 %Contents
1

An Outline of the Toshiba Machine Group
Corporate Information2

Foreword

4

Financial Highlights (consolidated)

5

Overseas Operations for Fiscal 2007

6

Overseas Offices
Financial Review

810Consolidated Balance Sheets

11

Consolidated Statements of Changes in Net Assets

12

Consolidated Statements of Cash Flows13

Notes to Consolidated Financial Statements

24

Report of Independent Auditors

25

Directors & Auditors

Consolidated Statements of Income

An Outline of the Toshiba Machine GroupA highly respected integrated machine building group, internationallyrespected for its total capability in the production of quality plastic processing
machinery, die-casting machines, machine tools, precision machinery, hydraulicequipment, 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
Machine Group’s global-type solution business provides customers in such various
industries as the automobile, data communications and semiconductors with totalsatisfaction by the careful analysis and recommending of optimum-type solutions
to their requirements.

Corporate Information (as of March 31, 2007)
Company name:TOSHIBA MACHINE CO., LTD.

Headquarters:

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

Established:

1938

Capital:¥12,484 million (US$106 million)

Shares of Common Stock
Issued and Outstanding:

166,885,530 shares

Number of Shareholders:

11,063

Number of employees:

1,626 (Consolidated: 3,435)1

Foreword
Spurred by an increase in private-sector plant and equipment investment and a steadyescalation in exports, despite concern over soaring crude oil prices, the Japanese domestic
economy for the fiscal year under review continued to expand moderately.
Overseas, China continued to lead the Asian region with strong robust growth, while the other
Asian nations having been undergoing a period of transition also resulted in favorable businessconditions. The United States, despite a decline in some industries, continued in its general
economic expansion, while Europe also maintained its overall business upturn.
The Japanese domestic machine industry continued to experience favorable conditions due toan increase in plant and equipment investment and exports.
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, and pioneer new domestic and overseas growth markets for their injection molding
machines, die-casting machines, plastic extrusion machines, machine tools, semiconductor
manufacturing equipment, hydraulic equipment and electronic control equipment, which
resulted in a 16.4% increase over the previous term in consolidated total orders received, totaling¥185,146 million (US$1,568 million). Consolidated net sales in virtually every division, increasedin tandem with consolidated total orders received resulting in a 13.9% increase over the previous
term, totaling ¥164,385 million (US$1,393 million). (An exchange rate of US$1.00 = ¥118.05
shall be used throughout this report)
In combination with the increased sales of our products, including various molding machines,
machine tools, semiconductor manufacturing equipment and electronic control equipment, ourbusiness rationalization efforts resulted in a 26.4% increase over the previous term inconsolidated pre-tax profits totaling ¥19,721 million (US$167 million) and a 3.3% increase overthe previous term in net consolidated profits totaling ¥10,828 million (US$92 million), ourfourth consecutive year of increased revenue and fifth consecutive year of increased profits.
Consolidated total orders received, consolidated net sales and consolidated profit all showed thehighest record ever.
Hence, we are pleased to announce that a fiscal year end dividend of ¥6.00 (US$0.05) per
share was distributed to our stockholders for the period ending on March 31, 2007, for a total
annual dividend of ¥12 (US$0.1) per share, the same as in the previous term.

2

In addition to our subsidiary established last year in New Delhi, India, a marketing andservicing base was also established on August 1, 2006 in Ho Chi Minh, Vietnam to further
reinforce our overseas strategy.
Although generally favorable conditions for our products is expected to continue for theforseeable future, many uncertainties remain such as volatile energy costs, rise in interest rates
and an international economic slowdown.
Under such business conditions, the Toshiba Machine Group implemented their ACTION
PROGRAM G1500 II last year to improve the quality of their business in new markets for thefurther enhancement of business performance and profitability. Furthermore, on April 1, 2007,
the Toshiba Machine Group also implemented their TOSHIBA MACHINE ACTION PROGRAM
GIII (TM-AP GIII) along with continued execution of their strategy based on various reforms,
marketing systems and advanced technologies, as well as reorganization and renewal of theirproduction facilities, 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 ISO14001 standards, while as a responsible
corporate citizen, training and educating of their workforce in the observance of all rules andregulations and fulfillment of all social responsibilities.

Reiji Nakajima
President
July, 2007

3

FINANCIAL HIGHLIGHTS (consolidated)
2007

2006

2005

2004

2003

¥164,386¥144,356¥123,573¥110,658¥97,297¥98,394¥85,598¥77,627¥68,455¥29,411¥25,742¥25,430¥25,786¥16,551¥12,233¥7,601¥3,056

Income before income¥19,750
taxes and minority interests $167,302¥16,715¥10,178¥5,104¥1,239¥8,437¥5,995¥2,940¥817¥193¥10,482¥7,093¥4,153¥1,052¥63.16¥42.48¥24.71¥6.29¥12.00

¥7.00

¥4.00

¥3.00

¥172,477¥145,057¥148,309¥136,278¥60,347¥47,624¥42,230¥37,525¥3,096¥2,004¥1,774¥1,275¥1,891¥1,825¥1,800¥2,050¥2,808¥2,512¥3,194¥2,587

3,336

3,310

3,068

3,380

Net sales$1,392,512¥109,801

Cost of sales$930,123¥34,078

Selling, general andadministrative expenses$288,674

Operating income¥20,507$173,715

Income taxes$71,470¥10,829

Net income$91,732
Per common share:¥65.80Net income$0.56¥12.00Cash dividends$0.10¥188,046

Total assets$1,592,935
Net assets¥71,029$601,686¥4,193

Capital expenditure(property, plant and equipment)$35,519

Depreciation¥2,086$17,670

R & D Cost

¥3,557$30,131

Number of employees

3,435

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

4

Overseas Operations for Fiscal 2007
During the fiscal year 2007, China
continued to lead the region with its robust
economy with other Asian nations also
experiencing favorable business conditions.
The United States economy, despite a decline

Net Sales

164,385

Millions of yen
Note : From the fiscal year ending on
March 31,2005 [Semicorductor
manufacturing equipment] is listed
separately from [Other products]

in certain selected industries, continued in its

123,573
16,619overall expansion, while Europe continued inits gradual economic recovery.
Under such economic conditions,increased foreign demand for our products
resulted in total consolidated overseas sales of¥74,360 million (US$630 million), an increase

110,658
97,29729,99031,134

144,356
18,221

25,247

19,08431,438ducts

Other Pro

ductorSemicon turing
Manufac t
Equipmen

Tools

Machine28,332

18,65885,989

MoldingyMachiner

78,72865,75660,86549,336sales.
In terms of machine types, injection

21,71024,90917,971of 5.3% over the previous year, contributing
to approximately 45.2% of total consolidated

16,286

Total

2003

2005

2004

2006

2007

molding machines and die-casting machines
continued to be our leading export products,
with the Asian region, principally China,

Total Sales & Overseas Sales

164,385

Millions of yen

Korea, Taiwan and Thailand, being our mostes
Total Sal

144,356

important markets.
In the future, the Toshiba Machine group123,573

plans to continue in the further

110,658

enhancement of their regional sales andservice networks, along with the providing of

97,297

machines of increasingly higher standards ofquality, as well as a total type of Solution

70,602Business based on our value chain of
products.

Overseas

Sales

59,58057,17245,515

2003

74,360

2005

2004

2006

2007

Export Percentages by Major Products
Other
Products
Molding
Machinery13%
Semiconductor
Manufacturing
Equipment

15%
53%
19%

MachineTools

5Overseas Offices■ North America ■■ Europe ■■ South East Asia ■TOSHIBA MACHINE CO., AMERICA
Chicago Head Office

TOSHIBA MACHINE (EUROPE)G.m.b.H.
Head Office

TOSHIBA MACHINE S.E. ASIA PTE. LTD.
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/

Karl-Arnold-Strasse 2a, 47877
Willich-Münchheide, GERMANY
Tel : [49]-(0)2154-9275-0
Fax : [49]-(0)2154-9275-75

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

U.K. Branch

Kuala Lumpur Branch

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

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

Los Angeles Office1440 South Balboa Avenue,
Ontario, CA 91761, U.S.A.
Tel : [1]-909-923-4009
Fax : [1]-909-923-7258

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

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

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

Hanoi Office
43A-Ngo Quyen Street, Hoan Kiem
District, Hanoi, VIETNAM
Tel : [84]-(0)4-936-7278~9
Fax : [84]-(0)4-936-7365

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.
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/

Ho Chi Minh Office
E Town Bldg. 8th Floor, Unit 364, Cong
Hoa Street, Tan Binh District,
Ho Chi Minh City, VIETNAM
Tel : [84]-(0)8-810-8658
Fax : [84]-(0)8-810-8657

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

Chonburi Branch
656 Sukumvit Road, Tambol Seansuk,
Ampur Muang, Chonburi 20130,
THAILAND
Tel : [66]-(0)38-341-670
Fax : [66]-(0)38-341-759

6

■ 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

Beijing Office
Beijing Fortune Building, Room No. 2014,
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

Tianjin Office12-32, Xinshuiyuan, Youyinan Road,
Hexi District, Tianjin, 300221,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)22-8836-3056
Fax : [86]-(0)22-2416-0380

Suzhou Office
112, Jin Di Ming Yuan, No. 168 Jie Fang
Xi Road, Suzhou, 215007,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)512-6855-0387
Fax : [86]-(0)512-6855-0562

Dalian Office
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

Guangzhou Office
Room 707, No.93, Linhexi Road, Tianhe
District, Guangzhou, 510610,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)20-8755-1180
Fax : [86]-(0)20-8755-1185■ South Asia ■Xiamen Office

TOSHIBA MACHINE (INDIA) PVT. LTD.

Room A303, Xinxin Jingdi Building,
No.396 Jia He Road, Huli District,
Xiamen, 361009,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)592-5596-381
Fax : [86]-(0)592-5596-382

No.1006, Antriksh Bhawan22, Kasturba
Gandhi Marg, New Delhi, 110001,
INDIA
Tel : [91]-(0)11-6632-6159
Fax : [91]-(0)11-6632-6161

TOSHIBA MACHINE (SHANGHAI) CO., LTD.
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 1215-1217, 12/F., Xihaimingzhu
Building, 1 Taoyuan Road, Nanshan
District, Shenzhen, 518052,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)755-8625-0110
Fax : [86]-(0)755-8625-0112

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

NuFlare Technology, Inc.
Korea Branch
4F Wonchang Bldg. 1000-2, 3,
Yeongtong-dong, Yeongtong-Gu,
Suwon Si, Gyeonggi-Do, 443-813, Korea
Tel : [82]-(0)70-7017-1136
Fax : [82]-(0)31-202-0435

7

Financial Review
CONSOLIDATED BALANCE SHEETSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2007 and 2006
Thousands of
U.S. dollars

Millions of yen
ASSETS
Current assets:
Cash and time deposits (Note 13)
Notes and accounts receivable, trade
Allowance for doubtful receivables
Net receivables
Inventories:
Finished products
Work in process
Raw materials and supplies
Total inventories
Deferred tax assets (Note 12)
Other current assets
Total current assets
Property, plant and equipment, net(Notes 6 and 11)
Intangible Assets
Investments and other assets:
Investments in:
Unconsolidated subsidiaries andaffiliates
Other securities (Note 5)Long-term loans
Deferred tax assets (Note 12)
Other investments
Total investments and other assets
Total assets

2007

2006

2007

¥36,028
65,328(449)
64,879¥39,410
56,142(433)
55,709$305,193
553,393(3,803)
549,590

3,510
37,072
1,067
41,6492,779
2,416
147,751

3,032
31,6702,207
36,9092,540
1,337
135,905

29,733314,0369,039
352,808
23,541
20,464
1,251,596

25,393

22,844215,104

824

735

6,980

193
11,916
243
612
1,114
14,078¥188,046

153
11,488282
342
728
12,993¥172,477

1,635
100,940
2,058
5,184
9,438
119,255$1,592,935

See accompanying notes to financial statements.

8Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

¥21,707¥26,809$183,880

Current portion of long-term debt (Notes 7 and 11)

1,100

1,538

9,318

Notes and accounts payable, trade

49,48040,992

419,144

Income taxes payable (Note 12)

5,403

5,323

45,769Accrued expenses

7,296

6,240

61,804

Warranty reserve

113

88

957

8,302

6,885

70,326

93,40187,875

791,198

Long-term debt (Notes 7 and 11)

10,1509,840

85,981

Deferred tax liabilities (Note 12)

3,198

2,937

27,090Accrued employees’ retirement benefits (Note 8)

10,2689,116

86,98023,616

21,893200,051

117,017

109,768

991,249

12,485

12,485

105,760

Additional paid-in capital

19,601

19,538166,040

Retained earnings

31,89523,423

270,182

Treasury stock,at cost(2,824,714 shares in 2007,1,717,748 shares in 2006)(2,072)(693)(17,552)

Total shareholders’ equity

61,90954,753

524,430

6,010

5,753

50,911

Deferred gains or losses on hedge

14

—

119

Foreign currency translation adjustments

(0)

(159)

(0)

Total valuation and translation adjustments

6,024

5,594

51,030Minority interest in consolidated subsidiaries:

3,096

2,362

26,226

Total net assets

71,02962,709601,686¥188,046¥172,477$1,592,935

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Short-term bank loans (Notes 7 and 11)

Other current liabilities
Total current liabilities
Long-term liabilities:

Total long-term liabilities
Total liabilities
Contingent liabilities (Note 9)
Net assets:
Shareholders’ equity: (Note 16)
Common stock
Authorized –360,000,000 shares

Issued166,885,530 shares–

Valuation and translation adjustments:
Unrealized holding gain on securities, net of tax

Total liabilities and net assets

See accompanying notes to financial statements.

9

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

Years ended March 31, 2007 and 2006
Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

¥164,386¥144,356$1,392,512

109,801

98,394930,123

54,58545,962

462,389

34,07829,411

288,674

20,507

16,551

173,715Interest and dividends

228

129

1,931

Exchange gain

357

584

3,024

Gain on sales of property, plant and equipment

—

714

—

Gain on sales of investment in consolidated subsidiaries

517

1,366

4,380

Gain on sales of investment in securities

22

120

186

Gain on sales of golf membership

20

—

169

Others

559

422

4,736

1,703

3,335

14,426

Interest

514

471

4,354

Loss on sale of bill

123

84

1,042

Amortization of transitional obligation for
employee’s retirement benefits (Note 7)

818

818

6,929

Loss on disposal of property, plant and equipment

198

174

1,677

Loss on impairment of fixed assets

33

—

280

Allotment of transfer construction (Note 15)

300

—

2,541

Loss on settlement of dispute (Note 15)

—

915

—

Others

474

709

4,016

2,460

3,171

20,83919,75016,715

167,302

Current

8,802

7,189

74,562

Deferred(365)(1,194)(3,092)

8,437

5,995

71,470

Income before minority interest

11,313

10,72095,832

Minority interest in income of
consolidated subsidiaries

484

238

4,100

¥10,829¥10,482$91,732

Net sales
Cost of sales (Note16)
Gross profit
Selling, general and administrative expenses (Notes 14 and 16)
Operating income
Other income:

Other expenses and losses:

Income before income taxes
and minority interest
Income taxes (Note 12)

Net income

Yen
Net income per share of common stock¥65.80U.S. dollars¥63.16$0.56

See accompanying notes to financial statements.

10

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Years ended March 31, 2007 and 2006
Millions of yen
Numberof
SharesCommonStock

Additional
paid in
capitalRetainedearnings

Treasurystock

Balance at March 31, 2005 166,885,530 ¥12,485 ¥19,405 ¥14,461(¥821)

Deferred
Minority
Unrealized
gains or Translation Interest in
gain onlosses adjustments consolidated
securities,net
on hedge
subsidiaries¥2,747—(¥653)

¥809

494

1,553

5,753

—

(159)

2,362

257

14

159

734

¥6,01014(¥0)¥3,096

10,482

Net income
Exchange of stock forshares of affiliated company

133

Purchase of treasury stock(14)

Disposal of treasury stock142(1,485)

Cash dividends(35)

Bonuses to directors and statutory auditors
Net changes in items other thanshareholders’ equity

3,006

Balance at March 31, 2006 166,885,530 12,485

19,53823,423(693)

10,829Net income(1,474)Purchase of treasury stock
63

Disposal of treasury stock95(2,306)

Cash dividends(51)

Bonuses to directors and statutory auditors
Net changes in items other thanshareholders’ equity

Balance at March 31, 2007 166,885,530 ¥12,485 ¥19,601 ¥31,895 (¥2,072)

Thousands of U.S. dollars
Retainedearnings

Treasurystock

Unrealized
gain onsecurities,net

Deferred
gains orlosseson hedge$105,760 $165,506 $198,416($5,870)$48,734—($1,347)$20,008

2,177

119

1,347

6,218

$50,911

$119

($0)

$26,226

CommonStock
Balance at March 31, 2006

Additional
paid in
capital91,732

Net income(12,486)

Purchase of treasury stock
534

Disposal of treasury stock804(19,534)

Cash dividends
Bonuses to directors and statutory auditors(432)

Net changes in items other thanshareholders’ equity
Balance at March 31, 2007

Minority
Translation Interest in
adjustments consolidated
subsidiaries$105,760 $166,040 $270,182 ($17,552)

See accompanying notes to financial statements.

11

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

Years ended March 31, 2007 and 2006
Millions of yen
2007
Operating Activities:
Income before income taxes and minority interest¥19,750
Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation
2,086
Allowance for doubtful receivables
17
Warranty reserve
25
Employees’ retirement benefit, less payments
1,152
Gain on sales of investment securities(22)
Gain on sale of investment in consolidated subsidiaries(517)
Interest and dividend income(228)
Interest expense
514
Loss (gain) on sales and disposal of property, plant and equipment 193
Loss on settlement of dispute—
Changes in operating assets and liabilities:
Notes and accounts receivables, trade(9,185)Inventories(4,740)Notes and accounts payables, trade
8,488
Advances received
1,299
Accrued expenses
1,072
Others(115)
Sub total
19,789Interest and dividend income received
228
Interest expense payments(529)
Loss on settlement of dispute—
Income taxes paid
(8,743)
Others(124)
Net cash provided by operating activities
10,621
Investing Activities:
Acquisition of investment securities(97)
Proceeds from sales of investment securities
47
Proceeds from sales of investment in consolidated subsidiaries
795
Purchases of property, plant and equipment(5,173)
Proceeds from sales of property, plant and equipment
47
Payments of long-term loan receivables(23)
Repayments of long-term loan receivables
62
Others(735)
Net cash provided by (used in) investing activities(5,077)
Financing Activities:
Increase (decrease) in short-term bank loans(3,602)
Repayments of long-term debt
(1,628)Purchases of treasury stock(1,474)
Cash dividends paid
(2,306)
Others(74)
Net cash used in financing activities(9,084)
Effect of exchange rate changes on cash and cash equivalents
158
Net cash increased in cash and cash equivalents(3,382)
Cash and cash equivalents at the beginning of year
39,410Cash and cash equivalents at end of year (Note 13)¥36,028

Thousands of
U.S. dollars

2006

2007

¥16,715$167,302

1,891
2
3
1,113
(120)
(1,366)
(129)
471
(540)
915

17,670
144
212
9,759
(186)
(4,380)(1,931)
4,354
1,635
—

(3,565)(5,233)
6,213
2,012
499
2,229
21,110129(465)(1,181)(6,320)(84)
13,189(77,806)(40,152)
71,902
11,004
9,081(975)
167,632
1,931(4,481)—(74,062)(1,050)89,970

(22)
181
2,400
(2,330)
844
(15)
67
(111)
1,014

(821)
398
6,734
(43,820)
398
(195)
525
(6,226)(43,007)

357
(761)
(15)
(1,485)(3)(1,907)495
12,791
26,619¥39,410(30,512)(13,791)(12,486)(19,534)(627)(76,950)
1,338(28,649)
333,842$305,193

See accompanying notes to financial statements.

12

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 thedates of the consolidated financial statements andthe reported amounts of revenues and expenses
during the reporting periods. Actual results could
differ from these estimates.
The consolidated balance sheets, statements ofincome, changes in net assets and cash flows
incorporate certain reclassifications andrearrangements in order to present these statements in forms which are more familiar to readersof these statements outside of Japan. In addition,
the notes to the consolidated financial statements
include information which is not required undergenerally accepted accounting principles andpractice 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 its subsidiaries(together the “Companies”). Certain immaterial
subsidiaries are not consolidated, but stated atcost.
All significant intercompany transactions andaccounts and unrealized intercompany profits
among consolidated entities are eliminated inconsolidation.
The cost in excess of underlying interest in net
equity of consolidated subsidiaries at the time ofacquisition, which is included in intangible assetsof the accompanying consolidated balance sheets,is deferred and amortized within the five-year
period.

Investments in affiliates (15 to 50 percentowned companies ) in which the ability to exercise significant influence exist, except immaterial
investments, are stated at cost.
(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 dates 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 consolidated
subsidiaries 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
debt securities and other securities, in accordancewith the accounting standard for financial instruments.
Held-to-maturity debt securities are carried atamortized cost. Marketable securities classified asother securities are carried at fair value with any
changes in unrealized gain or loss, net of income
taxes, directly included in equity.
Non-marketable securities classified as othersecurities are carried at cost. Cost of securities sold isdetermined by the moving average method.
(d) Inventories
Inventories are stated at the cost, determinedby the specific identification 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 uncollectible 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.

13

(f) Warranty reserve
Warranty reserve has been provided for at theestimated amount of the incurred during the warranty period based on historical experience.
(g) Enployees Bonuses
The bonuses to the employees are paid twice ayear and accrued based on estimated amounts to
be paid in the subsequent period.
(h) Depreciation of property, plant and equipment
Depreciation of buildings is principally computed, by the straight-line method and otherdepreciation of property, plant and equipment iscomputed by the declining balance method overthe estimated useful lives of respective assets, principally ranging from three to sixty years for buildings and from three to twenty-two years formachinery, equipment and vehicle.
(i) 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 including patent right are computed by the straight-line
method over the estimated useful lives of respective assets.
(j) Finance Leases
Finance leases, which do not transfer ownershipof the leased assets to the lessees, are accounted forin the same manner as operating leases.
(k) Derivative financial instruments
All derivatives are stated at fair value. Gains orlosses arising from changes in fair value arecharged or credited to income for the period inwhich they arise, except for derivatives that aredesignated as hedging instruments. Gains or losses arising from changes in fair value of the derivatives designated as hedging instruments net of theapplicable income taxes, are reported as a component of net assets.
(l) Income Taxes
The Companies accrue current income taxes
based on taxable income.
The Companies include many items for financial reporting purposes which, in the case of
expenses, are not currently deductible and in thecase of income, are not currently taxable.
Income tax effects on temporary differences
between tax and financial reporting purposes
reflected as deferred income taxes in the consolidated financial statements using the asset and liability method.

14(m) Employees’ Retirement Benefits
Accrued employees’ retirement benefits areprovided based on the projected retirement benefit obligation and the fair value of plan assets at
year-end.
The unrecognized transitional obligation is
being amortized over 15 years. Actuarial gain or loss
is amortized by the straight-line method over the
average remaining years of service of employees.
(n) Appropriation of Retained Earnings
Under the Commercial Code of Japan, theappropriation of retained earnings with respect toa given financial period is made by resolution of
the shareholders at a general meeting to be held
subsequent to the close of such financial period.
The accounts for that period do not, therefore,
reflect such appropriations. See Notes 14.
(o) 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.
(p) 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.
(q) Reclassifications
Certain accounts in the consolidated financial
statements for the year ended March 31, 2006
have been reclassified to conform to the 2007 presentation.

3. U.S. Dollar Amounts
U.S. dollar amounts are included solely for theconvenience of the readers and have been translated at the rate of ¥118.05=U.S.$1,the approximate
exchange rate prevailing in the Japanese foreignexchange market on March 31, 2007. This translation should not be construed as a representationthat the yen amounts actually represent, have been,or could be converted into U.S. dollars.

4. Accounting Changes(a) Accounting standard for presentation of net
assets in the balance sheet

Effective from the year ended March 31, 2007, the Company adopted “accounting standard for presentation of net assets in the balance sheet” and related implementation guidelines.
Due to the adoption of this accounting standard, minority interests are included in net assets at March
31, 2007. Under the previous presentation rules, minority interests were presented as a separate component the consolidated balance sheet.
In addition, preparation of a consolidated statement of changes in net assets has been required,instead of a consolidated statement of shareholders’ equity, for the year ended March 31, 2007.
In this connection, the consolidated balance sheet as of March 31, 2006 and the consolidated statement of shareholders’ equity for the year ended March 31, 2006 have been reclassified to conform to thepresentation and disclosure of consolidated financial statements as of and for the year ended March 31,
2007.
For the year ended March 31, 2007, the amount of shareholders’ equity would have been ¥67,918 million (US$575,332 thousand) if the previous year’s presentation were applied(b) Accounting standard for directors‘ bonuses
In the year ended March 31, 2007, the Company adopted “accounting standard for directors
bonuses” and changed to provide for bonuses to directors and corporate auditors at the end of the fiscal year to which such bonuses are attributable.
The effect of the adoption of this new accounting standard on operating income for the year ended
March 31, 2007 was ¥65 million (US$551 thousand).
(c) Accounting standard for the impairment of fixed assets
In the year ended March 31, 2006, the Company has adopted new accounting standards for the
impairment of fixed assets in accordance with “Accounting Standards for the Impairment of Fixed
Assets” and “Implementation Guidance for Accounting Standards for the Impairment of fixed assets.”
The effect on net income of the adoption of this new accounting standard was nil for the year
ended March 31, 2006.
(d) Accounting standard for employee retirement and severance benefits
In the year ended March 31, 2006, the Company adopted the partial amendment of “Corporate
Accounting Standard No. 3 regarding Employee Retirement and Severance Benefits” issued on March
16, 2005.
The effect on net income of the adoption of this new accounting standard was nil for the year
ended March 31, 2006.

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

Equity securities

2007
Acquisition Carrying
cost
value
¥1,816¥11,723¥1,816¥11,7232006
Unrealized Acquisition Carrying
gains
cost
value
¥9,907¥1,820¥11,371

Unrealized
gains¥9,551¥9,907¥9,551¥1,820¥11,371

Thousands of U.S. dollars
2007
Acquisition Carrying Unrealized
cost
value
gains
Equity securities$15,383$99,305$83,922$15,383$99,305$83,922Non-marketable securities classified as other securities primary consisit of non-marketable equity
securities of ¥193 million (US$1,635) and ¥116 million as of March 31, 2007 and 2006, respectively.

15

6. Property, Plant and Equipment
Property, plant and equipment at March 31, 2007 and 2006 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

Land

¥6,062¥6,071$51,351

Buildings and structures

32,17130,783

272,520

Machinery and equipment

31,89930,193

270,216

565

565

4,786

Tools, furniture and fixtures

7,701

7,546

65,235Construction in progress

1,286

1,439

10,894

79,684

76,597675,002(54,291)(53,753)(459,898)¥25,393¥22,844$215,104

VehiclesLess accumulated depreciation

Depreciation expense for the years ended March 31, 2007 and 2006 were ¥ 2,086 million ($ 17,670
thousand) and ¥ 1,891 million, respectively.

7. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the short-term bank loans outstanding on March 31, 2007
and 2006 ranged principally from 1.08% to 6.59% and from 0.55% to 5.56%, respectively. Long-term
debt on March 31, 2007 and 2006 consisted of the following:
Millions of yen

Loans, principally from Japanese banks andinsurance companies maturing 2008 – 2011,
interest 1.00 % - 1.90 %Less current portion

Thousands of
U.S. dollars

2007

2006

2007

¥11,250¥11,378$95,299

11,25011,37895,299

1,100

1,538

9,318

¥10,150¥9,840$85,981

The aggregate annual maturities of long-term debt at March 31, 2007 were as follows:
Millions of yen

Thousands of
U.S. dollars

Year ending March 31
2008¥1,100$9,318

2009

8,650

73,274

2010

—

—

2011

—

—

1,500

12,706¥11,250$95,298

2012 and later16

8. Employees’ Retirement Benefits
The severance indemnity regulations of the Company and certain subsidiaries provides for benefit
payments based on the employees’ 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 trust bank which act as
the trustees.
The liability for employees’ retirement benefits at March 31, 2007 and 2006 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

¥18,984¥18,688$160,813

(816)

(807)

(6,912)

Unfounded status

18,16817,881

153,901

Unrecognized transitional obligation(6,375)(7,193)(54,003)

Unrecognized actuarial loss

(1,525)(1,572)(12,918)¥10,268¥9,116$86,980

Projected benefit obligation
Fair value of plan assets

Accrued retirement benefits obligation

The components of net periodic benefit costs for the years ended March 31, 2007 and 2006 were as follows:
Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

Service cost

¥1,110¥1,033$9,403

Interest cost

316

316

2,677

Expected return on plan assets

(18)

(7)

(152)

Amortization of transitional obligation

818

818

6,929

Recognized actuarial loss

285

280

2,414

¥2,511¥2,440$21,271

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:
2007

2006

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

2.5%

1.0%

Amortization period of transitional obligation

15 years

15 years

Amortization period of actuarial loss/gain

10 years

10 years

9. Contingent Liabilities
On March 31, 2007, 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 ¥272 million ($2,304 thousand) and ¥1,136 million ($9,623 thousand), respectively.

1710. 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,
2007 and 2006, which would have been reflected in the consolidated balance sheets if these arrangements have been accounted for as finance leases:
Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

Machinery, equipment and vehicles¥2,781¥910$23,558

Tools, furniture and fixtures

1,551

1,840

13,138Less-Accumulated depreciation(1,835)(1,408)(15,544)

Net book value¥2,497¥1,342$21,152

Acquisition Costs

Future lease payments (including the interest portion thereon) subsequent to March 31, 2007 forfinance leases accounted for as operating leases are as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2007

Due within one year

¥818

$6,929Due after one year

1,679

14,223¥2,497$21,152

Periodic lease charges, as a lessee, charged to income for the years ended March 31, 2007 and 2006
were ¥ 906 million ($7,675 thousand) and ¥ 589 million, respectively. The pro forma amounts ofdepreciation for the year ended March 31, 2007 and 2006, would be calculated at ¥906 million ($7,675
thousand) and ¥589 million by using the straight-line method over the lease term with no salvage
value.

11. Pledged Assets
The following assets were pledged as collateral at March 31, 2007 to secure short-term bank loans
amounting to ¥2 million ($17 thousand), (See Note 7).
Millions of yen

Thousands of
U.S. dollars

Land

¥581

$4,922

Machinery and equipment, net

502

4,252

2,821

23,897¥3,904$33,071

Buildings, net

12. 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, 2007 and 2006 are approximately 39.8% and 39.8%, respectively.
The reconciliation between the statutory rate and effective tax rate of income taxes for the years
ended March 31, 2007 and 2006 are as follows:

18

2007

2006

39.8 %

39.8 %

Per-capita portion of Inhabitant Tax

0.2

0.3

Non-taxable revenue

0.5

0.1

Non-deductible expenses

0.3

0.3

Unrealized intercompany profit on fixed assets

(0.0)

(0.2)

Change in valuation allowance

2.9

(0.2)

Difference in tax rates of consolidated subsidiaries

(1.3)

(1.0)

Other

0.3

(3.2)

Effective tax rate

42.7 %

35.9 %

Statutory tax rate

The significant components of deferred tax assets and liabilities at March 31, 2007 and 2006 were as follows:
Thousands ofMillions of yen
U.S. dollars
2007

2006

2007

¥1,509¥1,324$12,783

Allowance for doubtful receivables

106

129

898

Devaluation of inventories

182

170

1,542

Devaluation of securities

199

226

1,686

3,578

2,866

30,309

389

320

3,295

Other

1,294

1,023

10,961

Total deferred tax assets¥7,257¥6,058$61,474

Valuation allowance(2,917)(2,097)(24,710)Net deferred tax assets¥4,340¥3,961$36,764

(207)

(218)

(1,753)(3,930)(3,797)(33,291)

(10)

—

(85)

(¥4,147)(¥4,015)($35,129)(¥193)(¥54)($1,635)

Deferred tax assets:
Accrued employees bonuses

Accrued employees’ retirement benefits
Unrealized gain on inventories

Deferred tax liabilities:
Deferral of gain on sale of fixed assets
Unrealized gain on securities
Gain on deferred hedging
Deferred tax liabilities
Net deferred tax assets (liabilities)

13. 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, 2007 and 2006 is presented as follows:
Thousands ofMillions of yen
U.S. dollars
2007

2006

2007

Cash and time deposits¥36,028¥39,410$305,193

Cash and cash equivalents¥36,028¥39,410$305,193

19

14. Selling, general and administrative expenses
Major components of selling, general and administrative expenses at March 31, 2007 and 2006
are as follows:
Thousands of
U.S. dollars

Millions of yen
2007

2006

2007

Sales commission¥2,511¥2,567$21,271

Delivering expense

3,794

3,297

32,139Reserve for warranty

25

3

211

13,138

11,836111,292

Employees’ benefit costs

706

515

5,981

Depreciation

679

550

5,752

Rental expense

1,117

932

9,462

Traveling expense

1,474

1,291

12,486

Reserch and development expense

2,949

2,032

24,981

Subcontract processing expense

1,393

1,184

11,800

Others

6,292

5,204

53,299Personal expense

15. Other expenses
Allotment of transfer construction
It is an unexpected costs on malfunction of the machines delivered.
Loss on settlement of dispute
It is settlement compensation for the loss on damage caused by the machine tools delivered money in the TOSHIBA MACHINE COMPANY, AMERICA, a consolidated subsidiary.

16. Research and development costs
Research and development costs charged to income were ¥3,557 million ($30,131 thousand)and ¥2,808 million for the years ended March 31, 2007 and 2006, respectively.

17. Shareholders’ Equity
The Commercial Code of Japan (the “Code”) provides that an amount equal to at least 10% of theamount to be disbursed as distribution of earnings be appropriated to the legal reserve until the sum of
the legal reserve and additional paid-in capital account equals 25% of the common stock account. The
Code provides that neither additional paid-in capital nor the legal reserve is available for dividends, butboth may be used to reduce or eliminate a deficit by resolution of the shareholders or may be transferred
to common stock upon approval by the Board of Directors. The Code further provides that if the total
amount of additional paid-in capital and the legal reserve exceeds 25% of the amount of common stock,
the excess may be distributed to the shareholders either as a return of capital or as dividends subject to theapproval of the shareholders. The Company’s shares of common stock have no par value in accordancewith the Code.
The new Corporation Law of Japan (the “Law”), which superseded most of the provisions of the Code,went into effect on May 1, 2006. The Law stipulates similar requirements on distribution of earnings to
those of the Code. Under the Law, however, such distributions can be made at any time by resolution of
the shareholders, or by the Board of Directors if certain conditions are met.

20

18. 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 income information by business segment.
Millions of yen

Year ended March 31, 2007
Molding
Machinery

MachineTools

Semiconductor
Other
Equipment
Products

Sales¥86,053¥31,822¥25,263¥26,260¥(5,012)¥164,386

Operating expenses

75,62827,38822,63023,487(5,254)

143,879

Operating income

10,425

4,434

2,633

2,773

242

20,507

Identifiable assets

76,041

31,93032,48938,137

9,449

188,046

Depreciation

1,076

240

317

453

—

2,086

Capital expenditure

1,034

345

1,715

1,099

—

4,193

Eliminations
Consolidated
and/or corporate

Millions of yen

Year ended March 31, 2006
Molding
Machinery

Machine
Tools

Sales

¥78,733¥28,426¥19,087¥22,937¥(4,827)¥144,356

Operating expenses

70,52324,715

17,39020,246(5,069)127,805

Operating income

8,210

3,711

1,697

2,691

242

16,551

Identifiable assets

69,02331,76025,85433,732

12,108172,477

955

225

305

406

—

1,891

2,108

222

240

526

—

3,096

Depreciation
Capital expenditure

Semiconductor
Other
Equipment
Products

Eliminations
Consolidated
and/or corporate

Thousands of U.S.dollars

Year ended March 31, 2007
Molding
Machinery

MachineTools

Semiconductor
Other
Equipment
Products

Sales$728,954$269,564$214,003

222,448$(42,457)$1,392,512

Operating expenses

640,644

232,003

191,698

198,958(44,506)

1,218,797

Operating income

88,31037,561

22,30523,4902,049

173,715

Identifiable assets

644,142

270,479

275,214

323,058

80,042

1,592,935

Depreciation

9,115

2,033

2,685

3,837

—

17,670Capital expenditure

8,759

2,922

14,5289,310—

35,519Eliminations
Consolidated
and/or corporate

The Company and its domestic subsidiaries adopted “Accounting standard for directors’ Bonuses”
effective from the year ended March 31, 2007. As a result, operating expenses increased by ¥39 million(US$330 thousand) in Molding Machinery. ¥ 8 million (US$68 thousand) in Machine Tools. ¥4 million(US$34 thousand) in Semiconductor Equipment, and ¥14 million (US$119 thousand) in Other Products.
Operating income decreased by the same amounts accordingly.

21

(B) Geographic segment information of the companies for the years ended March 31, 2007 and 2006 wereas follows:
North America¥9,802
9,420
382
5,313

Millions of yen
Asia
Total
¥12,183¥180,360
11,102
159,758
1,081
20,602
8,285
175,533

Eliminations Consolidated¥(15,974) ¥164,386(15,879)
143,879(95)
20,507
12,513
188,046

North America¥9,154
8,969
185
4,949

Millions of yen
Asia
Total
¥11,022¥157,591
10,185140,973837
16,6187,100
157,417

Eliminations Consolidated¥ (13,235) ¥144,356(13,168)
127,805(67)
16,551
15,060172,477

Year ended March 31, 2007
Net sales
Operating expenses
Operating income
Identifiable assets

Japan¥158,375
139,236
19,139161,935

Year ended March 31, 2006
Net sales
Operating expenses
Operating income
Identifiable assets

Japan¥137,415
121,819
15,596145,368

Year ended March 31, 2007
Net sales
Operating expenses
Operating income
Identifiable assets

Japan$1,341,593
1,179,466
162,127
1,371,750

Thousands of U.S.dollars
North America
Asia
Total
Eliminations Consolidated$83,033$103,202 $1,527,828 $(135,316) $1,392,512
79,797
94,045
1,353,308(134,511) 1,218,797
3,236
9,157
174,520(805)
173,715
45,00670,182
1,486,938
105,997
1,592,935

The Company and its domestic subsidiaries adopted “Accounting standard for directors’ Bonuses”
effective from the year ended March 31, 2007. As a result, operating expenses increased by ¥65 million(US$551 thousand) in the Japan segment, and operating income decreased by the same amount accordingly.
(C) Sales to foreign customers for the years ended March 31, 2007 and 2006 were as follows:Year ended March 31, 2007
North America
Sales to foreign customers
Net sales
Ratio of sales to foreign Customers (%)¥50,170¥5,372¥74,360———

164,386

11.4

30.5

3.3

45.2

North America

Net sales
Ratio of sales to foreign Customers (%)

Ratio of sales to foreign Customers (%)

22

Total

¥48,914¥2,908¥70,602———144,356

13.0

33.9

2.0

48.9

North America

Net sales

Millions of yen
Asia
Other

¥18,780

Year ended March 31, 2007
Sales to foreign customers

Total¥18,818

Year ended March 31, 2006
Sales to foreign customers

Millions of yen
Asia
Other

Thousands of U.S.dollars
Asia
Other

Total

$159,407$424,989$45,506$629,902———

1,392,512

11.4

30.5

3.3

45.2

19. Related Party Transactions
During the year ended March 31, 2006, the Company and its consolidated subsidiaries had operational transactions with Toshiba Corporation, a 34.1% shareholder of the Company. A summary of thesignificant transaction with Toshiba Corporation for the year ended, March 31, 2006 is as follows.
There were no transactions with Toshiba Corporation for the year ended March 31, 2007.

Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

—

¥2,400——¥2,400—For the year:
Sales of investment in consolidated subsidiaries

Note : The third party organization calculated sales price.

20. Subsequent events(a) Pension plan
According to the enactment of the defined contribution pension plan law, Toshiba Machine andsome of its consolidated subsidiaries are to implement a defined contribution pension plan in July 1,
2007, by which the former non-contributory pension plan was terminated. Toshiba Machine and someof its consolidated subsidiaries are to apply the accounting treatment specified in the guidance issued
by the accounting standards board of Japan (“ASB”). By the effect of this transfer , we will decrease
income before income taxes and minority interest by ¥3,900 million (33,037 thousand) March 31,
2008.
(b) Changes of consolidated subsidiaries
The Company resolved at the board of directors on April 16, 2007 to sell the stocks of NuFlareTechnology, Inc. (“NuFlare”), a consolidated subsidiary, when NuFlare goes public on the Jasdaq securities exchange. As a result, NuFlare has become an affiliated company, accounted for by the equity
method.
Financial data of NuFlare at March 31, 2007 were as follows:

Millions of yen

Thousands of
U.S. dollars

Net assets¥30,971$262,355

Net sales

23,062

195,358

Net income

1,140

9,657

23

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, 2007 and 2006, and the related consolidated
statements of income, changes in net assets, 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 reasonablebasis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Toshiba Machine Co., Ltd. and consolidated subsidiaries at March 31,
2007 and 2006, and the consolidated results of their operations and their cash flows for the years thenended in conformity with accounting principles generally accepted in Japan.
As discussed in Note 20(a), Toshiba Machine Co., Ltd. and some of its consolidated subsidiaries have aplan to change its pension plan effective on July 1, 2007.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2007 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 thebasis described in Note 3.
June 26, 200724

Directors & Auditors

Directors President

Reiji Nakajima
Senior Managing Directors
Kosei Takeyama
Yoshi AtobeManaging Director
Hideo Tanaka
Directors
Fumihisa Yano
Masaki Ikuta
Akinori Ide
Yukio Iimura
Takateru Yoshimura
Yoshihiro Kishimoto
Auditors

Fumio Kamahora
Michio Matsumoto
Masaji Mito
Toshitake Takagi

2-2, Uchisaiwaicho 2 Chome, Chiyoda-ku, Tokyo 100-8503, Japan
TEL : 81-(0)3-3509-0200
FAX : 81-(0)3-3509-0333

SM06126-1000SS