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Financial Highlights
Years ended March 31

Thousands of
U.S.dollars

Millions of yen

Consolidated

2003

2004

2005

2006

2007

2007

\341,667\355,113\376,187\443,402\510,846$4,327,370

Operating income

12,741

15,034

16,195

17,15722,671

192,046

Net income

3,947

7,991

6,348

6,034

10,76391,173

Total assets

247,671

256,311

270,056

323,476358,253

3,034,756---

148,423

158,813

1,345,303

114,863

116,218

119,779

128,066--

Net sales

Total net assets *Total shareholders' equity

Yen

U.S.dollars

Per share data:
Net income Basic\13.57\28.16\22.44\21.40\38.72$0.328

Total shareholders' equity

405.49414.18428.88458.80494.73

4.191
Thousands of
U.S.dollars

Millions of yen

Non-Consolidated
Net sales
Operating income

2003

2004

2005

2006

2007

2007

\241,202\245,288\257,510\253,931\297,996$2,524,320

6,245

6,851

5,691

3,720

4,299

36,417

Net income

2,333

3,528

4,055

6,966

6,266

53,079Common stock

39,971

39,971

39,971

39,971

39,971

338,594

Total assets

181,221

187,526

198,634

197,815

237,9962,016,061---

110,494

113,039

957,552

104,044

103,844

105,248

110,494--

Total net assets *Total shareholders' equity

Yen

U.S.dollars

Per share data:
Net income Basic\7.99\12.41\14.33\24.84\22.54$0.191

Cash dividends

5.00

6.00

8.00

9.00

11.00

0.093

367.35370.14376.91395.91

407.11

3.449

Total shareholders' equity

The dollar amounts in this report represent translations of yen, for convenience only, at the rate of \118.05=US$1.00, the exchange rate
prevailing on March 31, 2007.
* Sections "Total net assets" are newly provided to conform to Japanese accounting regulation revisions. The fiscal 2006 figures havealso been restated to reflect this change. The former figures in 2007 are \137,363 millions (consolidated) and \113,036 millions (nonconsolidated), respectively.

CONTENTS
Financial Highlights.................................................................................................................................1
Consolidated Balance Sheets ...................................................................................................................4
Consolidated Statements of Operations ...................................................................................................6
Consolidated Statements of Changes in Net Assets ................................................................................7
Consolidated Statements of Cash Flows..................................................................................................8
Notes to Consolidated Financial Statements ...........................................................................................9
Supplemental Information of Non-Consolidated Financial Statements ................................................15

1

Business Overview in the Consolidated Fiscal Year 2006
The Japanese economy in the consolidated fiscal year 2006 continued gradual growth, due to increasing capital investments.
As for business conditions outside Japan, in spite of anxieties, the US economy stopped declining, the economy in Europe maintained its
stability, and the Asian economy continued growing with the focus on China.
Under these economic circumstances, the Toshiba TEC Group was committed to achieving its business policies of “Realize sustained
growth with profit” and “Establishment of a well-balanced global enterprise.” Specifically, merchantability was improved by releasing
new POS terminals and extending the MFP lineup, procurement costs were reduced to improve cost competitiveness, and direct sales
channels were expanded to strengthen marketability.
Sales amounted to 510,846 million yen, a 15% increase over the previous consolidated fiscal year, mainly due to the expansion of the POS
system and MFP businesses. Increases in revenue and reductions in costs resulted in an increase in operating income of 32% over theprevious consolidated fiscal year to 22,671 million yen, and an increase in net income of 78% to 10,763 million yen.
In terms of dividends from the surplus, the Toshiba TEC Group aims to continuously increase dividends by targeting a consolidated
dividend payout ratio of approximately 30%, while considering strategic investments for the mid- and long-term growth.
Based on the above business policies, dividends from the surplus in the business fiscal year 2006 were determined as follows:
The interim dividend was 5 yen per share, the year-end dividend was 6 yen per share, and the annual dividend was increased to 11 yen per
share with an increase of 2 yen over the previous business fiscal year.

Issues to be Addressed
The future of the Japanese economy is expected to maintain a gradual growth trajectory, due to increasing capital investments andpersonal consumption.
As for business conditions outside Japan, from the second half of the term in spite of anxieties regarding a slowdown, the US economy
will gradually recover, the economy in Europe will stop declining, while the Asian economy is expected to grow with the focus on China.
Under these economic circumstances, the Toshiba TEC Group is committed to achieving its business policies of “Realize sustained
growth with profit” and “Establishment of a well-balanced global enterprise.” We will make concerted efforts together to reinforce
our management base, by developing and releasing new products, enhancing cost competitiveness, improving sales quality and sales
efficiency, making inroads into peripheral areas and prospective markets, along with increasing resource efficiency.
In the fiscal year 2007, we will embrace every endeavor to implement measures including the following and thus develop our group’sbusiness. Your loyal support and cooperation will be greatly appreciated.

Improving Sales Capabilities of the Retail Information System BusinessWe will concentrate our efforts on further improving our sales capabilities in Japan to expand sales of POS systems, automatic
identification systems* and their related products, while further expanding the scale of our operations via improvements on agency
networking outside Japan.
* Automatic Identification Systems refer to systems, which contain hardware and software to automatically retrieve and identify datafrom barcodes and IC tags.

Reinforcing the Operating Base of the Document Processing and Telecommunication System BusinessWe are committed to expanding our sales and improving our earning power, by increasing the sales of strategic products such as full-color
MFPs and special terminals designed for specific customers, focusing more on emerging markets such as Brazil, Russia, India and China,
while enhancing cost competitiveness by shifting to self-manufacturing main parts.

Transferring the Home Electric Appliance Business
On June 1, 2007, we transferred the home electric appliance business to TOSHIBA HA PRODUCTS Co., Ltd., from a “Selection and
Focus” viewpoint. Thus, we will concentrate our management resource on the Retail Information System business and the Document
Processing & Telecommunication System business, in order to establish a more solid operating base.

2

Products Line Up
Retail Information Systems
z General merchandise systemsz Convenience store/Shopping center systemsz Super market systemsz Hospitality/Hotel systemsz Barcode printersz Handheld terminalsz OA Equipment/JIMCONz Supplies/Printing services
z Environmental equipment

Document Processing & Telecommunication Systems
z Full Color MFPsz B&W MFPsz Analog Copiersz Facsimiles
z Inkjet printheads
z Components (printed circut boards, constant voltage power supplies, molded products etc.)3Consolidated Balance Sheets
March 31, 2007 and 2006

Thousands of
U.S.dollars (Note 1)

Millions of yen

ASSETS

2007

2006

2007

\79,736\67,775$675,442

Current assets
Cash and cash equivalents
Trade notes and accounts receivable

87,847

69,372

744,151

Inventories

50,74647,729429,869

Deferred income taxes (Note 9)

10,868

9,375

92,063

Prepaid expenses and other current assets

10,962

10,39692,858

Allowance for doubtful accounts(3,512)(2,810)(29,750)

Total current assets

236,647

201,837

2,004,633

Fixed assets
Property, plant and equipment:
Land

2,777

5,624

23,524

Buildings and structures

29,27029,239247,946

Machinery and equipment

34,03532,627288,310

Tools, furniture and fixtures

63,69164,819539,526

Construction in progress

1,147

1,853

9,716

(96,308)(94,290)(815,824)

34,61239,872

293,198

Goodwill

39,10035,951

331,216

Other intangible assets

7,578

7,684

64,193

46,67843,635395,409

Less accumulated depreciation

Intangible assets:

Investments and other assets:
Investment securities: (Note 11)
Unconsolidated subsidiaries and affiliates

7,801

6,189

66,082

Other

4,762

5,054

40,339Deferred income taxes (Note 9)

20,406

19,484

172,859

Other investments and other assets

7,469

7,536

63,269Allowance for doubtful accounts

(122)

(131)

(1,033)40,31638,132

341,516

Total fixed assets

121,606

121,639

1,030,123

Total assets\358,253\323,476$3,034,756

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

4

Thousands of
U.S.dollars (Note 1)

Millions of yen

LIABILITIES AND NET ASSETS

2007

2006

2007

Trade notes and accounts payable\72,330\53,431$612,706

Short-term loans (Note 3)

18,46832,081

156,443

618

1,682

5,235

8,534

3,944

72,291

81-

686

Current liabilities

Current portion of long-term debt (Note 3)
Accrued income and other taxes
Accrued bonuses to directors and corporate auditors
Other current liabilities

66,97552,007567,344

167,006

143,145

1,414,705

674

906

5,709

Accrued retirement benefits (Note 4)

27,372

27,308

231,868

Other long-term liabilities

4,388

3,694

37,171

Total long-term liabilities

32,43431,908274,748

Total liabilities

199,440

175,053

1,689,453

39,971

39,971

338,594

Capital surplus

52,98752,986448,852

Retained earnings

42,452

34,540359,610

Total current liabilities
Long-term liabilities
Long-term debt (Note 3)

Contingent liabilities (Note 5)
Shareholders' equity
Common stock
Authorized-1,000,000,000 shares
Issued- 288,145,704 shares

Less treasury stock, at cost:
10,489,478 shares in 2007

(4,062)-(34,409)

9,143,293 shares in 2006-

(3,318)-

Total shareholders' equity

131,348

124,179

1,112,647

1,058

1,218

8,962

3

-

25

Valuation and Translation adjustment
Unrealized holding gains on securities
Net deferred profits on hedges
Foreign currency translation adjustments

4,957

2,669

41,991

6,018

3,887

50,97821,447

20,357

181,678

Total Net assets

158,813

148,423

1,345,303

Total liabilities and Net assets\358,253\323,476$3,034,756

Total valuation and translation adjustments
Minority interest in consolidated subsidiaries

5Consolidated Statements of Operations
Years ended March 31, 2007 and 2006

Thousands of
U.S.dollars (Note 1)

Millions of yen

2007

2006

2007

Net sales\510,846\443,402$4,327,370

Cost of sales (Note 8)292,202248,391

2,475,240

218,644

195,011

1,852,130

195,973

177,854

1,660,084

22,671

17,157

192,046

Interest and dividend income

1,178

974

9,979

Equity in earnings of affiliates

335

49

2,838

Gross profit
Selling, general and administrative expenses (Note 6 and 8)
Operating income
Non-operating income and expenses:

Gain on sales of land and training facility

3,008

-

25,481

Interest expense

(909)

(560)

(7,700)-339-(2,933)(1,291)(24,846)

-

(60)

-

Excess of the fair value of acquired net assets over cost *1
Expenses of extra pension for early retirement
Loss on impairment of fixed assets
Loss on sales of land and recreation facility

(563)

-

(4,769)Other, net (Note 7)(3,708)(2,815)(31,411)

Income before income taxes and minority interest

19,07913,793

161,618

Current

8,554

5,130

72,461

Deferred(1,808)488(15,316)

Income before minority interest

12,333

8,175

104,473

1,570

2,141

13,300\10,763\6,034$91,173

Income taxes:

Minority interest in income of consolidated subsidiaries
Net income

Yen

Per share data

U.S.dollars

2007

2006

2007

Net income-Basic\38.72\21.40$0.328Cash dividends\11.00\9.00$0.093

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
*1 An excess of the fair value of acquired net assets over cost, deemed as "negative goodwill" was recognized as current earnings to theoperations when U.S. subsidiary made business acquisition in accordance with "Statement of Financial Accounting Standards No.141,'Business Combinations'".

6

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2007 and 2006
Millions of yen

Common stock

Balance at March 31, 2005
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Minimum pension liability adjustment
Decrease from inclusion in consolidation of subsidiaries
Decrease from merger of non consolidated subsidiary
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2006

\39,971\39,971

Shareholder's equity
RetaindTreasury stock, Total shareholder'sCapital surplus
equityearnings
at cost\52,9851\52,986\31,575
6,034(2,232)
(63)
(331)
(436)
(7)
\34,540\(3,247)(72)
1\(3,318)\121,284
6,034(2,232)
(63)
(331)
(436)
(7)
(72)
2
\124,179
Millions of yen

Valuation and Translation adjustments
Net unrealized holding Net deferred profits on Foreign currency
Total valuation andgain on securities
hedgestranslation adjustments translation adjustments

Balance at March 31, 2005
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Minimum pension liability adjustment
Decrease from inclusion in consolidation of subsidiaries
Decrease from merger of non consolidated subsidiary
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2006

\288
930
\1,218-\(1,793)
4,462\2,669\(1,505)
5,392\3,887

Minority interests

Total net assets\827
19,530\20,357\120,606
6,034(2,232)
(63)
(331)
(436)
(7)
(72)
2
24,922\148,423

Millions of yen

Shareholder's equity

Balance at March 31, 2006
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2007

Common stock

Capital surplus

Retaindearnings

Treasury stock,at costTotal
shareholder'sequity\39,971\39,971\52,9861\52,987\34,540
10,764(2,784)(58)(10)\42,452\(3,318)(746)
2\(4,062)\124,179
10,764(2,784)
(58)
(746)
3
(10)
\131,348
Millions of yen

Valuation and Translation adjustments
Net unrealized holding Net deferred profits on Foreign currency
Total valuation andgain on securities
hedgestranslation adjustments translation adjustments

Balance at March 31, 2006
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2007

\1,218(160)\1,0583\3\ 2,669
2,288\4,957\3,8872,131\6,018

Minority interests

Total net assets\20,357
1,090\21,447\148,423
10,764(2,784)
(58)
(746)
3
3,211
\158,813

Thousands of U.S. dollars

Shareholder's equity

Balance at March 31, 2006
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2007

Common stock

Capital surplus

Retaindearnings

Treasury stock,at costTotal
shareholder'sequity$338,594$338,594$448,844
8$448,852$292,588
91,182(23,583)(491)(86)$359,610$(28,107)(6,319)17$(34,409)$1,051,919
91,182(23,583)(491)(6,319)25(86)$1,112,647
Thousands of U.S. dollars

Valuation and Translation adjustments
Net unrealized holding Net deferred profits on Foreign currency
Total valuation andgain on securities
hedgestranslation adjustments translation adjustments

Balance at March 31, 2006
Net income for the year
Cash dividends
Bonuses to directors and corporate auditors
Purchases of treasury stock
Retirement of treasury stock
Other, net
Balance at March 31, 2007

$10,318(1,356)$8,96225$25$22,609
19,382$41,991$32,927
18,051$50,978

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Numbers of shares in issue: 288,145,704 shares in 2007

Minority interests

Total net assets$172,444
9,234$181,678$1,257,290
91,182(23,583)(491)(6,319)25
27,199$1,345,303

7

Consolidated Statements of Cash Flows
Years ended March 31, 2007 and 2006

Thousands of
U.S.dollars (Note 1)

Millions of yen

2007

2006

2007

\19,079\13,793$161,618

14,265585
64(1,178)909(335)(3,008)
593
563
(405)
108
2,933

13,004
60
(286)
(626)
(974)
560
(49)
216
(429)
1,290

120,839
4,956
542(9,979)7,700(2,838)(25,481)
5,023
4,769
(3,431)915
24,845(14,857)(2,036)
15,904
12,68545,869
1,194
(895)
(463)
(5,192)723
41,236(1,283)(2,375)(814)
4,130
26,217964(562)(1,291)(8,252)
17,076(125,853)(17,247)
134,723
107,455
388,556
10,114(7,582)(3,922)(43,981)
6,125
349,310

Cash flows from investing activities
Acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Acquisition of intangible assets
Acquisition of investment securities
Proceeds from sales of investment securities
Payments of loan receivable
Proceeds from loan receivable
Other
Net cash used in investing activities(7,960)5,949(6,636)
(854)
563
(45)
65
(440)
(9,358)(11,566)
947(6,283)(1,360)
759
(32)
96
(475)
(17,914)(67,429)
50,394(56,213)(7,234)
4,769
(381)
550
(3,727)(79,271)

Cash flows from financing activities
Proceeds (Repayments) of short-term loans, net
Repayments of long-term debt
Purchase of treasury stock
Payments of dividend
Payments of dividend to minority shareholders of subsidiaries
Other
Net cash used in financing activities(14,947)(1,523)(746)(2,784)(719)
3(20,716)

841
(962)
(73)
(2,229)(450)
4(2,869)(126,616)(12,901)(6,319)(23,583)(6,091)
25(175,485)

799

2,535

6,768

Cash flows from operating activities
Income before income taxes and minority interest
Adjustment to reconcile income before income taxes andminority interest to net cash provided by operating activities:
Depreciation and amortization
Loss on impairment of fixed assets
Allowance for doubtful accounts
Accrual for retirement benefits, less payments
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on sales of land and training facility
Loss on sales or disposal of fixed assets
Loss on sales of land and recreation facility
Gains on sales of investment securities
Write down of investment securities
Expenses of extra pension for early retirement
Changes in assets and liabilities:
Notes and accounts receivable
Inventories
Notes and accounts payable
Other
Sub TotalInterest and dividend income received
Interest expense payments
Payments of extra pension for early retirement
Income taxes payments
Income taxes refund
Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents

11,961(1,172)

101,322

Cash and cash equivalents at beginning of year

67,77564,960574,120

-

3,928
59

-

\79,736\67,775$675,442

Increase in cash and cash equivalents resulting from:
Subsidiaries inclusion in consolidation
Merger of non-consolidated subsidiary
Cash and cash equivalents at end of year

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

8Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated
Financial Statements
The consolidated financial statements of TOSHIBA TECCORPORATION (the ”Company”) have been prepared inaccordance with accounting principles generally accepted inJapan, which are different in certain respects as to the applicationand disclosure requirements of International Financial ReportingStandards, and are compiled from the consolidated financial
statements prepared by the Company as required by the
Securities and Exchange Law of Japan.
Certain reclassifications have been made to present theconsolidated financial statements in a format which is morefamiliar to the readers outside Japan.
Effective the year ended March 31, 2007, the Company has
adopted a new accounting standard for the presentation of
net assets in the balance sheet and the related implementation
guidance. In addition, effective the year ended March 31, 2007,
the Company is required to prepare consolidated statementsof changes in net assets. In this connection, the previously
reported consolidated balance sheet as of March 31, 2006 andconsolidated statement of shareholders’ equity for the year thenended have been restated to conform to the presentation anddisclosure of the consolidated financial statements for the year
ended March 31, 2007.
Solely for the convenience of the readers, the consolidated
financial statements have been presented in U.S. dollars bytranslating Japanese yen amounts at the exchange rate of \118.05= US$1.00 prevailing as of March 31, 2007. The translation
should not be construed as a representation that the Japanese yen
could be converted into U.S. dollar at the above or any other rateof exchange.

2. Summary of Significant Accounting
Policies(A) Basis of Consolidation and Accounting ofInvestments in Affiliated Companies
The consolidated financial statements include the accounts of
the Company and its significant majority-owned subsidiaries(together the “Companies”). For the years ended March 31,
2007 and 2006, the accounts of 68 and 69 subsidiaries areconsolidated, respectively. All significant inter-company
transactions and accounts are eliminated in consolidation.
All assets and liabilities of the subsidiaries are revaluated on
acquisitions, if applicable. The difference between the cost ofinvestments in subsidiaries and the equity in their assets at thedates of acquisition is recognized on goodwill in the consolidatedbalance sheet and principally amortized by the straight-line
method over 5 to 15 years, except for those recorded in U.S.
subsidiaries.
The equity method of accounting is adopted for investments
in major unconsolidated subsidiaries and affiliated companies.
For the year ended March 31, 2007, the major unconsolidated
subsidiary for which the equity method of accounting has been
adopted was as follows:
TOSHIBA TEC NETHERLANDS RETAIL INFORMATION SYSTEMS B.V.
The investments in the remaining unconsolidated subsidiaries
and affiliated companies are stated at cost.
Certain subsidiaries have year end which differs from thatof the Company. As a result, adjustments have been made forany significant transactions which took place during the period
between the year end of the subsidiaries and the year end of theCompany.

(B) Foreign Currency Translation
Revenue and expense accounts of foreign subsidiaries aretranslated into yen using the annual average rate during theyear. The balance sheet accounts, except for the components
of shareholders’ equity, are translated at the rate in effect at thebalance sheet date. The components of shareholders’ equity
are translated at their historical rates. Translation adjustments
are presented as a component of “Valuation and Translation
adjustments” under Net Assets in the consolidated balance
sheets.
Foreign currency transactions are measured at the applicablerates of exchange prevailing at the transaction dates, unlesshedged by foreign exchange contracts. Assets and liabilities
denominated in foreign currencies at the balance sheet date arere-measured at the applicable rates of exchange prevailing at thatdate, unless hedged by foreign exchange contracts. Exchange
differences are charged or credited to operations.

(C) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments,
generally with original maturates of three months or less.

(D) Investment Securities
Marketable securities classified as “Other securities” arereported at fair value with unrealized holding gains or losses, netof taxes, presented as a component of “Valuation and Translation
adjustments” under Net Assets in the consolidated balance
sheets. Cost of securities sold is determined by the moving
average method.
Non-marketable securities classified as “Other securities” arecarried at cost, which is determined by the moving averagemethod.

(E) Inventories
Finished goods, merchandises and semi-finished components
are principally stated at the lower of cost, determined by the
first-in, first-out method, or market, or at the cost determinedby the specific cost method. Work-in-process is principallystated at the lower of cost, determined by the moving averagemethod, or market, or at the cost determined by the specific cost
method. Raw materials are principally stated at the lower of cost,
determined by the moving average method, or market.

(F) Property, Plant and Equipment and Depreciation
Property, plant and equipment are carried at cost. Material
improvements are capitalized, but repair and maintenanceincluding minor improvements are charged to income.
Depreciation of property, plant and equipment is generally
computed by the declining-balance method for the Company
and its domestic subsidiaries, and by the straight-line method
for the overseas subsidiaries, at the rates based on the estimateduseful lives of the respective assets. The useful lives of principal
property, plant and equipment are summarized as follows:
Buildings and structures
15 to 38 years
Machinery and equipment 5 to 11 years
Tools, furniture and fixtures 2 to 6 years

9(G) Intangible Assets and Amortization(M) Derivative Financial Instruments

Intangible assets are amortized by the straight-line method overtheir estimated useful lives.
Goodwill recognized through purchase and acquisition ofsubsidiary is basically amortized by the straight-line method over
5 to 15 years period. Concerning subsidiaries in U.S., goodwill
is not amortized, but instead tested for impairment annually andwhen events or circumstances indicate it might be impaired,in accordance with the “Statement of Financial AccountingStandards No.142, ‘Goodwill and Other Intangible Assets’”.

The Company and certain subsidiaries have entered into
forward exchange contracts to hedge the risk of fluctuationin exchange rate in the foreign currency transactions related
to accounts receivable and payable denominated in foreign
currency.
Derivative financial instruments are reported at fair value
with unrealized gain or loss, charged or credited to operations,
except for those which meet the criteria for the deferral hedge
accounting under which unrealized gains or losses is deferred
as assets or liabilities. Receivables and payables hedged byqualified forward foreign exchange contracts are translated at thecorresponding foreign exchange contract rates.

(H) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided in the amountsufficient to cover probable losses on collection. It consists ofindividually estimated uncollectible amounts and an amountcalculated using the rate of actual losses on collection in the past.

(I) Accrued bonuses to directors and corporate
auditors
Effective for the year ended March 31, 2007, the Company anddomestic consolidated subsidiaries have adopted an accounting
standard for directors’ bonuses.
The standard required that directors’ bonuses be accounted foras an expense of the accounting period in which such bonuses
were accrued.
As a result, operating income and income before taxes
and minority interests decreased by \81 million (U.S. $686
thousand).

(J) Retirement Benefits
Upon retirement or termination of employment, employees of
the Company and its domestic subsidiaries are generally entitledto lump-sum payments determined by reference to their current
basic rate of pay, length of service and conditions under which
the termination occurs.
The Company and domestic subsidiaries provide allowancefor the retirement benefits and make contributions to a noncontributory tax-qualified pension plans (the “Funded Plan”) for
employees’ severance indemnities payable, as part of the existing
retirement plan.
Allowance for the employees’ retirement benefits are
determined mainly at the amount based on the retirement benefit
obligation and the fair value of the pension plan assets, asadjusted for unrecognized actuarial gain or loss.

(K) Leases
The Companies lease certain equipment under non-cancelable
lease agreements referred to as finance leases. Finance leases
other than those, which transfer the ownership of the leased
property to the Companies, are primarily accounted for as
operating leases.

(L) Income Taxes, Deferred Tax Assets and Liabilities

10

Deferred tax assets and liabilities are determined based on the
differences between financial reporting and the tax bases of theassets and liabilities and are measured using the enacted tax
rates and laws which will be in effect when the differences are
expected to reverse.
Starting from the year ended March 31, 2007, the Company andits wholly owned domestic subsidiaries were permitted to file theconsolidated tax return in Japan for the Corporate Tax purpose.

(N) Revenue Recognition
Sales are generally recognized at the time of shipment of thegoods to customers except for sales of certain product, which arerecorded in the accounts upon customer acceptance.

(O) Research and Development Expenses
Research and development costs are charged to income as
incurred.

(P) Impairment of Fixed Assets
The Company and its domestic consolidated subsidiaries
implemented a new accounting standard for the “impairment of
fixed assets” from the year ended March 31, 2006. According to
the accounting standard, fixed assets are reviewed for impairment
whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. For the year
ended March 31, 2006, the loss on the impairment of tangible
fixed assets was \60 millions.

3. Short-Term Loans and Long-Term Debt
The average interest rate for short-term loans outstanding at
March 31, 2007 and 2006 is 4.8% and 4.3 %, respectively.
The long-term debt at March 31, 2007 and 2006, consists of thefollowing :Millions of yen

2007

Thousands of
U.S.dollars

2006

2007

Long-term debt:
Due serially through 2017, with interest
rate of 4.81 %\1,292\2,588
1,292
2,588$10,944
10,944

Less current portion

618

1,682

5,235

\674

\906

$5,709The aggregate annual maturities of long-term debt (including
the current portion) outstanding at March 31, 2007 are as
follows:
Year ending
March 31

2008
2009
2010
2011 and thereafter

Millions of yen

Thousands of
U.S.dollars

\618
668
1
5
\1,292$5,2355,659
8
42$10,944

4. Retirement Benefits
The Company and its domestic subsidiaries have defined benefit
plans,i.e., the Funded Plans and the lump-sum payment plans,
covering substantially all employees who are entitled to lumpsum or annuity payments, the amounts of which are determinedby reference to their basic rates of pay, length of service, and theconditions under which termination occurs.
The following table sets forth the funded status of the plans,
and the amounts recognized in the consolidated balance sheets asof March 31, 2007 and 2006 for the Companies' defined benefit
plans:
Millions of yen

Retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Unrecognized actuarial gain or loss
Unrecognized past service cost
Net amount recognized in the
consolidated balance sheet
Prepaid pension costAccrued retirement benefit obligation

Thousands of
U.S.dollars

2007

2006

2007

\(69,639)
35,426(34,213)
3,570
3,341

\(65,464)
31,885(33,579)
5,054
1,344

$(589,911)
300,093(289,818)
30,241
28,302(27,302)70\(27,372)(27,181)
127\(27,308)(231,275)
593$(231,868)

The components of retirement benefit expenses for the years
ended March 31, 2007 and 2006 are as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Amortization of past service cost
Total

Thousands of
U.S.dollars

2007

2006

2007

\3,099
1,326
(654)
1,001
464
\5,236\3,092
1,311
(498)
1,443
218
\5,566$26,252
11,233(5,540)8,479
3,930$44,354

6. Selling, General and Administrative
ExpensesMajor components of selling, general and administrative
expenses at March 31, 2007 and 2006 are as follows:
Millions of yen

Delivering expense
Advertising expense
Personal expense
Depreciation and amortization
Research and development expense
Other selling expense

2007

2006

2007

\8,316
4,084
95,601
4,068
21,10819,657\7,431
4,486
89,032
4,202
20,812
15,425$70,445
34,596809,835
34,460178,806
166,514

7. Non-Operating Income and Expenses Other, Net"Other, net" for the years ended March 31, 2007 and 2006,
consists of the following :Millions of yen

Write-down and disposal of inventories
Loss on sales or disposals ofproperty, plant and equipment
Foreign exchange gain or loss
Other, net

2007

Discount rates
Expected return on assets
Amortization period of past service cost
Amortization period of actuarial gain or loss

2006

Mainly 2.0%
Mainly 2.0%
Mainly 2.0%
Mainly 2.0%
10 years Straight-line method 10 years Straight-line method
10 years Straight-line method 10 years Straight-line method

Thousands of
U.S.dollars

2007

2006

2007

\(1,337)\(1,041)$(11,326)

(593)
241
(2,019)\(3,708)(216)
13(1,571)\(2,815)(5,023)
2,042(17,104)$(31,411)

8. Research and Development Expenses
Research and development costs charged to income for theyears ended March 31, 2007 and 2006 are as follows:
Millions of yen

Apart from the retirement benefit expenses above, additional
retirement benefit payments are included in Non-operating
expenses. The additional retirement benefit payments for theyears ended March 31, 2007 and 2006 were \3,094 millions($26,209 thousands) and \1,410 millions, respectively.
The assumption used in accounting for the above plans in 2007
and 2006 are as follows:

Thousands of
U.S.dollars

Thousands of
U.S.dollars

2007

2006

2007

\29,529\27,603$250,140

9. Income Taxes and Deferred Tax Assets
and Liabilities
The following table summarizes the difference between thestatutory tax rate and the Company's effective tax rate for theyears ended March 31, 2007.
There is no significant difference between the statutory tax rate
(40.6%) and the Company's effective tax rate for the year ended
March 31, 2006.
2007

5. Contingent liabilities
Contingent liabilities at March 31, 2007 and 2006 are as follows:
Millions of yen

Trade notes receivablediscounted or endorsed
Guarantees on lease contracts
Guarantees on employees' bank loans

Thousands of
U.S.dollars

2007

2006

2007

\1,658730
1,117\7,253112
1,325$14,045
6,184
9,462

Statutory tax rate
Effect of :Different tax rates applied to income of foreign subsidiaries
Expenses not deductible for income tax purposes
Changes in valuation allowance
Corporation tax deduction for research expenditures
Other, net

40.6 %(11.6)
2.1
9.2
(6.0)
1.1
35.4 %

11

Significant components of the Companies' deferred tax assets
and liabilities at March 31, 2007 and 2006 are as follows:
Millions of yen

2007

Deferred tax assets:
Accrued retirement benefits
Intangible assets
Accrued bonuses
Elimination of consolidated
unrealized gains
Other

Thousands of
U.S.dollars

2006

2007

(B) Operating leases
Future minimum lease payments subsequent to March 31, 2007
and 2006 for noncancelable operating leases are summarized asfollows:\11,025
7,994
3,777

\10,788
7,370
3,483

$93,393
67,71731,9952,254
10,02935,079(2,301)
32,7782,908
6,424
30,973(527)
30,446

19,094
84,955297,154(19,492)
277,662

643
729
132
1,504
\31,274

474
837
276
1,587
\28,859

5,447
6,175
1,118
12,740$264,922

Valuation allowance
Deferred tax liabilities:
Retained earnings appropriatedfor tax allowable reserves
Unrealized gains on securities
Other
Net deferred tax assets

10. Leases

Due within one year
Due after one year

2007

2006

2007

\129
180
\309

\138
52
\190

$1,093
1,525$2,618

11. Securities(1) Information regarding marketable Other Securities as ofMarch 31, 2007 and 2006 is as follows:
Millions of yen

Acquisition
cost

2007
Carrying
value

Millions of yen

2007

2006

Acquisition
cost

Accumulated
depreciation

New bookvalue

Acquisition
cost

Accumulated
depreciation

New book
value

\347
270
\617

\186
134
\320

\161
136
\297

\304
210
\514

\155
108
\263

\149
102
\251

Thousands of U.S.dollars

2007
Accumulated
depreciation

New book
value

Unrealized
gain (loss)

2007
Carrying value

Acquisition cost

Unrealized gain (loss)

Securities whose carrying value exceeds their acquisition cost:
Stocks$8,013$21,728
Securities whose acquisition cost exceeds their carrying value:
Stocks
2,389
2,067
Total
$10,402$23,795$13,715(322)$13,393(2) The proceeds from sales of securities, except those of theaffiliated companies, for the years ended March 31, 2007
and 2006 were \552 millions ($4,676 thousands) and \693
millions, respectively. The realized gains on those sales
for the years ended March 31, 2007 and 2006 were \405
millions ($3,431 thousands) and \425 millions, respectively.
The realized losses on those sales for the year ended March
31, 2006 were \7 millions.

Fair value information of the derivative financial instruments at
March 31, 2007 and 2006 is summarized below according to thedisclosure requirements applicable to the respective year:(1) Future minimum lease payments (including the interest
portion thereon) subsequent to March 31, 2007 and 2006 forfinance lease transactions accounted for as operating leases
are summarized as follows:
Millions of yen

Thousands of
U.S.dollars

2007

2006

2007

\88
210
\298

\83
168
\251

$745
1,779
$2,524(2) Lease payments for the years ended March 31, 2007 and2006, are \90 millions ($762 thousands) and \84 millions,
respectively.

12

2006
Carryingvalue

12. Derivative Financial Instruments

Machinery and equipment $2,939 $1,576 $1,363
Tools, furniture and fixtures
2,287 1,135 1,152$5,226 $2,711 $2,515

Due within one year
Due after one year

Acquisition
cost

Thousands of U.S.dollars

The following pro forma amounts represent the acquisition cost,
accumulated depreciation and net book value of leased property
as of March 31, 2007 and 2006, which would have been reflectedin the consolidated balance sheets if the finance lease accounting
had been applied to the finance lease transactions currently
accounted for as operating leases:

Acquisition
cost

Unrealized
gain (loss)

Securities whose carrying value exceeds their acquisition cost:
Stocks\946 \2,565 \1,619 \1,231 \3,078 \1,847
Securities whose acquisition cost exceeds their carrying value:
Stocks
282
244
(38)
31
29
(2)
Total
\1,228 \2,809 \1,581 \1,262 \3,107 \1,845(A) Finance leases

Machinery and equipment
Tools, furniture and fixtures

Thousands of
U.S.dollars

Millions of yen

Millions of yen

2007
Contract
Unrealized
Fair value
amountgain (loss)

Forward exchange contracts:
Sell Euros and others\2,812 \2,817

\(5)

2006
Contract
Unrealized
Fair value
amountgain (loss)\1,391 \1,400\(9)

Thousands of U.S.dollars

2007
Contract
amountForward exchange contracts:
Sell Euros and others$23,820

Fair value$23,863

Unrealized gain
(loss)$(43)

Above forward exchange contracts are taken by the Company
to hedge the foreign currency risk on inter-company transactions.
They meet the criteria for deferral hedge accounting, and holding
gains or losses of these financial instruments are deferred in the
Non-Consolidated Financial Statements of the Company.

13. Segment Information(B) Geographic Segments

The Companies operate in three business segments.
The products line up of these segments is presented on thesecond page of this report.
Thousands of
U.S.dollars

Millions of yen

2007

2006

Net Sales
Retail Information Systems
Unaffiliated customers\193,963\171,667Intersegment
2,407
2,021
Total
196,370
173,688
Document Processing & Telecommunication Systems
Unaffiliated customers
302,891
256,829
Intersegment
8,203
6,735
Total
311,094
263,564
Home Electric Appliances & Others
Unaffiliated customers
13,992
14,905Intersegment
231
239
Total
14,223
15,144
Eliminations(10,841)(8,994)
Consolidated\510,846\443,402
Operating Income
Retail Information Systems
Document Processing &Telecommunication Systems
Home Electric Appliances & Others
Eliminations
Consolidated
Identifiable Assets
Retail Information Systems
Document Processing &Telecommunication Systems
Home Electric Appliances & Others
Corporate and Eliminations
Consolidated
Depreciation and Amortization
Retail Information Systems
Document Processing &Telecommunication Systems
Home Electric Appliances & Others
Consolidated
Capital Expenditures
Retail Information Systems
Document Processing &Telecommunication Systems
Home Electric Appliances & Others
Consolidated(Note)

Thousands of
U.S.dollars

Millions of yen(A) Business Segment

2007$1,643,058
20,3901,663,448
2,565,786
69,4872,635,273
118,526
1,957
120,483(91,834)$4,327,370\9,046\7,892$76,629

13,239386
0\22,671

9,522
(257)
0
\17,157

112,1473,270
0$192,046\79,209\68,515$670,978221,240
9,108
48,696\358,253

206,946
7,364
40,651\323,476

1,874,121
77,154
412,503$3,034,756

2007

2006

2007

\270,336
85,769356,105\219,491
86,208305,699$2,290,013
726,548
3,016,561

103,117
1,121
104,238

93,744532
94,276

873,503
9,496
882,999

99,6796,189
105,868

95,107
8,417
103,524

844,380
52,426
896,806

37,714
68,116
105,830(161,195)\510,846

35,06055,614
90,674(150,771)\443,402

319,475
577,010
896,485(1,365,481)$4,327,370

Operating Income
Japan
American States
EuropeAsia and others
Eliminations
Consolidated\7,064
4,479
2,277
7,285
1,566
\22,671\6,348
2,770
2,038
6,380
(379)
\17,157$59,839
37,942
19,28861,711
13,266$192,046

Identifiable Assets
Japan
American States
EuropeAsia and others
Corporate and Eliminations
Consolidated\247,958
40,58567,39946,084(43,773)\358,253\227,299
42,54964,17645,525(56,073)\323,476$2,100,449
343,795
570,936
390,377(370,801)$3,034,756

Net SalesJapan
Unaffiliated customers
Intersegment
Total
American States
Unaffiliated customers
Intersegment
Total
EuropeUnaffiliated customers
Intersegment
Total
Asia and others
Unaffiliated customers
Intersegment
Total
Eliminations
Consolidated(Note1) Criteria of geographical segmentation and the name of countries or areas mainly
included in each segment except for Japan are as follows:(1) Criteria: geographical closeness(2) Countries & Areas
1. American States
U.S.A., Canada, Mexico, Puerto Rico, Panama, Venezuela, Brazil, Chile
2. Europe
U.K., France, Germany, Belgium, Spain, Netherlands, Sweden, Norway,
Denmark, Finland
3. Asia and Others
Singapore, Malaysia, Indonesia, China, Australia\2,919\2,874$24,727

10,710636\14,2659,376
754\13,004

90,724
5,388$120,839\2,757\3,710$23,355(Note2) Corporate assets mainly consist of cash, time deposits, securities and investments withfinancial institutions of the Company. Corporate assets at March 31, 2007 and 2006, are\49,565 millions ($419,864 thousands) and \41,096 millions, respectively.

11,576693\15,026

12,626985\17,32198,0605,870$127,285(C) Net Sales by Region

Corporate assets mainly consist of cash, time deposits, securities and investments withfinancial institutions of the Company. Corporate assets at March 31, 2007 and 2006, are\49,565 millions ($419,864 thousands) and \41,096 millions, respectively.

Millions of yen

Net SalesJapan
American States
EuropeAsia and others
Net sales(Note)

Thousands of
U.S.dollars

2007

2006

2007

\239,985
125,786
109,501
35,574\510,846\190,576
116,860
103,11232,854\443,402$2,032,910
1,065,532
927,582
301,346$4,327,370

Net sales by region are determined based upon the locations of the customers. Therefore,
this information is different from the net sales for geographic segments, which are
determined based upon where the sales originated.

13

14. Transactions with Related Parties

Status(A) Transactions with Fellow Subsidiaries for the year
ended March 31, 2006
StatusName

Address

Toshiba
Subsidiary
Minato-ku,
Capitalof the parent
Tokyo
company Corporation
Relationship
Dispatch of
Business
executive
officers, etc. RelationshipTransactions

Deposits offunds

Deposits of
funds

None
(Note)

Percentage of voting
rights held (%)

CapitalBusiness

100

Financing of
TOSHIBAGroup domestic
companies

None

Transaction
Amounts

Account
item

Balance at
Fiscal Year End

34,421

Cash andCashequivalents

34,421(Millions of yen)

(Millions of yen)

Policy for determining trade terms and other related matters
Depositing funds are determined from Market rates and offers from third party interests rates.

(B) Transactions with Fellow Subsidiaries for the year
ended March 31, 2007
Name

Address

Toshiba
Subsidiary Consumer
Chiyoda-ku,of the parent MarketingTokyo
company Corporation

Relationship
Dispatch of
Business
executive
officers, etc. Relationship
None

Transactions

Sales ofhome
Sales of ourelectric
products
appliances,
etc.

CapitalBusiness

Percentage of voting
rights held (%)

3,000

Businessplanning andsales of home
appliances anddomestic salesof IT products
and visualequipments forthe consumer
marketNone

Transaction
Amounts

Account
item

Balance at
Fiscal Year End

11,895Trade notes
and accountreceivable(Millions of yen)

(Millions of yen)

Name

Address

Toshiba
Subsidiaryof the parent Solutions Minato-ku,
Tokyocompany Corporation

Relationship
Dispatch of
Business
executive
officers, etc. Relationship
None

Transactions

Sales of document
Sales of our processing andproducts telecommunicationequipments, etc.

Percentage of voting
rights held (%)

100

Financing of
TOSHIBAGroup domestic
companies

None

Relationship
Dispatch of
Business
executive
officers, etc. RelationshipTransactions

Transaction
Amounts

Account
item

Balance at
Fiscal Year End

Deposits offunds

Deposits offunds

38,486

Cash andCashequivalents

38,486(Note)(Millions of yen)

(Millions of yen)Transaction Amounts are Balance at Fiscal Year End.

Policy for determining trade terms and other related matters
Depositing funds are determined from Market rates and offers from third party interests rates.

Under the resolution of the board of directors' meeting held on
December 25th, 2006, the business transfer of Home ElectricAppliances was carried out on June 1st, 2007.

(1) Background
The Home Electric Appliances business was transferred to
TOSHIBA HA PRODUCTS Co., Ltd., a subsidiary of TOSHIBACONSUMER MARKETING CORPORATION to unify
development, manufacturing and sales of the home electric
appliances business for more efficient business operations in the
TOSHIBA group.
This enabled us to strengthen our operation, concentrating in
Retail Information Systems business and Document Systems andTelecommunications business.

(2) Business Segment Affected
4,439

CapitalBusiness

Percentage of voting
rights held (%)

20,000Development,
designing,
manufacturing,sales andmaintenanceof computer
systems andcommunication
systems, etc.

None

Transaction
Amounts

Account
item

Balance at
Fiscal Year End

7,897

Trade notes
and accountreceivable

6,684(Millions of yen)

(Millions of yen)

(Millions of yen)

Policy for determining trade terms and other related matters
As in the case of general trade terms, sales of products are determined from market prices andoverall costs.

14

Business(Millions of yen)

Policy for determining trade terms and other related matters
As in the case of general trade terms, sales of products are determined from market prices andoverall costs.

StatusCapital(Millions of yen)

15. Subsequent Event

Transaction Amounts are Balance at Fiscal Year End.

StatusAddress

Toshiba
Subsidiary
Minato-ku,
Capitalof the parent
Tokyo
company Corporation

None(Millions of yen)

Name

Home Electric Appliances business is included in the businesssegment "Home Electric Appliances & Others".

(3) Consideration and Gain
The Home Electric Appliances business was sold for \1,886
million ($15,976 thousand) with the related gain on sales of \225million ($1,909 thousand).

Supplemental Information
Non-Consolidated Balance Sheets
March 31, 2007 and 2006

Thousands of
U.S.dollars

Millions of yen

ASSETS

2007

2006

2007

Cash and time deposits\47,856\38,937$405,388

Trade notes and accounts receivable

54,467

24,934

461,389

Finished goods

15,73010,266133,249

Work-in-process and raw materials

4,734

4,899

40,102Current assets

Inventories:

Deferred income taxes

5,783

4,210

48,988Prepaid expenses and other current assets

12,045

11,356

102,032

Allowance for doubtful accounts
Total current assets

(769)

(420)

(6,514)

139,846

94,182

1,184,634

Fixed assets
Property, plant and equipment:
Land

1,837

4,717

15,561

Buildings and structures

19,315

20,125

163,617

Machinery and equipment

10,956

10,78592,808Tools, furniture and fixtures

44,98346,318381,051

Construction in progress
Less accumulated depreciation

546

1,387

4,625

(59,525)(59,959)(504,235)

18,112

23,373

153,427

Intangible assets:
Other intangible assets

3,468

3,544

29,377

3,468

3,544

29,37753,931

54,621

456,849

Investments and other assets:
Investment securities
Subsidiaries and affiliates

4,505

4,537

38,162

Deferred income taxes

Other

15,066

14,379127,624

Other investments and other assets

3,171

3,291

26,861

Allowance for doubtful accounts

(103)

(112)

(873)

76,57076,716648,623

98,150103,633

831,427\237,996\197,815$2,016,061

Total fixed assets
Total assets

15Thousands of
U.S.dollars

Millions of yen

LIABILITIES AND NET ASSETS

2007

2006

2007

\60,102\39,733$509,123

Current liabilities
Trade notes and accounts payable
Current portion of long-term debt

1

2

8

Accrued bonuses to directors and corporate auditors

46

-

390

Accrued income taxes

4,577

465

38,772Other payables and current liabilities

40,712

27,615344,871

Total current liabilities

105,438

67,815893,164715

59

19,41819,412

164,490

Long-term liabilities
Long-term debt
Accrued retirement benefits
Other long-term liabilities

94

79

796

Total long-term liabilities

19,51919,506

165,345

Total liabilities

124,957

87,321

1,058,509

39,971

39,971

338,594

52,98752,986448,852

Voluntary reserve

14,944

12,717

126,590

Unappropriated

8,475

7,254

71,792(4,062)-(34,409)

Shareholders' equity
Common stock
Authorized-1,000,000,000 shares
Issued- 288,145,704 shares
Capital surplus
Retained earnings :Less treasury stock, at cost:
10,489,478 shares in 2007
9,143,293 shares in 2006-

(3,318)-112,315

109,610

951,419

721

884

6,108

3

-

25

724

884

6,133

Total Net assets

113,039

110,494

957,552

Total liabilities and Net assets\237,996\197,815$2,016,061

Total shareholders' equity
Valuation and Translation adjustment
Unrealized holding gains on securities
Net Deferred profits on hedges
Total valuation and translation adjustments

16

Supplemental Information
Non-Consolidated Statements of Operations and Retained Earnings
Years ended March 31, 2007 and 2006

Thousands of
U.S.dollars

Millions of yen

2007

2006

2007

Net sales\297,996\253,931$2,524,320

Cost of sales

226,782

185,035

1,921,067

71,214

68,896603,253

Selling, general and administrative expenses

Gross profit

66,91565,176566,836

Operating income

4,299

3,720

36,417

Interest and dividend income

8,555

7,083

72,469Gains on sale of land and training facility

3,008

-

25,481Non-operating income and expenses:

Interest expense

(19)

(15)

(161)

Expenses of extra pension for early retirement(1,904)(589)(16,129)

Loss on valuation of investment in affiliates(3,010)-(25,498)

Loss on sale of land and recreation facility

(563)

-

(4,769)

-

(60)

-

(2,725)(1,677)(23,083)

7,641

8,462

64,727

Current

3,525

(208)

29,861

Deferred(2,150)1,704(18,213)

6,266

6,966

53,079Unappropriated retained earnings at beginning of year

-

4,534

-

Transfer from voluntary reserve

-

25

-

Cash dividends-(1,116)-

Bonuses to directors and corporate auditors

-

(39)

-

Transfer to voluntary reserve-(2,000)-Loss on impairment of fixed assets
Other, net
Income before income taxes
Income taxes:

Net income

Appropriation of retained earnings:

Cash interim dividends-(1,116)-

Unappropriated retained earnings at end of year-

\7,254-17

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