Annual
Report2008

Contents
1

An Outline of the Toshiba Machine Group
Corporate Information2

Foreword

4

Financial Highlights (consolidated)

5

Overseas Operations for Fiscal 2008

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

27

Report of Independent Auditors

28

Directors & Auditors

Consolidated Statements of Income

An Outline of the Toshiba Machine GroupA highly respected integrated machine building group, internationallyrespected for its total capability in the production of quality plastic processing
machinery, die-casting machines, machine tools, precision machinery, hydraulicequipment, and electronic controls.

Based on their highly innovative technology, expertise, and experience
nurtured over decades as one of the world’s leading machine builders, the Toshiba
Machine Group’s global-type solution business provides customers in such various
industries as the energy, automobile, electronics, optics and nano technology withtotal satisfaction by the careful analysis and recommending of optimum-type
solutions to their requirements.

Corporate Information (as of March 31, 2008)
Company name:TOSHIBA MACHINE CO., LTD.

Headquarters:

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

Established:

1938

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

Shares of Common Stock
Issued and Outstanding:

166,885,530 shares

Number of Shareholders:

11,632

Number of employees:

1,661 (Consolidated: 3,246)1

Foreword
Spurred by a dramatic increase in private-sector plant and equipment investment andunderlying strength in exports due to improvement of corporate earnings, the Japanese domestic
economy in the former half of the current fiscal year continued to moderately expand, however, inthe latter half of the same year remained flat under unstable conditions due to concerns overrecession of the U.S. economy triggered by the U.S. subprime mortgage crisis, soaring prices ofcrude oil and raw materials, and appreciation of the yen.
Overseas, China and other Asian nations maintained a high level of economic growth. The
European economy also maintained its overall business upturn, while the United States saw
slowing economic growth, affected by the subprime mortgage crisis, etc.
The machinery industry continued to enjoy favorable conditions on the whole due to anincrease in plant and equipment investment and exports, in spite of a decline in some categories.
Under such circumstances, the Toshiba Machine Group, based on our corporate CS (Customer
Satisfaction) policy, continued in its concerted efforts to secure orders, develop new products,
and pioneer in new domestic and overseas markets.
Consolidated total orders received, however, totaled ¥155,631 million (US$1,553 million), a
15.9% decrease over the previous term. This is mainly because NuFlare Technology Inc.,
previously a consolidated subsidiary of the semiconductor manufacturing equipment division, is
now listed as a company accounted for by the Equity Method and was excluded from theconsolidated subsidiaries. When total orders received by NuFlare Technology Inc. are deductedfrom the previous year’s consolidated total orders received, the result is ¥157,207 million(US$1,569 million), making current results a minor decrease over the previous term due to a dropin plant and equipment investment in some industries using injection molding machines, despite
the increased sales of machine tools and hydraulic equipment.
Consolidated net sales, affected in the same manner as consolidated total orders received,
totaled ¥148,779 million (US$1,485 million), a 9.5% decrease over the previous term. With theincreased sales of die-casting machines, plastic extrusion machines, machine tools and hydraulicequipment, however, consolidated net sales increased 5.3% as compared with ¥141,323 million(US$1,411 million), excluding net sales of Nuflare Technology Inc. (An exchange rate of
US$1.00=¥100.19 shall be used throughout this report)
In combination with the increased sales of our products, including various molding machines
and machine tools, our business rationalization efforts resulted in a 5.4% increase over theprevious term in consolidated operating income totaling ¥18,971 million (US$189 million),compared with ¥17,993 million (US$180 million) subtracting operating income of NuFlareTechnology Inc. Consolidated pre-tax profit totaled ¥18,178 million (US$181 million) andconsolidated net profits resulted in ¥13,910 million (US$139 million), a 28.5% increase over theprevious term, including special profits from the sale of stocks held in addition to profits fromnormal sales activities, our sixth consecutive year of increased profits. And, consolidated income
margin, consolidated recurring profit margin, and consolidated net profit margin of the current

2term, all showed the highest record ever.
Hence, we are pleased to announce the year-end dividend of the current fiscal year, ¥9(US$0.09) per share (¥6 (US$0.06) for ordinary dividend and ¥3 (US$0.03) for dividend
commemorating the 70th year since foundation of our company), was distributed to ourstockholders for the period ending on March 31, 2008, resulting in a total annual dividend of ¥15(US$0.15) per share.
Since June, 2007, we have cooperated with Sanjo Seiki Co., Ltd. in marketing vertical injection
molding machines. To further strengthen the tie-up, we made capital participation in December,
2007.
In February, 2008, we concluded a partnership contract with KraussMaffei Technologies GmbHin Germany with an eye to developing leading-edge plastic processing machines and strengthening
CS solutions on a worldwide scale.
Additionally, the hydraulic equipment division was separated to establish a new company
named Hyest Corporation on April 1, 2008 in order to quickly address any change in managerial
environment and market trends.
As many uncertainties remain, such as a slackened U.S. economy, skyrocketing crude oil andraw materials prices, and a strong yen and weak dollar, the situation does not allow prematureconclusions.
Under such business conditions, the Toshiba Machine Group started a totally renewed midterm
management plan on April 1, 2008 to continue growth toward the future under the name of TM
GrowVary Plan, which signifies the Toshiba Machine Group will continue growing while globally
diversifying itself according to ever-changing world circumstances.
We are determined to secure orders and improve profitability by providing leading companies,
the driving forces behind growth markets, with “production means reputed for their top-ranking
workmanship” specialized in “ultra-precision to ultra large-sized machines” to energeticallypromote global deployment. We will also promote our strategies for sales, production, technology
and workforce, 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 andeducating our workforce to forge the future of our company in observance of all rules andregulations, and fulfillment of all social responsibilities.

Reiji Nakajima
President
July, 2008

3

FINANCIAL HIGHLIGHTS (consolidated)
Net sales

2008

2007

2006

2005

2004

¥148,779¥164,386¥144,356¥123,573¥110,658¥109,801¥98,394¥85,598¥77,627¥34,078¥29,411¥25,742¥25,430¥20,507¥16,551¥12,233¥7,601¥19,750¥16,715¥10,178¥5,104¥8,437¥5,995¥2,940¥817¥10,829¥10,482¥7,093¥4,153¥65.80¥63.16¥42.48¥24.71¥12.00¥12.00

¥7.00

¥4.00

¥188,046¥172,477¥145,057¥148,309¥71,029¥60,347¥47,624¥42,230¥4,193¥3,096¥2,004¥1,774¥2,086¥1,891¥1,825¥1,800¥3,557¥2,808¥2,512¥3,194

3,435

3,336

3,310

3,068

$1,484,969
Cost of sales¥101,628$1,014,353

Selling, general and¥28,180

administrative expenses$281,266

Operating income¥18,971$189,350

Income before income¥20,520

taxes and minority interests $204,811
Income taxes¥6,610$65,975

Net income¥13,910$138,836

Per common share:
Net income¥86.79$0.87

Cash dividends¥15.00$0.15

Total assets¥157,998$1,576,984

Net assets¥70,004$698,713

Capital expenditure¥3,098(property, plant and equipment)$30,922

Depreciation¥2,170$21,659

R & D Cost

¥1,742$17,387

Number of employees

3,246

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

4

Overseas Operations for Fiscal 2008
During the fiscal year 2008, China andother Asian nations continued their economic
high growth. The European economy also
experienced favorable business conditions,while the United States saw slowed economic
growth, adversely affected by the subprime
mortgage crisis and other factors.
Under such economic conditions, theNet Sales

Millions of yen
Note 1 : From the fiscal year ending on March
31,2005 [Semicorductor manufacturing
equipment] is listed separately from [Other
products]
144,356
Note 2 : From the fiscal year ending
18,221March 31, 2008, the consolidated
subsidiaries of [Semiconductor
Manufacturing Equipment]
19,084
123,573
are excluded from our
16,619consolidated companies.
110,658

Toshiba Machine group made an all-out effort

31,134

to secure orders, develop new products and16,286

164,385
21,71025,247

Total

Other
roducts
23,156 P
Machine37,470 Tools

28,332

24,90988,152

18,658(customer satisfaction) policy. As a result,

MoldingyMachiner

85,98978,728

total consolidated overseas sales for this term

65,756amounted to ¥67,155 million (US$670million),

60,865

contributing to approximately 45.1% of total
consolidated sales.

2004

In terms of machine types, injection
machine tools are our leading export

148,779

31,438open up new markets based on our CS

molding machines, die-casting machines andductorSemicon uring
ct
Manufa ten
Equipm

2005

2006

2007

2008

Total Sales & Overseas Sales
Millions of yen

164,385
148,779

products, with the Asian region, principallyes
Total Sal

144,356

China, India, Vietnam and Indonesia, being
our most important markets.

123,573

In the future, the Toshiba Machine group110,658

plans to continue in the further enhancementof our overseas bases to strongly promote
global deployment, a slogan of our new mid-

Overseasterm management plan named “TM GrowVary
Plan”, along with providing machines of70,602increasingly higher standards of quality with

57,172more efficient service networks, as well as anintegrated total Solution Business based on

2004

our value chain of products.

74,360Sales

67,15559,580

2005

2006

2007

2008

Export Percentages by Major Products
Other
Products
Molding
Machinery

11%
Machine
Tools

23%
66%

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 MACHINERY CO,. LTD.
Canada Branch
6 Shields Court, Suite 101, Markham,
Ontario, L3R 4S1, CANADA
Tel : [1]-905-479-9111
Fax : [1]-905-479-6098
URL http://www.toshibamachine.on.ca/

60 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
43A-Ngo Quyen Street, Hoan Kiem
District, Hanoi, VIETNAM
Tel : [84]-(0)4-936-7278~9
Fax : [84]-(0)4-936-7365

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)8-810-8658
Fax : [84]-(0)8-810-8657

TOSHIBA MACHINE (THAILAND) CO., LTD.
TMT SERVICE & ENGINEERING CO., LTD.
127/28 Panjathanee Tower, 23rd Floor,
Nonthree Road,
Khwaeng Chong Nonthree,
Khet Yannawa, Bangkok, 10120,
THAILAND
Tel : [66]-(0)2-681-0158
Fax : [66]-(0)2-681-0162

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

6

■ East Asia ■SHANGHAI TOSHIBA MACHINE CO., LTD.
Head Office4788, Jin Du Road,
Xinzhuang Industry Zone,
Shanghai, 201108,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)21-5442-0606
Fax : [86]-(0)21-5866-2450

Beijing Office
Beijing Fortune Building, Room No. 2014,
5 Dong Sanhuan Bei-Lu, Chaoyang
District, Beijing, 100004,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)10-6590-8977
Fax : [86]-(0)10-6590-8979

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

TOSHIBA MACHINE (INDIA) PVT. LTD.

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

No.1006, Antriksh Bhawan, 22, Kasturba
Gandhi Marg, New Delhi, 110001,
INDIA
Tel : [91]-(0)11-6632-6159
Fax : [91]-(0)11-6632-6161

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

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

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

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

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

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, 2008 and 2007
Thousands of
U.S. dollars

Millions of yen
ASSETS
Current assets:
Cash and time deposits (Note 15)
Marketable securities (Note 6)
Notes and accounts receivable, trade
Allowance for doubtful receivables
Net receivables
Inventories:
Finished products
Work in process
Raw materials and supplies
Total inventories
Deferred tax assets (Note 14)
Other current assets
Total current assets
Property, plant and equipment, net(Notes 7 and 13)
Intangible assets
Investments and other assets:
Investments in:
Unconsolidated subsidiaries andaffiliates (Note 5)
Other securities (Note 6)Long-term loans
Deferred tax assets (Note 14)
Other investments
Total investments and other assets
Total assets

2008

2007

2008

¥17,083
17,50053,918(378)
53,540¥36,028—
65,328(449)
64,879$170,506
174,668
538,157(3,773)534,384

5,069
23,892
1,177
30,1383,090
1,530
122,881

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

50,594
238,466
11,748300,808
30,841
15,2731,226,480

22,44425,393224,014

620

824

6,188

3,283
5,875
205
2,124
566
12,053¥157,998

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

32,76858,6392,046
21,2005,649
120,302$1,576,984

See accompanying notes to financial statements.

8

Millions of yen
LIABILITIES AND NET ASSETS
2008
Current liabilities:
Short-term bank loans (Notes 8 and 13)¥11,500
Current portion of long-term debt (Note 8)
8,650
Notes and accounts payable, trade37,875
Income taxes payable (Note 14)
5,824
Accrued expenses
6,265
Warranty reserve86
Other current liabilities
6,268
Total current liabilities
76,468Long-term liabilities:
Long-term debt (Note 8)—Long-term accounts payable, other
2,009
Deferred tax liabilities (Note 14)—
Accrued employees’ retirement benefits (Note 9)9,310
Accrued directors’ retirement benefits
207
Total long-term liabilities
11,526
Total liabilities
87,994
Contingent liabilities (Note 10)
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
43,879Treasury stock, at cost (9,836,006 shares in 2008, 2,824,714 shares in 2007)(8,398)
Total shareholders’ equity
67,567
Valuation and translation adjustments:
Unrealized holding gain on securities, net of tax
2,470
Deferred gains or losses on hedge
23
Foreign currency translation adjustments(56)
Total valuation and translation adjustments
2,437
Minority interest in consolidated subsidiaries—
Total net assets
70,004
Total liabilities and net assets¥157,998

Thousands of
U.S. dollars

2007

2008

¥21,707
1,100
49,480
5,403
7,296
113
8,302
93,401$114,782
86,336
378,032
58,13062,531
858
62,561
763,230

10,150—
3,198
10,268—23,616
117,017—
20,052—
92,923
2,066
115,041878,271

12,485
19,601
31,895(2,072)
61,909124,613
195,638
437,958(83,820)674,389

6,010
14
(0)
6,024
3,096
71,029¥188,046

24,653230(559)
24,324—
698,713$1,576,984

See accompanying notes to financial statements.

9

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

Years ended March 31, 2008 and 2007
Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

¥148,779¥164,386$1,484,969

101,628

109,801

1,014,353

47,151

54,585

470,616

28,18034,078281,266

18,971

20,507

189,350

Interest and dividend

347

228

3,463

Rent income

166

—

1,657

Equity in earnings of affiliates

41

—

409

Foreign exchange gain

—

357

—

Gain on sales of property, plant and equipment

12

—

120

Gain on sales of investments in consolidated subsidiaries and affiliates

2,850

517

28,446

Gain on sales of investments in securities

3,130

22

31,241Gain on sales of golf membership

—

20

—

Gain on change in interest in consolidated subsidiary

511

—

5,100

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

322

559

3,214

7,379

1,703

73,650Interest

334

514

3,334

Loss on sales of notes receivable

134

123

1,337

Foreign exchange loss

215

—

2,146

Amortization of transitional obligation for
employees’ retirement benefits (Note 9)

571

818

5,699

Brand fee expense

209

—

2,086

OthersOther expenses and losses:

291

198

2,904

3,708

—

37,010Accrued for directors' retirement benefits for prior periods

163

—

1,627

Loss on impairment of fixed assets

—

33

—

Allotment of transfer construction (Note 17)

—

300

—

Others

205

474

2,046

5,830

2,460

58,18920,52019,750204,811

Current

9,571

8,802

95,528Deferred(2,961)(365)(29,554)

6,610

8,437

65,975

13,91011,313

138,836—484—¥13,910¥10,829$138,836

Loss on disposal of property, plant and equipment
Loss on revision of retirement benefit plan

Income before income taxes and minority interest
Income taxes (Note 14)

Income before minority interest
Minority interest in income of consolidated subsidiaries
Net income

Yen
Net income per share of common stock¥86.79U.S. dollars¥65.80$0.87

See accompanying notes to financial statements.

10

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

Years ended March 31, 2008 and 2007

Millions of yen
Numberof
SharesCommonStock

Additional
paid in
capitalRetainedearnings

Treasurystock

Balance at March 31, 2006 166,885,530 ¥12,485 ¥19,538 ¥23,423¥(693)

Deferred
Minority
Unrealized
gains or Translation Interest in
gain onlosses adjustments consolidated
securities,net
on hedge
subsidiaries¥5,753—¥(159)¥2,362

257

14

159

734

6,010

14

(0)

3,096

(3,540)9(56)(3,096)¥2,470

¥23

¥(56)

—

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

Disposal of treasury stock95(2,306)

Cash dividends
Bonuses to directors andstatutory auditors(51)

Net changes in items other thanshareholders’ equity
Balance at March 31, 2007 166,885,530 12,485

19,601

31,895 (2,072)
13,910Net income(6,326)

Purchase of treasury stock(1,926)

Cash dividends
Net changes in items other thanshareholders’ equity

Balance at March 31, 2008 166,885,530 ¥12,485 ¥19,601 ¥43,879 ¥(8,398)

Thousands of U.S. dollars
Treasurystock

Unrealized
gain onsecurities,net

Deferred
gains orlosseson hedge$124,613 $195,638 $318,345 $(20,681)$59,986$140(35,333)$24,653

CommonStock
Balance at March 31, 2007

Additional
paid in
capitalRetainedearnings$ (0)$30,90190(559)(30,901)$230$ (559)—138,836

Net income(63,139)

Purchase of treasury stock(19,223)

Cash dividends
Net changes in items other thanshareholders’ equity
Balance at March 31, 2008

Minority
Translation Interest in
adjustments consolidated
subsidiaries$124,613 $195,638 $437,958 $(83,820)

See accompanying notes to financial statements

11

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

Years ended March 31, 2008 and 2007

Thousands of
U.S. dollars

Millions of yen
2008
Operating activities:
Income before income taxes and minority interest¥20,520
Adjustments to reconcile income before income taxes andminority interest to net cash provided by operating activities:
Depreciation
2,171
Allowance for doubtful receivables
306
Warranty reserve
8
Employees’ retirement benefit(264)
Gain on sales of investment securities(3,130)Gain on sales of investments in consolidated subsidiaries and affiliates (2,850)
Interest and dividend income(347)
Interest expense
334
Loss (gain) on sales and disposal of property, plant and equipment279
Interest expense(41)
Changes in operating assets and liabilities:
Notes and accounts receivable, trade
1,249
Inventories(1,403)
Notes and accounts payable, trade(2,162)
Advances received(1,472)
Accrued expenses(100)Long-term accounts payable, other
2,009
Others826
Sub total
15,933
Interest and dividend income received
347
Interest paid
(333)
Income taxes paid
(8,369)Others(133)
Net cash provided by operating activities
7,445
Investing activities:
Acquisition of investment securities(100)
Proceeds from sales of investment securities
3,397
Acquisitions of investment in unconsolidated subsidiaries and affiliates(768)
Proceeds from sales of investments in consolidated subsidiaries
2,750
and affiliates
Payment for sale of investment in subsidiaries resulting
in change in scope of consolidation(490)
Purchases of property, plant and equipment(2,992)
Proceeds from sales of property, plant and equipment
44
Payments of long-term loan receivables(4)
Repayments of long-term loan receivables
42
Others(155)
Net cash provided by (used in) investing activities
1,724
Financing activities:
Increase (decrease) in short-term bank loans(1,207)
Repayments of long-term debt
(1,100)Purchases of treasury stock(6,326)
Cash dividends paid
(1,926)
Others—Net cash used in financing activities(10,559)
Effect of exchange rate changes on cash and cash equivalents(55)
Net decrease in cash and cash equivalents(1,445)
Cash and cash equivalents at the beginning of year
36,028Cash and cash equivalents at end of year (Note 15)¥34,583

12

2007

2008

¥19,750$204,811

2,086
17
25
1,152
(22)
(517)
(228)
514
193
—

21,6693,054
80(2,635)(31,241)(28,446)(3,463)
3,334
2,785
(409)

(9,185)(4,740)
8,488
1,299
1,072
—
(115)
19,789228(529)(8,743)(124)
10,621

12,466(14,003)(21,579)(14,692)(998)
20,0528,243
159,028
3,463(3,324)(83,531)(1,327)74,309

(97)
47
—

(998)
33,906(7,665)795

27,448—(5,173)
47
(23)
62
(735)
(5,077)(4,891)(29,863)
439
(40)
419
(1,548)17,207(3,602)(1,628)(1,474)(2,306)(74)(9,084)158(3,382)
39,410¥36,028(12,048)(10,980)(63,139)(19,223)—(105,390)(549)(14,423)
359,597$345,174

See accompanying notes to financial statements.

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 ofincome, changes in net assets and cash flows
incorporate certain reclassifications andrearrangements in order to present these statements in forms which are more familiar to readersof these statements outside of Japan. In addition,
the notes to the consolidated financial statements
include information which is not required 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, but
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 percentowned companies) in which the ability to exercise
significant influence exist, except immaterial
investments, are accounted for 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 income 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 average rates for the respective periods. The components of shareholders’ equity are translated attheir historical exchange rates.
(c) Securities
Securities owned by the Companies have beenclassified into two categories, held-to-maturity debt
securities and 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
sold is determined by the moving average method.
(d) Inventories
Inventories are stated at cost, determined by
the specific identification method for finishedproducts and work in process, and by the moving
average method for raw materials and supplies.
(e) Allowance for doubtful receivables
The allowance for doubtful receivables is stated at the amount determined based on the default
ratio sustained over a specific period in the pastand the estimated uncollectible amount determined based on the analysis of certain individual
accounts, including probable bad debts and claims
in bankruptcy.

13

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.

(i) Amortization of intangible assets
Computer software used internally by theCompany and consolidated subsidiaries is amortized by the straight-line method over the relevant
economic useful lives (5 years). The others including patent rights are computed by the straight-line
method over the estimated useful lives of respective assets.

(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 July 1, 2007, the Company and certain domestic consolidated subsidiaries amended
their employees’ retirement plans from a combination of lump-sum defined benefit plans and taxqualified pension plans to a combination of lumpsum defined benefit plans, defined benefit plansand defined contribution plans. The Company andsome of its consolidated subsidiaries applied theaccounting treatment specified in the guidanceissued by the Accounting Standards Board ofJapan (“ASBJ”).
The effect of this plan amendment decreased
income before income taxes and minority interestby ¥3,708 million ($37,010 thousand) for the year
ended March 31, 2008.

(j) Finance leases
Finance leases, which do not transfer ownership of the leased assets to the lessees, areaccounted for in the same manner as operatingleases.

(n) Directors’ retirement benefits
The Company and its domestic consolidated
subsidiaries accrued an estimated amount calculated in accordance with its internal rule for retirement benefits for directors.

(k) Derivative financial instruments
All derivatives are stated at fair value. Gains orlosses arising from changes in fair value arecharged or credited to income for the period inwhich they arise, except for derivatives that aredesignated as hedging instruments. Gains or losses
arising from changes in fair value of the derivatives
designated as hedging instruments, net of theapplicable income taxes, are reported as a component of net assets.

(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 each year.
Diluted net income per share is not presented
since the Company has never issued any securities
with a dilutive effect, such as bonds with warrants
and convertible bonds. Cash dividends per sharerepresent the actual amount declared as applicable to the respective years.

(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 differ-(p) Statements of cash flows
In preparing the statements of cash flows, cashon hand, readily available deposits and short-term
highly liquid investments with maturities of notexceeding three months at the time of purchaseare considered to be cash and cash equivalents.

(g) Employees bonuses
The bonuses to the employees are paid twice ayear and accrued based on the estimated amounts
to be paid in the subsequent period.
(h) Depreciation of property, plant and equipment
Depreciation of buildings is principally computed by the straight-line method and otherdepreciation of property, plant and equipment iscomputed by the declining balance method overthe estimated useful lives of respective assets,principally ranging from three to sixty years forbuildings and from three to twenty-two years formachinery, equipment and vehicle.

14

ences between tax and financial reporting purposes are reflected as deferred income taxes in the
consolidated financial statements using the asset
and liability method.

(q) Reclassifications
Certain accounts in the consolidated financial

statements for the year ended March 31, 2007
have been reclassified to conform to the 2008 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 ¥100.19=U.S.$1,the approximate exchange rate prevailing in the Japanese foreign exchange market on March 31, 2008. Thistranslation should not be construed as a representation that the yen amounts actually represent,
have been, or could be converted into U.S. dollars.

4. Accounting Changes(a) Changes in method of depreciation of property,
plant and equipment
Effective from the year ended March 31, 2008,
upon the amendment to the Corporation Tax Law
of Japan, the Company and its domestic consolidated subsidiaries changed their method of depreciation to the depreciation method permitted
under the Corporation Tax Law of Japan after
amendment for property, plant and equipment
acquired on or after April 1, 2007.
This change in the method of depreciation
decreased operating income and income before
income taxes and minority interest for the year
ended March 31, 2008 by ¥63 million ($629 thousand).
The effect of this change on segment information is explained in Note 22.
(Additional Information)
Upon the revision of the Corporation Tax Law
of Japan, the Company and its domestic consolidated subsidiaries depreciate the residual value ofthe property, plant and equipment acquired on or
before march 31, 2007 over 5 years by the straightline method as permitted under the revision of
Corporation Tax Law of Japan. The residual value
has represented 5% of the acquisition cost of theasset under the previous Corporation Tax Law ofJapan.
This change in depreciation for the residual
value decreased operating income and income
before income taxes and minority interest for theyear ended March 31, 2008 by ¥284 million($2,834 thousand).
The effect of this change on segment information is explained in Note 22.
(b) Presentation of financial instruments in the balance sheet
Effective from the year ended March 31, 2008,
the Company and its domestic consolidated subsidiaries adopted the amended “business indicator

for the financial instruments accounts”.
The Company and its domestic consolidated
subsidiaries reclassified negotiable certificates ofdeposit from “Cash and time deposits” to“Marketable securities”.
The balances of negotiable certificates ofdeposit classified in “Marketable securities” at
March 31, 2008 and classified in “Cash and time
deposits” at March 31, 2007 were ¥17,500 million($174,668 thousand) and ¥15,500 million, respectively.
(c) Amended auditing treatment for directors’
retirement benefits
Effective from the year ended March 31, 2008,
the Company and its domestic consolidated subsidiaries adopted the amended “Auditing
Treatment Relating to Reserve Defined under theSpecial Tax Measurement Law, Reserve Defined
under the Special Law and Reserve for Director
and Corporate Auditor Retirement Benefits”. Until
March 31, 2007, director and corporate auditor
retirement benefits were expensed when paid.
From the year ended March 31, 2008, however,those are accrued at the amount that would be
required to be paid in accordance with the internal
rule when all directors and corporate auditors
retired at year end.
The effect of the adoption of this new standard
on operating income and income before income
taxes and minority interest for the year ended
March 31, 2008 were ¥38 million ($379 thousand)and ¥201 million ($2,006 thousand), respectively.
The effect of the adoption of this new standard
on segment information is immaterial for the year
ended March 31, 2008.
(d) Accounting standard for directors’ bonuses
Effective from the year ended March 31, 2007,
the Company and its domestic consolidated subsidiaries adopted “Accounting Standard for
Directors Bonuses” provided for accrued bonuses
to directors and corporate auditors for the fiscal
year to which such bonuses are attributable.
The adoption of this new accounting standard
decreased operating income and income before
income taxes and minority interest for the year
ended March 31, 2007 was ¥65 million.
The effect of this change on segment information is explained in Note 22.

5. Changes in Consolidated Subsidiaries
The Company sold the stocks of NuFlareTechnology, Inc. (“NuFlare”), a consolidated subsidiary, when NuFlare went public on the Jasdaq
securities exchange. As a result, NuFlare, effective
on April 1, 2007, became an affiliated company,

15

accounted for by the equity method.
Financial data of NuFlare at March 31, 2007, just before that NuFlare became an affiliated company
from a consolidated subsidiary, were as follows:
Millions of yen¥26,962

Current assets

3,287

Property, plant and equipment
Intangible assets

161

Investment and other assets

561

Current liabilities

21,635Long-term liabilities

2,194

Proceeds from sales of the stocks of NuFlare and payment for sales of the stocks were as follows:
Millions of yen
Proceeds from sales of the stocks¥2,250Cash and cash equivalents of NuFlare March 31, 2007

(2,740)

Payment for sales of the stocks(¥490)

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

Equity securities

2008
Acquisition Carrying
cost
value
¥1,649¥5,682¥1,649¥5,682

2007
Unrealized Acquisition Carrying
gains
cost
value
¥4,033¥1,816¥11,723

Unrealized
gains¥9,907¥4,033¥9,907¥1,816¥11,723

Thousands of U.S. dollars
2008
Acquisition Carrying Unrealized
cost
value
gains
Equity securities$16,459$56,713$40,254$16,459$56,713$40,254

Non-marketable securities classified as other securities primary consist of negotiable certificate ofdeposit of ¥17,500 million ($174,668 thousand) and non-marketable equity securities of ¥193 million($1,926 thousand) as of March 31, 2008 and non-marketable equity securities of ¥193 million as ofMarch 31, 2007.

16

7. Property, Plant and Equipment
Property, plant and equipment at March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

Land

¥6,060¥6,062$60,485

Buildings and structures

31,361

32,171

313,015

Machinery and equipment

28,96831,899289,131

534

565

5,330

7,143

7,701

71,294

605

1,286

6,039

74,671

79,684745,294(52,227)(54,291)(521,280)¥22,444¥25,393$224,014

VehiclesTools, furniture and fixtures
Construction in progress

Less accumulated depreciation

Depreciation expense for the years ended March 31, 2008 and 2007 were ¥2,170 million ($21,659
thousand) and ¥2,086 million, respectively.

8. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the short-term bank loans outstanding on March 31, 2008
and 2007 ranged principally from 1.28% to 6.38% and from 1.08% to 6.59%, respectively. Long-term
debt on March 31, 2008 and 2007 consisted of the following:
Millions of yen

Loans, principally from Japanese banks andinsurance companies maturing 2009 – 2012,
interest 1.90 % – 2.11 %Less current portion

Thousands of
U.S. dollars

2008

2007

2008

¥8,650¥11,250$86,336

8,650

11,25086,336

8,650

1,100

86,336—¥10,150—

The aggregate annual maturities of long-term debt at March 31, 2008 were as follows:Year ending March 31
2009Millions of yen

Thousands of
U.S. dollars¥8,650$86,336¥8,650$86,33617

9. 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, 2008 and 2007 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

¥14,688¥18,984$146,601

Fair value of plan assets(1,167)(816)(11,647)

Unfounded status

13,521

18,168

134,954

Unrecognized transitional obligation(3,345)(6,375)(33,387)(866)(1,525)(8,644)¥9,310¥10,268$92,923

Projected benefit obligation

Unrecognized actuarial loss
Accrued retirement benefits obligation

The components of net periodic benefit costs for the years ended March 31, 2008 and 2007 were as follows:
Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

Service cost

¥850

¥1,110$8,484

Interest cost

270

316

2,695

Expected return on plan assets

(18)

(18)

(180)

Amortization of transitional obligation

571

818

5,699

Recognized actuarial loss

202

285

2,016

Others

118

—

1,178

¥1,993¥2,511$19,892

Certain consolidated subsidiaries have adopted the conventional method in calculating their projected benefit obligation.
Assumptions used in the accounting for the projected benefit obligation were as follows:
2008

2007

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

2.5%

2.5%

Amortization period of transitional obligation

15 years

15 years

Amortization period of actuarial loss/gain

10 years

10 years

10. Contingent Liabilities
On March 31, 2008, contingent liabilities for notes discounted in the ordinary course of business andfor loans guaranteed by the Company, principally on behalf of non-consolidated subsidiaries and affiliated companies, amounted to ¥200 million ($1,996 thousand) and ¥949 million ($9,472 thousand),
respectively.

18

11. Leases
Finance leases of the Companies other than those where ownership of the leased assets is transferred to the lessee, are accounted for as operating leases. The following pro forma amounts represent
the acquisition costs, accumulated depreciation and net book value of the leased assets at March 31,
2008 and 2007, which would have been reflected in the consolidated balance sheets if these arrangements have been accounted for as finance leases:
Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

Machinery, equipment and vehicles¥1,174¥2,781$11,718

Tools, furniture and fixtures

1,437

1,551

14,342Less-Accumulated depreciation(1,607)(1,835)(16,040)

Net book value¥1,004¥2,497$10,021

Acquisition Costs

Future lease payments (including the interest portion thereon) subsequent to March 31, 2008 forfinance leases accounted for as operating leases were as follows:
Millions of yen

Thousands of
U.S. dollars

2008

2008

Due within one year¥443

$4,422

Due after one year

561

5,599

¥1,004$10,021

Periodic lease charges, as a lessee, charged to income for the years ended March 31, 2008 and 2007
were ¥ 577 million ($5,759 thousand) and ¥ 906 million, respectively. The pro forma amounts of depreciation for the years ended March 31, 2008 and 2007 would be calculated at ¥577 million ($5,759 thousand) and ¥906 million by using the straight-line method over the lease term with no salvage value.

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 don’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 inspected validity of the operation by the Corporate Auditing Office.

13. Pledged Assets
The following assets were pledged as collateral at March 31, 2008 to secure short-term bank loans
amounting to ¥2 million ($20 thousand). (See Note 8):
Millions of yen

Thousands of
U.S. dollars

Land

¥581

$5,799Machinery and equipment, net

388

3,873

2,650

26,450¥3,619$36,121

Buildings, net

19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, 2008 and 2007 were approximately 39.8%.
The reconciliation between the statutory rate and effective tax rate of income taxes for the years
ended March 31, 2008 and 2007 were as follows:
2008

2007

39.8 %

39.8 %

Par-capita portion of Inhabitant Tax

0.2

0.2

Non-taxable revenue

0.8

0.5

Non-deductible expenses

0.5

0.3

Unrealized intercompany profit on fixed assets

(0.0)

(0.0)

Change in valuation allowance

(8.0)

2.9

Difference in tax rates of consolidated subsidiaries

(1.4)

(1.3)

Other

0.3

0.3

Effective tax rate

32.2 %

42.7 %

Statutory tax rate

The significant components of deferred tax assets and liabilities at March 31,2008 and 2007 were as follows:
Thousands ofMillions of yen
U.S. dollars
2008

2007

2008

¥1,362¥1,509$13,594

Allowance for doubtful receivables

54

106

539

Devaluation of inventories

106

182

1,058

Devaluation of securities

199

199

1,986

Accrued employees’ retirement benefits

3,673

3,578

36,660

Amount not shifted to defined contribution pension plan

1,142

—

11,398

Unrealized intercompany profit on inventories

613

389

6,118

Enterprise tax payable

497

—

4,961

Other

1,218

1,294

12,158

Total deferred tax assets¥8,864¥7,257$88,472

Valuation allowance(1,876)(2,917)(18,725)

Net deferred tax assets¥6,988¥4,340$69,747

(196)

(207)

(1,956)(1,563)(3,930)(15,600)

(15)

(10)

(150)

Deferred tax liabilities(¥1,774)(¥4,147)($17,706)

Net deferred tax assets (liabilities)¥5,214¥193$52,041

Deferred tax assets:
Accrued employees’ bonuses

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

2015. Cash and Cash Equivalents.
Reconciliation between cash and time deposits in the consolidated balance sheets and cash and cash
equivalents in the statements of cash flows at March 31, 2008 and 2007 were presented as follows:
Thousands ofMillions of yen
U.S. dollars
2008

2007

2008

Cash and time deposits¥17,083¥36,028$170,506

Marketable securities

17,500—174,668

Cash and cash equivalents¥34,583¥36,028$345,174

16. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses at March 31, 2008 and 2007
were as follows:
Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

Sales commission¥2,352¥2,511$23,475

Delivering expense

4,030

3,794

40,224

Reserve for warranty

8

25

80

11,145

13,138111,239Retirement allowance

691

706

6,897

Depreciation

632

679

6,308

Rent expense

918

1,117

9,163

Traveling expense

1,438

1,474

14,353

Research and development expense

1,251

2,949

12,486

Outside order expense

1,030

1,393

10,280

Others

4,685

6,292

46,761

Personal expense

17. Other Expenses and Losses
Allotment of transfer construction
It is an unexpected costs on malfunction of the machines delivered.

18. Research and Development Costs
Research and development costs charged to income were ¥1,743 million ($17,397 thousand) and¥3,557 million for the years ended March 31, 2008 and 2007, respectively.

2119. Shareholders’ Equity.
The Corporation Law of Japan (the “Law”), which superseded most of the provisions of theCommercial Code of Japan, 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 capitalreserve) and retained earning (other than the legal reserve) be transferred to the capital reserve andlegal reserve, respectively, until the sum of the capital reserve and legal reserve equals 25% of the common stock account. Such distributions can be made at any time by resolution of the shareholders, or by
the Board of Directors if certain conditions are met, but neither the capital reserve nor the legal reserveis available for distributions.

20. Related Party Transactions
During the year ended March 31, 2008, the Company and its consolidated subsidiaries had operationaltransactions with Toshiba Corporation, a 21.4% shareholder of the Company and NuFlare Technology, Inc.,a 25.6% affiliate of the Company.
A summary of the significant transactions with Toshiba Corporation for the year ended, March 31, 2008
and 2007 were as follows:
Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

¥2,750—$27,448

209

—

2,086

¥2,959—$29,534

For the year:
Sales of investment in affiliates
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 year ended, March 31,
2008 and 2007 were as follows:
Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

¥113

—

$1,128¥113—$1,128For 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, 2008 and 2007 were as follows:
Yen

U.S. dollars

2008

2007

2008

Net income per share¥86.79¥65.80$0.87

Net assets per share

445.74414.07

4.45

The information regarding diluted net income per share is omitted because of no diluted effect.

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

2008

2007

160,285

164,561
Thousands of
U.S. dollars

Millions of yen

Net income

2008

2007

2008

¥13,910¥10,829$138,836———¥13,910¥10,829$138,836

Net income not applicable to shareholders of common stock
Net income applicable to shareholders of common stock

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

Number of shares at year-end

2008

2007

157,050

164,061
Thousands of
U.S. dollars

Millions of yen

Net assets

2008

2007

2008

¥70,004¥71,029$698,712

—

3,096

—

¥70,004¥67,933$698,712

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

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, 2008
Molding
Machinery

Machine
Tools

Other
Products

Eliminations
and/or corporate

Consolidated

Sales¥88,205¥37,765¥27,646¥(4,837)¥148,779

Operating expenses

77,77831,502

25,400(4,872)

129,808

Operating income

10,427

6,263

2,246

35

18,971

Identifiable assets

74,35930,90540,973

11,761

157,998

Depreciation

1,278

327

565

—

2,170

Capital expenditure

1,605

281

1,212

—

3,098

23

Millions of yen

Year ended March 31, 2007

Eliminations
Consolidated
and/or corporate

Molding
Machinery

MachineTools

Semiconductor
Other
Equipment
Products

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

Operating expenses

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

143,879

Operating income

10,425

4,434

2,633

2,773

242

20,507

Identifiable assets

76,041

31,93032,48938,137

9,449

188,046

Depreciation

1,076

240

317

453

—

2,086

Capital expenditure

1,034

345

1,715

1,099

—

4,193

Thousands of U.S.dollars

Year ended March 31, 2008
Molding
Machinery

Machine
Tools

Other
Products

Eliminations
and/or corporate

Consolidated

Sales$880,377$376,934$275,936$(48,278)$1,484,969

Operating expenses

776,305

314,423

253,518(48,627)

1,295,619

Operating income

104,072

62,511

22,417349

189,350

Identifiable assets

742,180

308,464

408,953

117,387

1,576,984

Depreciation

12,756

3,264

5,639

—

21,659

Capital expenditure

16,0202,805

12,097—30,922

As described Note 5, NuFlare Technology, Inc., classified in the Semiconductor Equipment segment,
became an affiliated company from a consolidated subsidiary for the year ended March 31, 2008. As aresult, the Semiconductor Equipment segment was abolished and included in the Other Products segment.
As described Note 4(a) and Note 4(a) (Additional Information), the Company and its domestic subsidiaries changed their method of depreciation based on an amendment to the Corporation Tax Law ofJapan for property, plant and equipment effective from the year ended March 31, 2008. As a result, operating expenses increased by ¥53 million ($529 thousand) in the Molding Machinery segment, ¥41 million($409 thousand) in the Machine Tools segment, and ¥253 million ($2,525 thousand) in the Other Products
segment. Operating income decreased by the same amounts accordingly.
As described Note 4(d), the Company and its domestic subsidiaries adopted “Accounting Standard for
Directors Bonuses” effective from the year ended March 31, 2007. As a result, operating expenses
increased by ¥39 in the Molding Machinery segment, ¥8 in the Machine Tools segment, ¥4 in the
Semiconductor Equipment segment, and ¥14 million in the Other Products segment. Operating income
decreased by the same amounts accordingly.
(B) Geographic Segment Information
Geographic Segment Information of the Companies for the years ended March 31, 2008 and 2007 wereas follows:Year ended March 31, 2008
Net sales
Operating expenses
Operating income
Identifiable assets

24

Japan
¥143,384
125,803
17,581
131,267

North America¥10,406
9,904
502
7,125

Millions of yen
Asia
Total
¥14,795¥168,585
13,587
149,294
1,208
19,291
9,304
147,696

Eliminations Consolidated¥(19,806)¥148,779(19,486)
129,808(320)
18,971
10,302
157,998

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

Japan¥158,375
139,236
19,139161,935

North America¥9,802
9,420
382
5,313

Japan
$1,431,121
1,255,644
175,477
1,310,181

Thousands of U.S.dollars
North America
Asia
Total
Eliminations Consolidated$103,863$147,669 $1,682,653 $(197,684) $1,484,969
98,852
135,6121,490,108(194,489)
1,295,619
5,010
12,057
192,544(3,195)
189,350
71,11592,864
1,474,160
102,824
1,576,984

Year ended March 31, 2008
Net sales
Operating expenses
Operating income
Identifiable assets

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

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

As described Note 4(a) and Note 4(a) (Additional Information), the Company and its domestic subsidiaries changed their method of depreciation based on an amendment to the Corporation Tax Law ofJapan for property, plant and equipment effective from the year ended March 31,2008. As a result, operating expenses increased by ¥347 million ($3,463 thousand) in the Japan segment. Operating income
decreased by the same amounts accordingly.
As described Note 4(d), the Company and its domestic subsidiaries adopted “Accounting standard for
directors’ Bonuses” effective from the year ended March 31, 2007. As a result, operating expenses
increased by ¥65million 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, 2008 and 2007 were as follows:Year ended March 31, 2008
North America
Sales to foreign customers
Net sales
Ratio of Sales to foreign Customers (%)¥43,889¥6,845¥67,156———

148,779

11.0

29.5

4.6

45.1

North America

Net sales
Ratio of Sales to foreign Customers (%)

Ratio of Sales to foreign Customers (%)

Total¥50,170¥5,372¥74,360———

164,386

11.4

30.5

3.3

45.2

North America

Net sales

Millions of yen
Asia
Other

¥18,818

Year ended March 31, 2008
Sales to foreign customers

Total¥16,422

Year ended March 31, 2007
Sales to foreign customers

Millions of yen
Asia
Other

Thousands of U.S.dollars
Asia
Other

Total

$163,908$438,058$68,320$670,286———

1,484,969

11.0

29.5

4.6

45.1

25

23. Subsequent Event
Cash Dividends
The following appropriations of retained earnings, which have not been reflected in the accompanying financial statements for the year ended March 31, 2008, were approved at the meeting of the Boardof Directors held on April 30, 2008:
Cash dividends (¥9.00 = $0.09 per share) ¥1,414 million ($14,113 thousand)26

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 (the “Company”) as of March 31, 2007 and 2008, and the related consolidated
statements of operations, changes in net assets, and cash flows for the years then ended, all expressed inyen. 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 auidit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Toshiba Machine Co., Ltd. and consolidated subsidiaries at March 31,
2007 and 2008, 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, 2008 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 26, 200827

Directors & Auditors

Directors President

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

Michio Matsumoto
Masahiro Suzuki
Satoshi Hironaka
Toshitake Takagi

28

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

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