥42,230¥37,525¥37,306¥39,620¥1,774¥1,275¥2,378¥2,565¥1,800¥2,050¥2,289¥2,610¥3,194¥2,587¥2,951¥2,749

3,068

3,380

3,565

3,814

Net sales$1,150,694¥85,598

Cost of sales$797,076¥25,742

Selling, general andadministrative expenses$239,706

Operating income¥12,233$113,912

Income taxes$27,377¥7,093

Net income (loss)$66,049
Per common share:¥42.48Net income (loss)

$0.40
¥7.00

Cash dividends$0.07¥145,057

Total assets$1,350,750
Shareholders’ equity¥47,624$443,468¥2,004

Capital expenditure(property, plant and equipment)$18,661

Depreciation¥1,825$16,994

R & D expenditures¥2,512$23,391

Number of employees

4

3,310

Overseas Operations for Fiscal 2005
During the fiscal year under review,
China, despite its conservative fiscal policy,

Net Sales

Millions of yen

Total
123,573
roducts
16,619 Other P

led the Asian region in overall economic
growth, along with the United States, while
Europe continued in its slow rate of recovery.
Under such economic conditions,

110,658

127,359
104,599

38,887

expanded foreign demand for our die-casting

97,297

27,19829,990machines and machine tools resulted in total
consolidated overseas sales of ¥59,580 million

30,06831,134

17,971

27,97560,865previous year, contributing to approximately
In terms of machine types, injection
molding machines and die-casting machines
continued to be our leading export products,
with the Asian region, principally China,
Korea, Taiwan, Indonesia, and Thailand,
being the largest market for our products.
During the current fiscal year, we willcontinue in the further enhancement of ourregional sales and service networks, along

2003

2002

2001

65,756

MoldingyMachiner

49,33649,42658,40424,909 Machine Tools

18,658(US$555 million), a 4.2% increase over the
48.2% of total consolidated sales.

16,286ductorSemicon turing
Manufac t
Equipmen

2004

2005

Note : From the fiscal year ending on March 31,2005 [Semicorductor
manufacturing equipment] will be listed separately from [other]

Total Sales & Overseas Sales

123,573

Millions of yensTotal Sale

110,658

127,359
104,599

with providing our customers with machines

97,297of increasingly higher standards of quality, as
well as a total type of Solution Business basedon our value chain of products.
57,172
55,1392001

59,580Overseas

Sales

45,51544,096

2003

2002

2004

2005

Export Percentages by Major Products
Other
Products
Semiconductor
Manufacturing
Equipment

Molding
Machinery

13%
13%
54%
20%

MachineTools

5Overseas Offices♦ North America ♦TOSHIBA MACHINE CO., AMERICA
Chicago Head Office
755 Greenleaf Avenue,
Elk Grove Village, IL 60007, U.S.A.
Tel : [1]-847-593-1616
Fax : [1]-847-593-0897
URL http://www.toshiba-machine.com/

Los Angeles Office1481 South Balboa Avenue, Ontario,
CA 91761, U.S.A.
Tel : [1]-909-923-4009
Fax : [1]-909-923-7258

New Jersey Office1578 Sussex Turnpike, Randolph,
NJ 07869, U.S.A.
Tel : [1]-973-252-9956
Fax : [1]-973-252-9959

Atlanta Office6478 Putnam Ford Drive, Suite #106,
Woodstock, GA 30189, U.S.A.
Tel : [1]-678-494-8005
Fax : [1]-678-494-8006

New York Office
10 Corporate Park Drive, Suite C,
Hopewell Junction, NY 12533, U.S.A.
Tel : [1]-845-896-0692
Fax : [1]-845-896-1724

TOSHIBA MACHINE MACHINERY CO., LTD.
USA Branch
755 Greenleaf Avenue,
Elk Grove Village, IL 60007, U.S.A.
Tel : [1]-847-593-1616
Fax : [1]-847-593-0897

TOSHIBA MACHINE MACHINERY CO., LTD.
Canada Branch
6 Shields Court, Suite 101, Markham,
Ontario, L3R 4S1, CANADA
Tel : [1]-905-479-9111
Fax : [1]-905-479-6098
URL http://www.toshibamachine.on.ca/♦ Europe ♦TOSHIBA MACHINE (EUROPE) G.m.b.H.
Head OfficeKarl-Arnold-Strasse 2a, 47877
Willich-Münchheide, GERMANY
Tel : [49]-(0)2154-9275-0
Fax : [49]-(0)2154-9275-75

6U.K. Branch

Beijing Office

60 Burners Lane, Kiln Farm,
Milton Keynes MK11 3HD
UNITED KINGDOMTel : [44]-(0)1908-562327
Fax : [44]-(0)1908-562348

Beijing Fortune Building, Room No. 303,
5 Dong Sanhuan Bei-Lu, Chaoyang
District, Beijing, 100004,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)10-6590-8977
Fax : [86]-(0)10-6590-8979♦ South East Asia ♦TOSHIBA MACHINE S.E. ASIA PTE. LTD.
Head Office

Tianjin Office

No. 24 Tuas Avenue 4,
Singapore 639374, SINGAPORE
Tel : [65]-68611455
Fax : [65]-68612023

Room No. B901, Jindong Building,
No. 99, Liuwei Road, Hedong District,Tianjin, 300171,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)22-2416-0311
Fax : [86]-(0)22-2416-0380

Kuala Lumpur OfficeSuzhou Office

70-G, Jalan SS21/62,
Damansara Utama, 47400 Petaling Jaya,
Selangor Darul Ehsan, MALAYSIA
Tel : [60]-(0)3-77297544
Fax : [60]-(0)3-77297545

3F, Room C1, Gui Du Tower No. 8,
Zhong Xin Road, Suzhou, 215021
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)512-6761-9211
Fax : [86]-(0)512-6761-0380

Penang Office

Dalian Office

No. 61, Jalan Prai Jaya 4,
Bandar Prai Jaya, 13600 Prai, Penang,
MALAYSIA
Tel : [60]-(0)4-3980086
Fax : [60]-(0)4-3989652

No. 171-8, Dongbei Avenue,
Development Zone, Dalian, 116600
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)411-8732-7911
Fax : [86]-(0)411-8732-6899

TOSHIBA MACHINE (THAILAND) CO., LTD.
TMT SERVICE & ENGINEERING CO., LTD.

TOSHIBA MACHINE (SHANGHAI) CO., LTD.

127/28 Panjathanee Tower, 23rd
Floor, Nonthree Road,
Khwaeng Chong Nonthree,
Khet Yannawa, Bangkok, 10120,
THAILAND
Tel : [66]-(0)2-681-0158
Fax : [66]-(0)2-681-0162♦ East Asia ♦SHANGHAI TOSHIBA MACHINE CO., LTD.
Head Office4788, Jin Du Road,
Xinzhuang Industry Zone,
Shanghai, 201108,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)21-5442-0606
Fax : [86]-(0)21-5866-2450
1F Block, 223 Fu Te Bei Street,
Wai Gao Qiao Free Trade Zone,
Shanghai, 200131,
PEOPLE’S REPUBLIC OF CHINA

4788, Jin Du Road,
Xinzhuang Industry Zone,
Shanghai, 201108,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)21-5442-5455
Fax : [86]-(0)21-5442-5466

TOSHIBA MACHINE HONG KONG LTD.
Head Office
Suite 1010, 10th Floor, Tower 3,
China Hong Kong City,
33 Canton Road, Tsim Sha Tsui,
Kowloon, HONG KONG
Tel : [852]-2735-1868
Fax : [852]-2735-1872

Shenzhen Office
Room 318-319, Century Plaza Hotel,
Kin Chit Road, Shenzhen, 518001,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)755-8232-0453
Fax : [86]-(0)755-8234-3497

TOSHIBA MACHINE TAIWAN CO., LTD.
No. 62, Lane 188, Jui-Kuang Road,
Nei-Hu District, Taipei, TAIWAN
Tel : [886]-(0)2-2659-6558
Fax : [886]-(0)2-2659-6381

Financial Review

CONSOLIDATED BALANCE SHEETSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2005 and 2004ASSETS
Current assets:
Cash and time deposits (Note 12)
Marketable securities (Note 4)
Notes and Accounts receivable, trade
Allowance for doubtful receivables
Net receivables
Inventories:
Finished products
Work in process
Raw materials and supplies
Total inventories
Deferred taxes (Note 11)
Other current assets
Total current assets
Property, plant and equipment, net(Notes 5 and 10)
Intangible Assets
Investments and other assets:
Investments in:
Unconsolidated subsidiaries andaffiliates
Other securities (Note 4)Long-term loans
Deferred taxes (Note 11)
Other investments
Total investments and other assets
Total assets

Millions of yen
2005
2004

Thousands of
U.S. dollars
2005¥26,619
52,578(430)
52,148¥ 36,10734
50,529(542)
49,987$247,872
489,598(4,004)
485,5943,945
25,5692,162
31,676
2,164
1,622
114,229

5,810
20,3491,712
27,871
737
2,252
116,988

36,735238,095
20,132294,962
20,151
15,105
1,063,684

22,20822,196

206,798

663

486

6,174

153
6,537
337
89
841
7,957
¥145,057

1,405
5,680
374
145
1,035
8,639
¥148,309

1,425
60,872
3,138
829
7,830
74,094$1,350,750

See accompanying notes to financial statements

7

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Short-term bank loans (Notes 6 and 10)
Current portion of long-term debt (Notes 6 and 10)
Notes and Accounts payable
Income taxes payable
Accrued expenses
Advances received
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 6 and 10)
Deferred taxes (Note 11)
Accrued employees’ retirement benefits (Note 7)
Total long-term liabilities
Total liabilities
Contingent liabilities (Note 8 and Note 15)
Minority interest in consolidated subsidiaries
Shareholders’ equity:
Common stock
Authorized
360,000,000 shares
Issued166,885,530 shares
Additional paid-in capital
Retained earnings
Unrealized holding gain on securities
Foreign currency translation adjustments
Treasury stock, at cost
(2,056,612 shares in 2005, 39,175 shares in 2004)
Total shareholders’ equity
Total liabilities and shareholders’ equity

Millions of yen
2005
2004

Thousands of
U.S. dollars
2005

26,452762
34,779
4,444
5,736
2,768
731
75,672¥41,348
748
32,240
632
6,112
2,157
1,408
84,645$246,317
7,096
323,857
41,38253,41325,775
6,807
704,647

11,3781,570
8,004
20,952
96,624

12,1401,512
7,100
20,752
105,397

105,950
14,62074,532
195,102899,749

809

682

7,533

12,485
19,405
14,461
2,747(653)

12,485
19,405
8,517
2,286
(453)

116,258
180,697
134,659
25,580(6,081)

(821)

(10)

(7,645)47,624¥145,057

42,230¥148,309

443,468$1,350,750

See accompanying notes to financial statements

8

CONSOLIDATED STATEMENTS OF INCOMETOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

years ended March 31, 2005 and 2004
Thousands of
U.S. dollars

Millions of yen
2005¥123,573
85,59837,97525,742
12,233

2004¥110,658
77,62733,031
25,4307,601

2005$1,150,694
797,076
353,618
239,706
113,912

98
26
472
596

100
785
441
1,326

913
242
4,395
5,550

521

695

4,851

356

894

3,315

827
947
2,651

835
1,399
3,823

7,701
8,819
24,686

10,178

5,104

94,776

Income before minority interest
Minority interests in income(loss) ofconsolidated subsidiaries
Net income

4,597(1,657)
2,940
7,238

727
90
817
4,287

42,807(15,430)
27,37767,399145¥7,093134¥4,1531,350$66,049

Net income per share of common stock¥42.48¥24.71

U.S. dollars$0.40

Net sales
Cost of sales (Note 13)
Gross profit
Selling, general and administrative expenses (Note 13)
Operating income
Other income:Interest and dividends
Gain on sales of property, plant and equipment
OthersOther expenses:
Interest
Special benefits for employees retired
under early retirement program
Amortization of transitional obligation for
employees retirement benefits (Note 7)
OthersIncome before income taxes
and minority interests
Income taxes:(Note 11)
Current
DeferredYen

See accompanying notes to financial statements.

9

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

years ended March 31, 2005 and 2004

Balance at March 31, 2003
Net income
Cash dividends
Bonuses to directors and statutory auditors

Number of
Shares
166,885,530

Millions of yen
CommonAdditional paidstock
in capital¥12,485¥19,405

Retainedearnings
4,866
4,153
(500)
(2)

Balance at March 31, 2004
166,885,530
Net income
Increase on newly consolidated subsidiaries
Cash dividends
Bonuses to directors and statutory auditors
Decrease on merger of consolidated subsidiaries
Decrease on liquidation of consolidated subsidiary
Balance at March 31, 2005
166,885,530

12,485

19,405

8,517
7,093
11
(1,001)
(29)
(129)
(1)
¥14,461¥12,485¥19,405

Balance at March 31, 2004
Net income
Increase on newly consolidated subsidiaries
Cash dividends
Bonuses to directors and statutory auditors
Decrease on merger of consolidated subsidiaries
Decrease on liquidation of consolidated subsidiary
Balance at March 31, 2005

Thousands of U.S. dollars
CommonAdditional paid
Retainedstock
in capitalearnings$116,258$180,697$79,309
66,049102(9,321)(270)(1,201)(9)$116,258$180,697$134,659
See accompanying notes to financial statements.

10

CONSOLIDATED STATEMENTS OF CASH FLOWSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

years ended March 31, 2005 and 2004
Millions of yen
2005
2004
Operating Activities:
Income before income taxes and¥10,178
minority interests
Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation
1,825
Allowance for doubtful receivables(115)
Employees’ retirement benefit,
less payments
903
Devaluation of marketable securities—
Loss (gain) on sales and disposal ofproperty, plant and equipment
232
Changes in operating assets and liabilities:
Notes and accounts receivables, trade(1,797)
Inventories(3,416)
Notes and accounts payables, trade
2,582
Advances received
570
Accrued expenses(553)
Income taxes paid
(1,016)
Others(654)
Net cash provided by operating activities
8,739
Investing Activities:
Purchase of property, plant and equipment(1,448)
Sale of property, plant and equipment
248
Payment of long-term loan receivables(36)
Repayment of long-term loan receivables
73
Investments to a subsidiaries—
Others(62)
Net cash used in investing activities(1,225)
Financing Activities:
Decrease in short-term bank loans(14,897)
Proceeds from long-term debt—
Repayment of long-term debt
(748)
Bond redemption—
Purchases of treasury stock(810)
Cash dividends paid
(1,001)
Net cash used in financing activities(17,456)
Effect of exchange rate changes oncash and cash equivalents(73)
Net cash increased in cash and(10,015)
Cash equivalents
Cash and cash equivalent at the beginning of year
36,112
Increase in newly consolidated subsidiaries
528
Decrease on liquidation of consolidated subsidiaries(6)
Cash and cash equivalents at end of year
¥26,619(Note 12)

Thousands of
U.S. dollars
2005¥5,104$94,776

1,800
(54)

16,994(1,071)

(204)
40

8,409

(602)

2,160

(3,774)(1,420)
6,985
1,020
1,508
(334)
(199)
9,870

(16,733)(31,809)
24,043
5,308(5,149)(9,461)(6,091)
81,376(1,541)
889
(7)
98
(719)
(65)
(1,345)(13,484)
2,309
(335)
680

768
11,400(13,269)(3,000)(138,719)—(7,543)(500)(4,601)(9,321)(162,548)

(272)
3,652

(680)
(93,259)

32,460—336,270
4,917

—

(56)

¥36,112$247,872

—

—

(577)
(11,407)—(6,965)—

See accompanying notes to financial statements.

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

1. Basis of Presenting Consolidated
Financial Statements
The accompanying consolidated financial
statements of Toshiba Machine Co., Ltd. (the"Company") and consolidated subsidiaries areprepared on the basis of accounting principles
generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards, and are compiled from theconsolidated financial statements prepared by theCompany as required by the securities andExchange Law of Japan. The preparation of thesefinancial statements requires management tomake estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the consolidated financial statements andthe reported amounts of revenues and expenses
during the reporting period. Actual results could
differ from these estimates. The consolidated
statements of shareholders' equity have been prepared to supply additional information.
The consolidated balance sheets, statements ofincome and cash flows incorporate certain reclassifications and rearrangements in order to present these statements in forms which are morefamiliar to readers of these statements outside ofJapan. In addition, the notes to the consolidated
financial statements include information which is
not required under generally accepted accounting principles and practice in Japan but is presented herein as additional information.

2. Summary of Significant Accounting
Policies(a) Basis of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The consolidated financial statements include
the accounts of the Company and those of its subsidiaries (together the "Companies").Certain subsidiaries which are not material are not consolidated.
All significant intercompany transactions andaccounts and unrealized intercompany profits are
eliminated in consolidation.
The difference between the cost and underlying interst in net equity of consolidated subsidiaries at the time of acquisition, which is included in intangible assets of the accompanying consolidated balance sheets, is deferred and amortized within the five-year period.
Investments in affiliates (15 to 50 percent-12

owned companies ) in which the ability to exercise significant influence exist, except immaterial
investments, are stated at cost plus equity in undistributed earning (losses) of investees.
Net consolidated income (losses) includes theCompany's share of the current net earnings (losses) of such companies, after elimination of unrealized intercompany profits.
(b) Translation of Foreign Currencies
Monetary assets and liabilities denominated inforeign currencies are translated into Japanese
yen at the exchange rate prevailing at the balancesheet date except for those hedged by a forward
contract, which are translated using the contracted rate .
The foreign exchange gains and losses fromtranslation are recognized in the consolidated
statements of income to the extent that they are
not hedged by foreign exchange derivatives.
All assets and liabilities of foreign subsidiaries
and affiliates are translated at current rates at therespective balance sheet dates and all income andexpense accounts are translated at average rates
for the respective periods. The components ofshareholders' equity are translated at their historical exchange rates.
(c) Securities
Securities owned by the companies have beenclassified into two categories, held-to-maturity
securities and other securities, in accordance withaccounting standard for financial instruments.
Held-to-maturity securities are carried at amortized cost. Marketable securities classified as othersecurities are carried at fair value with any
changes in unrealized gain or loss, net of income
taxes, directly included in shareholders equity.
Non-marketable securities classified as othersecurities are carried at cost. Cost of securities
sold is determined by the moving averagemethod.
(d) Inventories
Inventories are stated at the cost, determinedby the specific indentification method for finishedproducts and work in process, and by the moving
average method for raw materials and supplies.
(e) Allowance for doubtful receivables
The allowance for doubtful receivables is stated based on the default ratio sustained over a specific period in the past and the estimated uncol-

lectible amount based on the analysis of certain
individual accounts, including probable bad debts
and claims in bankruptcy.
This amount is considered sufficient to coverpossible losses on collection.
(f) Bonuses
The bonus to the employees are paid twice ayear and accrued based on estimated amounts to
be paid in the subsequent period. Bonuses todirectors and statutory auditors, which are subject
to approval by the shareholders, are an appropriation of retained earnings and not charged toincome.
(g) Depreciation of property, plant and equipment
Depreciation of building is computed, withminor exceptions, by the straightline method andother depreciation of property, plant and equipment is computed by the declining balancemethod over the estimated useful lives of respective assets.
(h) Amortization of intangible assets
Computer software used internally by theCompany and consolidated subsidiaries is amortized by the straight -line method over the relevant economic useful lives (5 years). The others
are computed by the declining balance method
over the estimated useful lives of respective assets.
(i) Finance Leases
Finance leases, which do not transfer ownership of the leased assets to the lessees are accounted for in the same manner as operating leases.
(j) Income Taxes
The Companies accrue income taxes based on
taxable income.
The Companies include many items for financial reporting purpose which, in the case of
expenses, are not currently deductible and in thecase of income, are not currently taxable.
Income taxes based on temporary differences
between tax and financial reporting purposes arereflected as deferred income taxes in the consolidated financial statements using the asset and liability method.
(k) Employee’s Retirement Benefits
Accrued employees' retirement benefits are provided based on the projected retirement benefit
obligation less the fair value of plan assets at year-end.
The unrecognized transitional obligation is being
amortized over 15 years. Actuarial gain or loss isamortized by the straight-line method over the average remaining years of service of employees.

13(l) Legal Reserve
Under the Commercial code of Japan (the"Code") the Company and domestic subsidiaries
are required to appropriate as a legal reserve anamount of retained earnings equal to at least 10%of cash dividends and other distributions for eachperiod until such reserve and the amount of capital surplus equals 25% of the common stock. The
code also provides that, to the extent that the sumof capital surplus and legal reserve exceeds 25%of the common stock, the amount of any suchexcess is available for appropriations by resolutionof the shareholders.
(m) Amounts per Share of Common Stock
Net income (loss) per share is computed
based on the weighted-average number of sharesof common stock outstanding during each year.
Diluted net income per share is not presented
since the Company has never issued any securities
with a dilutive effect, such as bonds with warrants
and convertible bonds. Cash dividends per sharerepresent the actual amount declared as applicable to the respective years.
(n) Statements of Cash Flows
In preparing the statements of cash flows, cashon hand, readily available deposits and short-term
highly liquid investments with maturities of notexceeding three months at the time of purchaseare considered to be cash and cash equivalents.
(o) Reclassifications
Certain accounts in the consolidated financial
statements for the year ended March 31, 2004
have been reclassified to conform to the 2005 presentation.

3. U.S. Dollar Amounts
U.S. dollar amounts are included solely for theconvenience of the reader and have been translated at the rate of ¥107.39=U.S.$1,the approximate
exchange rate prevailing in the Japanese foreignexchange market on March 31, 2005. This translation should not be construed as a representationthat the yen amounts actually represent, havebeen, or could be converted into U.S. dollars.

4. Securities
Information regarding marketable securities classified as other securities included in investment
securities were as follows:
Millions of yen

Equity securities

Carrying
value¥1,8812005
Marketvalue¥6,442

Unrealized
gains¥4,561¥1,881¥6,442¥4,561

Carrying
value¥1,7942004
Marketvalue¥5,587

Unrealized
gains¥3,793¥1,794¥5,587¥3,793Thousands of U.S. dollars
2005
Carrying
MarketUnrealized
value
value
gains
Equity securities$17,516$59,987$42,471$17,516$59,987$42,471

5. Property, Plant and Equipment
Property, plant and equipment at March 31, 2005 and 2004 consisted of the following:

Land
Buildings and structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Construction in progress
Less accumulated depreciation

Millions of yen
2005
2004
¥6,081¥6,23730,31530,362
31,06332,247
575
593
7,423
7,384
361
112
75,81876,935(53,610)(54,739)¥22,208¥22,196

Thousands of
U.S. dollars
2005$56,625
282,289
289,2545,354
69,122
3,362
706,006(499,208)$206,798

Depreciation expense for the years ended March 31, 2005 and 2004 were ¥ 1,825 million ($ 16,994
thousand) and ¥ 1,800 million, respectively.

6. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the short - term bank loans outstanding on March 31, 2005
and 2004, ranged principally from 0.52% to 4.70%, and from 0.49% to 2.30% respectively. Long-term
debt on March 31, 2005 and 2004 consisted of the following:
Millions of yen
2005
2004
Loans, principally from Japanese banks andinsurance companies, with pledged assets as
collateral, maturing 2006 – 2010 ,interest 1.31 % – 2.27 %Less current portion

14¥12,140
12,140762¥11,378

12,88812,888748¥12,140

Thousands of
U.S. dollars
2005$113,046
113,046
7,096$105,950

The aggregate annual maturities of long-term debt at March 31, 2005 were as follows:Year ending March 31
2006
2007
2008
2009
2010 and later

Millions of yen

Thousands of
U.S. dollars

¥762
1,538
1,140
8,690
10
¥12,140$7,096
14,322
10,61580,92093$113,046

7. Employees' Retirement Benefits
The severance indemnity regulation of the Company and certain subsidiaries provides for benefit
payments based on the employee’s current basic rate of pay and length of service.
The Company and certain subsidiaries have a non-contributory funded pension plan for employees. The Company and certain subsidiaries pay the full cost of the benefits to a bank which act as thetrustees.
The liability for employees retirement benefits at March 31, 2005 and 2004 consisted of the following:
Millions of yen
2005
2004

Thousands of
U.S. dollars
2005¥18,557¥18,667$172,800(744)(1,001)(6,928)Unrecognized transitional obligation(8,011)(8,930)(74,597)

Unrecognized actuarial loss

(1,798)(1,636)(16,743)

Accrued retirement benefits obligation¥8,004¥7,100$74,532

Projected benefit obligation
Fair value of plan assets

The components of net periodic benefit costs for the year ended March 31, 2005 and 2004 were as follows:
Millions of yen
2005
2004

Thousands of
U.S. dollars
2005

Service cost

¥1,007¥1,187$9,377

Interest cost

311

420

2,896

(7)

(8)

(65)

Recognized actuarial loss

239

326

2,225

Amortization of transitional obligation

827

835

7,701

¥2,377¥2,760$22,134

Expected return on plan assets

Certain consolidated subsidiaries have adopted the conventional method in calculating their projected benefit obligation.
Assumptions used in the accounting for the projected benefit obligation were as follows:
Discount rate
Expected rate of return on plan assets
Amortization period of transitional obligation
Amortization period of actuarial loss/gain

15

2005
2.0%
1.0%
15 years
10 years

2004
2.0%
1.0%
15 years
10 years8. Contingent Liabilities
On March 31, 2005 contingent liabilities for notes discounted in the ordinary course of businessand for loans guaranteed by the Company, principally on behalf of non-consolidated subsidiaries andaffiliated companies, amounted to ¥347 million ($3,231 thousand) and ¥848 million ($7,896 thousand), respectively.

9. Leases
Finance leases of the Companies other than those where ownership of the leased assets is transferred to the lessee, are accounted for as operating leases. The following pro forma amounts represent
the acquisition costs, accumulated depreciation and net book value of the leased assets at March 31,
2005 and 2004, which would have been reflected in the consolidated balance sheet if these arrangements have been accounted for as finance leases:
Thousands ofAcquisition Costs

Millions of yen
2005
2004

U.S. dollars
2005

Machinery, equipment and vehicles

¥893

¥920

$8,315Tools, furniture and fixtures

2,010

2,040

18,717Less-Accumulated depreciation(1,386)(1,566)(12,906)

Net book value¥1,517¥1,394$14,126

Future lease payments (including the interest portion thereon) subsequent to March 31,2005 forfinance leases accounted for as operating leases are as follows:
Millions of yen
2005

Thousands of
U.S. dollars
2005

Due within one year¥545

$5,075Due after one year

972

9,051

¥1,517$14,126

Periodic lease charges, as a lessee, charged to income for the years ended March 31, 2005 and 2004
were ¥ 586 million ($5,457 thousand) and ¥ 763 million, respectively.

10. Pledged Assets
The following assets were pledged as collateral at March 31, 2005:
Property, plant and equipment(Net of accumulated depreciation)

Millions of yen¥5,200Thousands of
U.S. dollars$48,422

The preceding collaterals were pledged to secure long-term debt amounting to ¥196 million($1,825 thousand), short-term bank loans amounting to ¥587 million ($5,466 thousand).

11. Income Taxes
Income taxes in Japan applicable to the Companies generally comprise Corporation Tax,Enterprise Tax and Prefectural and Municipal Inhabitants taxes. The statutory tax rates for the years
ended March 31, 2005 and 2004 are approximately 39.8% and 41.1% respectively.
The reconciliation between the statutory rate and effective tax rate of income taxes for the year
ended March 31, 2005 and 2004 are as follows:

16

2005

2004

39.8 %

41.1 %Per capita portion of Inhabitant Tax

0.5

0.9

Non-taxable revenue

0.1

0.5

Non-deductible expense

0.5

1.2

Unrealized intercompany profit on fixed asset

(0.0)

(0.1)

Change in valuation allowance(9.0)(27.7)

Difference of a tax rate with consolidated subsidiaries

(1.1)

—

Other

(1.9)

0.1

Effective tax rate

28.9 %

16.0 %

Statutory tax rate

The significant components of deferred tax assets and liabilities at March 31, 2005 and 2004 were as follows:
Millions of yen
2005
2004

Thousands of
U.S. dollars
2005

Deferred tax assets:¥1,005¥230$9,359Allowance for doubtful accounts

155

42

1,443

Devaluation of inventories

161

98

1,499

Devaluation of securities

226

4

2,104

2,127

69

19,806

117

84

1,090

Other

1,206

355

11,230Total deferred tax assets¥4,997¥882$46,531

Valuation allowance(2,490)—(23,186)

Net deferred tax assets¥2,507¥882$23,345

(15)

(17)

(140)

Unrealized gain on securities(1,809)(1,495)(16,845)

Deferred tax liabilities(¥1,824)(¥1,512)($16,985)(¥683)(¥630)($6,360)

Accrued employees bonuses

Accrued employees’ retirement benefits
Unrealized gain on inventories

Deferred tax liabilities:
Depreciation

Net deferred tax assets (liabilities)

Due to the change in the Corporate Enterprise Tax rate effective for tax period ending March
31,2005, the Company's statutory tax rate will change from 41.1% to 39.8%.

12. Cash and cash equivalents.
Reconciliation between cash and time deposits in the consolidated balance sheets and cash andcash equivalents in the statements of cash flows at March 31, 2005 and 2004 is presented as follows:

Millions of yen
2005
2004
Cash and time deposits¥26,619¥36,107$247,872

Short-term investments

—

¥5

—

¥26,619¥36,112$247,872

Cash and cash equivalents

17

Thousands of
U.S. dollars
200513. Research and development costs
Research and development costs charge to income were ¥2,512 million ($23,391 thousand) and¥3,194 million for the years ended March 31, 2005 and 2004 respectively.

14. Segment information(a) Business segment information
The Companies’ business is classified into the following four segments based on the similarities of typeand nature of business:
Molding Machinery: Injection molding machines, Die casting machines, Plastic extrusion
Machine Tools: Large size machine tools, Portal type machine tools, Machining centers, Horizontal
boring machines, High-precision machines
Semiconductor Equipment: Electron beam lithography system, Epitaxial reactor system
Other Products: Hydraulic equipment, Electronic controls
The tables below present sales, operating expenses and operating profit information by business segment.
Year ended March 31, 2005

Sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Capital expenditure

Molding
Machinery¥65,764
60,097
5,667
56,751
927
782

MachineTools¥25,082
22,0892,993
23,480203
268

Millions of yen
Semiconductor
Other
Eliminations
Consolidated
Equipment
Products and/or corporate¥16,342¥20,238¥(3,853)¥123,573
14,636
18,263(3,745)111,340
1,706
1,975
(108)
12,23323,887
31,8499,090
145,057
323
372
—
1,825
214
740
—
2,004

Year ended March 31, 2004

Sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Capital expenditure

Molding
Machinery¥60,872
56,724
4,148
57,314
1,006
398

MachineTools¥18,843
18,247596
22,474212
150

Millions of yen
Other
Eliminations
Consolidated
Products and/or corporate¥34,438¥(3,495)¥110,658
31,462(3,376)103,057
2,976
(119)
7,601
57,708
10,813
148,309
582
—
1,800
1,226
—
1,774

Effective April 1, 2004 the Company separated their Semiconductor Equipment business which had
been included in other products, due to its increased in amount.
Year ended March 31, 2005

Sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Capital expenditure

18

Molding
MachineMachineryTools$612,385 $233,560
559,615
205,690
52,77027,870528,457
218,642
8,632
1,890
7,282
2,495

Thousands of U.S.dollars
Semiconductor
Other
Eliminations
Consolidated
Equipment
Products and/or corporate$152,174$188,453$(35,878) $1,150,694
136,288
170,062(34,873)
1,036,782
15,886
18,391(1,005)
113,912
222,432
296,574
84,6451,350,750
3,008
3,464
—
16,994
1,993
6,891
—
18,661

(b) Geographic segment information of the Companies for the year ended March 31,2005 and 2004 were as
follows:
North America¥7,829
7,707
122
4,846

Millions of yen
Asia
Total
¥7,453¥136,291
6,985
123,989468
12,302
6,038
136,401

Eliminations Consolidated¥(12,718) ¥123,573(12,649)
111,340(69)
12,2338,656
145,057

North America¥10,941
10,838103
7,491

Millions of yen
Asia
Total
¥3,083¥120,369
3,019
112,984
64
7,385
2,065
135,275

Eliminations Consolidated¥(9,711) ¥110,658(9,927)103,057
216
7,601
13,034
148,309

Year ended March 31, 2005
Net sales
Cost and expenses
Operating income
Identifiable assets

Japan¥121,009
109,297
11,712
125,517

Year ended March 31, 2004
Net sales
Cost and expenses
Operating income
Identifiable assets

Japan¥106,345
99,127
7,218
125,719

Year ended March 31, 2005
Net sales
Cost and expenses
Operating income
Identifiable assets

Japan$1,126,818
1,017,758
109,060
1,168,796

Thousands of U.S.dollars
North America
Asia
Total
Eliminations Consolidated$72,903$69,401 $1,269,122 $(118,428) $1,150,694
71,76765,043
1,154,568(117,786) 1,036,782
1,136
4,358
114,554(642)
113,91245,12556,225
1,270,146
80,6041,350,750(c) Sales to foreign customers for the years ended March 31,2005 and 2004 were as follows:Year ended March 31, 2005
North America
Sales to foreign customers
Net sales
Ratio of Sales to foreign Customers (%)¥40,354¥4,452¥59,580———

123,573

12.0

32.7

3.5

48.2

North America

Net sales
Ratio of Sales to foreign Customers (%)

Ratio of Sales to foreign Customers (%)

Total¥32,243¥5,856¥57,172———

110,658

17.2

29.1

5.4

51.7

North America

Net sales

Millions of yen
Asia
Other

¥19,073

Year ended March 31, 2005
Sales to foreign customers

Total¥14,774

Year ended March 31, 2004
Sales to foreign customers

Millions of yen
Asia
Other

Thousands of U.S.dollars
Asia
Other

Total

$137,573$375,771$41,456$554,800———

1,150,694

12.0

32.7

3.5

48.2

15. Other19

A consolidated subsidiary, Toshiba Machine Company, America ("TMA") which is a defendant in alegal lawsuit, was ordered by a lower court in March 2003 to pay to the plaintiff a sum of $9.3 million tocompensate for alleged losses incurred regarding one of our machine tools. Although TMA contested
this decision, their appeal was overruled and was ordered by the court of appeals to pay $9.3 million
with 10% interest calculated from the day of the lower court ruling to the date of payment. Based on
the advice of their attorneys, TMA has petitioned for a rehearing of their appeal and is currently under
litigation. Based on the opinion of their lawyers, TMA has withheld paying $2.2 million.

Report of Independent Auditors
The Board of Directors
Toshiba Machine Co., Ltd.
We have audited the accompanying consolidated balance sheets of Toshiba Machine Co., Ltd(the"Company") and consolidated subsidiaries as of March 31, 2004 and 2005, and the related consolidated
statements of income, shareholders' equity, and cash flows for the years then ended, all expressed in yen.
These financial statements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards, generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of the Company and consolidated subsidiaries at March 31, 2004 and 2005,
and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.

The U. S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2005 are presented solely for convenience. Our audit also included the translationof yen amounts into U. S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 3.

June 29, 200520

Directors & Auditors

Directors

President
Reiji Nakajima
Managing Directors
Kazuo Hanzawa
Katsuhiko Goto
Kosei Takeyama
Directors
Yoshi Atobe
Mitsuji Yokoyama
Hideo Tanaka
Fumihisa Yano
Hiroshi Hanai

Auditors

21

Fumio Kamahora
Michinori Tanaka
Masaki Ikuta
Masanobu Ohyama