Contents
2 An Outline of the Company
3 Foreword
5 Financial Highlights (Consolidated)
6 Overseas Operations for Fiscal 2001
7 Overseas Offices
Financial Review

9 Consolidated Balance Sheets
11

Consolidated Statements of Operations
Consolidated Statements of Shareholders’ Equity

12 Consolidated Statements of Cash Flows
13 Notes to Consolidated Financial Statements
21 Independent Auditors’ Report
22 Directors and Auditors

1

An Outline of the Company
TOSHIBA MACHINE, an integrated machine builder withlongstanding international renown for its total capability andquality, excels in the production of machine tools, plastic
processing machinery, industrial machinery, hydraulicequipment, semiconductor manufacturing equipment, precision
machinery, and electronic controls.
TOSHIBA MACHINE was one of the first companies to

Numazu Plant

establish mechatronics oriented production systems by utilizing
its own advanced precision technologies and sophisticatedelectronics experience for the research and development of theadvanced technologies required for the future and forcontinuous and stable growth.

Sagami Plant

Company name:
Headquarters:

TOSHIBA MACHINE CO., LTD.
2068-3, Ooka, Numazu-shi,
Shizuoka-ken 410-8510, Japan
Established:
1938
Capital:¥12,485 million (U.S.$101 million)
Total no. of employees: 2,280 (current as of March 31, 2001)
Gotemba Plant

2

Foreword

Although the Japanese economy began
to show signs of an upturn due to a slightdomestically and overseas, as well as theincrease in private investment in the IT

development of new products, favorable(Information Technology) andsales conditions for our machine tools,

semiconductor industries during the first

injection molding machines and extruders,half of the fiscal year under review, thisalong with greatly increased demand for

was more than offset by decreased private

semiconductor equipment, total orders

investment during the latter fiscal half

received by the Toshiba Machine

resulting in an overall slowdown of theCompany group, on a consolidated basis,

economy.

was ¥134,317 million (US$1,084 million),

Overseas, although the European

an increase of 27.3% over the previous

economy continued to enjoy relatively

term. (An exchange rate of ¥123.90 =robust performance, the American$1.00 will be used throughout this report)

economy started to enter the stage of slow

As for our consolidated sales, increased

growth. In Asia, despite growth of thesales of injection molding machines,

Chinese economy, other economies such

extruders and semiconductor equipment

as that of Singapore, Korea and Taiwan all

more than compensated for relatively

experienced a slowdown due to theweak demand for our machine tools

negative effects of the American economic

resulting in total group sales of ¥127,359

slowdown.

million (US$1,028 million), an increase of

The machinery industry, due toincreased investment in plant and16.5% over the previous term.
In terms of profits and losses, increased

equipment, experienced overall favorable

sales of our products, especially injection

demand.

molding machines and semiconductor

Under such overall conditions, and our3ongoing efforts to secure orders, both

equipment, along with increased profit due

to improved sales, foreign exchange

continuing of our product restructuringconditions, and an improvement in all

program and increasing in both the

aspects of management resulted in an

volume of orders received and sales, as

operating profit of ¥4,428 million (US$36

well as our profitability.

million) and a net profit of ¥1,558 million(US$13 million).

Under such harsh economic conditions,
we will also continue in carrying out

Despite being our first year ofvarious reforms in our organization,

profitability in the last three years, webusiness processes, costs and group

regret to announce that due to the

management, in addition to the speedy

reinforcement of our finances, ourresearch, development and offering of newcompany will forego the distribution of a

products and best solution typedividend for the fiscal year just ended.

recommendations to our customers based

As for the prospects for the current

on our CS (Customer Satisfaction) policy.

fiscal year, a continuation of the present

In regards to our manufacturing systems,

economic sluggishness is forecast due tofurther rationalization and efficiency

the negative effects of the slowdown ofmeasures are also to be implemented

the American economy on the Asianbased on ISO9001 and ISO14001

economy, decreased private investment instandards for the production of quality,

plant and equipment and stagnant

environmentally friendly products.

consumer spending. Despite this uncertain
situation, the Toshiba Machine group will
be implementing their TOSHIBAMACHINE ACTION PROGRAM 21 III(TM-AP21 III) to assure that we remain an
influential force in the industry by theJuly, 2001
4

Financial Highlights (consolidated)

Net sales
Cost of sales
Selling, general andadministrative expenses
Operating income (loss)
Income (loss) before income taxes
and minority interests
Income taxes
Net income (loss)
Per common share:
Net income (loss)
Cash dividends
Total assets
Shareholders’ equity
Capital expenditure(property, plant and equipment)
Depreciation
R & D expenditure

Number of employees

2001

2000

1999

1998

1997

¥127,359$1,027,918¥92,048$742,922¥30,883$249,258¥4,428$35,738¥2,123$17,135¥733$5,916¥1,558$12,575¥109,283¥125,352¥155,943¥147,546¥80,852¥90,694¥114,452¥113,078¥30,310¥33,779¥36,913¥35,192¥(1,879)¥879¥4,578¥(723)¥(8,779)¥(856)¥7,640¥(434)

¥171

¥524

¥955

¥436

¥(8,661)¥(1,326)¥6,603¥(917)

¥9.33
$0.08
¥—
$—
¥166,588$1,344,536¥39,620$319,774¥2,565$20,702¥2,610$21,065¥2,749$22,187¥(51.90)¥(7.95)¥39.71¥(5.55)

¥—

¥2.00

¥3.00

¥—

¥153,563¥159,579¥169,324¥158,597¥36,075¥43,971¥46,152¥39,431¥2,953¥4,100¥3,543¥3,278¥3,313¥3,467¥3,501¥3,597¥3,035

¥—

¥—

¥—

3,999

—

—

—

3,814

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

5

Overseas Operations for Fiscal 2001
Net Sales
155,943

Millions of yen

During the fiscal year under review,despite relatively robust European economic
growth, the American economy entered aperiod of slow growth. In Asia, the Chinese
economy experienced generally favorable
growth, despite subdued activity in othereconomies of this region, such as Singapore
and Korea due to the negative influence of
the American economic slowdown.
Under such conditions, a large increasein our injection molding machines andsemiconductor equipment sales more thancompensated for a decrease in our machine
tools resulted in a total ¥55,139 million(US$ 445 million) in consolidated overseas
sales, an increase of 19.8% compared to theprevious year and comprising
approximately 43.3% of total sales.
As in previous years, the North American
region accounted for 31% of our total export
amount, with our other principal markets
being Korea, Taiwan, China, Europe,Thailand and Singapore.
By machinery type, the greatest share of
our injection molding machines, die castmachines and machine tools were exported
to the North American and Asian regions.
In the future, implementation of a further
enhanced overseas sales and service
network for even quicker response to ourcustomers’ needs, along with the providingof unexcelled quality products and aftersales is planned.

127,359

147,546

125,352

31,085roducts

109,283

38,88724,00931,678

Total

Other P

29,846

Molding
75,868yMachiner

58,404

59,18750,33573,590e Tools

Machin30,068
29,10242,15648,9902001

42,278

2000

1999
1998

1997

Total Sales & Overseas Sales
Millions of yen

les155,943
147,546

127,359
125,352aTotal S109,283

as55,13961,42843,24746,00756,673

1997

1998

Overse
Sales

2001

2000

1999

Export Percentages by Major Products
e Tools

Machints
Produc
Other

24%

23%

53%

inery

g MachMoldin6Overseas Offices
Overseas Subsidiaries, Affiliates and Joint VenturesTOSHIBA 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
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
Columbus Office (OHIO)
4150 Weaver Court South,
Hilliard, OH 43026, U.S.A.
Tel: [1]-614-529-9223
Fax: [1]-614-529-9305
Atlanta Office6478 Putnam Ford Drive, Suite #106,
Woodstock, GA 30189, U.S.A.
Tel: [1]-678-494-8005
Fax: [1]-678-494-8006
Cincinnati Office
230 Northland Blvd., Suite 126B, Cincinnati,
OH 45246, U.S.A.
Tel: [1]-513-772-4899
Fax: [1]-513-772-5899
Colorado Office9465 West 77th Drive, Arvada,
CO 80005, U.S.A.
Tel: [1]-303-422-1590
Fax: [1]-303-422-1590
TOSHIBA MACHINE CO. CANADA LTD.
6 Shields Court, Suite 101, Markham, Ontario,
L3R 4S1, CANADA
Tel: [1]-905-479-9111
Fax: [1]-905-479-6098

Branch and Representative Offices
TOSHIBA MACHINE CO., LTD.
U.K. BRANCH
60 Burners Lane, Kiln Farm,
Milton Keynes MK11 3HD, UNITED KINGDOM
Tel: [44]-(0)-1908-562327
Fax: [44]-(0)-1908-562348
TOSHIBA MACHINE CO., LTD.
BEIJING OFFICE
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
TOSHIBA MACHINE CO., LTD.
NETHERLANDS REPRESENTATIVE OFFICE
Siriusdreef 17-27, 2132 WT Hoofddorp,
THE NETHERLANDS
Tel: [31]-(0)23-5689-134
Fax: [31]-(0)23-5689-111

7

TOSHIBA MACHINE (EUROPE) G.m.b.H.
Karl-Arnold-Strasse 2a,47877 Willich-Münchheide, GERMANY
Tel: [49]-(0)2154-9275-0
Fax: [49]-(0)2154-9275-75
TOSHIBA MACHINE SOUTH EAST ASIA PTE. LTD.
Head Office
No. 24 Tuas Avenue 4,
Singapore 639374, SINGAPORE
Tel: [65]-8611455
Fax: [65]-8612023
Kuala Lumpur 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
Penang Office
No. 21, Jalan Prai Jaya 4, Bandar Prai Jaya,
13600 Prai, Penang, MALAYSIA
Tel: [60]-(0)4-3980086
Fax: [60]-(0)4-3989652
Jakarta Office
Rukan Pesona Indah Kapuk A/12A,
JL. Raya Kapuk Kamal 20A,
Jakarta 14470, INDONESIA
Tel: [62]-(0)21-5561760
Fax: [62]-(0)21-5561750
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

TOSHIBA MACHINE TAIWAN CO., LTD.
No. 62, Lane 188, Jui-Kuang Road, Nei-Hu District,Taipei, TAIWAN, R.O.C.
Tel: [886]-(0)2-2659-6558
Fax: [886]-(0)2-2659-6381
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 611, Century Plaza Hotel,
Kin Chit Road, Shenzhen,
PEOPLE’S REPUBLIC OF CHINA
Tel: [86]-(0)755-232-0453
Fax: [86]-(0)755-234-3497
SHANGHAI TOSHIBA MACHINE CO., LTD.
405 Citic Pent-Ox Metropolis, 1085 Pudong Avenue,
Shanghai, 200135,
PEOPLE’S REPUBLIC OF CHINA
Tel: [86]-(0)21-5885-0606
Fax: [86]-(0)21-5866-2450
JAPAN MACHINES (AUSTRALIA) PTY. LTD.
Sydney Office
1 Giffard Street, Silverwater,
N. S.W. 2128, AUSTRALIA
Tel: [61]-(0)2-9739-8787
Fax: [61]-(0)2-9648-4717
Melbourne Office
39 Amberley Crescent, Dandenong,
Victoria 3175, AUSTRALIA
Tel . [61]-(0)3-9793-2044
Fax : [61]-(0)3-9791-5389

F i n a n c i a l

R e v i e w

Consolidated Balance Sheets
Toshiba Machine Co., Ltd. and Consolidated Subsidiaries

March 31, 2001 and 2000

ASSETS
Current assets:
Cash and cash equivalents (Note 2.n)Marketable securities (Note 4)
Trade receivables:
Notes
Accounts

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001¥40,595—¥45,2722,080$327,643—

18,41645,65815,657
33,699148,636
368,507

64,074(937)

49,356(1,136)517,143(7,563)

63,13748,220509,580

Inventories:
Finished products
Work in process
Raw materials and supplies

8,852
17,039865

8,511
15,532782

71,445
137,522
6,981

Total inventories

26,75624,825215,948

Deferred taxes (Note 11)
Other current assets

812
1,483

818
2,003

6,554
11,970Total current assets

132,783

123,218

1,071,695

384
5,691
667
425
856

424
185
948
260
856

3,099
45,932
5,383
3,430
6,910

8,023

2,673

64,75425,39026,721

204,923

392
—

381
570

3,164
—

¥166,588¥153,563$1,344,536

Allowance for doubtful receivables
Net receivables

Investments and long-term loans:
Investments in:
Unconsolidated subsidiaries and affiliated companies (Note 13)
Other securities (Note 4)Long-term loans
Deferred taxes (Note 11)
Other investments
Total investments and long-term loans

Property, plant and equipment(Notes 5, 6 and 10)
Other assets
Foreign currency translation adjustment
Total assets

See accompanying notes to financial statements.

9

LIABILITIES ANDSHAREHOLDERS’ EQUITYCurrent liabilities:
Short-term bank loans (Notes 6 and 10)
Current portion of long-term debt (Notes 6 and 10)
Trade payables:
Notes
Accounts
Total payables
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 severance indemnities (Note 7)
Total long-term liabilities
Total liabilities
Minority interest in consolidated subsidiaries
Shareholders’ equity:
Common stock of ¥50 par value
Authorized — 360,000,000 shares
Issued — 2000 166,885,530 shares
Issued — 2001 166,885,530 shares
Additional paid-in capital
Retained earnings
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock
Total shareholders’ equity
Contingent liabilities (Note 8)
Total liabilities and shareholders’ equity

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001¥50,098
3,425¥50,0173,750$404,342
27,643

22,101
10,793

17,077
7,396

178,378
87,11032,89424,473

265,488

665
5,490
1,782
1,229

389
4,238
1,480
708

5,367
44,31014,383
9,920

95,58385,055

771,453

22,657
1,526
6,568

25,791
13
5,692

182,865
12,31653,01130,751
126,334

31,496
116,551

248,192
1,019,645

634

937

5,117

12,485
19,405
5,725
2,154
(149)
(0)

12,485
19,405
4,185
—
—
(0)

100,767
156,618
46,207
17,385(1,203)(0)39,62036,075

319,774¥166,588¥153,563$1,344,536

10

Consolidated Statements of Operations
Toshiba Machine Co., Ltd. and Consolidated Subsidiaries

Years ended March 31, 2001 and 2000
Millions of yen
2001
2000
¥127,359¥109,283
92,04880,852

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Other income:Interest and dividends
Gain on sale of property, plant and equipment
OthersOther expenses:
Interest
Special benefits for employees retired under early retirement program
OthersThousands of
U.S. dollars
2001$1,027,918
742,92235,311

28,431

284,996

30,88330,310249,258

4,428(1,879)35,738

193
—
1,627

158
2,440
1,351

1,558
—
13,131

1,820

3,949

14,689

1,566
417
2,142

1,541
6,421
2,887

12,6393,366
17,287

4,125

10,84933,292

2,123(8,779)17,135

Income taxes: (Note 11)
Current
Deferred
Minority interests in loss of consolidated subsidiaries
Net income (loss)

733
882
(149)
168
¥1,558

171
471
(300)
289
¥(8,661)

5,916
7,119
(1,203)
1,356$12,575

Net income (loss) per share of common stock¥9.33

Income (Loss) before income taxes and minority interests

Yen

U.S. dollars¥(51.90)$0.08

See accompanying notes to financial statements.

Consolidated Statements of Shareholders’ Equity
Toshiba Machine Co., Ltd. and Consolidated Subsidiaries

Millions of yen
Number ofsharesCommonstock

Additional paidin capital

Retainedearnings

Balance at March 31, 1999
Cumulative effect of change in accounting for income taxes
Increased due to change in consolidation of subsidiaries
Net loss
Bonuses to directors and statutory auditors

166,885,530¥12,485¥19,405¥12,081
493
293
8,661
21

Balance at March 31, 2000
Net income
Bonuses to directors and statutory auditors

166,885,530

12,485

19,405

4,185
1,558
18

Balance at March 31, 2001

166,885,530¥12,485¥19,405¥5,725

Thousands of U.S. dollars
Commonstock

Additional paidin capital

Retainedearnings

Balance at March 31, 2000
Net income
Bonuses to directors and statutory auditors$100,767$156,618$33,777
12,575
145

Balance at March 31, 2001

$100,767$156,618$46,207

See accompanying notes to financial statements.

11

Consolidated Statements of Cash Flows
Toshiba Machine Co., Ltd. and Consolidated Subsidiaries

Years ended March 31, 2001 and 2000
Millions of yen
2001
2000
Operating Activities:
Income (loss) before income taxes and minority interests
Adjustments to reconcile income (loss) before income taxes
and minority interests to net cash provided by operating activities:
Depreciation and amortization
Allowance for doubtful receivables
Provision for severance indemnities, less payments
Devaluation of marketable securities
Exchange loss
Gain and loss on sales and disposal of property, plant and equipment
Changes in operating assets and liabilities:
Trade notes and accounts receivables
Inventories
Trade notes and accounts payables
Advances received
Accrued expenses
Income taxes paid
OthersNet cash provided by (used in) operating activities
Investing Activities:
Purchase of property, plant and equipment
Sale of property, plant and equipment
Increase in short-term loan receivables, net
Payment of long-term loan receivables
Repayment of long-term loan receivables
OthersThousands of
U.S. dollars
2001¥2,123¥(8,779)$17,135

2,610
(163)
876
104
—
289

3,313
(52)
(1,572)499
137(2,263)21,065(1,316)
7,070
839
—
2,333

(14,718)(1,931)
8,421
301
1,277
(606)
(604)

14,290
4,263(3,242)
(560)
(912)
(369)
(34)

(118,789)(15,585)
67,966
2,429
10,307(4,891)(4,875)(2,021)

4,719(16,312)(1,555)
1,103
70
(32)
350
367

(2,580)
2,635
(94)
(364)
383
(276)

(12,550)
8,902
565
(258)
2,825
2,962

Net cash provided by investment activities
Financing Activities:
Decrease in short-term bank loans
Proceeds from long-term debt
Repayment of long-term debt
Issue of bond
Dividends paid for minority interest

303

(296)

2,446

(318)
482
(3,544)——(1,493)
6,540
(168)
2,000
(7)

(2,566)
3,890(28,604)——

Net cash provided by (used in) financing activities(3,380)

6,872(27,280)

421

(317)

3,398

Net cash increased (decreased) during the year
Cash and cash equivalent at the beginning of year
Increase in cash and cash equivalents due to change in consolidated consolidation of subsidiaries(4,677)45,272—

10,97833,754
540(37,748)
365,391—

Cash and cash equivalent at the end of year

¥40,595¥45,272$327,643

Effect of exchange rate change on cash and cash equivalents

See accompanying notes to financial statements.

12Notes to Consolidated Financial Statements
Toshiba Machine Co., Ltd. and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial
Statements
The consolidated balance sheets, statements of operations andcash flows are prepared from those which are in accordance withaccounting principles generally accepted in Japan, which may
differ in some material respects from accounting principles
generally accepted in countries and jurisdictions other thanJapan. The preparation of these financial statements requires
management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ
from these estimates. The consolidated statements ofshareholders’ equity have been prepared to supply additional
information.
The consolidated balance sheets, statements of operations andcash flows incorporate certain reclassifications andrearrangements in order to present these statements in forms
which are more familiar to readers of these statements outside ofJapan. In addition, the notes to the consolidated financial
statements include information which is not required undergenerally accepted accounting principles and practice in Japanbut is presented herein as additional information.

2. Summary of Significant Accounting Policies(a).Basis of consolidation and accounting forinvestments in unconsolidated subsidiaries
and affiliated companies
The consolidated financial statements include the accounts ofToshiba Machine Co., Ltd. (the Company) and, certain
subsidiaries which are not material are not consolidated, those of
its subsidiaries (together the Companies). All significant
intercompany transactions and accounts and unrealizedintercompany profits are eliminated in consolidation.
The difference between the cost and underlying net equity ofinvestments in consolidated subsidiaries at the time ofacquisition is deferred and amortized over a five-year period.
Investments in affiliates (15 to 50 percent-owned companies
except subsidiaries) in which the ability to exercise significant
influence exist are stated at cost plus equity in undistributed
earning (losses).
Net consolidated income (losses) includes the Company’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 in foreign
currencies are translated into Japanese yen at the exchange rate
prevailing at the balance-sheet date except for those hedged by aforward contract, which are translated using the contracted ratewith the resulting exchange differences amortized over thecontract period.
All the assets and liabilities of foreign subsidiaries andaffiliates are translated at current rates at the respective balance
sheet dates and all income and expense accounts are translated ataverage rates for the respective periods.
Effective April 1, 2000, the Company and domestic
consolidated subsidiaries adopted a revised accounting standard
for foreign currency transactions.
In accordance with a revised accounting standard for foreign
currency translation, the Company has included foreign currencytranslation adjustments in shareholders’ equity and minority
13

interests in consolidated subsidiaries. Prior to the year ended
March 31, 2001, foreign currency translation adjustments were
included in assets or liabilities.
The consolidated balance sheet at March 31, 2000 has notbeen restated.
The adoption of this revised accounting standard for foreign
currency transactions did not have a material effect on theaccompanying financial statements.

(c).Marketable and Investment Securities
Prior to the year ended March 31, 2001, marketable securities
had been valued at the lower of cost or market, cost being
determined by the moving average method, and investment
securities other than marketable securities started at cost
determined by the moving average method.
When the fair value of an individual security declines below
its cost and it is judged a permanent impairment of value, thecarrying value of the security is written down to fair value.
Effective April 1, 2000, the Company and domestic
consolidated subsidiaries adopted the new accounting standard
for financial instruments.
Investment securities are stated at market value from thecurrent year due to the new accounting standard. As a result,unrealized gain on available-for-sale securities ¥2,154 million
was credited to the Shareholders’ equity representing theincrease in market value over cost of investment securities of¥3,656 million ($29,508 thousand) net of deferred tax liabilities¥1,503 million ($12,131 thousand).
The adoption of the accounting standard for financial
instruments did not have a material effect on income before
income tax and minority interests.
As of April 1, 2000, the Companies and domestic
consolidated subsidiaries assessed their classification of
securities due to the new accounting standards.
As a result of this assessment, cash and cash equivalents, andinvestment securities increased ¥4,999 million ($40,347
thousand), ¥1,969 million ($ 15,892 thousand) respectively, andmarketable securities decreased the same amount.

(d).Inventories
Inventories are stated at the cost, determined by the identified
cost for finished products and work in process, and by themoving average method for raw materials and supplies.

(e). Allowance for doubtful accounts
The allowance for doubtful accounts is stated based on thedefault ratio sustained over a specific period in the past and theestimated uncollectible amount based on the analysis of certain
individual accounts, including probable bad debts and claims inbankruptcy.
This amount is considered sufficient to cover possible losses
on collection.

(f). Bonuses
The bonus to the employees are paid twice a year andaccrued based on estimated amounts to be paid in the subsequent
period. Bonuses to directors and statutory auditors, which are
subject to approval by the shareholders, are an appropriation ofretained earnings and not charged to income.

(g). Warranty reserve for sold products
A warranty reserve included in other current liabilities has
been provided for repair cost which may be required for the soldproducts in guarantee period. The reserve is estimated based on
the experience and future estimates.

(h). Depreciation of property, plant andequipment
Depreciation of building is computed, with minor exceptions,by the straight-line method and other depreciation of property,
plant and equipment is computed by the declining balancemethod based on Japanese tax laws.

(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
purposes which, in the case of expenses, are not currently
deductible and in the case of income, are not currently taxable.
Income taxes based on temporary differences between tax
and financial reporting purposes are reflected as deferred income
taxes in the consolidated financial statements using the asset andliability method.

(k). Retirement and Severance Benefits
The severance indemnity regulation of the Companies
provide for benefit payments determined by reference to theemployee’s current basic rate of pay and length of service.
The Company and certain consolidated subsidiaries have a
non-contributory funded pension plan for employees. The
Company and certain consolidated subsidiaries pay the full costof the benefits to a bank which act as trustees.
Effective April 1, 2000 the Company and its’ domestic
consolidated subsidiaries adopted a new accounting standard for
employees’ retirement benefits and accounted for the liability
for retirement benefits based on the projected benefit obligations
and plan assets at the balance sheet date.
The unrecognized transitional obligation determined as of the
beginning of the year is being amortized over 15 years. As aresult, compared with the prior method, net periodic benefit cost
increased by ¥589 million ($4,754 thousand) and income before
income taxes decreased by ¥589 million ($4,754 thousand)Severance benefits paid to directors and statutory auditors arecharged to income as paid. Any amounts eventually payable todirectors and statutory auditors upon retirement are subject toapproval by the shareholders.

(l). Legal Reserve
Under the Japanese Commercial Code, the Companies are

required to appropriate as a legal reserve an amount of retained
earnings equal to at least 10% of cash dividends and other
distributions for each period until the reserve equals 25% of theamount of common stock issued. This reserve is not available
for dividends, but may be used to reduce a deficit by resolutionof a shareholders’ meeting or may be capitalized by resolutionof the Board of Directors.
The appropriation of retained earnings or disposition of
accumulated deficit reflected in the accompanying consolidated
financial statements has been recorded after approval byshareholders as required under the Japanese Commercial Code.

(m). Amounts per Share of Common Stock
Net income per share is computed based on the weightedaverage number of shares of common stock outstanding during
each year.
Diluted net income per share is not presented since theCompany has never issued any securities with a dilutive effect,
such as bonds with warrants and convertible bonds.
Cash dividends per share represent the actual amountdeclared as applicable to the respective years.

(n). Statements of Cash Flows
In preparing the statements of cash flows, cash on hand,readily-available deposits and short-term highly liquid
investments with maturities of not exceeding three months at thetime of purchase are considered to be cash and cash equivalents.

(o). Reclassifications
Certain accounts in the consolidated financial statements forthe years ended March 31, 2000 have been reclassified toconform to the 2001 presentation.

(p). Accounting change
Effective April 1, 1999, the Companies changed valuation ofmarketable securities from the cost based on average to thelower of moving average cost or market value.
This change was made in order to establish a solid financial
position.
As a result of this change, loss before income taxes andminority interests increased by ¥499 million for the year end
March 31, 2000.

3. U.S. Dollar Amounts
U.S. dollar amounts are included solely for the convenienceof the reader and have been translated at the rate of¥123.90=U.S.$1,the approximate exchange rate prevailing in theJapanese foreign exchange market on March 31, 2001. Thistranslation should not be construed as a representation that the
yen amounts actually represent, have been, or could be
converted into U.S. dollars.

14

4. Market Value Information
At March 31, 2001 and 2000, the book value and net unrealized gains (losses) of quoted securities included in marketable securities
and investment securities were as follows:
Millions of yen
2001
Book
value

Market
value

—
—
—

—
—
—

Book
value

Marketvalue

Unrealized
gains (losses)———¥2,070
10—¥6,291
10
—

—

—

—

¥2,080¥1,977
10—¥5,52910—¥3,5520—¥1,987¥5,539¥3,552Marketable securities
EquityBonds
Other
Investment securities
EquityBonds
Other

Thousands of U.S.dollars
2001

2000
Unrealized
gains (losses)

Book
value

Marketvalue

Unrealized
gains (losses)¥4,221
0
—

—
—
—

—
—
—

—
—
—

¥6,301¥4,221

—

—

—

¥18
—
—

¥18
—
—

¥ (0)
—
—

$15,956
81—$44,624
81—$28,668
0
—

¥18

¥18

¥ (0)

$16,037$44,705$28,668

5. Property, Plant and Equipment
Property, plant and equipment on March 31, 2001 and 2000 consisted of the following:
Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Land
Buildings and structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Construction in progress¥6,94529,57535,977
615
8,021
96

¥6,77629,53237,756
629
8,156
80

$56,053
238,701
290,371
4,964
64,737775

Less accumulated depreciation

81,229(55,839)

82,929(56,208)

655,601(450,678)¥25,390¥26,721$204,923

Depreciation expensed for the years ended March 31, 2001 and 2000 amounted to ¥2,610 million ($21,065 thousand) and ¥3,313 million, respectively.

6. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the loans outstanding on March 31, 2001 ranged principally from 0.47% to 6.23%. Long-term
debt on March 31, 2001 and 2000 consisted of the following:
Millions of yen
2001
2000

15

Thousands of
U.S. dollars
2001

1st Bonds due 2003 interest 2.9%
¥2,000,000,000 fixed rate Bonds due 2002
Loans, principally from Japanese banks andinsurance companies, with assets pledged as collateral,maturing 2001 – 2009, interest 0.82% – 2.60%¥3,0002,000¥3,0002,000$24,213
16,142

21,082

24,541

170,153

Less current portion

26,082
3,425

29,541
3,750

210,508
27,643¥22,657¥25,791$182,865

The aggregate annual maturities of long-term debt after March 31, 2001 are as follows:Year ending March 31
2002
2003
2004
2005
2006 and later

Millions of yen

Thousands of
U.S. dollars¥3,425
5,809
15,962642
244$27,643
46,884
128,830
5,182
1,969

¥26,082$210,508

As of March 31, 2001 property, plant and equipment with a net book value of approximately ¥7,020 million ($56,659 thousand) were
pledged as collateral for long-term debt. In case of default and certain other specified events, as is customary in Japan, additional collateralmust be pledged if required by lending institutions under certain circumstances. Generally banks have the right to offset cash deposited withthem against any debt or obligation that becomes due.

7. Retirement and Severance Benefits
The severance indemnity regulation of the companies provide for benefit payments based on the employee’s current basic rate of pay
and length of service.
The Companies and certain consolidated subsidiaries have a non-contributory funded pension plan for employees. The Companies andcertain consolidated subsidiaries pay the full cost of the benefits to a bank which act as the trustees.
Effective April 1, 2000 the Company and its’ domestic consolidated subsidiaries adopted a new accounting standard for employees’
retirement benefits and accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at thebalance sheet date.
The liability for employees’ retirement benefits at March 31, 2001 consisted of the following:
Millions of yen
2001

Thousands of
U.S. dollars
2001

Projected benefit obligation
Fair value of plan assets
Unrecognized prior service cost
Unrecognized transitional obligation
Unrecognized actuarial loss
Prepaid pension cost

¥21,714(1,322)—(11,764)(2,060)—$175,254(10,670)—(94,948)(16,626)—

Net liability for retirement benefits¥6,568$53,010The components of net periodic benefit costs for the year ended March 31, 2001 were as follows:
Millions of yen
2001

Thousands of
U.S. dollars
2001

Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation

¥976
555
(41)
1,203

$7,877
4,479
(331)
9,710

Net periodic benefits cost

¥2,693$21,735

Certain consolidated subsidiaries have adopted the conventional method in calculating their projected benefit obligation as set forth in
the accounting standard for retirement benefits.
Assumptions used in the accounting for the projected benefit obligation are as follows:
Discount rate
3.0%
(at the beginning of the year
3.5%)
Expected rate of return on plan assets
4.0%
Amortization period of transitional obligation
15years
Amortization period of actuarial loss/gain
10years16

8. Contingent Liabilities
On March 31, 2001 contingent liabilities for notes discounted in the ordinary course of business and for loans guaranteed by theCompany, principally on behalf of non-consolidated subsidiaries and affiliated companies, amounted to ¥1,900 million ($15,335
thousand) and ¥998 million ($ 8,055 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.
Periodic lease charges to the Companies, as a lessee, charged to income for the years ended March 31, 2001 and 2000 are ¥1,023
million ($8,257 thousand) and ¥557 million, respectively. The leased assets and related expenses of the Companies’ finance leases, otherthan those where the ownership of the lease assets is transferred to the lessee and accounted for as operating leases, if capitalized, atMarch 31, 2001 comprise the following (in equivalent amounts):

Millions of yen
2001

Thousands of
U.S. dollars
2001¥1,362
3,102(2,173)$10,993
25,036(17,538)¥2,291$18,491

Millions of yen
2001

Thousands of
U.S. dollars
2001

Current obligation
Long-term obligation

¥943
1,348

$7,611
10,880Present values of lease payments¥2,291$18,491

Machinery, equipment and vehicles
Tools, furniture and fixtures
Accumulated depreciation

Future lease payments of the Companies are as follows:

Pro forma information above does not excluded the imputed interest portion because the financial lease obligations are not material
compared with the book values of property, plant and equipment.

10.Pledged Assets
The following assets were pledged as collateral at March 31, 2001:

Land, property, plant and equipment(net of accumulated depreciation)

Millions of yen
2001

Thousands of
U.S. dollars
2001¥7,020$56,659

The preceding collaterals were pledged to secure long-term debt amounting to ¥768 million ($6,199 thousand), short-term bank loans
amounting to ¥2,651 million ($21,396 thousand) and bonds amounting to ¥3,000 million ($24,213 thousand).

11.Income Taxes
Income taxes in Japan applicable to the Companies generally comprise Corporation Tax, Enterprise Tax and Prefectural andMunicipal Inhabitants taxes. The statutory rates for the years ended March 31,2001 and 2000 are approximately 41.1%.
The reconciliation of the differences between the statutory rate and effective tax rate of income taxes at March 31, 2001 is as follows:

17

Statutory tax rate
Non-deductible expense for tax purpose
Change in valuation allowance
Other

41.1%
1.5
(5.8)
(2.3)

Effective tax rate

34.5

The significant components of deferred tax assets and liabilities at March 31, 2001 are as follows:
Thousands of
U.S. dollars
2001

Millions of yen
2001
2000
Deferred tax assets:
Accrued employees bonuses
Allowance for doubtful accounts
Devaluation of inventories
Devaluation of Investment securities
Accrued pension and severance costs
Unrealized gain on inventories
Other

¥244
130
21
55
320
178
289

¥154
109
114
53
229
143
277

$1,969
1,049
169
444
2,583
1,437
2,333

Deferred tax assets
Deferred tax liabilities:
Depreciation
Unrealized gain on Investment securities¥1,237¥1,079$9,984

17
1,509

13
—

138
12,179Deferred tax liabilities¥1,526¥13$12,317

Net deferred tax (liabilities) assets¥(289)¥1,066$(2,333)

12.Derivatives
The Company enters into interest rate swap contracts and interest rate floor contracts to manage interest rate exposures on certain
liabilities.
The Company also enters into forward foreign exchange contracts and currency option contracts to hedge foreign exchange risk
associated with certain assets and liabilities denominated in foreign currencies.
These derivative transactions are utilized solely for hedging purposes under the Company’s internal control rules and are subjected tosupervision by the Board of Directors.
The contract amounts and estimated fair value of the derivative transactions outstanding at March 31, 2001 and 2000 are as follows:
Millions of yen
2001

Interest rate floor contracts
Sell:

Thousands of U.S.dollars
2001

Contract
amountFair
value

Unrealized
gains (losses)

Contract
amountFair
value

Unrealized
gains (losses)

¥300

¥(1)

¥(1)

$2,421(8)(8)

Millions of yen
2000

Forward foreign exchange contracts
Sell:
U.S. dollars
Currency option
Sell:
Call option U.S. dollars
Buy:
Put option U.S. dollars
Interest rate swap agreements
Interest rate floor contracts
Sell:

Contract
amountFair
value

Unrealized
gains (losses)

¥844

¥820

¥24

1,072

—

—

536
7,500

—
(22)

—
(22)

400

(1)

(1)

18

13.Account balances and transactions with unconsolidated subsidiaries and affiliates
Account balances and transactions with unconsolidated subsidiaries and affiliates for the years ended March 31, 2001 and 2000 are as
follows:
Millions of yen
2001
2000
¥384

Investment securities¥424

Thousands of
U.S. dollars
2001$3,09914.Segment information(A) Business segment information
The companies’ business is classified into the following three segments based on the similarities of type and nature of business:
Machine Tools: Large size machine tools, Portal type machine tools, Grinding machines, Machining centers, Horizontal boringmachines, High-precision machines
Molding Machinery: Injection molding machines, Die casting machines, Plastic extrusion
Other Products: Printing presses, Hydraulic equipment, Semiconductor manufacturing equipment, Electronic controls
The tables bellow present sales, operating expenses and operating profit information by business segment.

Year ended March 31, 2001

Sales
Operating expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditure

Millions of yen
MachineTools

Molding
Machinery

Other
Products

Elimination
and/or corporate

Consolidated¥30,129
31,551(1,422)
37,524664
388¥58,430
54,423
4,007
55,835901
598¥42,392
40,162
2,230
62,0401,045
1,579¥(3,592)(3,205)(387)
11,189——¥127,359
122,931
4,428
166,588
2,610
2,565

MachineTools

Molding
Machinery

Other
Products

Elimination
and/or corporate

Consolidated¥29,126
32,944(3,818)32,432
906
958¥50,370
48,383
1,987
55,496
1,079
1,077¥33,325
33,412(87)
49,928
1,328
918¥(3,538)(3,577)39
15,797——¥109,283
111,162(1,879)153,563
3,313
2,953

MachineTools

Molding
Machinery

Other
Products

Elimination
and/or corporate

Consolidated$243,172
254,649(11,477)
302,857
5,359
3,132

$471,590
439,250
32,340450,646
7,272
4,826

$342,147
324,149
17,998500,726
8,434
12,744$(28,991)(25,868)(3,123)90,307——$1,027,918
992,180
35,7381,344,536
21,06520,702

Year ended March 31, 2000

Sales
Operating expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditure

Millions of yen

Year ended March 31, 2001

Sales
Operating expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditure

19

Thousands of U.S. dollars

(B) Geographic segment information of the companies for the year ended March 31, 2001 and 2000 was follows:Year ended March 31, 2001
Net sales
Cost and expenses
Operating income
Identifiable assets

Millions of yen
Japan

North America

Asia

Total

¥119,064
114,723
4,341
135,789¥20,267
19,943324
12,978¥5,669
5,543
126
4,958

¥145,000
140,209
4,791
153,725

Japan

North America

Asia

Total

¥104,689
107,043(2,354)
116,671¥17,865
17,546319
11,080¥2,880
2,758
122
2,632

¥125,434
127,347(1,913)130,383

Year ended March 31, 2000
Net sales
Cost and expenses
Operating income
Identifiable assets¥(17,641)(17,278)(363)
12,863¥127,359
122,931
4,428
166,588

Millions of yen

Year ended March 31, 2001
Net sales
Cost and expenses
Operating income
Identifiable assets

Elimination and/or corporate Consolidated

Elimination and/or corporate Consolidated¥(16,151)(16,185)
34
23,180¥109,283
111,162(1,879)153,563

Thousands of U.S.dollars
Japan

North America

Asia

Total

$960,969
925,933
35,036
1,095,956$163,575
160,960
2,615
104,746$45,755
44,7381,017
40,016$1,170,299
1,131,631
38,6681,240,718

Elimination and/or corporate Consolidated

North America

Asia

Other

Total

¥23,088—18.1¥28,649—
22.5¥3,402—
2.7¥55,139
127,359
43.3$(142,381)(139,451)(2,930)103,818$1,027,918
992,180
35,7381,344,536(C) Sales to foreign customers were as follows:Year ended March 31, 2001
Sales to foreign customers
Net sales
Ratio of sales to foreign customers (%)

Millions of yen

Year ended March 31, 2000
Sales to foreign customers
Net sales
Ratio of sales to foreign customers (%)

Millions of yen
North America

Asia

Other

Total

¥21,219—19.4¥21,325—
19.5¥3,463—
3.2¥46,007109,283
42.1

Year ended March 31, 2001
Sales to foreign customers
Net sales
Ratio of sales to foreign customers (%)

Thousands of U.S.dollars
North America

Asia

Other

Total

$186,344—
18.1$231,227—
22.5$27,457—
2.7$445,028
1,027,918
43.3

20

Independent Auditors’ Report

The Board of Directors and Shareholders
Toshiba Machine Co., Ltd.

We have audited the consolidated balance sheets of Toshiba Machine Co., Ltd. andconsolidated subsidiaries as of March 31, 2001 and 2000, and the related consolidated
statements of operations, shareholders’ equity, and cash flows for the years then ended, allexpressed in yen. Our audits were made in accordance with auditing standards, proceduresand practices generally accepted and applied in Japan and, accordingly, included such testsof the accounting records and such other auditing procedures as we considered necessary inthe circumstances.
In our opinion, the accompanying consolidated financial statements, expressed in yen,present fairly the consolidated financial position of Toshiba Machine Co., Ltd. andconsolidated subsidiaries at March 31, 2001 and 2000, and the consolidated results of theiroperations and their cash flows for the years then ended in conformity with accounting
principles and practices generally accepted in Japan consistently applied during the period,
except for the change, with which we concur, in the method of accounting for marketablesecurities and investments securities as discussed note 2.(p)As described in Note 2 to the consolidated financial statements, Toshiba Machine Co.,
Ltd. and consolidated subsidiaries have adopted new accounting standards for employees’
retirement benefits and financial instruments and the revised accounting standard forforeign currency transactions in the preparation of their consolidated financial statements
for the year ended March 31, 2001.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2001 are presented solely for convenience. Our audit
also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 3 to the consolidated
financial statements.

Tokyo, Japan
June 28, 2001

See note 1 to the consolidated financial statements which explains the basis of preparing the consolidated
financial statements of Toshiba Machine Co., Ltd. under Japanese accounting principles and practices.

21

Directors and Auditors(From left)
Kunihiko Naruse Yoshifumi Hayashi Takahiko Inokuma Yasuhiro Kuroki

Directors

President
Takahiko Inokuma

Senior Managing Director
Yoshifumi Hayashi

Managing Directors
Yasuhiro Kuroki
Kunihiko Naruse

Directors
Tamotsu Mukai
Keisuke Maehara
Harunori Nomura
Reiji Nakajima
Katsuhiko Goto

Auditors

Noburo Minami
Motoyasu Morita
Kazutaka Yamashita
Kunio Akita

22

Numazu Headquarters
2068-3,Ooka,Numazu-shi,Shizuoka-ken 410-8510,Japan
Tel: 81-(0)559-26-5141
Fax: 81-(0)559-25-6501

Tokyo Main Branch
2-11,4-chome Ginza,Chuo-ku,Tokyo 104-8141,Japan
Tel: 81-(0)3-3567-0520
Fax: 81-(0)3-3562-5220
URL http://www.toshiba-machine.co.jp/

SM01109-2000-SZ