Contents
1

An Outline of the Toshiba Machine Group
Corporate Information2

Foreword

4

Financial Highlights (consolidated)

5

Overseas Operations for Fiscal 2010

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

31

Report of Independent Auditors

32

Directors & Auditors

Consolidated Statements of Operations

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, 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 suchvarious industries as nano-technology, optics, electronics and automotives withtotal satisfaction by careful analysis and the recommendation of optimum-type
solutions to their requirements.

Corporate Information (as of March 31, 2010)
Company Name:TOSHIBA MACHINE CO., LTD.

Headquarters:

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

Established:

1938

Capital:¥12,484million (US$134 million)

Shares of Common Stock
Issued and Outstanding:

166,885,530 shares

Number of Shareholders:

14,370

Number of Employees:

1,534 (Consolidated: 3,067)

1

Foreword
Fiscal year 2010 saw the begin of recovery from depression due primarily to stimulative
measures by governments all over the world in reaction to the massive economic crisis arisingfrom the United States financial crisis. However industry, including the machinery industry, wasable to achieve only moderately improved results, except in some emerging markets where
economic recovery and growth were stronger, due to tight control of capital investment,
employment, and payments.

Under such economic conditions, the Toshiba Machine Group continued to focus on “a returnto origin principles of manufacturing (monozukuri)”, “complete cost reduction”, and “a speed upof research and development”, and made a concerted effort to secure orders in the world market,
improve its own financial condition, develop new products, and exploit new markets.

Unfortunately, capital investment did not recover in many of our customers’ industries(especially the automotive industry) due to continuing economic concerns. As a result, in thisfiscal year, consolidated orders received totaled ¥60,162 million (US$6,466million), a 42.9%
decrease over the previous term. Further, consolidated net sales totaled ¥74,694 million(US$803million), a 38.7% decrease over the previous term. Consequently, consolidated backlog
totaled ¥47,931million (US$515million), 23.3% decrease over the end of previous term.

Though we fixed expenses, reduced variable costs, and implemented business rationalization
efforts, the resulting consolidated operating loss was ¥1,816 million (US$20), a ¥13,352 million(US$144) decrease over the previous term, and the net loss of current term was ¥4,531 million(US$49), a ¥9,834 million (US$106) decrease over the previous term.

The year-end dividend for this term, ¥1.5(US$0.02) per share, was distributed to ourstockholders for the period ending on March 31, 2010, resulting in a total annual dividend of¥4.5(US$0.05) per share.

As for the domestic and overseas outlook, though capital investment in our primary customer
industries still has not recovered, we will make every effort to pioneer new markets, introduce2new products corresponding to changing market needs, and further reduce costs throughefficiency to improve profit.

Under these severe management circumstances and the changing industrial structure, theToshiba Machine Group has launched a new midterm management plan, “TM AC Plan (Toshiba
Machine Adapt to the Change Plan)”, beginning April 1st, 2010.

Under this new midterm management plan, we aim to position ourselves ahead of the paradigm
shift in industrial structure which is driving this great pace of change. To achieve this plan, we
have established the slogan “Expansive Innovation for Expanding Market”.

“Expansive Innovation” means trying to expand markets by improving and re-marketing
existing products over developing countries which belong to the volume zone of the industrial
structure pyramid. “Expanding Markets” means using our core technology to develop new
progressive products attractive to that portion of the new industrial structure pyramid which sets
energy and environment as keywords.

Establishing “Expansive Innovation for Expanding Markets” as a basic principle, and gathering
the power of the Toshiba Machine Group, will allow us to further develop a lean management
structure, enhance Company value, and strengthen management foundation. In addition, we will
make every effort to realize complete management of quality and the environment based on
ISO9001 and ISO14001 standards while, as a responsible corporate citizen, training and educating
our workforce to forge the future of our Company in observance of all rules and regulations, and in
fulfillment of all social responsibilities.

Yukio Iimura
President
July, 2010

3

FINANCIAL HIGHLIGHTS (consolidated)
Net sales

2010

2009

2008

2007

2006

¥74,694¥121,890¥148,779¥164,386¥144,356¥84,760¥101,628¥109,801¥98,394¥25,594¥28,180¥34,078¥29,411¥11,536¥18,971¥20,507¥16,551¥9,866¥20,520¥19,750¥16,715¥4,563¥6,610¥8,437¥5,995¥5,303¥13,910¥10,829¥10,482¥34.18¥86.79¥65.80¥63.16¥12.00¥15.00¥12.00¥12.00¥132,734¥157,998¥188,046¥172,477¥68,712¥70,004¥71,029¥60,347¥5,550¥3,098¥4,193¥3,096¥2,561¥2,170¥2,086¥1,891¥1,684¥1,742¥3,557¥2,808

3,148

3,246

3,435

3,336

$802,816
Cost of sales¥56,470$606,943

Selling, general and¥20,040

administrative expenses$215,391

Operating income (loss)¥(1,816)$(19,518)

Income (loss)before income¥(2,032)

taxes and minority interests$(21,840)

Income taxes¥2,499$26,859

Net income (loss)¥(4,531)$(48,699)

Per common share:
Net income (loss)¥(29.80)$(0.32)

Cash dividends

¥4.50
$0.05

Total assets¥115,806$1,244,690

Net assets¥63,372$681,126

Capital expenditure¥625(property, plant and equipment)$6,718Depreciation¥2,514$27,021

R & D Cost

¥1,567$16,842

Number of employees

3,067

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

4

Overseas Operations for Fiscal 2010
In the fiscal year 2010, there have beensigns the recession may have bottomed out
thanks to stimulative measures whichgovernments around the world established inreaction to the massive economic crisis arisingfrom the United States’ financial downturn.
However, the world economy seems to havemade only half of a full recovery due to the
reduced control in capital equipment
investment, employment, and wages, with the
exception of better economic recovery andgrowth in a few emerging countries. As aresult, corporate performance and themachinery industry did not make a full-scale
recovery.
Under such economic conditions, theToshiba Machine Group focused on theinitiatives. “Return to basic principles ofmanufacturing (Monozukuri)”, “implement
cost reduction”, and “speed-up research anddevelopment”, and made an intensive effort tosecure orders in Japan and overseas, improvefinancial strength, develop new products, andexplore new markets.
Although there are signs of capital
equipment investment after the 4th quarter,
especially in emerging markets including
China, there has been deterioration of capital
equipment investment by our major overseas
customers in the 3rd quarter and previous
quarters, and the total consolidated overseas
sales for this term was ¥35,763 million(US$388 million), which is a 31.8% decreaseover the previous term.
Our leading export machinery products
are injection molding machines, die-castingmachines, and machine tools, and the mostcommon destination is the Asian region.
At the end of the fiscal year 2009, we
made concerted efforts to overcome theserious economic situation with a one-year
term management plan. Starting April 2010,
we implemented a new midterm management
plan “TM AC Plan (Toshiba Machine Adapted
to the Change Plan)”. We will gather all thepower of the Toshiba Machine Group in orderto build up lean management, enhancecompany value, and strengthen ourmanagement foundation.

Net Sales

Millions of yen
Note 1 :From the fiscal year
ending March 31, 2008, theconsolidated subsidiaries of[Semiconductor
Manufacturing
Equipment] are
144,356
excluded fromour consolidated
18,221companies.

ductorSemicon turing
Manufac t
en
m
ip
Equ

164,385

148,779

21,71023,15625,247

121,890
19,24837,47019,08431,43838,22628,332

Total
Other74,694
Products
12,579Machineools
31,334 T

88,15264,37585,989

Moldingry
30,780 Machine

78,728

2006

2008

2007

2010

2009

Total Sales & Overseas Sales
Millions of yen

164,385
148,779
144,356

121,890

123,572
74,69470,602

67,15574,36052,41059,580

2005

2006

2008

2007

2009

es
Total Sal35,763

Overseas

Sales

2010

Export Percentages by Major Products
Other
Products
Molding
Machinery

8%

Machine
Tools

41%

51%

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/

Oskar-Messter-Strasse 22,85737 Ismaning, GERMANY
Tel : [49]-(0)89-9509499-0
Fax : [49]-(0)89-9509499-25

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

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

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

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

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

TOSHIBA MACHINE COMPANY CANADA
LTD.
6 Shields Court, Suite 101, Markham,
Ontario, L3R 4S1, CANADA
Tel : [1]-905-479-9111
Fax : [1]-905-479-6098
URL http://www.toshibamachine.ca/

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

Kuala Lumpur Branch
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. 61, Jalan Prai Jaya 4,
Bandar Prai Jaya, 13600 Prai, Penang,
MALAYSIA
Tel : [60]-(0)4-3980086
Fax : [60]-(0)4-3989652

Jakarta Office
ANZ Tower, 20th Floor,
J1. Jenderal Sudirman Kav. 33A,
Jakarta, 10220, INDONESIA
Tel : [62]-(0)21-5790-1217~8
Fax : [62]-(0)21-5790-1219

Hanoi Office
2nd, VIT Tower, No.519, Kim Ma Street,
Ba Dinh District, Hanoi, VIETNAM
Tel : [84]-(0)4-2220-8700~1
Fax : [84]-(0)4-2220-8702

Ho Chi Minh Office
E-Town Bldg., 8th Floor, Unit 1, 364,
Cong Hoa Street, Tan Binh District,
Ho Chi Minh City, VIETNAM
Tel : [84]-(0)8-3810-8658
Fax : [84]-(0)8-3810-8657

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)2-681-0158~61
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

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)10-6590-8977~8
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,
Exploitation District, Dalian, 116600,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)411-8732-7911
Fax : [86]-(0)411-8732-6899

Xiamen Office■ South Asia ■TOSHIBA MACHINE (INDIA) PVT. LTD.
Head Office

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

6A, 6th Floor, Uppal’s Plaza, M-6, Jasola
District Centre, New Delhi 110025,
INDIA
Tel : [91]-(0)11-4329-1111
Fax : [91]-(0)11-4329-1127

TOSHIBA MACHINE (SHANGHAI) CO., LTD.

Chennai Branch

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

Regus Office Centre, Olympia Tech
Park, Office 212, Level 3, Altius
Building No. 1, Sidco Industrial Estate,
Guindy, Chennai - 600032, INDIA
Tel : [91]-(0)44-4299-4161
Fax : [91]-(0)44-4299-4300

TOSHIBA MACHINE HONG KONG LTD.
Suite 1508, 15th Floor, Tower 3, China
Hong Kong City,
33 Canton Road, Tsim Sha Tsui,
Kowloon, HONG KONG
Tel : [852]-2735-1868
Fax : [852]-2735-1872

TOSHIBA MACHINE (SHENZHEN)
CO., LTD
Room 606, Building 2, Animation Park,
Yuehai Road, Nanhai Street, Nanshan
District, Shenzhen, 518054,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)755-8625-0599
Fax : [86]-(0)755-8625-0522

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

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

7

Financial Review
CONSOLIDATED BALANCE SHEETSTOSHIBA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2010 and 2009
Thousands of
U.S. dollars

Millions of yen
ASSETS
Current assets:
Cash and time deposits (Note 11 and 15)
Marketable securities (Note 5 and 11)
Notes and accounts receivable, trade (Note 11)
Allowance for doubtful receivables
Net receivables
Inventories:
Finished products
Work in process
Raw materials and supplies
Total inventories
Deferred tax assets (Note 14)
Other current assets
Total current assets
Property, plant and equipment, net(Notes 6,10 and 13)
Intangible assets
Investments and other assets:
Investments in:
Unconsolidated subsidiaries and affiliates
Other securities (Note 5 and 11)Long-term loans
Deferred tax assets (Note 14)
Other investments
Total investments and other assets
Total assets

2010

2009

2010

¥15,993
16,00028,633(237)
28,396¥15,194
11,50040,990(207)
40,783$171,894
171,969
307,749(2,547)305,202

3,093
16,493102
19,6881,493
1,690
83,2604,640
20,976668
26,2842,425
2,457
98,64333,244
177,268
1,096
211,608
16,047
18,164
894,884

23,452

24,775

252,064

481

607

5,170

2,560
4,347
132
653
921
8,613
¥115,806

2,293
3,642
174
1,775
825
8,709
¥132,734

27,51546,722
1,419
7,018
9,898
92,572$1,244,690

See accompanying notes to financial statements.

8

Millions of yen
LIABILITIES AND NET ASSETS
2010
Current liabilities:
Short-term bank loans (Notes 7, 11 and 13)¥10,515
Notes and accounts payable, trade (Note 11)17,313
Income taxes payable (Note 14)
222
Accrued expenses
3,611
Warranty reserve73
Other current liabilities (Note 7)
3,893
Total current liabilities
35,627Long-term liabilities:
Long-term debt (Note 7 and 11)
7,500
Long-term accounts payable, other47
Accrued employees’ retirement benefits (Note 8)
8,997
Accrued directors’ retirement benefits
86
Deffered tax liabilities (Note 14)
123
Other long-term liabilities (Note 7)
54
Total long-term liabilities
16,807
Total liabilities
52,434
Contingent liabilities (Note 9)
Net assets:
Shareholders’ equity: (Note 19)
Common stock
Authorized –360,000,000 shares
Issued–166,885,530 shares
12,485Additional paid-in capital
19,601Retained earnings
40,927
Treasury stock, at cost (14,848,594 shares in 2010, 14,843,759 shares in 2009)(10,038)
Total shareholders’ equity
62,975
Valuation and translation adjustments:
Unrealized holding gain on securities, net of tax
1,517
Deferred gains or losses on hedge
3
Foreign currency translation adjustments(1,123)
Total valuation and translation adjustments
397
Total net assets
63,372
Total liabilities and net assets¥115,806

Thousands of
U.S. dollars

2009

2010

¥12,010
22,253
607
4,610
83
6,564
46,127$113,016
186,081
2,386
38,811
785
41,842382,921

7,500
1,054
9,180
96
—
65
17,89564,02280,610505
96,700
924
1,322
582
180,643
563,564

12,485
19,601
46,826(10,036)
68,876

134,190
210,673
439,886(107,890)
676,859

1,061
6(1,231)(164)
68,712¥132,734

16,30532(12,070)
4,267
681,126$1,244,690

See accompanying notes to financial statements.

9

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

Years ended March 31, 2010 and 2009
Thousands of
U.S. dollars

Millions of yen
Net sales
Cost of sales (Note 17)
Gross profit
Selling, general and administrative expenses (Notes 16 and 17)
Operating income (loss)

2010

2009

2010

¥74,694¥121,890$802,816

56,47084,760606,943

18,224

37,130195,873

20,04025,594215,391(1,816)

11,536(19,518)

189

402

2,031

Other income:Interest and dividend
Rent income

173

178

1,859

Equity in earnings of affiliates

111

—

1,193

Gain on reversal of allowance for doubtful accounts

—

73

—

Gain on sales of property, plant and equipment

8

4

86

Gain on sales of investments in unconsolidated subsidiaries

5

—

54

Gain on change in interest in affiliates

162

—

1,741

Subsidy income

384

—

4,127

Others

209

298

2,247

1,241

955

13,338Other expenses and losses:
Interest

236

268

2,537

Loss on sales of notes receivable

23

87

247

Foreign exchange loss

217

107

2,332

Amortization of transitional obligation for
employees’ retirement benefits (Note 8)

502

502

5,396

Equity in losses of affiliates

—

924

—

Brand fee expense

145

249

1,558

Loss on disposal of property, plant and equipment

36

50

387

Loss on impairment of fixed assets (Note 18)

48

—

516

Loss on devaluation of investment securities

10

52

107

Others

240

386

2,580

1,457

2,625

15,660(2,032)

9,866(21,840)

Current

615

2,676

6,610

Deferred

1,884

1,887

20,249

2,499

4,563

26,859¥(4,531)¥5,303$(48,699)

Income (loss) before income taxes and minority interests
Income taxes (Note 14)

Net income (loss)

Yen
Net income (loss) per share of common stock

U.S. dollars

2010

2009

2010

¥(29.80)¥34.18$(0.32)

See accompanying notes to financial statements.

10

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

Years ended March 31, 2010 and 2009

Millions of yen
CommonStock

Additional
paid in
capitalRetainedearnings

Unrealized
Treasurygain onstock
securities,netof taxDeferred
gains orlosseson hedge

Translation
adjustments

166,885,530 ¥12,485¥19,601¥43,879¥(8,398)¥2,470¥23¥ (56)(1,409)(17)(1,175)1,061

6(1,231)

456

(3)

108

¥1,517¥3¥ (1,123)

Deferred
gains orlosseson hedge

Translation
adjustments$64$ (13,231)

4,901

(32)

1,161

$134,190 $210,673 $439,886 $(107,890) $16,305$32$ (12,070)

Numberof
SharesBalance at March 31, 2008

5,303

Net income(1,638)Purchases of treasury stock(2,356)

Cash dividends
Net changes in items other thanshareholders’ equity
Balance at March 31, 2009

166,885,530

12,485

19,601

46,826(10,036)(4,531)

Net income(2)

Purchases of treasury stock(1,368)Cash dividends
Net changes in items other thanshareholders’ equity
Balance at March 31, 2010

166,885,530 ¥12,485¥19,601¥40,927 ¥ (10,038)

Thousands of U.S. dollars
CommonStock
Balance at March 31, 2009
Net income

Additional
paid in
capitalRetainedearnings$134,190 $210,673 $503,289 $(107,868) $11,404(48,699)(22)

Purchases of treasury stock
Cash dividends
Net changes in items other thanshareholders’ equity
Balance at March 31, 2010

Unrealized
Treasurygain onstock
securities,netof tax(14,704)

See accompanying notes to financial statements

11

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

Years ended March 31, 2010 and 2009

Thousands of
U.S. dollars

Millions of yen
2010
Operating activities:
Income (loss) before income taxes and minority interests¥(2,032)
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation
2,514
Allowance for doubtful receivables
3
Warranty reserve(10)
Employees’ retirement benefit(182)
Director’s retirement benefit(10)
Gain on sales of investments in unconsolidated subsidiaries(5)Interest and dividend income(189)Interest expense
236
Loss on sales and disposal of property, plant and equipment
28
Equity in losses (earnings) of affiliates(111)
Changes in operating assets and liabilities:
Notes and accounts receivable, trade
12,356Inventories
6,596
Notes and accounts payable, trade(4,940)
Advances received(1,246)
Accrued expenses(989)
Long-term accounts payable, other(1,008)Others(240)
Sub total
10,771
Interest and dividend income received
189
Interest paid
(246)
Income taxes paid
(636)
Others(23)
Net cash provided by operating activities
10,055Investing activities:
Acquisition of investment securities—
Proceeds from sales of investments in unconsolidated subsidiaries
11
Payments for sales of investments in capital of subsidiaries and affiliates—
Purchases of property, plant and equipment(2,028)Proceeds from sales of property, plant and equipment
24
Purchases of intangible assets(20)
Payments of long-term loan receivables(13)
Repayments of long-term loan receivables
55
Others12
Net cash used in investing activities(1,959)Financing activities:
Increase (decrease) in short-term bank loans(1,511)
Proceeds from long-term debt
Repayments of long-term debt
Purchases of treasury stock(2)
Cash dividends paid
(1,368)Others(19)
Net cash used in financing activities(2,900)Effect of exchange rate changes on cash and cash equivalents
103
Net increase (decrease) in cash and cash equivalents
5,299
Cash and cash equivalents at the beginning of year
26,694
Cash and cash equivalents at end of year (Note 15)¥31,993

2009

2010

¥9,866$(21,840)

2,561
(208)
(3)
(130)
(111)
(402)
268
46
924

27,02132(107)(1,956)(107)(54)(2,031)2,537
301(1,193)

12,9283,854(15,144)(812)(1,621)(955)(86)
10,975417(302)(8,824)(87)
2,179

132,803
70,894(53,095)(13,392)(10,630)(10,834)(2,582)
115,767
2,031(2,644)(6,836)(247)
108,071

(104)

—
118
—
(21,797)
258
(215)
(140)
591
130
(21,055)(50)(4,633)
37
(181)
(1)
32
(1)
(4,901)
1,159
7,500(8,650)(1,638)(2,356)(7)(3,992)(1,175)(7,889)34,583¥26,694(16,240)(22)(14,704)(203)(31,169)
1,107
56,954
286,909$343,863

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 are prepared 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 ReportingStandards, and are compiled from the consolidated financial statements prepared by the Company
as required by the Financial Instruments 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 ofoperations, 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 underaccounting principles generally accepted in Japanbut 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 consolidated
subsidiaries (together the “Companies”). Certain
immaterial subsidiaries are not consolidated, inwhich the investments are stated at cost.
All significant intercompany transactions andaccounts and unrealized intercompany profits
among consolidated entities are eliminated in consolidation.
The cost in excess of underlying interest in net
assets 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 percent-owned companies) in which the ability to exercise
significant influence exist, except immaterial
investments, are accounted for using the equity
method.
Immaterial investments in affiliates are statedat 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 perfectly hedged byforward contracts, which are translated using thecontracted rate.
The foreign exchange gains and losses fromtranslation are recognized in the consolidated
statements of operations to the extent that they
are not hedged by foreign exchange derivatives.
All assets and liabilities of foreign consolidated
subsidiaries are translated at the current rates at
the respective balance sheet dates and all income
and expense accounts are translated at the current rates at end of the term. The components ofshareholders’ equity are translated at their historical exchange rates. Differences in transaction are
directly charged to foreign currency translation
adjustments in new assets.
(c) Securities
Securities owned by the Companies have beenclassified into two categories, held-to-maturity debt
securities or other securities, in accordance withthe 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 net assets.
Non-marketable securities classified as othersecurities are carried at cost. Cost of securities soldis determined by the moving average method.
(d) Inventories
Finished products and work in process arestated at the lower of cost, determined by the individual identification method, or their net realizable value. Raw materials and supplies are statedat the lower of cost, determined by the moving
average method or their net realizable value.
(e) Allowance for doubtful receivables
The allowance for doubtful receivables is stated at the amount determined based on the default
ratio sustained over a specific period in the past13

and the estimated uncollectible amount determined based on the analysis of certain individual
accounts, including probable bad debts and claims
in bankruptcy.
This amount is considered sufficient to coverpossible losses on collection.
( f ) Warranty reserve
Warranty reserve has been provided for warranty costs to be incurred during the warranty
period based on the historical experience.
(g) Employees bonuses
The bonuses to the employees are paid twice ayear and accrued based on the estimated amounts
incurred and to be paid in the subsequent period.
(h) Depreciation of property, plant and equipment(Excluding leased assets)
Depreciation of buildings is principally computed by the straight-line method and depreciation of other property, plant and equipment iscomputed by the declining balance method overthe estimated useful lives of respective assets,principally ranging from 3 60 years for buildings
and structures, and from 3 22 years for machinery, equipment and vehicles.
(Additional Information)
Effective from the year ended March 31, 2009,
the Company and its domestic consolidated subsidiaries changed the estimated useful lives ofmachinery from 6 13 years to 4 9 years after
reviewing the availability of these assets in conjunction with the revision of the Corporation Tax
Law of Japan.
The effect of this change on operating income
and income before income taxes and minority
interests was immaterial for the year ended March
31, 2009.
( i ) Amortization of intangible assets
Computer software held for internal use isamortized by the straight-line method over the relevant economic useful life (5 years). The otherintangible assets, including patent rights, areamortized by the straight-line method over theestimated useful lives of respective assets.
( j ) Leased assets
Leased assets under finance lease transactions
that do not transfer ownership to the lessee aredepreciated by the straight-line method over thelease term with no residual value.
However, finance lease transactions, commencing on or before March 31, 2008, that do nottransfer ownership to the lessee, are accounted for
as operating lease transactions.

14(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 cash flow hedging instruments, netof the applicable income taxes, are reported as acomponent of net assets.
( l ) Income taxes
The Companies accrue current income taxes
based on taxable income.
The Companies include many temporary difference items for financial reporting purpose
which, in the case of expenses, are not currently
deductible and in the case of income, are not currently taxable.
Income tax effects on such temporary differences between tax and financial reporting purposes are reflected as deferred income taxes in the
consolidated financial statements using the asset
and liability method.
(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 orloss is amortized by the straight-line method over
the average remaining years of service of employees.
(Additional Information)
Effective from the year ended March 31, 2010,
the Company and its domestic consolidated subsidiaries adopted the amended “AccountingStandard for retirement benefits” (AccountingStandards Board of Japan (“ASBJ”) Statement
No.19, issued July 31, 2008)
This change had no effect on operating loss,
loss before income taxes and minority interests,
and unrecognized actuarial loss for the year ended
March 31, 2010.
(n) Directors’ retirement benefits
Domestic consolidated subsidiaries accrued an
estimated amount calculated in accordance with
its internal rule for retirement benefits for directors.
(Additional Information)
Previously, the Company had accrued an estimated amount calculated in accordance with its internal
rule for retirement benefits for directors. However, atthe ordinary general shareholders’ meeting held on
June 26, 2008, an approval was adopted regardingthe severance payment to be made following the abolition of retirement benefit system for directors.
Accordingly, the entire accrued amount of the provision of the payments, ¥123 million, was reversed, andis stated as long-term payable, other in the accompanying consolidated balance sheet as of March 31,
2009.
This change had no effect on operating income
and income before income taxes and minority interests for the year ended March 31, 2009.
(o) Amounts per share of common stock
Net income (loss) per share is computed basedon the weighted-average number of shares of common stock outstanding during a 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) Cash equivalents
In preparing the consolidated statement ofcash flows, cash on hand, readily available
deposits and short-term highly liquid investmentswith maturities of not exceeding three months at
the time of purchase are considered to be cash
and cash equivalents.

year ended March 31, 2010, revenue and costs
related to construction contracts, subject to thisaccounting standard and guidance, were recognized by the percentage-of-completion method.
This change had no effect on operating loss,
loss before income taxes and minority interestsand segment information for the year ended
March 31, 2010.
(b) Practical solution on unification of accounting
policies applied to foreign subsidiaries for consolidated financial statements
Effective from the year ended March 31, 2009,
the Company applied “Practical Solution on
Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Statements”(ASBJ, Practical Issues Task Force No. 18, issued
May 17, 2006), and necessary modifications havebeen made for consolidation.
This change had no effect on operating income
and income before income taxes and minority
interests for the year ended March 31, 2009.

4. Accounting Changes(c) Accounting standard for measurement of inventories
Effective from the year ended March 31, 2009,
the Company and its domestic consolidated subsidiaries adopted the new accounting standard“Accounting Standard for Measurement of
Inventories” (ASBJ Statement No.9, issued July 5,2006).
The Company and its domestic consolidated
subsidiaries changed accounting policies to“Inventories are stated at the lower of cost, determined by the specific identification method for finished products and work in process, and by themoving average method for raw materials and supplies, or their net realizable value” from
“Inventories are stated at cost, determined by the
specific identification method for finished products and work in process, and by the moving average method for raw materials and supplies”.
This change in accounting policy for measurement of inventories resulted in the decreases inoperating income and income before income taxes
and minority interests by ¥445 million for the year
ended March 31, 2009.
The effect of this change on segment information is explained in Note 22.

(a) Accounting standard for construction contracts
Effective from the year ended March 31, 2010,
the Company and its domestic consolidated subsidiaries adopted the new accounting standard“Accounting Standard for Construction Contracts”(ASBJ Statement No.15, issued December 27,2007) and “Guidance on Accounting Standard forConstruction Contracts” (ASBJ Guidance No.18,
issued December 27, 2007). Effective from the(d) Accounting standard for lease transactions
Effective from the year ended March 31, 2009,
the Company and its domestic consolidated subsidiaries adopted the amended “AccountingStandard for Lease Transactions” (ASBJ
Statement No.13, March 30, 2007; revised fromthe standard originally issued by the Corporate
Accounting Council on June 17, 1993) and(q) Reclassifications
Certain accounts in the consolidated financial
statements for the year ended March 31, 2009
have been reclassified to conform to the 2010 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 ¥93.04=U.S.$1,the approximate
exchange rate prevailing in the Japanese foreignexchange market on March 31, 2010. This translation should not be construed as a representationthat the yen amounts actually represent, havebeen, or could be converted into U.S. dollars.

15

“Guidance on Accounting Standard for Lease Transaction” (ASBJ Guidance No.16, March 30 2007, revised
from the standard originally issued by the Japanese Institute of Certified Public Accountants on January
18, 1994).
Previously, finance lease transactions that do not transfer ownership of the leased assets to the lessee,
were accounted for as operating lease transactions. Effective from the year ended March 31, 2009, suchfinance lease transactions are recognized as leased assets and leased obligations on the balance sheet.
However, finance lease transactions, which do not transfer ownership of the leased assets to the lessee,
commencing on or before March 31, 2008 continue to be accounted for as operating lease transactions.
This adoption of new standard had no effect on operating income and income before income taxes andminority interests for the year ended March 31, 2009.

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

Equity securities

2010
Acquisition Carrying
cost
value
¥1,700¥4,172¥1,700¥4,1722009
Unrealized Acquisition Carrying
gains
cost
value
¥2,472¥1,711¥3,463

Unrealized
gains¥1,752¥2,472¥1,752’Thousands of U.S. dollars
2010
Acquisition Carrying Unrealized
cost
value
gains

Equity securities$18,272$44,841$26,569$18,272$44,841$26,569¥1,711¥3,463

Loss on devaluation of investment securities in marketable securities for the years ended March 31,
2010 and 2009 were ¥10 million ($107 thousand) and ¥39 million, respectively.
Non-marketable securities classified as marketable securities primary consist of negotiable certificate of deposit of ¥16,000 million ($171,969 thousand) and ¥11,500 million as of March 31, 2010 and2009, respectively. Non-marketable equity securities as other securities primary consist of ¥175 million($1,881 thousand) and ¥179 million as of March 31, 2010 and 2009, respectively. Loss on devaluation of
investment securities in non-marketable equity securities for the years ended March 31, 2009 was ¥13
million.

16

6. Property, Plant and Equipment
Property, plant and equipment at March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Land

¥5,989¥6,053$64,370

Buildings and structures

34,18034,020367,369

Machinery and equipment

30,15130,357

324,065

479

498

5,148

6,932

7,162

74,506

Lease assets

98

79

1,053

Construction in progress

854

317

9,179

78,68378,486845,690(55,231)(53,711)(593,626)¥23,452¥24,775$252,064

VehiclesTools, furniture and fixtures

Less accumulated depreciation

Depreciation expense for the years ended March 31, 2010 and 2009 were ¥2,514 million ($27,021
thousand) and ¥2, 561 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, 2010
and 2009 ranged principally from 0.94% to 4.37% and 1.19% to 4.54%, respectively. Long-term debt on
March 31, 2010 and 2009 consisted of the following:
Millions of yen

Loans, principally from Japanese banks andinsurance companies maturing 2011 – 2014,
interest 1.15 % – 1.95 %Less current portion

Thousands of
U.S. dollars

2010

2009

2010

¥7,500¥7,500$80,610

7,500

7,500

80,610—¥7,500—¥7,500$80,610

The aggregate annual maturities of long-term debt at March 31, 2010 were as follows:Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2011

—

—

2012

¥700

$7,524

2013

700

7,524

2014

6,100

65,562——¥7,500$80,6102015 and later

17

The aggregate annual maturities of finance lease obligations at March 31, 2010 were as follows:

Millions of yen

Year ending March 31

Thousands of
U.S. dollars

2011

¥22

$236

2012

22

236

2013

20

216

2014

11

118

2015 and later

1

12

¥76

$818

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 thetrustees.
The liability for employees’ retirement benefits at March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

¥14,337¥14,641$154,095

Fair value of plan assets(2,626)(1,562)(28,224)

Unfounded status

11,711

13,079125,871

Unrecognized transitional obligation(2,340)(2,842)(25,150)(374)(1,057)(4,021)¥8,997¥9,180$96,700

Projected benefit obligation

Unrecognized actuarial loss
Accrued retirement benefits obligation

The components of net periodic benefit costs for the years ended March 31, 2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Service cost

¥819

¥797

$8,802

Interest cost

237

235

2,547

Expected return on plan assets

(28)

(27)

(301)

Amortization of transitional obligation

502

502

5,396

Recognized actuarial loss

235

197

2,526

1

174

11

¥1,766¥1,878$18,981

Others

Certain consolidated subsidiaries have adopted the conventional method in calculating their projected benefit obligation.

18

Assumptions used in the accounting for the projected benefit obligation were as follows:
2010

2009

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

2.0%

2.0%

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, 2010, contingent liabilities for loans guaranteed by the Company, principally on behalfof non-consolidated subsidiaries and affiliated companies, amounted to ¥886 million ($9,523 thousand).

10. Leases
As described Note 4(d), the Company and its domestic consolidated subsidiaries adopted theamended “Accounting standard for lease transactions”. However, finance leases of the Companies otherthan those where ownership of the leased assets is transferred to the lessee, commencing on or before
March 31, 2008 continue to be accounted for as operating leases. The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of the leased assets accounted for as operating leases at March 31, 2010 and 2009, which would have been reflected in the consolidated balance sheets if these arrangements had been accounted for as finance leases:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Machinery, equipment and vehicles

¥763

¥996

$8,201Tools, furniture and fixtures

757

895

8,136

Less-Accumulated depreciation(1,179)(1,264)(12,672)

Net book value

¥341

¥627

$3,665Acquisition Costs

Future lease payments (including the interest portion thereon) subsequent to March 31, 2010 for
finance leases accounted for as operating leases were as follows:
Millions of yen

Thousands of
U.S. dollars

Due within one year¥201

$2,160Due after one year

140

1,505

¥341

$3,665Periodic lease expenses, as a lessee, charged to income for the years ended March 31, 2010 and2009 were ¥ 289 million ($3,106 thousand) and ¥ 455 million, respectively. The pro forma amounts ofdepreciation for the years ended March 31, 2010 and 2009 would be calculated at ¥ 289 million ($3,106
thousand) and ¥ 455 million by using the straight-line method over the lease term with no salvage value.

1911. Financial Instruments
Effective from the year ended March 31, 2010, the Companies adopted the new accounting standard“Accounting Standard for Financial Instruments” (ASBJ Statement No.10, issued March 10, 2008) and“Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19, issued
March 10, 2008).
Overview(a) Policy for financial instruments
The Companies invests in short-term deposits for fund management, where temporally cash surplus isinvested in low-risk financial instruments. The Companies raises a fund by bank borrowings. The
Companies uses derivatives only to reduce risk, and does not use derivatives for speculative trading purposes.
(b) Contents of financial instruments, related risk and risk management system
Operating receivables such as notes and accounts receivable, trade are exposed to customer credit risk.
The Companies tries to reduce this risk by the Companies’ sales management rules. Investments, consisting of marketable securities of corporations, are exposed to stock price fluctuation risk in market. To
address this risk, the Companies monitors their stock price in every quarter. Operating payables such as
notes and accounts payable, trade are almost due within six months. Debts are mainly used in normal operations and capital investments. The maturity date of the debts is up to 4 years from the balance sheet dateat the maximum.
Derivative transactions consist of foreign exchange forward contracts used for the purpose of hedging
foreign exchange risk associated with certain assets and liabilities denominated in foreign currency, and aremanaged under the internal management policies, to the extent deemed necessary. (k) Derivative financial
instruments in Note 2. Summary of Significant Accounting Policies explains hedge accounting, hedging
instruments and methods, hedging policy, hedge items and assessment of hedge effectiveness.
The Finance Department of the Companies prepares and updates its cash flow plan to manage liquidity
risk. A part of bank borrowings are subject to terms of financial covenants. If the Companies violates theterms of financial covenants, the terms of borrowings may be possibly revised the terms of financial
covenants.
The terms of financial covenants incident to syndicated loan (¥7,000 million ($75,236 thousand) at
March 31, 2010) contract are as follows:① March 31 and September 30 every year, the Company must keep the amount of net assets in the consolidated balance sheet over ¥50,949 million ($547,603 thousand).
② In the consolidated statements of operations for the fiscal year ending March 31, the Company must
not record operating loss for the two consecutive years.
(c) Supplemental information on the fair value of financial instruments
Fair value of financial instruments are calculated based on market prices, or by using reasonable estimates when market prices are not available. These estimates include variable factors, and are subject tofluctuation due to the change in underlying assumptions. The contract amounts of derivatives discussed in
Note 12. Derivative financial instruments below are not an indicator of the market risk associated with
derivative transactions.
Fair value of financial instructions
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2010 and theirfair value were as follows:(Financial instruments whose fair value was extremely difficult to determine were not included.)Millions of yen
2010

20

Carrying value

Fair value

Difference

Cash and time deposits¥15,993¥15,993―

Notes and accounts receivable, trade28,63328,626¥(7)

Marketable securities and investment securities

21,83023,324

1,494

Total assets¥66,456¥67,943¥1,487

Short-term bank loans¥10,515¥10,515―

Notes and accounts payable, trade17,313

17,313―Long-term debt

7,500

7,499

¥(1)

Total liabilities¥35,328¥35,327

¥(1)

¥5

¥5

―

Derivatives

Thousands of U.S. dollars
2010
Carrying value

Fair value

Cash and time deposits$171,894$171,894―

Notes and accounts receivable, trade307,749

307,674$(75)

Marketable securities and investment securities

234,630

250,688

16,057

Total assets$714,273$730,256$15,982

Short-term bank loans$113,016$113,016―

Notes and accounts payable, trade186,081

186,081―Long-term debt

80,61080,600$(10)

Total liabilities$379,707$379,697

$(10)

$54

$54

―

Derivatives

Difference*Derivatives are presented as net amounts receivable or payable with net amounts payable in parentheses.
(a) Method for calculating fair value of financial instruments, short-term investments and derivative transactions① Cash and time deposits
The carrying value approximate fair value because these are due within short-term.
② Notes and accounts receivable, trade
The amount of notes and accounts receivable, trade is classified based on certain terms and discounted using a rate which reflects safety interest and credit risk
③ Marketable securities and investment securities
For negotiable certificate of deposit, the carrying value approximate fair value because it is due within short-term.
Investment securities are based on quoted market prices.
④ Short-term bank loans; ⑤ Notes and accounts payable, trade
The carrying value approximate fair value because these are due within short-term.
⑥ Long-term debt
The fair value of long-term debt is determined based on the present value of principles and interest,
discounted by the interest rate that would be applied if similar new borrowings were entered into.
⑦ Derivatives
Please refer to Note 12. Derivative Financial Instruments.
(b) Financial instruments whose fair value was extremely difficult to determine
2010

Investment securities for which the market prices
are not available

Millions of yen

Thousands of
U.S. dollars¥1,076$11,565

Market prices don’t exist for these items, or the cost of estimating cash flow is considered prohibitive.

21

These items are not included in ③ Marketable securities and investment securities in the above, because
their fair value are not readily determinable.
(c) The aggregate annual maturities of financial assets at March 31, 2010 were as follows:

Due within
one year

Millions of yen
2010
Due after one Due after five Due after ten
years through years throughyears
five years
ten years

Cash and time deposits¥15,977―――

Notes and accounts receivable, trade28,435¥198——

16,000―――¥60,412

¥198

―

―

Marketable securities and investment securities
Negotiable certificate of deposit
Total

Due within
one yearThousands of U.S. dollars
2010
Due after one Due after five Due after ten
years through years throughyears
five years
ten years

Cash and time deposits$171,722―――

Notes and accounts receivable, trade305,621$2,128——

171,969―――$649,312$2,128――Marketable securities and investment securities
Negotiable certificate of deposit
Total(d) Annual maturities of long-term debt
Please refer to Note 7. Short-term Bank Loans and Long-term Debt

12. Derivative Financial Instruments
The Company has entered into derivative transactions (foreign exchange contract, interest rate swap
and currency option transaction) in order to manage certain risks arising from adverse fluctuations in foreign currency exchange rate and in interest rate. The Company doesn’t hold or issue derivative financial
instruments for the purpose of speculative trading. Derivative transactions are entered into by the Finance
Department under the rules approved by the Board of Directors. Derivative transactions are inspectedvalidity of the operation by the Corporate Auditing Office.
Derivatives designated as hedging instruments at March 31, 2010 were as follows:

Hedgeditem

Accounting in principle

22

Millions of yen
2010
Contract
Contract
amountamountdue after
one year

Fair valueForeign exchange forward contracts:
To sell foreign currencies:
U.S. dollars

accounts

312

―

(2)

Euro

receivable

209

73

8

21

―

0

British Pound
Appropriated accounting for foreign currency
Foreign exchange forward contracts:
To sell foreign currencies:
U.S. dollars

accounts

1,233

―

―

Euro

receivable

122

―

―

accounts

267

―

―

2,164

73

―

To buy foreign currencies:
U.S. dollars

payableTotal

Hedgeditem

Thousands of U.S. dollars
2010
Contract
Contract
amountamountdue after
one year

Fair value

Accounting in principle
Foreign exchange forward contracts:
To sell foreign currencies:
U.S. dollars

accounts

3,353

―

(21)

Euro

receivable

2,246

785

86

226

―

0

British Pound
Appropriated accounting for foreign currency
Foreign exchange forward contracts:
To sell foreign currencies:
U.S. dollars

accounts

13,252――Euro

receivable

1,311

―

―

accounts

2,870

―

―

23,258785―

To buy foreign currencies:
U.S. dollars

payableTotal

13. Pledged Assets
The following assets were pledged as collateral at March 31, 2010 to secure short-term bank loans
amounting to ¥ 2 million ($21 thousand). (See Note 7):23

Millions of yen

Thousands of
U.S. dollars

Land

¥581

$6,245

Machinery and equipment, net

185

1,988

Buildings and structures, net

2,344

25,193¥3,110$33,426

14. Income Taxes
Income taxes in Japan applicable to the Companies generally comprise Corporation Tax, EnterpriseTax and Prefectural and Municipal Inhabitants Taxes. The statutory tax rates for the years ended March
31, 2010 and 2009 were approximately 39.7%.
The reconciliation between the statutory rate and effective tax rate of income taxes for the year
ended March 31, 2009 was as follows:2009
Statutory tax rate

39.7 %

Per-capita portion of Inhabitant Tax

0.4

Permanently non-taxable revenue

2.1

Permanently non-deductible expenses

0.5

Unrealized intercompany profit on fixed assets

0.2

Change in valuation allowance

4.7

Difference in tax rates of consolidated subsidiaries

(1.9)

Other

0.6

Effective tax rate

46.3 %

Reconciliation between the statutory tax rate and the effective tax rate for the year ended March
31,2010 is not presented, as permitted, since the Company incurred a loss before income taxes for theyear then ended
The significant components of deferred tax assets and liabilities at March 31, 2010 and 2009 were as
follows:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Accrued employees’ bonuses¥594¥1,067$6,384

Allowance for doubtful receivables

199

143

2,139

Devaluation of inventories

478

163

5,138

Devaluation of securities

514

510

5,525

3,430

3,619

36,866

Amount not shifted to defined contribution pension plan

322

697

3,461

Unrealized intercompany profit on inventories

48

532

516

Enterprise tax payable

55

77

591

Deferred tax assets:

Accrued employees’ retirement benefits24Other

1,133

1,262

12,177

Total deferred tax assets¥6,773¥8,070$72,797

Valuation allowance(3,555)(2,869)(38,210)Net deferred tax assets¥3,218¥5,201$34,587

Deferral of gain on sale of fixed assets

(178)

(187)

(1,913)

Unrealized gain on securities

(954)

(746)

(10,254)

Gain on deferred hedging

(2)

(4)

(21)

Foreign consolidated subsidiaries’ retained earning

(61)

(64)

(656)

Total deferred tax liabilities¥(1,195)¥(1,001)$(12,844)

Net deferred tax assets¥2,023¥4,200$21,743

Deferred tax liabilities:

15. Cash and Cash Equivalents
Reconciliation between cash and time deposits in the consolidated balance sheets and cash and cash
equivalents in the consolidated statements of cash flows at March 31, 2010 and 2009 were presented asfollows:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Cash and time deposits¥15,993¥15,194$171,894

Marketable securities

16,00011,500171,969

Cash and cash equivalents¥31,993¥26,694$343,863

16. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31,
2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

Sales commission¥1,167¥1,804$12,543

Delivering expense

1,871

3,250

20,110Reserve for warranty

128

83

1,376

9,210

11,13698,990Retirement allowance

638

639

6,857

Depreciation

915

683

9,834

Rent expense

786

877

8,448

Traveling expense

946

1,377

10,168

1,103

1,046

11,855

484

1,094

5,202

2,792

3,605

30,008Personal expense

Research and development expense
Outside order expense
Others25

17. Research and Development Costs
Research and development costs charged to income were ¥1,567 million ($16,842 thousand) and¥1,684 million for the years ended March 31, 2010 and 2009, respectively.

18. Loss on impairment of fixed assets
Grouping of assets is based on the business units, except for idle asset, which is grouped individually.
Loss on impairment of fixed assets for year ended March 31, 2010 amounted to ¥ 48 million ($516 thousand).
The recoverable value of assets was calculated based in their estimated future cash flows, except landand buildings, for which the recoverable value was calculated by the market value.

Millions of yen
2010

Thousands of
U.S. dollars
2010

Numazu-shi, Shizuoka-ken, JAPAN:
Land

Idle property

¥45

$484

Buildings and structures

Idle property

3

32

¥48

$516

Total

19. Shareholders’ Equity
The current Corporation Law of Japan (the “Law ”) went into effect on May 1, 2006. The Law provides that an amount equal to 10% of the amount to be distributed as distribution of additional paid in
capital (other than the capital reserve) and retained earning (other than the legal reserve) be transferred to the capital reserve and legal reserve, respectively, until the sum of the capital reserve andlegal reserve equals 25% of the common stock account. Such distributions can be made at any time byresolution of the shareholders, or by the Board of Directors if certain conditions are met, but neither
the capital reserve nor the legal reserve is available for distributions.

20. Related Party Transactions
During the years ended March 31, 2010 and 2009, the Company and its consolidated subsidiaries
had operational transactions with Toshiba Corporation, a 22.1% shareholder of the Company and
NuFlare Technology, Inc., a 21.3% and 25.6% affiliate of the Company.
A summary of the significant transactions with Toshiba Corporation for the years ended, March 31,
2010 and 2009 were as follows:
Millions of yen

Thousands of
U.S. dollars

2010

2009

2010

¥165

¥249

$1,773For the year:
Payment of brand fee

Note : Sales price was market price.
Brand fee rate was contracted beforehand.
A summary of the significant transactions with NuFlare Technology, Inc. for the years ended, March 31,

26

2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

¥120

¥119

$1,290For the year:
Rent income for land, buildings and structures

Note : Rent price was market price.

21 Net Income and Net Assets per Share
Net income and net assets per share for the years ended march 31, 2010 and 2009 were as follows:
Yen

U.S. dollars

2010

2009

2010

Net income per share¥(29.80)¥34.18$(0.32)

Net assets per share

416.82451.93

4.48

Basic information for calculation of net income per share was as follows:
Thousands of sharesweighted-average number of shares of common stock

2010

2009

152,039

155,123
Thousands of
U.S. dollars

Millions of yen
2010

2009

2010

¥(4,531)¥5,303$(48,699)

Net income (loss)not applicable to shareholders of common stock

—

—

—

Net income (loss) applicable to shareholders of common stock¥(4,531)¥5,303$(48,699)

Net income (loss)

Basic information for calculation of net assets per share was as follows:

Thousands of shares

Number of shares at year-end

2010

2009

152,037

152,042
Thousands of
U.S. dollars

Millions of yen

Net assets
Minority interests in consolidated subsidiaries
Net assets applicable to shareholders of common stock

2010

2009

2010

¥63,372¥68,712$681,126———¥63,372¥68,712$681,12627

22. Segment Information(A) Business Segment Information
The Companies’ business is classified into the following three 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
Other Products: Hydraulic equipment, Electronic controls
The tables bellow present sales, operating expenses and operating income information by business segment.
Millions of yen

Year ended March 31, 2010
Molding
Machinery

Machine
Tools

Other
Products

Eliminations
and/or corporate

Consolidated

Sales¥30,781¥31,334¥14,015¥(1,436)¥74,694

Operating expenses

35,09028,392

15,341(2,313)76,510Operating income (loss)(4,309)2,942(1,326)877(1,816)

Identifiable assets

46,006

26,292

28,941

14,567

115,806

Depreciation

1,263

564

687

—

2,514

263

73

289

—

625

Capital expenditure

Millions of yen

Year ended March 31, 2009
Molding
Machinery

Machine
Tools

Other
Products

Eliminations
and/or corporate

Consolidated

Sales¥64,375¥38,791¥22,497¥(3,773)¥121,890

Operating expenses

60,21832,717

21,957(4,538)110,354

Operating income

4,157

6,074

540

765

11,536

Identifiable assets

60,63032,19331,594

8,317

132,734

946

386

1,229

—

2,561

1,387

2,538

1,625

—

5,550

Depreciation
Capital expenditure

Thousands of U.S.dollars

Year ended March 31, 2010
Molding
Machinery

Machine
Tools

Other
Products

Eliminations
and/or corporate

Consolidated

Sales$330,836$336,780$150,634$(15,434)$802,816

Operating expenses

377,150

305,159

164,886(24,861)

822,334

Operating income (loss)(46,314)31,621(14,252)

9,427(19,518)

Identifiable assets

494,475

282,588

311,060

156,567

1,244,690

Depreciation

13,575

6,062

7,384

—

27,021

Capital expenditure

2,827

785

3,106

—

6,718

As described Note 4(c), the Company and its domestic subsidiaries adopted “Accounting Standard for
Measurement of Inventories” effective from the year ended March 31, 2009. As a result, operating expenses increased by ¥183 million in the Molding Machinery segment, ¥195 million in the Machine Tools segment, and ¥67 million in the Other Products segment. Operating income decreased by the same amounts
accordingly.

28

(B) Geographic Segment Information
Geographic Segment Information of the Companies for the years ended March 31, 2010 and 2009 wereas follows:Japan
North America¥69,716¥5,391
71,976
5,684(2,260)(293)
89,004
3,567

Millions of yen
Asia
Total
¥7,628¥82,735
7,527
85,187101(2,452)
5,898
98,469Eliminations Consolidated¥(8,041)¥74,694(8,677)76,510636(1,816)
17,337
115,806

Japan¥114,723
104,559
10,164
109,831

Millions of yen
Asia
Total
¥13,193¥137,580
12,671
126,336522
11,244
8,506
124,042

Eliminations Consolidated¥(15,690)¥121,890(15,982)
110,354
292
11,536
8,692
132,734

Year ended March 31, 2010
Sales
Operating expenses
Operating income (loss)
Identifiable assets
Year ended March 31, 2009
Sales
Operating expenses
Operating income
Identifiable assets

North America¥9,664
9,106
558
5,705

Year ended March 31, 2010
Sales
Operating expenses
Operating income (loss)
Identifiable assets

Japan
North America$749,312$57,943
773,603
61,092(24,291)(3,149)956,621
38,338

Thousands of U.S.dollars
Asia
Total
Eliminations Consolidated$81,986$889,241$(86,425)$802,816
80,901
915,596(93,262)
822,334
1,085(26,355)
6,837(19,518)
63,392
1,058,351
186,339
1,244,690

As described Note 4(c), the Company and its domestic subsidiaries adopted “Accounting Standard for
Measurement of Inventories” effective from the year ended March 31, 2009. As a result, operating expenses increased by ¥445 million in the Japan segment, and operating income decreased by the same amountaccordingly.
(C) Sales to foreign customers
Sales to foreign customers for the years ended March 31, 2010 and 2009 were as follows:Year ended March 31, 2010
North America
Sales to foreign customers
Net sales
Ratio of Sales to foreign Customers (%)¥26,051¥2,203¥35,763———

74,694

10.1

34.8

3.0

47.9

North America

Net sales
Ratio of Sales to foreign Customers (%)

Total¥7,509Year ended March 31, 2009
Sales to foreign customers

Millions of yen
Asia
Other

Millions of yen
Asia
Other

Total

¥12,972¥36,239¥3,199¥52,410———

121,890

10.6

29.8

2.6

43.0

29

Year ended March 31, 2010
North America
Sales to foreign customers
Net sales
Ratio of Sales to foreign Customers (%)

Thousands of U.S.dollars
Asia
Other

Total

$80,707$279,998$23,678$384,383———

802,816

10.1

34.8

3.0

47.9

23. Subsequent Event
Cash Dividends
The following appropriations of retained earnings, which have not been reflected in the accompanying consolidated financial statements for the year ended March 31, 2010, were approved at the meetingof the Board of Directors held on April 30, 2010:
Cash dividends (¥1.50 = $0.02 per share) ¥228 million ($2,451 thousand)30

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. andconsolidated subsidiaries as of March 31, 2010 and 2009, and the related consolidated statements ofoperations, 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 to express
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, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years thenended in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2010 are presented solely for convenience. Our audit also included the translationof yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 3.

June 28, 201031

Directors & Auditors

Directors President

Yukio Iimura
Executive Vice President
Yoshi Atobe
Senior Managing Director
Fumihisa Yano
Managing Directors
Akinori Ide
Hiroshi Hanai
Directors
Yoshihiro Kishimoto
Takanao Suzuki
Satoshi Hironaka
Masayuki Yagi
Shigetomo Sakamoto
Auditors

Michio Matsumoto
Masahiro Suzuki
Teruyuki Makino
Michiharu Watanabe

32