ANNUAL REPORT ’99

Contents
An Outline of the Company w
Foreword e
Financial Highlights t
Overseas Operations y
Overseas Subsidiaries, Affiliates, Joint Ventures andRepresentative Offices u
Financial Review
Balance Sheets oStatements of Earnings and Retained Earnings !1
Statements of Cash Flows !2
Notes to Financial Statements !3
Report of Independent Certified Public Accountants !7
Directors !81

Numazu Plant

Sagami Plant

Gotemba Plant

An Outline of the Company
TOSHIBA MACHINE, an integrated machine builder with longstanding international
renown for its total capability and quality, excels in the production of machine tools,
plastic processing machinery, industrial machinery, hydraulic equipment, semiconductor
manufacturing equipment, precision machinery, and electronic controls.
TOSHIBA MACHINE was one of the first companies to establish mechatronicsoriented production systems by utilizing its own advanced precision technologies andsophisticated electronics experience for the research and development of the advanced
technologies required for the future and for continuous and stable growth.

Company name:TOSHIBA MACHINE CO., LTD.
Headquarters:
2068-3, Ooka, Numazu-shi, Shizuoka-ken 410-8510, Japan
Established:
1938
Capital:¥12,485 million (U.S.$104 million)
Total no. of employees: 2,664 (current as of July 31,1999)

Numazu Plant

Sagami Plant

Gotemba Plant

Area:(approximate)

213,000m2(2,293,000 ft2)

171,000m2(1,841,000 ft2)

86,000m2(926,000 ft2)

Buildings:(approximate)

131,000m2(1,410,000 ft2)

74,000m2(797,000 ft2)

19,000m2(205,000 ft2)

No. of machines:(approximate)

2,200 (including
410 machine tools)

1,300 (including
310 machine tools)

200 (including
30 machine tools)

No. of employees:(approximate)

1,670

550

170
2

Foreword

During the fiscal term ending March
31, 1999, the Japanese economy continued

injection molding machines, industrial

to be plagued by depressed consumer

machinery, hydraulic equipment,

demand, decreased private-sector plant

semiconductor-manufacturing equipment,

investment, and four consecutive quarters

and food service equipment all sufferedof minus growth. Overseas, the Asianfrom weak demand resulting in a 32.2%

economy also continued to suffer fromdecrease over the previous term, totaling

depressed economic growth due to the¥83,385 million (US$692 million). (Anfinancial and foreign exchange crises,

exchange rate of ¥120.55=$1.00 will be

while the European and Americanused throughout this report)

economies continued to enjoy relatively
robust growth.
In the machinery industry, bleak
economic conditions continued due a

As for sales volume, a drop in demand
resulted in a 21.3% decrease over theprevious term, totaling ¥95,022 million(US$788 million).

sudden decrease in private-sector plant

In terms of profit and loss, despiteand equipment investment and fierce

efforts in decreasing costs, upgrading anddomestic and overseas competition.

rationalization of our production systems,

Under these conditions, the TOSHIBA

and further improvement of the efficiency

MACHINE CO., LTD. despite itsof all our operations, we regret tocontinued efforts to secure orders, bothannounce the incurring of a fiscal pre-tax

domestic and abroad, as well as theloss of ¥1,286 million (US$11 million)

development of new products, recorded a

and a net loss ¥1,717 million (US$ 14

decrease in total orders received and sales

million).

volume.

3

As for orders received, machine tools,

Due to this fiscal loss recorded for theperiod under review, it is with deepneeds by the development of new

remorse that we will be foregoing the

products, the expanding and reinforcing ofdividend distribution for the fiscal term

its sales and service network, and thejust ended and limiting it to an interim

further promoting of its

dividend of ¥2.00 (US$ 0.02) per share.

internationalization to increase the volume

Despite our expectations in regards tothe official Japanese Governmentof orders received, sales volume, andprofitability.

economic stimulus measures, continued

As for our manufacturing systems,

long term depressed consumer demand,rationalization and efficiency measures arecoupled with suppressed private sector

to be implemented for increased

investment in plant and equipment, alongproduction in combination with thoroughwith the continuing stagnant Asian

quality control to serve as a foundation foreconomic situation, and indications of an

improved profitability of our company.

European and American economic

Furthermore, in regards to the Year

slowdown suggest that the current bleak

2000, the TOSHIBA MACHINE CO.,economic conditions will continue into theLTD. in conjunction with all of ourforeseeable future.

domestic and overseas group companies,

Under such adverse conditions and with
our eyes toward the 21st century, theare now completing preparations to assure
full compatibility of all our products.

TOSHIBA MACHINE CO., LTD. isdetermined to overcome and remain aviable force by drastic reform of its
administrative organization, in addition to
the anticipating and fulfilling of customer

July, 1999
4

Financial Highlights (non-consolidated)

1999

1998

1997

1996

1995

¥59,142$490,601¥35,880$297,636¥95,022$788,237¥(1,717)$(14,243)¥69,500¥67,539¥55,744¥51,665¥51,199¥48,709¥46,508¥38,820¥120,699¥116,248¥102,252¥90,485¥4,620¥(863)¥(3,687)¥(7,570)¥(10.29)$(0.09)
¥2.00
$0.02

¥27.68¥(5.20)¥(22.37)¥(45.94)

¥3.00

¥—

¥—

¥—

Shareholder’s equity¥39,426$327,051¥41,977¥37,357¥38,115¥41,802

Number of shareholders

17,742

17,685

16,117

14,234

14,410Net sales – Japan– Overseas
Total net sales
Net earnings (loss)
Amounts per share:
Net earnings (loss)
Cash dividend applicable to period

In millions of yen (thousands of US dollars) except for number of shareholders and per-share data.

Net Sales
Millions of yen

120,699
116,248

102,252
90,485
16,977

20,924

21,44522,824
20,364

15,351

39,470ts

Produccts
l Produria
Indust27,742sing
ProcesPlastic
ery
Machine Tools

35,60435,101
39,42031,87834,76025,942
23,962

5

Other35,272

17,668

1995

Total

16,82823,391

19,782

95,022

1997
1996

1998

1999

MachinOverseas Operations

During the fiscal year under review,despite increased overseas sales andservice activities, especially in China
where a new subsidiary, the SHANGHAITOSHIBA MACHINE CO., LTD. wasestablished in Shanghai, these efforts weremore than offset by the negative effects ofthe continuing depressed Asian economy,
resulting in an approximate 26% decreasein the amount of orders received for a
total of ¥36,119 million (US$300 million).
Export sales volume, due to the adverse
influence of declining orders, also
registered a 30% decrease, totaling¥35,880 million (US$298 million),contributing to approximately 38% of
total sales.
The principal export destination was
the North American region which
comprised approximately 50% of allexport orders, followed by such Asian
nations as China, Taiwan, Korea,
Thailand, India, and Singapore.
In terms of types of machines, orders
for machine tools and injection molding
machines were mainly received from
North America and Asia, and die-castingmachines were mainly received from
Asia, North America and Europe.
During the current business year, thefurther enhancing of our sales and service
networks in each region, along with theproviding of even better products alongwith speedier service to our customers isplanned.

Sales & Exports
Millions of yen

120,699
116,248

95,022

Total

102,252
90,485s

Export

51,19935,88048,70846,50838,820

1995

1997

1996

1999

1998

Export Percentages by Major Productsychinerrial Ma

IndustOther

ts

Produce Tools

Machin

13%

5%
42%

40%

cessing

Pro
Plastic

ery

Machin6Overseas Subsidiaries, Affiliates, Joint Ventures and Representative 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: 847-593-1616
Fax: 847-593-0897
Los Angeles Office1481 South Balboa Avenue,
Ontario, CA 91761, U.S.A.
Tel: 909-923-4009
Fax: 909-923-7258
New Jersey Office#609, 45 US Highway 46,
Pine Brook, NJ 07058, U.S.A.
Tel: 973-808-0870
Fax: 973-808-0871
Columbus Office (Ohio)
4150 Weaver Court South,
Hilliard, OH 43026, U.S.A.
Tel: 614-529-9223
Fax: 614-529-9305
Michigan Office2178 Commons Parkway,
Okemos, MI 48864, U.S.A.
Tel: 517-347-4769
Fax: 517-347-4837
Atlanta Office1412 Oakbrook Drive, Suite 185,
Norcross, GA 30093, U.S.A.
Tel: 770-729-0777
Fax: 770-729-0061
Denver Office
350 Indiana Street, Suite 810,
Golden, CO 80401, U.S.A.
Tel: 303-279-7067
Fax: 303-384-3601
Cincinnati Office
230 Northland Boulevard,
Suite 126B, Cincinnati,
OH 45246, U.S.A.
Tel: 513-772-4899
Fax: 513-772-5899
TOSHIBA MACHINE CO. CANADA LTD.
6 Shields Court, Suite 101,
Markham, Ontario,
L3R 4S1, CANADA
Tel: 905-479-9111
Fax: 905-479-6098

Representative Offices
BEIJING REPRESENTATIVE OFFICE
Beijing Fortune Building,Room No. 917, 5 Dong Sanhuan
Bei-Lu, Chaoyang District, Beijing,
100004, PEOPLE’S REPUBLIC OF CHINA
Tel: 010-6590-8977
Fax: 010-6590-8979
U.K. REPRESENTATIVE OFFICE
c/o STEVENS INTERNATIONAL LIMITED
Unit E1, Whiteacres,
Whetstones Industrial Park,
Whetstone, Leicester,LE8 3ZG, U.K.
Tel: 01162-754550
Fax: 01162-754568

7

TOSHIBA MACHINE (EUROPE) G.m.b.H.
Otto-Brenner-Strasse 5,47877 Willich-Munchheide,F. R. GERMANY
Tel: 02154-9275-0
Fax: 02154-9275-75
TOSHIBA MACHINE S.E. ASIA PTE. LTD.
Head Office
No. 24 Tuas Avenue 4,
Singapore 639374, SINGAPORE
Tel: 8611455
Fax: 8612023
Kuala Lumpur Office
70-G, Jalan SS21/62, Damansara Utama,
47400 Petaling Jaya,
Selangor Darul Ehsan, MALAYSIA
Tel: 03-7197544
Fax: 03-7197545
Penang Office
Level 31, TG3 & 4 Menara Komtar,
10000 Penang, MALAYSIA
Tel: 04-2631380
Fax: 04-2631353
Jakarta Office
Rukan Pesona Indah Kapuk A/12A,
JL. Raya Kapuk Kamal 20A,
Jakarta 14470, INDONESIA
Tel: 021-5561760
Fax: 021-5561750
TOSHIBA MACHINE TAIWAN CO., LTD.
5F-1, 146, Sung Chiang Road,
Taipei, TAIWAN, R.O.C.
Tel: 02-2551-4163
Fax: 02-2543-2597
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: 2735-1868
Fax: 2735-1872
Shenzhen Office
Room 611, Century Plaza Hotel,
Kin Chit Road, Shenzhen,
PEOPLE’S REPUBLIC OF CHINA
Tel: 0755-232-0453
Fax: 0755-234-3497

Manila Office
Ground Floor, VNP Building,479 Pedro Gil Street,
Ermita, Metro Manila, PHILIPPINES
Tel: 02-525-8783
Fax: 02-522-3006
TOSHIBA MACHINE (THAILAND) CO., LTD.
127/28 Panjathanee Tower, 23rd Floor,
Nonthree Road, Khwaeng Chong Nonthree,
Khet Yannawa, Bangkok, 10120, THAILAND
Tel: 02-681-0158
Fax: 02-681-0162
TMT SERVICE & ENGINEERING CO., LTD.
127/28 Panjathanee Tower, 23rd Floor,
Nonthree Road, Khwaeng Chong Nonthree,
Khet Yannawa, Bangkok, 10120, THAILAND
Tel: 02-681-0158
Fax: 02-681-0162
SHANGHAI TOSHIBA MACHINE CO., LTD.
1F, Block B, Development Mansion,
51 Ri Jing Street, Wai Gao Qiao Free Trade Zone,
Shanghai, 200131, PEOPLE’S REPUBLIC OF
CHINA
Tel: 021-5866-2448
Fax: 021-5866-2450
JAPAN MACHINES (AUSTRALIA) PTY. LTD.
1 Giffard Street, Silverwater,
N.S.W. 2128, AUSTRALIA
Tel: 02-9739-8787
Fax: 02-9648-4717

F i n a n c i a l

R e v i e w

Balance Sheets (non-consolidated)
March 31, 1999 and 1998

Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999¥19,532¥18,576$162,024

8,865

5,430

73,538Notes

16,882

24,962140,041

Accounts

33,80738,229280,440

50,68963,191

420,481

(654)

(700)

(5,425)50,03562,491

415,056

Finished products

3,866

4,293

32,070Work in process

16,52814,885

137,105

62

87

514

20,456

19,265

169,689

914

1,318

7,582

99,802

107,080

827,889

21,60021,895

179,179

3,101

2,857

25,724

150

49

1,244

1,125

1,040

9,332

421

439

3,493

4,797

4,385

39,793

258

257

2,139

¥126,457¥133,617$1,049,000

ASSETS

Current assets:
Cash
Marketable securities
Trade receivables:

Less allowance for doubtful receivables
Net receivables

Inventories:

Raw materials and supplies
Total inventories
Prepaid expenses and other current assets
Total current assets

Property, plant and equipment(Notes 2 and 3)

Investments and long-term loans:
Investments in:
Subsidiaries and affiliated companies
Other securities
Long-term loans
Deposits and other investments
Total investments and long-term loans

Other assets

9March 31, 1999 and 1998

Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999¥34,895¥34,595$289,465—

13,002—

Notes

14,721

20,698122,115

Accounts

6,393

7,262

53,032

Total payables

21,11427,960175,147

Income taxes payable

25

28

207

Accrued expenses

3,464

4,738

28,735

Advanced received

1,775

871

14,724

529

876

4,389

Total current liabilities

61,802

82,070512,667

Long-term debt (Note 3)

19,635

3,935

162,878

5,594

5,635

46,40487,031

91,640721,949

12,485

12,485103,567

Capital surplus

19,405

19,405160,971

Legal reserve (Note 5)

2,278

2,193

18,897

Appropriated

3,020

3,020

25,051

Unappropriated

2,238

4,874

18,56539,426

41,977

327,051¥126,457¥133,617$1,049,000

LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Short-term bank loans (Note 3)
Current portion of long-term debt (Note 3)
Trade payables:

Other current liabilities

Liability for employee retirement andseverance indemnities (Note 4)
Total liabilities

Contingent liabilities (Note 7)
Shareholders' equity:
Common stock of ¥50 par value
Authorized — 360,000,000 shares
Issued — 166,885,530 shares(1998 — 166,885,530 shares)

Retained earnings:

Total shareholders' equity

See accompanying notes to financial statements

10Statements of Earnings and Retained Earnings (non-consolidated)
For the years ended
March 31, 1999 and 1998

Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999

Net sales¥95,022¥120,699$788,237

Cost of sales

76,222

95,989632,285

18,80024,710155,952

19,55022,414

162,173

(750)

2,296

(6,221)

Interest and dividends

644

341

5,342

Gain on property sold

—

2,649

—

Others

790

715

6,553

1,434

3,705

11,895Interest

1,235

869

10,245

Others

1,141

482

9,465

2,376

1,351

19,710(1,692)4,650(14,036)

25

30

207

(1,717)4,620(14,243)

4,874

254

40,431

Cash dividends

834

—

6,918

Transfer to legal reserve

85

—

705

Total appropriation

919

—

7,623

Balance at end of year

2,238

4,874

18,565

Earnings (loss) per share¥(10.29)¥27.68$(0.09)Gross profit
Selling, general and administrative
Expenses
Operating income (loss)

Other income:

Other expenses:

Earnings (loss) before income tax
Income taxes:
Net earnings (loss)

Unappropriated retained earnings:
Balance at beginning of year
Appropriation

In millions of yen (thousands of U.S. dollars) except for Earnings per common share.
See accompanying notes to financial statements.

11

Statements of Cash Flows (non-consolidated)
For the years ended
March 31, 1999 and 1998

Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999

Cash received from customers¥113,077¥123,824$938,009

Cash paid to suppliers and employees(104,934)(122,279)(870,460)

644

342

5,342

(1,235)(869)(10,245)

Income taxes paid

(17)

(37)

(141)

Others

(716)

(285)

(5,939)

6,819

696

56,566(2,083)(1,809)(17,279)

Sale of property, plant and equipment

434

4,287

3,600

Purchase of securities

(253)

(475)

(2,099)

Sale of securities

(431)

8

(3,575)

Collection of loan receivables

(264)

(116)

(2,190)

Disbursement of loan receivables

179

388

1,485

Others

(70)

(91)

(581)

(2,488)

2,192(20,639)

300

3,220

2,489

Proceeds from long-term debt

12,7002,000

105,350

Repayment of long-term debt

—

(179)

—

3,000

—

24,886(13,002)(1,958)(107,856)

(833)

—

(6,910)(2,105)(2,180)(17,461)

60

903

498

Net cash increased (decreased) during the year

4,391

3,791

36,425

Cash and cash equivalent at the beginning of the year

24,006

20,215

199,137

Cash and cash equivalent at the end of the year

28,39724,006

235,562

Operating Activities:

Interest and dividends received
Interest paid

Net cash flow from operating activities
Investing Activities:
Purchase of property, plant and equipment

Net cash flow from investment activities
Financing Activities:
Proceeds from short-term bank loans

Issue of bond
Repayment of bond
Dividends paid
OthersNet cash flow from financing activities

12Notes to Financial Statements (non-consolidated)

1. Basis of Financial Statements Presentationand Summary of Significant
Accounting Policies
a. Basis of Presentation of Financial Statements
The accompanying financial statements have been
prepared from accounting records maintained by Toshiba
Machine Co.,Ltd. in accordance with the provisions set
forth in the Japanese Commercial Code and in conformity
with the Securities and Exchange Law of Japan andaccounting principles generally accepted in Japan, which
may differ in some material respects from accounting
principles generally accepted in countries andjurisdictions other than Japan.
In order to facilitate the understanding of readers
outside Japan, certain reclassifications are made to thefinancial statements prepared for domestic reporting
purposes. In addition, the notes to the financial statements
include information which is not required underaccounting principles generally accepted in Japan but ispresented herein as additional information.

b. Basis of Translation of Financial Statements
The statements are expressed in Japanese yen and,solely for the convenience of the readers, have beentranslated into United States dollars at the rate of
U.S.$1.00 = ¥120.55, the prevailing rate on March 31,
1999.
This translation should not be construed as arepresentation that the Japanese yen amounts shown could
be converted into U.S. dollars.

c. Exchange Rate
Assets in foreign currencies are translated into yen
amounts at the exchange rate prevailing on the balance
sheet date, except for investments in securities which aretranslated at historical rates.

d. Inventories
Inventories are stated at the cost, determined by theidentified cost for finished products and work in process,and by the moving average method for raw materials andsupplies.

e. Securities and Investments
Marketable equity securities (included in current
marketable securities and investments in other securities) ,investments in subsidiaries and affiliated companies arestated at cost which is determined by the average cost
method.

f. Property, plant and equipment, depreciationand lease transaction
Property, plant and equipment is stated at cost.
13

Depreciation of property, plant and equipment, except
for building is computed by the declining balance method
over the applicable useful lives. Building is depreciatedby the straight line method over the estimated lives.
Depreciation of building in prior years was computed by
the declining balance method. Effective from April
1,1998, the Company adopted a new policy for the
method of depreciation, which was adopted to provide a
better matching of costs and revenue, with an opportunitychange in Japanese tax law. The effects were to decrease
depreciation by ¥188 million ($1,560 thousand) anddecrease loss before income taxes by ¥158 million($1,311 thousand). Effective from April 1, 1998, theCompany also adopted a new policy for the estimateduseful lives of buildings, which shortened these useful
lives in accordance with the changes in Japanese tax law.
The effects were to increase depreciation by 49
million($406 thousand) and increase loss before income
taxes by 42 million ($348 thousand).
Finance lease transactions, except for those which meetthe condition that the ownership of the leased asset issubstantially transferred to the lessee, are accounted for as
operating lease transactions.

g. Liability for Employee Retirement andSeverance Indemnities
Under the Company's employee retirement plan, an
allowance based on the length of service and basic salaryat the date of termination is paid to employees byterminating their employment. Payments for voluntarytermination are less than the payments for involuntarytermination.
For tax purposes, only 40% of the retirement liability
on a voluntary basis is deductible at the time accrued, but
the liability for employee retirement and severance
indemnities included in the balance sheets represents 50%
of full liability based on voluntary retirement. The
difference between that amount and the amount actually
paid is deductible at the time of payment.
The Company has the Corporate Pension Plan, which
has been qualified for Japanese tax law, for above
employee retirement plan. Past service cost in that
Pension Plan has been amortized by 15 years.
Directors are not covered by the programs describedabove, since amounts vary with circumstances and it istherefore not practicable to compute liability for future
payments. Such allowances are not deductible fromtaxable income until they are paid.

2. Property, Plant and Equipment
Property, plant and equipment on March 31, 1999 and 1998 consisted of the following:
Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999

Land

¥3,764¥3,761$31,224

Buildings

19,85019,698

164,662

Structures

3,708

3,673

30,759Machinery and equipment

35,25934,407

292,484

433

416

3,592

9,993

9,342

82,895

273

411

2,265

73,28071,708607,881(51,680)

49,813(428,702)¥21,600¥21,895$179,179

VehiclesTools, furniture and fixtures
Construction in progress

Less accumulated depreciation

Depreciation charged to income for the years ended March 31, 1999 and 1998 amounted to ¥2,812 million (US$ 23,326 thousand) and ¥2,875 million (US$23,849 thousand), respectively.

14

3. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the loans outstanding on March 31, 1999 and 1998 ranged principally from 0.52%
to 1.50% and from 1.09% to 1.64% respectively. Long-term debt on March 31, 1999 and 1998 consisted of the following:

2nd Convertible Bonds, due 1999 interest 1.7%
1st Bonds, due 2004 interest 2.9%

Millions of
yen
1999

Millions of
yen
1998

Thousands of
U.S. dollars
1999

¥

—

¥13,002

$

3,000

—

24,886

16,635

3,935

137,992

19,635

16,937

162,878—

13,002—¥19,635¥3,935$162,878—

Loans, principally from Japanese banks andinsurance companies, with assets pledged ascollateral, maturing 1999 - 2004 ,interest 1.48% - 2.60% (1998: 1.48 -2.52% )Less current portion

The aggregate annual maturities of long-term debt after
March 31, 1999 are as follows :Millionsof yenYear ending March 31,
2000
2001
2002
2003
2004 and later

15

¥

—
1,935
—
2,000
15,70019,635

Thousands of
U.S. dollars$ —16,051—
16,591
130,236
162,878

As of March 31, 1999 property, plant and equipmentwith a net book value of approximately ¥4,520 million(U.S.$37,495 thousand) were pledged as collateral for longterm debt. As is customary in Japan, additional collateralmust be pledged if required by lending institutions undercertain circumstances, and generally banks have the right tooffset cash deposited with them against any debt or
obligation that becomes due and in case of default andcertain other specified events against all other debts payable
to the banks.

4. Cost of Employee Retirement and Severance Indemnities
The total charges to income for benefits under the company's retirement plan described in note 1.g for the years ended
March 31, 1999 and 1998 were ¥2,486 million (US$20,622 thousand) and ¥2,049 million (U.S.$16,997 thousand),
respectively.

5. Legal Reserve and Cash Dividends
The Commercial Code provides that an amount equivalent to at least 10% of cash dividends paid be appropriated as alegal reserve until such reserve equals 25% of stated capital.

6. Rent Expense
The company rents office space, employees housing and office equipment under cancelable lease agreements.
Rent expense for the years ended March 31, 1999 and 1998 amounted to ¥776 million (U.S.$6,437 thousand) and ¥873
million (U.S.$7,242 thousand), respectively.

7. Contingent Liabilities
On March 31, 1999 contingent liabilities for notes discounted in the ordinary course of business and for loans guaranteedby the Company principally on behalf of subsidiaries and affiliated companies amounted to ¥2,914 million (U.S.$24,713
thousand) and ¥721 million (US$5,981 thousand), respectively.

8.Cash Equivalents
For the purpose of the Statements of Cash Flows, the Company considers this all highly liquid and readily convertible
into cash.

16

Report of Independent Certified Public Accountants

To:The Board of Directors of
Toshiba Machine Co., Ltd.

We have examined the balance sheets of Toshiba Machine Co., Ltd. as of March 31,
1999 and 1998, and the related statements of earnings and retained earnings and statementsof cash flows for the years then ended. Our examinations were made in accordance withgenerally accepted auditing standards, procedures and practices in Japan and,accordingly, included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial
position of Toshiba Machine Co., Ltd. as of March 31, 1999 and 1998, and the results of
their operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles in Japan applied on a consistent basis.
The United States dollar amounts shown in the accompanying financial statements havebeen translated solely for convenience. We have reviewed this translation and, in our
opinion, the financial statements expressed in yen have been translated into dollars on thebasis described in Note 1.
Tokyo, Japan
June 29, 1999

CENTURY AUDIT CORPORATION
Certified Public Accountant

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

17

(From left)
Osamu Shimada, Takahiko Inokuma, Takuya Oikawa, Yoshifumi Hayashi

Directors

President
Takahiko Inokuma

Senior Managing Director
Takuya Oikawa

Managing Directors
Osamu Shimada
Yoshifumi Hayashi

Directors
Harukatsu Goto
Kunihiko Naruse
Tamotsu Mukai
Yasuhiro Kuroki
Kouzyu Aoki
Keisuke Maehara
Harunori Nomura

Auditors

Hidemaru Suzuki
Yasuo Ota
Noburo Minami
Kunio Akita

18

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/

SM99086-3,000-SZ
Printed in Japan