ML11158A022

Toshiba Corporation 2010 Financial Review - Annual Report 2010 - Financial Review. (Non-Proprietary Version)

ML11158A022
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Site:	07000036, Westinghouse
Issue date:	12/31/2010
From:	Toshiba Corp
To:	NRC/FSME
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Download: ML11158A022 (60)

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TOSHIBA Leading Innovation TOSHIBA CORPORATION 201.0 FINANCIAL REVIEW Annual Report 2010 - Financial Review

Management's Discussion and Analysis FIVE-YEAR

SUMMARY

Toshiba Corporation and Subsidiaries Millions of yen, Years ended March 31 except per share amounts 2010 2009 2008 2007 2006 Net sales V6,381,599

¥6,654,518 Y7,665,332 Y7,116,350 Y6,343,506 Cost of sales 4,922,237 5,366,087 5,756,603 5,312,179 4,659,795 Selling, general and administrative expenses (Note 1) 1,342;171 1,538,617 1,662,336 1,545,807 1,443,101 Operating income (loss) (Note 2) 117,191 (250,186) 246,393 258,364 240,610 Income (loss) from continuing operations, before income taxes and noncontrolling interests 24,962 (279,252) 265,049 327,131 182,329 Income taxes 29,688 54,323 113,375 157,024 91,832 Net income (loss) attributable to shareholders of Toshiba Corporation (19,743)

(343,559) 127,413 137,429 78,186 Per share of common stock:

Earnings (loss) attributable to shareholders of Toshiba Corporation (Note 3)

-Basic

?

(4.93)

Y (106.18)

V 39.46 V

42.76 V

24.32

-Diluted (4.93)

(106.18) 36.59 39.45 22.44 Cash dividends 5.00 12.00 11.00 6.50 Total assets V5,451,173 V 5,453,225 V5,935,637 Y5,931,962 Y4,727,113 Equity attributable to shareholders of Toshiba Corporation 797,455 447,346 1,022,265 1,108,321 1,002,165 Capital expenditures (Property, plant and equipment) 209,621 357,111 465,044 375,335 338,800 Depreciation (Property, plant and equipment) 254,018 308,737 340,852 259,882 228,637 R&D expenditures 323,248 378,261 393,293 393,987 372,447 Number of employees 204,000 199,000 198,000 191,000 172,000 Notes: 1) The one time receipt of W4,085 million for "Subsidy received on return of substitutional portion of Employees' Pension Fund Plan, net of settlement loss of V5,045 million" was classified as a reduction of selling general and administrative expenses for the fiscal year ended March 31, 2006.

2) Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales, and reported as a measurement of segment profit or loss. This result is regularly reviewed to support decision-making in allocation of resources and to assess performance. Some items that are classified as operating income (loss) under U.S. generally accepted accounting principles ("GAAP"), such as restructuring charges and gains (losses) from the sales or disposal of fixed assets, may be presented as non-operating income (loss).

3) Basic earnings (loss) per share attributable to shareholders of Toshiba Corporation (EPS) is computed based on the weighted-average number of shares of common stock outstanding during each period.

Diluted EPS assumes the dilution that could occur if convertible bonds were converted or stock acquisition rights were exercised to issue common stock, unless their inclusion would have an antidilutive effect.

4) U.S.GAAP was codified by the Financial Accounting Standards Board. Beginning with the fiscal year ended March 31, 2010, the codified standards are described in "Accounting Standards Codification (ASC)," and the Pre-Codify standards are also presented together.

5) Beginning with the fiscal year ended March 31. 2010. the Company adopted ASC No.810 "Consolidation" (formerly SFAS No.160). Prior-period data for she fiscal years ended from March 31, 2006 through 2009 has been reclassified to conform with the current classification.

6) The Mobile Broadcasting business ceased operation at the end of the fiscal year ended March 31, 2009. Prior-period data for the fiscal years ended from March 31, 2006 through 2008 has been reclassified to conform with the current classification.

2. Management's Discussion and Analysis

18. Consolidated Balance Sheets 20. Consolidated Statements of Income

21. Consolidated Statements of Equity

22. Consolidated Statements of Cash Flows

23. Notes to Consolidated Financial Statements

59. Report of Independent Auditors 2

SCOPE OF CONSOLIDATION As of the end of March 2010, Toshiba Group comprised Toshiba Corporation and 542 consolidated subsidiaries and its operating segments were in the Digital Products, Electronic Devices, Social Infrastructure, Home Appliances and Others.

121 consolidated subsidiaries were involved in Digital Products, 57 in Electronic Devices, 230 in Social Infrastructure, 66 in Home Appliances and 68 in Others.

The number of consolidated subsidiaries was 5 more than at the end of March 2009.

200 affiliates were accounted for by the equity method as of the end of March 2010.

RESULTS OF OPERATIONS NET SALES AND INCOME (LOSS)

The overall condition of the global economy remained severe in FY2009 as the recession continued to make its impact felt, but the second half of the fiscal year showed some positive signs of a gradual recovery. In the United States and Europe unemployment levels have remained high and overall economic conditions are expected to remain severe, but the Chinese economy has grown, driven by domestic demand, and other Asian economies also are on the upturn. In Japan, a continuing awareness of overcapacity of plant and facilities remained in some sectors, and persistent high unemployment leaves the over-all outlook unclear, but positive results from emergency stimulus packages appear to point to a gradual upturn in the econo-my.

In these circumstances, under the Action Programs to Improve Profitability announced in January 2009, a series of strate-gic policies that aim to generate profit regardless of market conditions and fluctuations, Toshiba resolutely promoted group-wide cost reduction measures and strategic allocations of resources, accelerated the further globalization of its business and promoted business structure reformation.

Toshiba's consolidated net sales for FY2009 were 6,381.6 billion yen, a decrease of 272.9 billion yen from the previous year. This result reflected yen appreciation and the impact of the recession in the first half of FY2009, though the latter half saw an improvement against the year-earlier period. Consolidated.operating income (loss) saw a significant improvement in all business segments apart from Others, and returned to the black to the tune of 117.2 billion yen, a year-on-year advance of 367.4 billion yen. Most notably, operating income in the Semiconductor business returned to the black, driven in particular by a recovery in performance in Memories.

Income (Loss) from continuing operations before income taxes and noncontroHing interests improved by 304.3 billion yen to 25.0 billion yen, despite the restructuring costs, and the net loss attributable to shareholders of Toshiba Corporation improved by 323.9 billion yen to -19.7 billion yen.

KEY PERFORMANCE INDICATORS Following are the key performance indicators ("KPIs") that the Management of the Group uses in managing its business.

Net sales and operating income (loss) are basic indicators for measuring the business results of the Group. Operating income (loss) is regularly reviewed to support decision-making in allocations of resources and to assess performance.

Operating income ratio (ratio of operating income to net sales) is also KPIs.

The Group aims to evolve into one of the world's top-level diversified electric & electronics manufacturers through excel-lent operational performance and winning global competitiveness, and to secure a return to the path of sustained growth with steadily higher profit while simultaneously reinforcing its financial foundation.

To assess financial position of the Group, the Management emphasizes the shareholders' equity ratio (ratio of total equity attributable to shareholders of Toshiba Corporation to total assets) and debt-to-equity ratio. Active capital investment and R&D activity are indispensable for growth of the Group, both are KPIs. To measure the efficiency of investments, Management emphasizes ROI (return on investment).

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Management's Discussion and Analysis I

Billions of yen Year ended March 31 2010 2009 Net sales 6,381.6 6,654.5 Operating income (loss) (Note 1) 117.2 (250.2)

Operating income (loss) ratio (%)

1.8 (3.8)

Return on equity (ROE) (%)

(3.2)

(46.8)

Shareholders' equity ratio (%)

14.6 8.2 Debt/equity ratio (%)

153 405 Capital expenditures (Note 2) 210.2 425.2 R&D expenditures 323.2 378.3 Return on investment (ROI) (%) (Note 3) 4.8 (9.6)

Notes: 1) Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales, and reported as a measurement of segment profit or loss. Some items that are classified as operating income (loss) under U.S. GAAP, such as restructuring charges and gains (losses) from the sales or disposal of fixed assets, may be present-ed as non-operating income (loss).

2) Capital expenditure is on an ordering amount basis. The capital expenditure amount includes the Group's portion of the investments made by Flash Alliance, Ltd. and others, mhich are companies accounted for by the equity method.

3) ROl is operating income (loss) divided by total debt plus total equity.

The Company's consolidated net sales for FY2009 were 6,381.6 billion yen, a decrease of 272.9 billion yen from the previous year. This result reflected yen appreciation and the impact of the recession in the first half of FY2009, though the latter half saw an improvement against the year-earlier period. Consolidated operating income (loss) saw a significant improvement in all business segments apart from Others, and returned to the black to the tune of 117.2 billion yen, a year-on-year advance of 367.4 billion yen. Most notably, operating income in the Semiconductor business returned to the black, driven in particular by a performance recovery in Memories.

Income (Loss) from continuing operations before income taxes and noncontrolling interests improved by 304.3 billion yen to 25.0 billion yen, despite the restructuring costs, and the net loss attributable to shareholders of Toshiba Corporation improved by 323.9 billion yen to -19.7 billion yen. This resulted in an improved operating income ratio and ROE, 1.8% and -

3.2%, respectively.

Equity attributable to the shareholders of Toshiba Corporation, increased to 797.4 billion yen, an increase of 350.1 billion yen from the end of March 2009, despite a net loss attributable to shareholders of Toshiba Corporation of -19.7 billion yen.

This reflects the capital increase resulting from a June 2009 public offering, as well as an improvement in accumulated other comprehensive income (loss) of 53.7 billion yen due to unrealized gains on the recovery in stock market prices.

Total debt decreased by 592.4 billion yen from the end of March 2009 to 1,218.3 billion yen.

As a result of the foregoing, the shareholders' equity ratio at the end of March 2010 was 14.6%, a 6.4-point improvement from the end of March 2009, and the debt-to-equity ratio at the end of March 2010 was 153%, a 252-point improvement from the end of March 2009.

The Group curbed capital expenditures and carefully selected projects by type of investment for the current period, and as a result capital expenditures were reduced by 215.0 billion yen to 210.2 billion yen on the company-wide basis of orders placed, compared with the previous fiscal year's 425.2 billion yen. Due to improved operating income and reduced total debt, ROI was greatly improved significantly from previous fiscal year. Also, the Group cut down R&D expenditures.

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DIVIDEND The Company, while giving full consideration to such factors as the strategic investments necessary to secure medium to long term growth, seeks to achieve continuous increases in its actual dividend payments, in line with a payout ratio in the region of 30 percent, on a consolidated basis.

As a result of strenuous efforts to recover business performance throughout FY2009, the Group's operating income has substantially improved over the previous term. However, net income (loss) attributable to shareholders of Toshiba Corporation on a consolidated basis and net income (loss) on a non-consolidated basis remained in the red. In terms of its financial position, the Group is tackling improvements in cash flow and reduction of debt, in order to reinforce its financial structure and to support future growth. In light of these circumstances, we regret that the Company is forced to forgo paying a dividend from earnings on both an interim and year-end basis.

The Company will carefully examine and decide on the dividend plan for the next term, FY2010, in light of the Group's financial position and strategic investment plans, and will announce the dividend for FY2010 as soon as it is determined.

RESULTS BY INDUSTRY SEGMENT Billions of yen Nei Sales Operating Income (loss)

Year ended Maich 31 Change (%)

Change Digital Products 2,363.6

-4%

13.3 27.5 Electronic Devices 1,309.1

-1%

(24.2) 299.0 Social Infrastructure 2,302.9

-4%

136.3 23.1 Home Appliances 579.8

-14%

(5.4) 21.7 Others 315.8

-6%

(4.3)

-4.8 Eliminations

-489.6 1.5 Total 6,381.6

-4%

117.2 367.4 DIGITAL PRODUCTS Digital Products saw overall sales decrease by 103.9 billion yen to 2,363.6 billion yen. The Visual Products business saw sales increase, mainly on a healthy performance by TVs in Japan. This reflected a high evaluation of product quality and perfor-mance, an improved brand image through successful promotions and advertising, and positive results from the eco-point sys-tem, the Japanese government's program to stimulate domestic demand. The acquisition of Fujitsu's hard disk drive.business also contributed to higher sales in the Storage Products business. The PC business saw lower sales, mainly due to the trend to low priced machines and changes in exchange rates. Retail Information Systems and Office Equipment and Mobile Phones also saw lower sales.

Overall segment operating income (loss) improved by 27.5 billion yen to 13.3 billion yen and moved into the black. While the PC business's profitability suffered, due to the penetration of low priced machines and increases in the cost of parts, the Visual Products business and Storage Products business recorded higher operating income on higher sales and success in cutting costs.

ELECTRONIC DEVICES Electronic Devices saw sales decrease by 15.8 billion yen to 1,309.1 billion yen. The Semiconductor business recorded higher sales: sales in Memories rose, reflecting an improved supply and demand balance and price stability for NAND Flash memo-ries, and sales in Discretes were at the same level as a year earlier, compensating for lower sales in System LSIs. The LCD business also saw a significant sales decline.

Overall segment operating income (loss) improved substantially by 299.0 billion yen to -24.2 billion yen. The Semiconductor business saw a significant improvement and returned to profit, mainly reflecting the performance in Memories and System LSIs, which saw higher sales, effective cost reductions, and an improved supply and demand balance and price stability that compensated for shifts in exchange rates. The LCD business recorded a weak performance.

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Management's Discussion and Analysis SOCIAL INFRASTRUCTURE Social Infrastructure saw overall sales decline by 93.3 billion yen to 2,302.9 billion yen. Nuclear Energy Systems posted healthy sales in respect of new plants overseas and maintenance and service, and the overall decline in segment sales primarily reflected a fall in orders in areas other than Nuclear Energy Systems.

Segment operating income increased by 23.1 billion yen to 136.3 billion yen. The Nuclear Energy Systems recorded high-er operating income on increased sales, and the Medical Systems business maintained high profitability. Other businesses in the segment also secured operating income at the same level as a year earlier, mainly reflecting successful efforts to cut costs.

HOME APPLIANCES Home Appliances saw sales decrease by 94.5 billion yen to 579.8 billion yen. Sales in Air-conditioning and Lighting Systems were affected by the decrease in housing and building starts. Declining consumption also brought lower sales to White Goods.

The segment as a whole recorded an operating loss of 5.4 billion yen, an improvement of 21.7 billion yen compared with the previous year, and in the second fiscal half the segment returned to the black. Most notable were the major improvement in performance in White Goods, reflecting progress in cost reductions, and the improvement in the Lighting Systems Business.

OTHERS Others saw sales fall by 18.5 billion yen to 315.8 billion yen, and operating income (loss) fell by 4.8 billion yen to -4.3 billion yen.

The Company's Consolidated Financial Statements are based on U.S. GAAP.

Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales, and reported as a measurement of segment profit or loss. This result is regularly reviewed to support decision-making in allocations of resources and to assess performance. Some items that are classified as operating income (loss) under U.S.

GAAP, such as restructuring charges and gains (losses) from the sales or disposal of fixed assets, may be presented as non-operating income (loss).

The Mobile Broadcasting business ceased operation at the end of FY2008, and its results are not incorporated into net sales, operating income (loss) or income (loss) from continuing operations, before income taxes and noncontrolling interests in the consolidated results. The business is classified as discontinued in the consolidated accounts, in accordance with ASC No.205-20, "Presentation of Financial Statement-Discontinued Operations", equivalent to the former SFAS No. 144. However, consolidated net income (loss) (consolidated net income (loss) attributable to shareholders of Toshiba Corporation) includes the operating results of the Mobile Broadcasting business.

RESEARCH AND DEVELOPMENT The Group, aiming to restart to the path of"Sustained growth with steadily higher profit", is anticipating customers' require-ments through strict benchmarking and "Imagination", and promoting R&D activities to provide products that lead to new trends in the market.

In a severe economic situation, the Group reduced R&D expenditures by 15% against FY2008, under the "Action Programs to Improve Profitability" announced in January 2009. As it did so, the Group selected areas for investment under the following three criteria:

1) Company-wide staff division for R&D undertook research into technologies with the potential to become the basis for

- innovative products, focusing on megarrends (anticipated business opportunities in the field of vital and healthcare ser-vices, such as demands for energy and environmental technologies in emerging countries and demands for medical care and education, and in the field of ICT(Information and communications technology) with the basis of worldwide trends to digitalization, networking and transfers of huge volumes of information);

2) R&D facilities of the in-house companies and the Group companies focused on developing essential technologies for application in brand new products ahead of other companies; and

3) the Group enhanced the efficiency of R&D activities by promoting common platforms, using overseas subsidiaries for software developing and focusing on growing markets.

The Group's overall R&D expenditures reached 323.2 billion yen in the fiscal year ended March 31, 2010. Expenditures for each business segment were as follows:

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Billions of yen Digital Products 80.8 Electronic Devices 144.1 Social Infrastructure 84.8 Home Appliances 13.2 Others 0.3 CAPITAL EXPENDITURES CAPITAL EXPENDITURE OVERVIEW The Group, aiming to restart to the path of "Sustained growth with steadily higher profit", held up basic investment strategy focusing on 1) Memories business for enhancing competition, 2)Power Systems & Industrial Systems business and 3) New business. Because the Group curbed capital investment and selected projects carefully, overall capital investments in FY2009 (based on the value of orders placed and including intangible assets; the same hereinafter) are 210.2 billion yen, which was reduced by 215.0 billion yen from those of FY2008. In the Electronic Devices segment, the Group reduced parts of invest-ment plans in view of market trends. At the same time, however, the Group focused on investment for finer lithography of NAND flash memories for the purpose of enhancement of its competitiveness. As a result, the capital investment in this seg-ment was reduced by 162.9 billion yen from that of FY2008. In the Social Infrastructure segment, the Group maintained the amount of investment in this area at the same level of FY2008, focusing on the nuclear energy business and new businesses such as new type rechargeable battery.

In the meantime, as the Group carefully selected the areas of investments, the above capital investment was further reduced by 39.8 billion yen from the initial capital investment plan of 250.0 billion yen.

This capital amount includes the Group's portion of the investments made by Flash Alliance, Ltd. and others, which are companies accounted for by the equity method.

In the Digital Products segment, capital investments totaling 19.0 billion yen were channeled into development and manu-facturing for PCs, imaging products and HDDs.

In the Electronic Devices segment, capital investments of 85.6 billion yen (including 38.9 billion yen, which is the Group's portion of the investments made by Flash Alliance, Ltd., and others, which are companies accounted for by the equity method) were mainly directed at manufacturing and development of semiconductor products and manufacturing of LCDs.

Major projects completed by the Group in this fiscal year included manufacturing facilities for NAND flash memory (at the Yokkaichi Operations). In the Social Infrastructure segment, capital investments of 82.0 billion yen were made in areas that included enhancement and renewal of infrastructure for manufacturing. Major projects completed by the Group in this fiscal year included building for development and design of nuclear power generation equipment (at the Isogo Nuclear Engineering Center).

In the Home Appliances segment, 10.2 billion yen was invested for to development of new models and manufacturing.

Capital expenditures in the Others segment totaled 13.4 billion yen.

PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES At the end of this fiscal year ending March 31, 2010, investment in new facilities and equipment upgrades in FY 2010 is pro-jected to total 320.0 billion yen (based on the value of orders placed and including intangible assets; hereinafter the same).

This figure includes the Group's portion of the investment made by Flash Alliance, Ltd. and others, which are companies accounted for by the equity method. The funds for capital expenditures will be financed by the equity finance and internal funds. The funds raised by the equity finance are the proceeds from the public offering on June 3, 2009 (including the sale of shares to international investors) and the capital increase by way of third-party allotment on June 23, 2009.

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Management's Discussion and Analysis billions of yen As of March 31, 2010 Planned Capital Business Segment Investments for Major Contents and Purposes FY 2010 Digital Products 33.0 Manufacturing facilities for HDDs, etc.

Electronic Devices 166.0 Manufacturing facilities for NAND flash memories, etc.

Social Expansion of investment for nuclear power business, enhancement of distri-Infrastructures 77.0 bution system for the emerging economies and manufacturing facilities for new type rechargeable battery, etc.

Home Appliances 15.0 Manufacturing facilities for new lighting etc.

Others 29.0 Total 320.0 Notes: 1) Consumption taoes are not included in these capital investment plans.

2) Retiring material facilities is not planned except for routine renewal of facilities.

3) The major planned new facilities and equipment upgrades in FY 2010 are as follows:

As of March 31, 2010 Capacity Name of Planned Improvement Company and Place Business Type of Facility Beginning after Office Segment Completion of Construction Yokkaichi Electronic Manufacturing facilities 300mm finer Operations of Yokkaichi, Mie Devices for semiconductors April 2010 lithography, etc.

the Company Flash Alliance, Electronic Manufacturing facilities 300mm finer Ltd., and others Yokkaichi, Mie Devices for semiconductors April 2010 lithography, etc.

FINANCIAL POSITION Total assets decreased by 2.0 billion yen from the end of March 2009 to 5,451.2 billion yen.

Equity attributable to shareholders of Toshiba Corporation, increased to 797.4 billion yen, an increase of 350.1 billon yen from the end of March 2009. This reflects the capital increase from a June 2009 public offering, as well as an improvement in accumulated other comprehensive income (loss) of 53.7 billion yen due to gains on recovery in the stock market prices.

Total debt decreased by 592.4 billion yen from the end of March 2009 to 1,218.3 billion yen.

As a result of the foregoing, the shareholders'equity ratio at the end of March 2010 was 14.6%, a 6.4-point improvement from the end of March 2009, and the debt-to-equity ratio at the end of March 2010 was 153%, a 252-point improvement from the end of March 2009.

CASH FLOWS In the fiscal year under review, net cash provided by operating activities amounted to 451.4 billion yen, an increase of 467.4 billion yen from net cash used in operating activities of 16.0 billion yen in the previous fiscal year. Net cash provided by oper-ating activities increased because of a large improvement in net loss attributable to Toshiba Corporation.

Net cash used in investing activities amounted to 252.9 billion yen, a decrease of 82.4 billion yen from 335.3 billion yen in the previous fiscal year. This was mainly due to decreased capital investments in the semiconductor business.

As a result of the foregoing, free cash flow amounted to 198.5 billion yen, an increase of 549.8 billion yen from minus 351.3 billion yen in the previous fiscal year.

Net cash used in financing activities amounted to 277.9 billion yen compared with 478.5 billion yen in net cash provided by financing activities in the previous fiscal year. This was mainly due to a reduction of short-term borrowings through the reinforcement of cash flow management.

The effect of exchange rate changes was to increase cash by 3.0 billion yen. Cash and cash equivalents at the end of the fis-cal year declined 76.4 billion yen from 343.8 billion yen the end of the previous fiscal year, to 267.4 billion yen.

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TREASURY STOCK Shares held as of the closing date of last period:

1,910,852 (common stock)

Shares acquired during the Demand for purchase of shares 311,688 period:

less than one unit from (common stock) shareholders Aggregate amount of 132 acquisition costs:

(million yen)

Shares disposed during the Demand for sale of shares 61,554 period:

less than one unit from (common stock) shareholders Aggregate amount of 22 sales value:

(million yen)

Shares held as of the closing 2,160,986 date of this period:

(common stock)

MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES As of March 31, 2010 Name ofCompany Voting Rights Racto (Percentage)

Location Toshiba TEC Corporation 52.9 Shinagawa-ku, Tokyo Toshiba Mobile Display Co., Ltd.

100.0 Fukaya Toshiba Plant Systems & Services Corporation 61.6 Ota-ku, Tokyo Toshiba Elevator and Building Systems Corporation 80.0 Shinagawa-ku, Tokyo Toshiba Solutions Corporation 100.0 Minato-ku, Tokyo Toshiba Medical Systems Corporation 100.0 Otawara Toshiba Nuclear Energy Holdings (US) Inc.

67.0 U.S.

Toshiba Nuclear Energy Holdings (UK) Ltd.

67.0 U.K.

Toshiba Consumer Electronics Holdings Corporation 100.0 Chiyoda-ku, Tokyo Toshiba America, Inc.

100.0 U.S.

Toshiba Capital (Asia) Ltd.

100.0 Singapore Taiwan Toshiba International Procurement Corporation 100.0 Taiwan Notes: 1) The Company has 542 consolidated subsidiaries (including the above 12 companies) in accordance with Generally Accepted Accounting Standards in the U.S., and 200 affiliated compa-nies accounted for by the equity method. The main affiliated companies accounted for by the equity method are Ikegami Tsushinki Co., Ltd., Shibaura Mechatronics Corporation.

Toshiba Machine Co., Ltd., and Topcon Corporation.

2) Toshiba Nuclear Energy Holdings (US) Inc. substantially owns all of the equity of Westinghouse Electric Company L.L.C.

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Management's Discussion and Analysis Main Places of Business and Facilities of the Company As of March 31. 2010 Segment Major Distribution Company-wide Offices Principal Office (Minato-ku, Tokyo), Hokkaido Branch Office (Sapporo), Tohoku Branch Office (Sendai), Shutoken Branch Office (Saitama), South-Shutoken Branch Office (Yokohama), Hokuriku Branch Office (Toyama), Chubu Branch Office (Nagoya), Kansai Branch Office (Osaka), Chugoku Branch Office (Hiroshima), Shikoku Branch Office (Takamatsu), Kyushu Branch Office (Fukuoka)

Laboratories Corporate Research & Development Center (Kawasaki), Software Engineering and others Center (Kawasaki), Corporate Manufacturing Engineering Center (Yokohama),

Yokohama Complex (Yokohama), Himeji Operations (Himeji)

Digital Products Laboratories Core Technology Center (Ome), PC Development Center (Ome)

Production Facilities Fukaya Operations (Fukaya), Ome Complex (Ome), Hino Operations (Hino)

Electronic Devices Laboratories Center For Semiconductor Research & Development (Yokohama)

Production Facilities Microelectronics Center (Kawasaki), Yokkaichi Operations (Yokkaichi),

Kitakyushu Operations (Kitakyushu), Oita Operations (Oita)

Social Infrastructure Laboratories Power and Industrial Systems Research and Development Center (Yokohama),

Isogo Nuclear Engineering Center (Yokohama)

Production Facilities Fuchu Complex (Fuchu, Tokyo), Komukai Operations (Kawasaki), Hamakawasaki Operations (Kawasaki), Keihin Product Operations (Yokohama), Mie Operations (Asahi-Cho, Mie)

RISK FACTORS RELATING TO THE TOSHIBA GROUP AND ITS BUSINESS The business areas of energy and electronics, the Group's main business areas, require highly advanced technology for their operation. At the same time, the Group faces fierce global competition. Therefore, appropriate risk management is indis-pensable. Major risk factors related to the Group identified by the Company are described below. The actual occurrence of any of those risk factors may adversely affect the Group's operating results and financial condition.

The risks described below are identified by the Group based on information available to the Group as of June 23, 2010 and involve uncertainties. Therefore the actual impacts of such risks on the Group's business may differ. The Group makes every effort to minimize any impact from these risks by maintaining an effective risk management.

1. Risks related to management policy (1) Strategic concentrated investment The Group makes strategic, concentrated investments in nuclear and other power and industrial systems businesses, in NAND Flash memories, and in new, strong and promising businesses, such as vital needs support and healthcare businesses; water system solutions; smart grids; storage devices; solar photovoltaic systems; new lighting systems, such as LED, SCiBT",

and smart facilities. In such areas as LCDs and System LSIs, the Group is also executing restructuring and selective alloca-tions of resources. While it is essential to allocate limited management resources to strategic, high growth areas in which the Group enjoys competitiveness, in order to secure and maintain the Group's advantages, the areas in which the Company makes concentrated investments may not grow as anticipated, the Group may not maintain or strengthen its competitive power in such areas, or the relevant investments may not generate the anticipated level of profit. In order to avoid such risks, the Group is conscious of capital costs and the need to conduct careful selection of investment items and to enhance progress management. Alongside these efforts, the Group also aims to achieve growth through allocation of strategic resources and to reinforce its financial base by means of thorough implementation of management of comprehensive investments that reflect the nature of each individual business. Further to this, the Group also makes every effort to utilize external resources through strategic business alliances where necessary.

(2) Success of strategic business alliances and acquisitions The Group actively promotes business alliances with other companies, including the formation ofjoint ventures and acquisi-tions, in order to grow new businesses in research, development, production, marketing and various other areas. If the Group has any disagreement with its partner in a business alliance or an acquisition in respect of financing, technological manage-ment, product development, management strategies or otherwise, such business alliance may be terminated or such acquisi-I0

tion may not have the expected effects. In addition, the Group's operating results and financial condition may be adversely affected by additional capital expenditures and guarantees to meet the obligations for such partnership business that may be incurred due to the deterioration of the financial condition of the partner, as well as for other reasons. Based on these assumptions, the Group pays careful attention to optimizing business formation to secure correspondence to the nature of the relevant business.

(3) Business structure reformation The Group as a whole is taking measures to reform the structure of poorly performing businesses including acceleration of strategic allocations of resources and development of a profit-making system that enables the Group to generate profit regardless of the market situation. With implementing those programs, restructuring these programs are well under way as a result of steady implementation of planned measures, and their progress is followed up in monthly meetings of management.

As a result, the Group has achieved an improvement in profit earlier than initially planned. However, if, in future, such pro-grams do not proceed as scheduled, or fail to produce the expected results, or otherwise result in unexpected adverse effects, the Group's operating results or financial condition may be affected.

(4) Measure for defense against takeover The Company has introduced a plan outlining countermeasures that may be taken against any large-scale acquisitions of the Company's shares (the "Takeover Defense Measures"). If an entity making a large-scale acquisition of the Company's shares does not comply with the procedures under the Takeover Defense Measures, the Company will counteract by making a gratis allotment of stock acquisition rights (shinkabu yoyaktuken) under the Takeover Defense Measures. Although such Takeover Defense Measures were introduced for the purpose of protecting and enhancing the corporate value of the Company and the common interests of its shareholders, they may limit the opportunities for the shareholders of the Company to sell their shares to hostile acquirers.

2. Risks related to financial condition, results of operations and cash flow (1) Business environment of the Digital Products business The market for the Digital Products business is intensely competitive, with many companies manufacturing and selling products similar to those offered by the Group. Additionally, this business may be heavily affected by economic fluctuations and consumer spending trends, and decreases in demand may cause declines in product prices. On the other hand, in times of rapid increases in demand, the Group's profit may be reduced due to the need to purchase costly parts and components, and a shortage of these parts and components may hinder the Group's ability to supply products to the market in a timely manner. The Group makes every effort to implement this business, monitoring the latest market trends in order to flexibly meet changes in supply and demand conditions and to thoroughly control production, procurement, sales and inventory (PSI). At the same time, the Group makes every effort to avoid risks and reduce costs in connection with the procurement of parts and components by promoting package procurement and comprehensive procurement on a Group-wide basis. The Group also makes every effort to minimize any impact from changes in the market by undertaking regional strategies for the promotion of business expansion and similar purposes in developing nations, including China, where its growth rate remains comparatively high in a fast changing market, and by appropriately revising the composition of products, such as introducing commoditized products that deliver the required functionality and strong cost competitiveness. However, any rapid fluctua-tion in demand may result in price erosion or increases in prices of components, which may adversely affect the Group's financial results with respect to this business.

(2) Business environment of the Electronic Devices business The market for the Electronic Devices business is highly cyclical, depending on demand, and intensely competitive, with many companies, mainly in overseas markets, manufacturing and selling products similar to those offered by the Group. The results of this business tend to change with economic fluctuations and, in particular, to be heavily affected by exchange rate fluctuations. Although the Group has secured substantial cost reductions, including reductions in fixed costs, through the strong implementation of restructuring programs, and operating income in Semiconductor business saw a significant improvement and returned to profit, unforeseen market changes and corresponding changes in demand may result in a mis-match between the production of particular products based on the sales volume initially expected and the actual demand for such products, or cause the business to be adversely affected by a decrease in product prices due to oversupply. In particular, the price for NAND Flash memories, the Group's major product in this business, may undergo rapid change, although the price was stable in FY2009, and System LSIs and other semiconductor products also face uncertain future market trends, in spite of gradual recovery in the consumer market for digital products that use semiconductors. The movement of the con-sumer market may influence demand for semiconductors. Fluctuations in the results of this business may materially affect the Group's overall business performance. In addition, the market may face a downturn, the Group may fail to market new II

Management's Discussion and Analysis products in a timely manner, or a rapid introduction of new technology may make the Group's current products obsolete.

Economies of scale with respect to the manufacture of the many products produced by this business are significant and there is intense competition to develop and market new products. Therefore, significant levels of capital expenditures are required to maintain and improve competitiveness in both the price and quality of products.

The Group makes every effort to implement the business by focusing its attention on these factors and promoting strate-gic allocation of resources. At the same time, the Group makes every effort to increase profits by enhancing cost competitive-ness, which is achieved by maintaining a technological advantage and expanding the product line-up.

Additionally, the Group undertakes rigorous selection in its investments and makes every effort to carefully monitor the latest market trends and to invest at the optimum level, while thoroughly controlling flexible production that corresponds to fluctuations in market demand, adjustment of supplies and investment management. The Group promotes procurement of components from overseas in US dollars in order to mitigate the impact of exchange rate fluctuations.

In addition, Toshiba Mobile Display Co., Ltd., which engages in the LCD business, remains in a situation in which its lia-bilities exceed its assets, and operates in a tight business environment in which it must deal with shifting exchange rates and price declines. The Group aims to regain profitability by implementing business structure reformation programs, with a pri-mary emphasis on LCD displays for mobile equipment that requires leading-edge technologies.

(3) Business environment of the Social Infrastructure business A significant portion of net sales in the Social Infrastructure business is attributable to national and local government expendi-tures on public works and to capital expenditures by the private sector. The Group monitors trends in such capital expenditures, and also makes best efforts to cultivate new business and customers, in order to avoid undue impact from any fluctuations.

However, reductions and delays in spending on public works, low levels of private capital expenditures due to economic recession, and exchange rate fluctuations may have a negative impact on this business.

Furthermore, this business involves the supply of products and services for large-scale, long-term projects on a worldwide basis.

Post-order changes in the specifications or other terms, delays, appreciation of material costs, policy changes, changes to and stop-pages of plans for various reasons, as well and natural and other disasters and other factors, may adversely and substantially affect the progress of such projects. In addition, when the percentage of completion method is applied to revenue recognition for long term construction contracts, the Group may reassess expected costs and profits and record previously accrued profits as a loss, in the event that the expected profits from such projects do not meet original expectations or projects are delayed or cancelled.

Furthermore, it may not be possible to pass on to the customer or others any additional costs incurred due to delays in the work process, and such costs may not be collected. In order to deal with such cases, the Group makes every effort to grasp trends in markets and projects and to ensure risk management before and after accepting orders. In addition, whenever possible, the Group makes every effort to appropriately avoid risk by making agreements with customers for advance payment or performance pay-ments, as well as other agreements on supplemental payments in the event of changes in specifications and delays in work.

(4) Business environment of the Home Appliances business The Home Appliances business faces intense competition from many companies manufacturing and selling products similar to those offered by the Group. In addition, the results of this business tend to be strongly affected by consumer spending, the emergence of new technologies and price declines in existing products for industrial light sources, and trends in building and housing construction starts relative to the lighting and air-conditioning businesses. Accordingly, the impact of the recession and price declines may lead to a deterioration in the results of this business Given this, the Group is making every effort to expand this business by developing it at the global level, including in developing nations that have a high growth rate, as well as developing new products that are environmentally friendly and that contribute to energy saving, such as new lighting sys-tems.

(5) Financial covenants Loan agreements entered into between the Company and financial institutions provide for financial covenants. Therefore, if the Company's consolidated net assets or credit rating falls below the respective levels provided for in the financial covenants, the Company's obligations with respect to relevant loan repayments may be accelerated upon request from the relevant lend-ing financial institutions. Furthermore, any breach by the Company of such financial covenants may trigger acceleration of the bonds or other borrowings of the Company.

The Company aims to improve business performance by further promoting restructuring programs and the transforma-tion of its business structures, and intends to continue to take all measures necessary to avoid breaches of its financial covenants and any consequent acceleration by improving its earnings through implementation of the "Action Programs to Improve Profitability." The Company is making efforts to obtain understanding of this by the financial institutions with which it has agreements. However, any acceleration of the Company's loan repayments may materially affect the Company's 12

financial condition and business operations.

(6) Financial risk Apart from being affected by the business operations of the Company or the Group, the Company's consolidated and non-consolidated results and financial condition may be affected by the following major financial factors:

(i) Deferred tax assets The Company accounted for a substantial amount of deferred tax assets. The Group reduces deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Recording of valuation allowances includes estimates and therefore involves uncertainty.

The Group may be required hereafter to record further valuation allowances, and the Group's future results and financial condition may be adversely affected thereby.

(ii) Exchange rate fluctuations The Group conducts business in various regions worldwide using a variety of foreign currencies and is therefore exposed to exchange rate fluctuations. Foreign currency denominated assets and liabilities held by the Group are translated into yen as the currency for reporting consolidated financial results. The effects of currency translation adjustments are included in "accumu-lated other comprehensive income (loss)" reported as a component of equity attributable to shareholders of Toshiba Corporation. As a result, the Group's equity attributable to shareholders of Toshiba Corporation may be affected by exchange rate fluctuations.

(iii) Accrued pension and severance costs The Group recognizes the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of its pension plan in the consolidated statements of income with a corresponding adjustment, net of tax, included in "accumulat-ed other comprehensive income (loss)" reported as a component of equity attributable to shareholders of Toshiba Carporation. Such adjustment to "accumulated other comprehensive income (loss)" represents the result of adjustment for the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligations. These amounts will be subsequently recognized as net periodic pension and severance costs pursuant to the applicable accounting standards.

The funded status of the Group's pension plan may deteriorate due to declines in the fair value of plan assets caused by lower returns, increases of severance benefit obligations caused by changes in the discount rate, salary increase rates or other actuarial assumptions. As a result, the Group's equity attributable to shareholders of Toshiba Corporation may be adversely affected, and the net periodic pension and severance costs to be recorded in "cost of sales" or "selling, general and administrative expens-es" may increase.

(iv) Impairment of long-lived assets and goodwill If events or changes in circumstances indicate that the carrying amount of any long-lived asset will not be recovered by the future undiscounted cash flow, the loss is recognized as an impairment, and the impairment loss is recognized as the amount by which the carrying value of the asset exceeds its fair value. A substantial amount of goodwill has been recorded in the Company's consolidated balance sheet in accordance with U.S.GAAP. Goodwill is required to be tested for impairment annu-ally. If an impairment test shows that the total of the carrying amounts, including goodwill, in relation to the business related to such goodwill exceeds its fair value, the relevant goodwill must be recalculated, and the balance of the current amount and the recalculated amount will be recognized as an impairment. Therefore, additional impairments may be recorded, depending on the valuation of long-lived assets and the estimate of future cash flow from business with goodwill.

(7) Changes in financing environment and others The Group has substantial amounts of interest-bearing debt for financing that is highly susceptible to market environments, including interest rate movements and fund supply and demand. Thus, changes in these factors may have an adverse effect on the Group's funding activities. The Group has also been raising funds by issuing bonds or taking loans from financial institu-tions. There can be no assurance that the Group will obtain refinancing loans or new loans in the future on similar terms. If the Group is unable to obtain loans for the necessary amount in a timely manner, the Group's financing may be adversely affected.

3. Risks related to business partners and others (1) Procurement of components and materials It is important for the Group's business activities to procure materials, components and other goods in a timely and appro-priate manner. However, such materials, components and goods may only be obtainable from a limited number of suppliers due to the particularity of such materials, components and goods and therefore may not be easily replaced if the need to do so arises. In cases of delay or other problems in receiving supply of such materials, components and other goods, shortages may occur or procurement costs may rise. It is necessary to procure materials, components and other goods at competitive costs 13

Management's Discussion and Analysis and to optimize the entire supply chain, including suppliers, in order for the Group to bring competitive products to market.

Any failure by the Group to procure such materials, components and other goods from key suppliers may impact the Group's competitiveness. Furthermore, any case of defective materials, components or other goods, or any failure to meet required specifications with respect to such materials, components or other goods, may also have an adverse effect on the reli-ability and reputation of the Group and Toshiba brand products.

In order to deal with such situations, the Group makes every effort to avoid risks by promoting multi-vendor procurement by means of adopting standard products, developing and cultivating new suppliers, and engaging in comprehensive procure-ment on a Group-wide basis, in addition to ensuring acquisition of materials, components and other goods through enhanced cooperation with key suppliers.

(2) Securing human resources A large part of the success of the Group's businesses depends on securing excellent human resources in every business area and process, including product development, production, marketing and business management. In particular, securing the necessary human resources is essential in respect of achieving globalization of the Group's businesses. However, competition to secure human resources is intensifying, as the number of qualified personnel in each area and process is limited, while demand for such personnel is increasing. As a result, the Group may fail to retain existing employees or to obtain new human resources. The Group will further reinforce educational programs for employees, toward developing human resources, including nurturing personnel able to support and promote business globalization.

In order to reduce fixed costs, the Group is implementing personnel measures, including the reallocation of human resources to focus on strong and promising businesses, reclaiming jobs that are oursourced to third parties or conducted by limited-term employees, reducing the number of limited-term workers, implementing a leave system, and reducing overtime through a review of working systems. However, fixed costs may not be reduced as anticipated or the implementation of such

.personnel measures may adversely affect the Group's employee morale, production efficiency or the ability to secure capable human resources.

4. Risks related to products and technologies (1) Investments in new businesses The Group invests in companies involved in new businesses, enters into alliances with other companies with respect to new businesses, and actively develops its own new businesses.

The Group is now accelerating expansion of new growth businesses that can take advantage of a synergy of the Group's strengths in areas that include vital needs support and healthcare businesses, water system solutions, smart grids, storage devices, solar photovoltaic systems, new lighting systems, such as LEDs and SCiBTM1.

The Group is also seeking to expand its smart facilities business, which provides total building solutions for office and commercial facilities. The business delivers environmentally and user friendly systems that reduce power consumption by exploiting a synergy of technologies for new businesses in combination with existing technologies.

The Group is actively engaged in research and development to cultivate new business domains and fields based on next-generation technologies, such as silicon carbide (SiC) semiconductors and new memory devices, both of which are expected to become next generation growth areas.

Cultivation of new businesses entails substantial uncertainty, and if any new business in which the Group invests or which the Group attempts to develop does not progress as planned, the Group may be adversely affected by incurring investment expenses that do not lead to the anticipated results. In order to avoid these risks, the Group makes every effort to resolve var-ious technological issues and to develop and capture potential demand effectively in the business development process.

5. Risks related to trade practice's (1) Parent company's guaranty When a subsidiary of the Company accepts an order for a large project, such as a plant, the Company, as the parent compa-ny, may, at the request of the customer, provide guarantees with respect to the subsidiary's performance under the contract.

Such guarantees are made pursuant to standard business practices and in the ordinary course of business. If the subsidiary subsequently fails to fulfill its obligations, the Company may be obligated to bear the resulting loss. The Company makes every effort to conduct appropriate management by periodically observing the subsidiaries' fulfillment of the contract require-ments and by providing cooperation where necessary.

6. Risks related to new products and new technology (1) Development of new products It is critically important for the Group to offer the market viable and innovative new products and services. The Group iden-14

tifies strategic product areas, which include product areas that are expected to drive future profits, and the Group makes its best efforts to assure the timely introduction of new products in such areas. However, due to the rapid pace of technological innovation, the development of new technologies, the launch of products to replace current ones, and changes in technologi-cal standards, the optimum introduction of new products to the market may not be accomplished, or new products may be accepted by the market for a shorter period than anticipated. In addition, any failure on the part of the Group to obtain suffi-cient funding and resources for continuous product development may affect the Group's ability to develop new products and services and to introduce them to market.

From the viewpoint of enhancing concentration and selection of managerial resources, the Group now selects research and development themes more rigorously, with a primary focus on developing original and advanced technologies, with close con-sideration for the timing of market introduction. More rigorous selection of research and development items may impair the Group's technological superiority in certain products and technological fields. In order to avoid these risks, the Group intends to enhance the efficiency of research and development activities by sharing intellectual property through the promo-tion of common platforms and using overseas resources more efficiently in system development.

7. Risks related to laws and regulations (1) Information security The Group maintains and manages personal information obtained through business operations, as well as trade secrets regarding the Group's technology, marketing and other business operations. Even though the Group makes every effort to manage this information appropriately, the Group's business performance and financial situation may be subject to negative influences in the event of an unanticipated leak of such information and such information is obtained and used illegally by a third party.

Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group makes every effort to ensure the stable operation of its information systems, it is possible that their functionality could be impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, or other causes.

(2) Compliance and internal control The Group is active in various businesses in regions worldwide, and its business activities are subject to the laws and regula-tions of each region. The Group has implemented and operates necessary and appropriate internal control systems for a number of purposes, including compliance with laws and regulations and strict reporting of business and financial matters.

However, there can be no assurance that the Group will always be able to structure and operate effective internal control sys-tems. Furthermore, such internal control systems may themselves, by their nature, have limitations, and it is not possible to guarantee that they will fully achieve their objectives. Therefore, there is a possibility that the Group will unknowingly and unintentionally violate laws and regulations in future. Changes in laws and regulations or changes in interpretations of laws and regulations by the relevant authorities may also cause difficulty in achieving compliance with laws and regulations or may result in increased compliance costs. On these grounds, the Group makes every effort to minimize these risks by making periodic revisions to the internal control systems, continuously monitoring operations, and so forth.

(3) The environment The Group is subject to various environmental laws, including laws on air pollution, water pollution, toxic substances, waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities. While the Group pays careful attention to these laws and regulations, it is possible that the Group may encounter legal or social liability for environmental matters, such as liability for the clean up of land at manufacturing bases throughout the world, regardless of whether the Group is at fault or not, with respect to its past, present or future business activities. It is also possible that, in future, the Group will face more stringent requirements on the removal of environmental hazards, including toxic substances, or on further reducing emissions of greenhouse gases, as a result of the introduction of more demanding environmental regu-lations or in accordance with societal requirements.

The Group's operations require the use of various chemical compounds, radioactive materials, nuclear materials and other toxic materials. The Group takes maximum care of such materials, giving first priority to human life and safety. However, the Group may incur damage, or the Group's reputation may be adversely affected, as a result of a natural disaster, the threat or occurrence of a terrorist incident, or of an accident or other contingency (including those beyond the Group's control) that leads to environmental pollution.

(4) Product quality claims While the Group makes every effort to implement quality control measures and to manufacture its products in accordance with appropriate quality-control standards, there can be no assurance that all products are free of defects that may result in a i5

Management's Discussion and Analysis recall, lawsuits or other claims relating to product quality.

8. Risks related to material legal proceedings (1) Legal proceedings The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and other legal proceedings, and investigations by relevant authorities. It is possible that such cases may arise in the future. Due to the differences in judicial systems and the uncertainties inherent in such proceedings, the Group may be subject to a ruling requiring payment of amounts far exceeding its expectations. Any judgment or decision unfavorable to the Group could also have a material adverse effect on the Group's business, operating results or financial condition. In addition, due to various cir-cumstances, there can be no assurance that lawsuits involving claims for large sums will not be brought, even if the possibility of receiving orders for such payment is quite low.

In January 2007, the European Commission (the "Commission") adopted a decision imposing fines on 19 companies, including the Company, for violating EU competition laws in the gas insulated switchgear market. The Company was indi-vidually fined EUR86.25 million and was also fined EUR4.65 million jointly and severally with Mitsubishi Electric Corporation. The Company contends that it did not violate EU competition laws and appealed the decision to the European Court of First Instance in April 2007.

Furthermore, with regard to alleged anti-competitive behavior, the Group is under investigation by the US Department of Justice, the Commission, and other authorities, for alleged violations of competition laws with respect to products that include semiconductors, LCD products, cathode ray tubes (CRT), heavy electrical equipment, and optical disc devices. Class action lawsuits with respect to alleged anti-competitive behavior have been brought against the Group in the United States and are currently pending.

9. Risks related to directors, employees, major shareholders and affiliates (1) Alliance in NAND flash memories The Group has a strategic alliance with a U.S. company, SanDisk Corporation ("SanDisk"), for the production of NAND flash memories, which includes production joint ventures (equity method affiliates). Under the joint venture agreement, the Group may purchase SanDisk's ownership interests in the production joint ventures at book value. In addition, the Company and SanDisk each provide a 50% guaranty in respect of the lease agreements of production facilities held by the production joint ventures. In the event that SanDisk's operating results and financial condition deteriorate, the Company may succeed to SanDisk's guaranty obligations or purchase SanDisk's ownership interests in the relevant production joint venture, in which case the production joint ventures will thereafter be treated as consolidated subsidiaries of the Company.

(2) Alliance in nuclear power systems business The Group acquired Westinghouse group in October 2006. The Company's ownership interest in Westinghouse group (including the holding company) is currently 67%. The remainder is held by three companies in Japan and overseas (the "minority shareholders").

While the shareholders' agreements restrict the minority shareholders from transferring their respective ownership inter-ests in Westinghouse's holding company until October 1, 2012, the minority shareholders have been given an option to sell all or part of their ownership interests to the Company ("Put Options"). However, since exercising the Put Options held by some of the minority shareholders requires consent from a third party, such minority shareholders are not able to exercise their Put Options at their own discretion.

The Group also has an option to purchase from the minority shareholders all or part of their respective ownership interest in Westinghouse's holding company under certain conditions. These options are in place for the purpose of protecting the interests of the minority shareholders and preventing equity participation by a third party which may put the Group at dis-advantage. The Company makes every effort to maintain a favorable relationship with the minority shareholders in connec-tion with Westinghouse's business. However in the event that the minority shareholders exercise their respective Put Options, or the Group exercises its purchase option, the Group will seek investment from a new strategic partner. Prior to such an investment, the Group may need to procure substantial funds in connection with the exercise of Put Options or pur-chase options.

I6

N

10. Others (1) Measures against counterfeit products While the Group protects and seeks to enhance the value of the Toshiba brand, counterfeit products created by third parties are found worldwide. While the Group makes every effort to prevent counterfeit products, the heavy circulation of counter-feit products may dilute the value of the Toshiba brand, and the Group's net sales may be adversely affected.

(2) Protection of intellectual property rights The Group makes every effort to secure intellectual property rights. However, in some regions, it may not be possible to secure sufficient protection.

The Group also uses the intellectual property of third parties pursuant to licenses. It is possible that the Group may fail to receive the necessary third-party licenses for new technology or is unable to obtain the renewal of existing party licenses or receives them on unfavorable terms.

In addition, it is also possible that a suit or such similar action or proceeding may be brought against the Group in respect of intellectual property rights or that the Group may itself have to file a suit in order to protect its intellectual property rights. Such lawsuits may require time, costs and other management resources. As a result of the outcome of these rulings, the Group may not be able to use important technology, or the Group may be found to be liable for damages.

(3) Political, economic and social conditions The Group undertakes global business operations. Any changes in political, economic, and social conditions and policies, legal or regulatory changes and exchange rate fluctuations, in Japan or overseas, may impact market demand and the Group's business operations. The Group makes every effort to avoid these risks and to reduce any impact when such risks emerge by continuously monitoring changes in the situation in each region where the Group operates, including legal and regulatory changes, and by promptly initiating countermeasures.

(4) Natural disasters Most of the Group's Japanese production facilities are located in the Keihin region of Japan, which includes Tokyo, Kawasaki City, Yokohama City and the surrounding area, while key semiconductor production facilities are located in Kyushu, Tokai, Hanshin and Tohoku. The Group is currently expanding its production facilities in Asia. As a result, any occurrence of a wide-scale disaster, terrorism or epidemic illness, such as a new type of flu, in any of these areas could have a significant adverse effect on the Group's results.

Additionally, while the Group takes precautionary measures, such as the construction of earthquake-resistant buildings at production facilities, large-scale disasters, such as earthquakes or typhoons, in regions where production sites are located may damage or destroy production capabilities and cause operational and transportation interruptions or other similar disrup-tions, which could affect production capabilities significantly.

In order to manage these risks, the Group established the "Business Continuity Plan (BCP)" as part of its continuing effort to avoid or minimize any impact from such disasters.

17

Consolidated Balance Sheets Toshiba Corporation and Subsidiaries As of March 31, 2010 and 2009 Thousands of U.S. dollars (Note 3)

M.llions of en Assets 2010 2009 2010 Current assets:

Cash and cash equivalents V 267,449 Y 343,793

$ 2,875,796 Notes and accounts receivable, trade:

Notes (Note 7) 44,122 64,260 474,430 Accounts (Note 7) 1,160,389 1,038,396 12,477,301 Allowance for doubtful notes and accounts (20,112)

(19,270)

(216,258)

Inventories (Note 8) 795,601 758,305 8,554,849 Deferred tax assets (Note 18) 134,950 141,008 1,451,075 Other receivables 187,164 176,196 2,012,516 Prepaid expenses and other current assets (Note 21) 192,043 217,943 2,064,979 Total current assets 2,761,606 2,720,631 29,694,688 Long-term receivables and investments:

Long-term receivables (Note 7) 3,337 3,987 35,882 Investments in and advances to affiliates (Note 9) 366,250 340,756 3,938,172 Marketable securities and other investments (Note 6) 253,267 190,110 2,723,301 Total long-term receivables and investments 622,854 534,853 6,697,355 Property, plant and equipment (Notes 11, 17 and 22):

Land 105,663 98,116 1,136,161 Buildings 1,016,520 996,709 10,930,323 Machinery and equipment 2,508,934 2,698,626 26,977,785 Construction in progress 97,309 114,617 1,046,333 3,728,426 3,908,068 40,090,602 Less-Accumulated depreciation (2,749,700)

(2,818,489)

(29,566,667)

Total property, plant and equipment 978,726 1,089,579 10,523,935 Other assets:

Goodwill and other intangible assets (Note 10) 618,731 629,820 6,653,022 Deferred tax assets (Note 18) 355,687 352,948 3,824,591 Other assets 113,569 125,394 1,221,172 Total other assets 1,087,987 1,108,162 11,698,785 Total assets Y5,451,173 Y 5,453,225

$58,614,763 The accompanying notes are an itegral pan of these statements i8

Thousands of U S. dollars (Noce 3)

Millions of yen Liabilities and equity 2010 2009 2010 Current liabilities:

Short-term borrowings (Note 11)

?

51,347 Y 747,971 552,118 Current portion of long-term debt (Notes 11 and 21) 206,017 285,913 2,215,237 Notes and accounts payable, trade 1,191,885 1,003,864 12,815,968 Accounts payable, other and accrued expenses (Note 26) 375,902 366,219 4,041,957 Accrued income and other taxes 42,384 38,418 455,742 Advance payments received 317,044 268,083 3,409,075 Other current liabilities (Notes 18,21 and 24) 303,866 357,305 3,267,376 Total current liabilities 2,488,445 3,067,773 26,757,473 Long-term liabilities:

Long-term debt (Notes 11.12 and 21) 960,938 776,768 10,332,667 Accrued pension and severance costs (Note 13) 725,620 719,396 7,802,365 Other liabilities (Notes 18 and 21) 148,548 130,007 1,597,290 Total long-term liabilities 1,835,106 1,626,171 19,732,322 Total liabilities V4,323,551 Y4,693,944

$46,489,795 Equity attributable to shareholders of Toshiba Corporation (Notes 12 and 19):

Common stock:

Authorized-10,000,000,000 shares Issued:

2010-4,237,602,026 shares

¥ 439,901 Y

$ 4,730,118 2009-3,237,602,026 shares 280,281 Additional paid-in capital 447,733 291,137 4,814,333 Retained earnings 375,376 395,134 4,036,301 Accumulated other comprehensive loss (464,250)

(517,996)

(4,991,935)

Treasury stock, at cost:

2010-2,160,986 shares (1,305)

(14,032) 2009-1,910,852 shares (1,210)

Total equity attributable to shareholders of Toshiba Corporation 797,455 447,346 8,574,785 Equity attributable to noncontrolling interests 330,167 311,935 3,550,183 Total equity

¥1,1127,622 Y 759,281

$12,124,968 Commitments and contingent liabilities (Notes 23.24 and 25)

Total liabilities and equity

¥!5,451,173 S,453,225

$58,614,763 19

Consolidated Statements of Income Toshiba Corporation and Subsidiaries For the years ended March 31, 2010 and 2009 Thousands of U.S. dollars (Note 3)

Milhions of yen 2010 2009 2010 Sales and other income:

Net sales

¥6,381,599 Y 6,654,518

$68.619,344 Interest and dividends 7,980 19,432 85,807 Equity in earnings of affiliates (Note 9) 22,385 9,596 240,699 Other income (Notes 6,7,16 and 21) 63,103 146,923 678,527 6,475,067 6,830,469 69,624,377 Costs and expenses:

Cost of sales (Notes 10, 14, 17. 22 and 26) 4,922,237 5,366,087 52,927,280 Selling general and administrative (Notes 10, 14, 15 and 22) 1,342,171 1,538,617 14,431,946 Interest 35,735 33,693 384,247 Other expense (Notes 6,7,16,17 and 21) 149,962 171,324 1,612,495 6,450,105 7,109,721 69,355,968 Income (loss) from continuing operations, before income taxes and noncontrolling interests 24,962 (279,252) 268,409 Income taxes (Note 18):

Current 52,108 52,308 560,301 Deferred (22,420) 2,015 (241,075) 29,688 54,323 319,226 Loss from continuing operations, before noncontrolling interests (4,726)

(333,575)

(50,817)

Loss from discontinued operations, before noncontrolling interests (Note 4)

(567)

(13,779)

(6,097)

Net loss before noncontrolling interests (S,293)

(347,354)

(56,914)

Less: Net income (loss) attributable to noncontrolling interests 14,450 (3,795) 155,376 Net loss attributable to shareholders of Toshiba Corporation V (19,743)

Y (343,559)

$ (212,290)

U.S. dollars Yen (Note 3)

Basic net loss per share attributable to shareholders of Toshiba Corporation (Note 20)

Loss from continuing operations V

(4.82)

Y (101.92)

(0.05)

Loss from discontinued operations V

(0.11) y (4.26)

(0.00)

Net loss V

(4.93)

Y (106.18)

(0.05)

Diluted net loss per share attributable to shareholders of Toshiba Corporation (Note 20)

Loss from continuing operations V

(4.82)

Y (101.92)

(0.05)

Loss from discontinued operations

¥ (0.11)

V (4.26)

(0.00)

Net loss V

(4.93)

V (106.18)

(0.05)

Cash dividends per share (Note 19)

V 5.00 The accompanying notes are an in-egral pan ofthese scaremenss.

20

Consolidated Statements of Equity Toshiba Corporation and Subsidiaries For the years ended March 31, 2010 and 2009 Common stock shares Additional paid-in capital Millions of yen Accumulated other Retained comprehensive Trea earnings loss sit Equity Equrry attibuble to atmboaem to sury shareholders of noncontrolling ock Toshiba Corporation interests Total equity Balance at March 31, 2008 V 280,126 Y 290,936 Y 774,461 V (322,214) Y (1,044)Y1,022.265 V 369,911 Y 1,392,176 Issuance of shares (Notes 12 and 19) 155 155 310 310 Change in ownership for noncontrolling interests and others 46 46 (1,216)

(1,170)

Dividends attributable to shareholders of Toshiba Corporation (35,592)

(35,592)

(35,592)

Dividends attributable to noncontrolling interests (12,710)

(12,710)

Comprehensive loss:

Net loss (343,559)

(343,559)

(3,795)

(347,354)

Other comprehensive loss, net of tax (Noce 19):

Net unrealized gains and losses on securities (Note6)

(31,822)

(31,822)

(4,456)

(36,278)

Foreign currency translation adjustments (105,221)

(105,221)

(33,169)

(138,390)

Pension liability adjustments (Note 13)

(57,739)

(57,739)

(2,498)

(60,237)

Net unrealized gains and losses on derivative instruments (Nore 21)

(1,000)

(1,000)

(132)

(1,132)

Total comprehensive loss (539,341)

(44,050)

(583,391)

Purchase of treasury stock, net, at cost (176)

(166)

(342)

(342)

Balance at March 31, 2009 280,281 291,137 395,134 (517,996)

(1,210) 447,346 311,935 759,281 Issuance of shares (Note 19) 159,620 157,921 317,541 317,541 Change in ownership for noncontrolling interests and others (1,325)

(1,325) 15,884 14,559 Dividends attributable to noncontrolling interests (7,094)

(7,094)

Comprehensive income (loss):

Net income (loss)

(19,743)

(19,743) 14,450 (5,293)

Other comprehensive income (loss), net of tax (Note 191:

Net unrealized gains and losses on securities (Noce6) 51,587 51,587 3,810 55,397 Foreign currency translation adjustments (8,694)

(8,694)

(8,410)

(17,104)

Pension liability adjustments (Note 13) 11,230 11,230 (500) 10,730 Net unrealized gains and losses on derivative instruments (Note 21)

(377)

(377) 92 (285)

Total comprehensive income 34,003 9,442 43,445 Purchase of treasury stock, net, at cost (15)

(95)

(110)

(110)

Balance at March 31, 2010 V 439,901 Y 447,733 V 375,376 V (464,250) V (1,305)V 797,455 V 330,167 V 1,127,622 Thousands of U.S. dollars (Note 3)

Accumulated Equity Equity Common Additional other attributable no attribumable to stock paid-i Retained comprehensive Treasury sharehoiders of nonconuro.l.ng Total shares cap ta earnings loss stock Toshiba Corporation interests equity Balance at March 31, 2009 53,013,774 53,130,505 S4,248,752 S (S,569,849) S (13,010)S 4,810,172 S 3,354,140 S 8,164,312 Issuance of shares (Note 19) 1,716,344 1,698,075 3,414,419 3,414,419 Change in ownership for nonconcrolling interests and others (14,247)

(14,247) 170,796 156,549 Dividends attributable to nonconcrolling interests (76,280)

(76,280)

Comprehensive income (loss):

Net income (loss)

(212,290)

(212,290) 155,376 (56,914)

Other comprehensive income (loss), net of tax (Note 19):

Net unrealized gains and losses on securities (Note 6) 554,699 554,699 40,968 595,667 Foreign currency translation adjustments (93,484)

(93,484)

(90,430)

(183,914)

Pension liability adjustments (Note 13) 120,753 120,753 (5,376) 115,377 Net unrealized gains and losses on derivative instruments (Note 21)

(4,054)

(4,054) 989 (3,065)

Total comprehensive income 365,624 101,527 467,151 Purchase of treasury stock, net, at cost (161)

(1,022)

(1,183)

(1,183)

Balance at March 31, 2010

$4,730,118 $4,814,333 $4,036,301 $ (4,991,935) $ (14,032)$8,574,785 $3,550,183 $12,124,968 The accompanying notes are an integral part of these statements

'I 21

Consolidated Statements of Cash Flows if Toshiba Corporation and Subsidiaries For the years ended March 31, 2010 and 2009 Millions of yen Thousands of U.S. dollars (Note 3) 2010 2010 2009.

Cash flows from operating activities Net loss before noncontrolling interests Adjustments to reconcile net loss before noncontrolling interests to net cash provided by (used in) operating activities-Depreciation and amortization Provisions for pension and severance costs, less payments Deferred income taxes Equity in (earnings) losses of affiliates, net of dividends Loss from sales, disposal and impairment of property, plant and equipment and intangible assets, net (Gain) loss from sales and impairment of securities and other investments, net (Increase) decrease in notes and accounts receivable, trade (Increase) decrease in inventories Increase (decrease) in notes and accounts payable, trade Increase (decrease) in accrued income and other taxes Increase in advance payments received Other Net cash provided by (used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment and intangible assets Proceeds from sale of securities Acquisition of property, plant and equipment Acquisition of intangible assets Purchase of securities (Increase) decrease in investments in affiliates Proceeds from sale of Toshiba Building Co., Ltd. stock Other Net cash used in investing activities Cash flows from financing activities Proceeds from long-term debt Repayment of long-term debt Increase (decrease) in short-term borrowings, net Proceeds from stock offering Dividends paid Purchase of treasury stock, net Other V (5,293)

¥(347,354)

(56,914) 298,998 10,985 (22,809)

(11,566) 25,055 349,764 (13,733)

(7,843) 1,215 3,291 3,215,032 118,118 (245,258)

(124,366) 269,409 7,181 (98,347)

(35,SS4) 176,443 3,899 58,592 43,861 451,445 (37,878) 186,676 60,517 (182,501)

(51,647) 27,018 (3,536)

(16,011) 77,215 (1,057,495)

(382,301) 1,897,237 41,925 630,021 471,624 4,854,247 40,071 214,264 430,871 6,931 4,035 74,527 (215,876)

(477,720)

(2,321,247)

(47,053)

(59,055)

(505,946)

(14,316)

(29,609)

(153,935) 8,288 (43,399) 89,118 79,800 (30,967)

(23,624)

(332,979)

(252,922)

(335,308)

(2,719,S91) 397,181 (303,748)

(680,346) 317,541 (5,728)

(109)

(2,652) 337,415 (275,976) 469,026 (50,350)

(345)

(1,318) 4,270,763 (3,266,108)

(7,315,548) 3,414,419 (61,591)

(1,172)

(28,516)

Net cash provided by (used in) financing activities (277,861) 478,452 (2,987,753)

Effect of exchange rate changes on cash and cash equivalents 2,994 (31,989) 32,194 Net increase (decrease) in cash and cash equivalents (76,344) 95,144 (820,903)

Cash and cash equivalents at beginning of year 343,793 248,649 3,696,699 Cash and cash equivalents at end of year V 267,449 Y 343,793

$ 2,875,796 Supplemental disclosure of cash flow information Cash paid during the year for-Interest V 31,036 Y 35,004

$ 333,720 Income taxes 4,487 140,923 48,247 Non-cash financing activities-Conversion of convertible bonds 310 Sale of Toshiba building Co., Ltd. stock-Assets sold 173,353 Liabilities relinquished 151,434 The accompanying notes are an integral part of these statements.

22

Notes to Consolidated Financial Statements Toshiba Corporacion and Subsidiaries March 31, 2010

1. DESCRIPTION OF BUSINESS Toshiba Corporation and its subsidiaries (hereinafter collectively, the "Company") are engaged in research and development, manufacturing and sales of high-technology electronic and energy products, which range (1)Digital Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home Appliances, and (5)Others. For the year ended March 31, 2010, sales of Digital Products represented the most significant portion of the Company's total sales or approximately 34 percent. Social Infrastructure, second to Digital Products, represented approximately 34 percent, Electronic Devices approximately 19 per-cent and.Home Appliances approximately 8 percent of the Company's total sales. For the year ended March 31, 2009, sales of Digital Products represented the most significant portion of the Company's total sales or approximately 34 percent. Social Infrastructure represented approximately 33 percent, Electronic Devices approximately 19 percent and Home Appliances approximately 9 percent of the Company's total sales. The Company's products are manufactured and marketed throughout the world with approximately 45 percent and 49 percent of its sales in Japan for the years ended March 31, 2010 and 2009, respectively and the remainder in Asia, North America, Europe and other parts of the world.

2.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES PREPARATION OF FINANCIAL STATEMENTS Toshiba Corporation and its domestic subsidiaries maintain their records and prepare their financial statements in accor-dance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of the countries of their domicile.

Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States. These adjustments were not recorded in the statutory books of account.

In June 2009, the Financial Accounting Standards Board ("FASB") issued the Accounting Standards Codification

("ASC"). The ASC has become the source of authoritative U.S. generally accepted accounting principles ("GAAP"). The codified standards are described in "ASC", and the Pre-Codify standards are also presented together.

BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES The consolidated financial statements of the Company include the accounts of Toshiba Corporation, its majority-owned sub-sidiaries and variable interest entities ("VIEs") for which the Company is the primary beneficiary in accordance with ASC No.810 "Consolidation" (formerly FASB Interpretation No.46 as revised in December 2003). All significant intra-entity transactions and accounts are eliminated in consolidation.

Investments in affiliates in which the ability to exercise significant influence exists are accounted for under the equity method of accounting. The Company eliminates unrealized intra-entity profits in determining its equity in the current net earnings (losses) of such companies.

USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabili-ties, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company has identified significant areas where it believes assumptions and estimates are particularly critical to the consolidated financial statements. These are determination of impairment on long-lived tangible and intangible assets and goodwill, realization of deferred tax assets, uncertain tax posi-tions, pension accounting assumptions, revenue recognition and other valuation allowances and reserves including contingen-cies for litigations. Actual results could differ from those estimates.

CASH EQUIVALENTS All highly liquid investments with original maturities of 3 months or less at the date of purchase are considered to be cash equivalents.

FOREIGN CURRENCY TRANSLATION The assets and liabilities of foreign consolidated subsidiaries and affiliates that operate in a local currency environment are translated into Japanese yen at applicable current exchange rates at year end. Income and expense items are translated at aver-age exchange rates prevailing during the year. The effects of these translation adjustments are included in accumulated other comprehensive income (loss) and reported as a component of equity. Exchange gains and losses resulting from foreign cur-rency transactions and translation of assets and liabilities denominated in foreign currencies are included in other income or other expense in the consolidated statements of income.

23

Notes to Consolidated Financial Statements Toshiba Corporacion and Subsidiaries March 31, 2010 ALLOWANCE FOR UNCOLLECTIBLE RECEIVABLES An allowance for uncollectible trade receivables is recorded based on a combination of the write-off history, aging analysis, and an evaluation of any specific known troubled accounts. When all collection options are exhausted including legal recourse, the accounts or portions thereof are deemed to be uncollectible and charged against the allowance.

MARKETABLE SECURITIES AND OTHER INVESTMENTS The Company classifies all of its marketable securities as available-for-sale which are reported at fair value, with unrealized gains and losses included in accumulated other comprehensive income (loss), net of tax. Other investments without quoted market prices are stated at cost. Realized gains or losses on the sale of securities are based on the average cost of a particular security held at the time of sale.

Marketable securities and other investment securities are regularly reviewed for other-than-temporary declines in carrying amount based on criteria that include the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer and the Company's intent and ability to retain marketable securities and investment securities for a period of time sufficient to allow for any anticipated recovery in market value. When such a decline exists, the Company recognizes an impairment loss to the extent of such decline.

INVENTORIES Raw materials, finished products and work in process for products are stated at the lower of cost or market, cost being deter-mined principally by the average method. Finished products and work in process for contract items are stated at the lower of cost or estimated realizable value, cost being determined by accumulated production costs.

. In accordance with general industry practice, items with long manufacturing periods are included among inventories even when not realizable within one year.

PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, including significant renewals and additions, are carried at cost. Depreciation for property, plant and equipment associated with domestic operations is computed generally by the 250% declining-balance method with estimated residual value reduced to a nominal value. Depreciation for property, plant and equipment for foreign subsidiaries is generally computed using the straight line method.

The estimated useful lives of the buildings are 3 to 50 years, and those of the machinery and equipment are 2 to 20 years.

Maintenance and repairs, including minor renewals and betterments, are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS Long-lived assets, other than goodwill and intangible assets with indefinite useful lives, are evaluated for impairment using an estimate of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of such asset may not be recoverable. If the estimate of undiscounted cash flow is less than the carrying amount of the asset, an impairment loss is recorded based on the fair value of the asset. Fair value is determined primarily by using the anticipated cash flows discounted at a rate commensurate with the risk involved. For assets held for sale, an impairment loss is further increased by costs to sell. Long-lived assets to be disposed of other than by sale are considered held and used until disposed of.

GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Goodwill is allocated among and tested for impairment at the reporting unit level. Intangible assets with finite use-ful lives, consisting primarily of core and current technology and software, are amortized using the straight-line method over their respective contractual periods or estimated useful lives.

ENVIRONMENTAL LIABILITIES Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or reme-dial efforts are probable and the costs can be reasonably estimated, based on current law and existing technologies. Such liabili-ties are adjusted as further information develops or circumstances change. Costs of future obligations are not discounted to their present values.

INCOME TAXES The provision for income taxes is computed based on the pre-tax income (losses) included in the consolidated statements of income. Deferred income taxes are recorded to reflect the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, and are measured by applying cur-rently enacted tax laws. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the change is enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than 24

not that a tax benefit will not be realized.

The company recognizes the financial statement effects of tax positions when they are more likely than not, based on the technical merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

ACCRUED PENSION AND SEVERANCE COSTS The Company has various retirement benefit plans covering substantially all employees. The unrecognized net obligation existing at initial application of ASC No.715 "Compensation-Retirement Benefits" (formerly Statement of Financial Accounting Standards ("SFAS") No.87), and prior service costs resulting from amendments to the plans are amortized over the average remaining service period of employees expected to receive benefits. Unrecognized actuarial gains and losses that exceed 10 percent of the greater of the projected benefit obligation or the fair value of plan assets are also amortized over the average remaining service period of employees expected to receive benefits.

NET EARNINGS (LOSS) PER SHARE.

Basic net earnings (loss) per share attributable to shareholders of Toshiba Corporation ("EPS") is computed based on the weighted-average number of shares of common stock outstanding during each period. Diluted EPS assumes the dilution that could occur if stock acquisition tights were exercised to issue common stock, unless their inclusion would have an anti-dilu-tive effect.

REVENUE RECOGNITION Revenue of mass-produced standard products, such as digital products and electronic devices, is recognized when there is persuasive evidence of an arrangement, the product has been delivered, the sales price is fixed or determinable, and collectibil-ity is reasonably assured. Mass-produced standard products are considered delivered to customers once they have been shipped, and the title and risk of loss have transferred.

Revenue related to equipment that requires installation, such as social infrastructure business, is recognized when the installation of the equipment is completed, the equipment is accepted by the customer and other specific criteria of the equipment are demonstrated by the Company.

Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately from

• the equipment is recognized ratably over the contract term or as the services are provided.

Revenue on long-term contracts is recorded under the percentage of completion method. To measure the extent of progress toward completion, the Company generally compares the costs incurred to date to the estimated total costs to com-plete based upon the most recent available information. When estimates of the extent of progress toward completion and contract costs are reasonably dependable, revenue from the contract is recognized based on the percentage of completion. A provision for contract losses is recorded in its entirety when the loss first becomes evident.

Revenue from arrangements with multiple elements, which may include any combination of products, equipment, install-ment and maintenance, is allocated to each element based on its relative fair value if such element meets the criteria for treat-ment as a separate unit of accounting as prescribed in ASC No.605 "Revenue Recognition" (formerly the Emerging Issues Task Force Issue 00-21). Otherwise, revenue is deferred until the undelivered elements are fulfilled as a single unit of accounting.

Revenue from the development of custom software products is recognized when there is persuasive evidence of an arrange-ment, the sales price is fixed or determinable, collectibility is probable, and the software product has been delivered and accepted by the customer.

SHIPPING AND HANDLING COSTS The Company includes shipping and handling costs which totaled Y79,140 million ($850,968 thousand) and Y89,405 million for the years ended March 31, 2010 and 2009, respectively in selling, general and administrative expenses.

DERIVATIVE FINANCIAL INSTRUMENTS The Company uses a variety of derivative financial instruments, which include forward exchange contracts, interest rate swap agreements, currency swap agreements and currency options for the purpose of currency exchange rate and interest rate risk management. Refer to Note 21 for descriptions of these financial instruments.

The Company recognizes all derivative financial instruments, such as forward exchange contracts, interest rate swap agree-ments, currency swap agreements and currency options in the consolidated financial statements at fair value regardless of the purpose or intent for holding the derivative financial instruments. Changes in the fair value of derivative financial instru-ments are either recognized periodically in income or in equity as a component of accumulated other comprehensive income (loss) depending on whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify as a fair value hedge or a cash flow hedge. Changes in fair value of derivative financial instruments accounted for as fair value 25

Notes to Consolidated Financial Statements Toshiba Corporacion and Subsidiaries March 31, 2010 hedges are recorded in income along with the portion of the change in the fair value of the hedged item that relates to the hedged risk. Changes in fair value of derivative financial instruments accounted for as cash flow hedges, to the extent they are effective as a hedge, are recorded in accumulated other comprehensive income (loss), net of tax. Changes in the fair value of derivative financial instruments not qualifying as a hedge are reported in income.

SALES OF RECEIVABLES The Company enters into transactions to sell certain trade notes receivable and trade accounts receivable. The Company may retain certain interests in these transactions. Gain or loss on the sale of receivables is computed based on the allocated carrying amount of the receivables sold. Retained interests are recorded at the allocated carrying amount of the assets based on their relative fair values at the date of sale. The Company estimates fair value based on the present value of future expect-ed cash flows less credit losses.

ASSET RETIREMENT OBLIGATIONS The Company records asset retirement obligations at fair value in the period incurred. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is then depreciated over the life of the asset.

The liability increases due to the passage of time based on the time value of money until the obligation is settled. Subsequent to the initial recognition, the liability is adjusted for any revisions to the expected value of the retirement obligation, and for accretion of the liability due to the passage of time.

RECENT PRONOUNCEMENTS In June 2009, the FASB issued SFAS No.166 "Accounting for Transfers of Financial Assets, an amendment of FASB Statement No.140" ("ASC No.860"). ASC No.860 eliminates the concept of a qualifying special-purpose entity and changes the dere-cognition requirements of financial assets. It also provides financial statement users with more information and enhances dis-closures with greater transparency about a transferor's continuing involvement in transferred financial assets and the risks thereof. ASC No.860 is effective for fiscal years beginning after November 15, 2009, and the Company will adopt ASC No.860 effective April 1, 2010. The Company is currently evaluating the impact of adoption of ASC No.860 on the Company's financial position and results of operations but does not expect it to have a material impact.

In June 2009, the FASB issued SFAS No.167 "Amendments to FASB Interpretation No.46 (revised 2003)"("ASC No.810").

ASC No.810 removes exceptions regarding the deconsolidation of a qualifying special-purpose entity as a result of the elimi-nation of the qualifying special-purpose entity concept by ASC No.810. It requires that an entity determine the need for consolidating a variable interest entity based on qualitative analysis. It revises its evaluation on a continuous basis. And it requires increased transparency of an enterprise's involvement with a variable interest entity. ASC No.810 is effective for fis-cal years beginning after November 15, 2009, and the Company will adopt ASC No.810 effective April 1, 2010. The Company is currently evaluating the impact of adoption of ASC No.810 on the Company's financial position and results of operations but does not expect it to have a material impact.

In October 2009, the FASB issued Accounting Standards Updates ("ASU") No.2009-13 "Multiple-Deliverable Revenue Arrangements" ("ASU No.2009-13"). ASU No.2009-13 amends ASC No.605 "Revenue Recognition", and establishes the requirements for treating multiple elements of revenue arrangements as separate units of accounting, and permits using a best estimate of the selling price when vendor-specific objective evidence or third-party evidence of selling price is not available. At the same time, the use of the residual method, which was previously permitted to use to allocate arrangement consideration, is prohibited. Moreover, additional disclosure such as effects by this amendments is required. ASU No.2009-13 is effective for fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the timing and the impact of adop-tion of ASU No.2009-13 on the Company's financial position and results of operations.

In October 2009, the FASB issued ASU No.2009-14 "Certain Revenue Arrangements That Include Software Elements" ("ASU No.2009-14"). ASU No.2009-14 amends ASC No.985 "Software", and clarifies the scope of ASC No.985 in certain revenue arrangement that include software elements. ASU No.2009-14 is effective for fiscal years beginning on or after June 15, 2010.

The Company is currently evaluating the timing and the impact of adoption of ASU No.2009-14 on the Company's finan-cial position and results of operations.

SUBSEQUENT EVENTS The Company has evaluated subsequent events up to June 23, 2010 in accordance with ASC No.855 "Subsequent Events" (for-merly SFAS No.165).

RECLASSI FICATIONS Certain reclassifications to the prior year's consolidated financial statements and related footnote amounts have been made to conform to the presentation for the current year.

The Company adopted SFAS No.160 "Noncontrolling Interest in Consolidated Financial Statements" ("ASC No.810") effective 26

April 1, 2009. ASC No.810 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiaries, and to measure at fair value of retained noncontrolling equity investments when a subsidiary is deconsolidated. ASC No.810 also requires disclosures that clearly identify and distinguish the interests of the parent and the interests of the noncontrol-ling owners. These financial statement presentation requirements have been adopted retrospectively and amounts as of and for the year ended March 31, 2009 have been reclassified or adjusted to conform to this guidance. ASC No.810 also changes the way the consolidated statements of income are presented and its presentation and disclosure requirements shall be applied retrospectively for all periods presented. Upon adoption, noncontrolling interests, which were previously referred to as minority interest and classified between total liabilities and shareholders' equity on the consolidated balance sheets are now included as separate component of total equity.

3. U.S. DOLLAR AMOUNTS U.S. dollar amounts are included solely for convenience of readers. These translations should not be construed as a represen-tation that the yen could be converted into U.S. dollars at this rate or any other rates. The amounts shown in U.S. dollars are not intended to be computed in accordance with generally accepted accounting principles in the United States for the trans-lation of foreign currency amounts. The rate of Y93=U.S.$1, the approximate current rate of exchange at March 31, 2010, has been used throughout for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated financial statements.

4. DISCONTINUED OPERATION Since its establishment, Mobile Broadcasting Corporation ("MBCO"), a consolidated subsidiary of the Company, has strived to gain and serve an increasing number of customers in an effort to expand its broadcasting business for mobile devices.

However, the number of subscribers has not reached a sufficient level to sustain operation and, following a thorough review of its operation, the Company has decided to cease broadcasting. MBCO ended all its broadcasting services by the end of March 2009. The Company is taking certain required procedures for its liquidation.

In accordance with ASC No.205-20 "Presentation of Financial Statements-Discontinued Operations" (formerly SFAS No.144),

operating results relating to MBCO in consolidated statements of income are reclassified as discontinued operations.

Income (loss) relating to discontinued operations is as follows:

Thousands of Millions of yen U.S dollars Year ended March 31 2010 2009 2010 Sales and other income V

Y 1,390 Costs and expenses 956 2S,024 10,280 Loss from discontinued operations, before income taxes and noncontrolling interests (956)

(23,634)

(10,280)

Income taxes (389)

(9,85S)

(4,183)

Loss from discontinued operations, before noncontrolling interests (567)

(13,779)

(6,097)

Less:Net income from discontinued operations attributable to noncontrolling interests (141)

(1,516)

Net loss from discontinued operations attributable to shareholders of Toshiba Corporation (426)

(13,779)

(4,581)

Impairment losses on long-lived assets ofY10,409 million are included in costs and expenses for the year ended March 31, 2009.

27

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 S. FAIR VALUE MEASUREMENTS ASC No.820 "Fair Value Measurements and Disclosures" (formerly SFAS No.157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure-ment date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels below; Level 1 - Quoted prices for identical assets or liabilities in active markets.

Level 2 - Quoted prices for similar assets or liabilities in active markers.

Quoted prices for identical or similar instruments in markets that are not active.

Inputs other than quoted prices that are observable.

Inputs that are derived principally from or corroborated by observable marker data by correlation or other means.

Level 3 - Instruments whose significant inputs are unobservable.

Assets and liabilities measured at fair value on a recurring basis Assets and liabilities that are measured at fair value on a recurring basis at March 31, 2010 and 2009 are as follows:

Millions of yen March 31. 2010 Level I Level 2 Level 3 Total Assets:

Cash equivalents:

MMF

?

15,615 V

V 15,615 Marketable securities:

Equity securities 209,628 2,466 212,094 Debt securities 2,393 2,393 Derivative assets:

Forward exchange contracts 1,486 1,486 Interest rate swap agreements 9

9 Currency swap agreements 255 255 Subordinated retained interests 5,942 5,942 Total assets V 225,243 V

4,216 V 8,335 Y 237,794 Liabilities:

Derivative liabilities:

Forward exchange contracts V

1,313 f

V 1,313 Interest rate swap agreements 5,168 5,168 Currency swap agreements 422 422 Currency options 162 162 Total liabilities V

7,065 V

V 7,065 28

Millions of yen March 31. 2009 Level I Level 2 Level 3 Tocal Assets:

Marketable securities:

Equity securities Y

135,283 Y

1,499 Y

Y 136,782 Debt securities 3,045 3,045 Derivative assets:

Forward exchange contracts 734 734 Interest rate swap agreements 74 74 Currency swap agreements 207 207 Subordinated retained interests 10,762 10,762 Total assets Y

135,283 Y

2,514 Y 13,807 Y

151,604 Liabilities:

Derivative liabilities:

Forward exchange contracts Y

V 10,406 Y

Y 10,406 Interest rate swap agreements 2,541 2,541 Total liabilities Y

V 12,947 Y

Y 12,947 Thousands of U.S. dollars March 31.2010 Level I Level 2 Level 3 Tocal Assets:

Cash equivalents:

MMF 167,903 167,903 Marketable securities:

Equity securities 2,254,065 26,516 2,280,581 Debt securities 25,731 25,731 Derivative assets:

Forward exchange contracts 15,978 15,978 Interest rate swap agreements 97 97 Currency swap agreements 2,742 2,742 Subordinated retained interests 63,893 63,893 Total assets

$2,421,968

$ 45,333

$ 89,624

$2,556,925 Liabilities:

Derivative liabilities:

Forward exchange contracts

$ 14,118 14,118 Interest rate swap agreements 55,570 55,570 Currency swap agreements 4,538 4,538 Currency options 1,742 1,742 Total liabilities

$ 75,968 75,968 Cash equivalents Cash equivalents whose fair values are valued based on quoted market prices in active markets are classified within Level 1.

Marketable securities Level 1 securities represent marketable equity securities listed in active markets, which are valued based on quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 securities represent marketable equity securities listed in less active markets, which are valued based on quoted market prices for identical assets in inactive markets.

Level 3 securities represent corporate debt securities and valued based on unobservable inputs as the markets for the assets are nor active at the measurement date.

Derivative instruments Derivative instruments principally represent forward currency exchange contracts and interest rate swap agreements, which are classified within Level 2. They are valued based on inputs that can be corroborated with the observable inputs such as foreign currency exchange rate, LIBOR and others.

I 29

Notes to Consolidated Financial Statements Noe(oCnoiae FnnilSaeet Toshiba Corporation and Subsidiaries March 31. 2010 Subordinated retained interests Subordinated retained interests are valued based on unobservable inputs and classified within Level 3. They are valued based on the internal valuation models and the Company's own assumptions.

Analyses of the changes in Level 3 assets measured at fair value on a recurring basis for the years ended March 31, 2010 and 2009 are shown below:

Millions of yen Subordinated Marketable retained Year ended March 31, 2010 secarities interests Total Balance at beginning of year V

3,045

¥ 10,762 V 13,807 Total gains or losses (realized or unrealized):

Included in gains (losses)

Included in other comprehensive income (loss)

(556)

(556)

Purchases, issuances and settlements (96)

(4,820)

(4,916)

Balance at end of year If 2,393 V

5,942 V 8,335 Millions of yen Subordinated Marketable retained Year ended March 31, 2009 securities interests Total Balance at beginning of year Y

3,515 Y

9,888 Y 13,403 Total gains or losses (realized or unrealized):

Included in gains (losses)

Included in other comprehensive income (loss) 0 0

Purchases, issuances and settlements (470) 874 404 Balance at end of year Y

3,045 Y 10,762 Y 13,807 Thousands of U.S. dollars Subordinated Marketable retained Year ended March 31, 2010 securities interests Total Balance at beginning of year

$ 32,742

$115,721

$148,463 Total gains or losses (realized or unrealized):

Included in gains (losses)

Included in other comprehensive income (loss)

.(5,979)

(S,979)

Purchases, issuances and settlements (1,032)

(51,828)

(52,860)

Balance at end of year

$ 25,731

$ 63,893

$ 89,624 At March 31, 2010 and 2009, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt securities and subordinated retained interests.

30

Assets and liabilities measured at fair value on a non-recurring basis Assets that are measured at fair value on a non-recurring basis at March 31, 2010 and 2009 are as follows:

Millions of yen March 31. 2010 Level 1 Level 2 Level 3 Tocal Assets:

Equity securities V

¥

¥ 620 V

620 Investments in affiliates 11,921 8,582 20,503 Long-lived assets held for use 42,403 42,403 Long-lived assets held for sale 10,618 10,618 Total assets V

11,921 V

¥ 62,223 V

74,144 Millions of yen March 31. 2009 Level 1 Level 2 Level 3 Tocal Assets:

Equity securities Y-701 Y

701 Investments in affiliates 8,364 8,364 Total assets Y

8,364 Y

701 Y

9,065 Thousands of U.S. dollars March 31, 2010 Level 1 Level 2 Level 3 Total Assets:

Equity securities

$ 6,667 6,667 Investments in affiliates 128,183 92,279 220,462 Long-lived assets held for use 455,946 455,946 Long-lived assets held for sale 114,172 114,172 Total assets

$ 128,183

$- 669,064

$ 797,247 Certain non-marketable equity securities accounted for under the cost method were written down to their fair value, result-ing in other-than-temporary impairment. The impaired securities were classified within level 3 as they were valued based on the specific valuation techniques and hypotheses of the Company with unobservable inputs.

Certain equity method investments were written down to their fair value, resulting in other-than-temporary impairment.

Some of the impaired investments were classified within Level 1 as they were valued based on quoted market prices in active markets. The other impaired securities were classified within level 3 as they were valued based on the specific valuation tech-niques and hypotheses of the Company with unobservable inputs.

Previous equity interests of newly controlled subsidiaries in step acquisitions were remeasured to their fair value, which were classified within level 3 as they were valued based on the specific valuation techniques and hypotheses of the Company with unobservable inputs.

The impaired long-lived assets were classified within level 3 as they were valued based on discounted cash flows expected to be generated by the related assets and on the transfer price of stocks with unobservable inputs.

As a result, the total losses for the years ended March 31, 2010 and 2009 were Y23,181 million ($249,258 thousand) and Y3,045 million.

31

Notes to Consolidated Financial Statements

(

Toshiba Corporation and Subsidiaries March 31, 2010

6. MARKETABLE SECURITIES AND OTHER INVESTMENTS The aggregate cost, gross unrealized holding gains and losses, and aggregate fair value for marketable equity securities and debt securities classified as available-for-sale securities by security type at March 31, 2010 and 2009 are as follows:

Millions of yen Gross unrealized Gross unrealized Cost holding gains holding losses Fair value March 31, 2010:

Equity securities V

93,416

? 120,189

?

1,511 4

212,094 Debt securities 2,949 0

556 2,393 V

96,365

¥ 120,189 f

2,067 Y 214,487 March 31, 2009:

Equity securities Y

96,258 Y

51,109 Y

10,585 Y

136,782 Debt securities 3,045 0

0 3,045 Y

99,303 Y

51,109 Y

10,585 Y

139,827 Thousands of U.S. dollars Gross unrealized Gross unrealized Cost holding gains holding losses Fair value March 31, 2010:

Equity securities

$1,004,473

$1,292,355

$ 16,247

$ 2,280,581 Debt securities 31,710 0

5,979 25,731

$1,036,183

$1,292,355

$ 22,226

$2,306,312 At March 31, 2010 and 2009, debt securities mainly consist of corporate debt securities.

Contractual maturities of debt securities classified as available-for-sale at March 31, 2010 are as follows:

Millions of yen Thousands of U.S. dollars March 31, 2010.

cost Fair value Cost Fair value Due within one year V

0 V

0 0

0 Due after one year within five years 2,949 2,393 31,710 25,731 V

2,949 V

2,393

$ 31,710 25,731 The proceeds from sales of available-for-sale securities for the years ended March 31, 2010 and 2009 were Y2,667 million

($28,677 thousand) and Y1,995 million, respectively. The gross realized gains on those sales for the years ended March 31, 2010 and 2009 were Y1,321 million ($14,204 thousand) and F1,017 million, respectively. The gross realized losses on those sales for the years ended March 31, 2010 and 2009 were Y69 million ($742 thousand) and Y496 million, respectively.

At March 31, 2010, the cost and fair value of available-for-sale securities in an unrealized loss position over 12 consecutive months were not significant.

Aggregate cost of non-marketable equity securities accounted for under the cost method totaled Y38,058 million ($409,226 thousand) and Y50,232 million at March 31, 2010 and 2009, respectively. At March 31, 2010, investments with an aggregate cost of¥37,479 million ($403,000 thousand) were not evaluated for impairment because (a)rhe Company did nor estimate the fair values of those investments as it was not practicable to estimate the fair value of the investment and (b)the Company did not identify any events or changes in circumstances that might have had significant adverse effects on the fair values of those investments.

Included in other expense are charges of Y5,902 million ($63,462 thousand) and Y42,399 million related to other-than-temporary declines in the marketable and non-marketable equity securities for the years ended March 31, 2010 and 2009, respectively.

32

7. SECURITIZATIONS The Company has transferred certain trade notes and accounts receivable under several securitizarion programs. These secu-ritization transactions are accounted for as a sale in accordance with ASC No.860 "Transfers and Servicing' (formerly SFAS No.140), because the Company has relinquished control of the receivables. Accordingly, the receivables sold under these facilities are excluded from the accompanying consolidated balance sheets.

Under the asset-backed securitization program entered into in Europe, the Company holds subordinated retained inter-ests for certain trade notes and accounts receivable. As of March 31, 2010 and 2009, the fair value of retained interests were Y4,816 million ($51,785 thousand) and Y10,762 million, respectively.

The Company recognized losses ofY1,976 million ($21,247 thousand) and Y2,590 million on the securitizations of receiv-ables for the years ended March 31, 2010 and 2009, respectively.

Subsequent to sale, the Company retains collection and administrative responsibilities for the receivables. Servicing fees received by the Company approximate the prevailing market rate. Related servicing assets or liabilities are immaterial to the Company's financial position.

The table below summarizes certain cash flows received from and paid to special purpose entities ("SPEs") on the above securitization transactions.

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Proceeds from new securitizations V1,018,458 Y863,058

$10,951,161 Servicing fees received 430 428 4,624 Purchases of delinquent and foreclosed receivables 1,218 2,418 13,097 Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for the years ended March 31, 2010 and 2009 are as follows:

Millions of yen Total pricipal amount Amount 90 days of recelvables or more past due March 31 2010 2009 2010 2009 Accounts receivable V1,273,517 Y1,199,380 V33,339 Y22,412 Notes receivable 96,035 137,575 75 36 Total managed portfolio 1,369,552 1,336,955 V33,414 Y22,448 Securitized receivables (161,704)

(230,312)

Total receivables V 1,207,848 Y1,106,643 Thousands of U.S. dollars Total principal amount Amount 90 days of recervables or more past due March 31, 2010 Accounts receivable

$13,693,731

$358,484 Notes receivable 1,032,635 806 Total managed portfolio 14,726,366

$359,290 Net credit losses Year ended March 31 2010 2009 V5,908 Y4,454 792 486 V6,700 Y4,940 Net credit losses Year ended March 31, 2010

$63,527 8,516

$72,043 Securitized receivables Total receivables (1,738,753)

$12,987,613 33

Notes to Consolidated Financial Statements

(

Toshiba Corporation and Subsidiaries March 31, 2010

8. INVENTORIES Inventories consist of the following:

Millions of yen Thousands of U.S. dollars March 31 2010 2009 2010 Finished products V303,860 Y263,498

$3,267,312 Work in process:

Long-term contracts 96,376 93,922 1,036,301 Other 243,807 253,037 2,621,580 Raw materials 151,558 147,848 1,629,656 V795,601 Y758,305

$8,554,849

9. INVESTMENTS IN AND ADVANCES TO AFFILIATES The Company's significant investments in affiliated companies accounted for by the equity method together with the per-centage of the Company's ownership of voting shares at March 31, 2010 were: Topcon Corporation (35.5%); Toshiba Machine Co., Ltd. (22.1%); Toshiba Finance Corporation ("TFC") (35.0%); Toshiba Mitsubishi-Electric Industrial Systems Corporation (50.0%); and Semp Toshiba Amazonas S.A. (40.0%).

Of the affiliates which were accounted for by the equity method, the investments in common stock of the listed companies were carried at Y36,097 million ($388,140 thousand) and Y36,779 million at March 31, 2010 (5 companies) and 2009 (4 com-panies), respectively. The Company's investments in these companies had market values ofY44,192 million ($475,183 thou-sand) and V29,843 million at March 31, 2010 and 2009, respectively, based on quoted market prices at those dates.

Summarized financial information of the affiliates accounted for by the equity method is shown below:

Millions of yen March 31 Current assets Other assets including property, plant and equipment Total assets Current liabilities Long-term liabilities Equity Total liabilities and equity 2010

? 1,263,890 1,111,965 V2,375,855 f 998,135 701,219 676,501 V2,375,855 2009

¥1,215,888 1,184,261 Y2,400,149 Y1,038,800 769,043 592,306 Y2,400,149 Thousands of U.S. dollars 2010

$13,590,215 11,956,613

$25,546,828

$10,732,635 7,539,989 7,274,204

$25,546,828 Thousands of Millions of yen US. dollars Year ended March 31 2010 2009 2010 Sales V1,876,055 Y2,039,742

$20,172,634 Net income 59,403 33,155 638,742 A summary of transactions and balances with the affiliates accounted for by the equity method is presented below:

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Sales V 149,196 Y 214,742

$ 1,604,258 Purchases 132,823 167,632 1,428,204 Dividends 11,580 11,227 124,516 Thousands of Millions ofyen U.S. dollars March 31 2010 2009 2010 Notes and accounts receivable, trade V

36,607 Y 36,252 393,624 Other receivables 11,395 8,127 122,527 Long-term loans receivable 100,397 105,150 1,079,538 Notes and accounts payable, trade 110,700 95,275 1,190,323 Other payables 23,319 31,980 250,742 Capital lease obligations 37,438 44,246 402,559 34

10. GOODWILL AND OTHER INTANGIBLE ASSETS The Company rested goodwill for impairment in accordance with ASC No.350 "Intangibles-Goodwill and Other" (formerly SFAS No.142), applying a fair value based test and has concluded that there was no impairment for the years ended March 31, 2010 and 2009.

The components of acquired intangible assets excluding goodwill at March 31, 2010 and 2009 are as follows:

Millions of yen Accumulated Gross car rving Net carrying March 31, 2010 amount amortization amount Other intangible assets subject to amortization:

Software V 195,063 V 124,162 V

70,901 Technical license fees 62,440 32,457 29,983 Core and current technology 134,107 23,696 110,411 Other 79,770 28,356 51,414 Total V 471,380 V 208,671 V 262,709 Other intangible assets not subject to amortization:

Brand name 37,770 Other 3,018 Total 40,788 V 303,497 Millions of yen Gross carrying Accumulated Net Carrying March 31, 2009 amount amortization amount Other intangible assets subject to amortization:

Software Y 181,530 Y 111,2S4 Y

70,276 Technical license fees 62,996 26,887 36,109 Core and current technology 141,549 23,205 118,344 Other 87,826 37,776 S0,0S0 Total Y 473,901 Y 199,122 Y 274,779 Other intangible assets not subject to amortization:

Brand name 39,020 Other 5,306 Total 44,326 Y 319,105 Thousands of U.S. dollars Gross carrying Accumulated Net carrying March 31, 2010 amount amortization amount Other intangible assets subject to amortization:

Software

$2,097,451

$1,335,075

$ 762,376 Technical license fees 671,398 349,000 322,398 Core and current technology 1,442,011 254,796 1,187,215 Other 8S7,742 304,903 552,839 Total

$ 5,068,602

$2,243,774

$2,824,828 Other intangible assets not subject to amortization:

Brand name 406,129 Other 32,452 Total 438,581

$3,263,409 35

Notes to Consolidated Financial Statements

(

Toshiba Corporation and Subsidiaries March 31, 2010 Intangible assets acquired during the year ended March 31, 2010 primarily consisted of software of Y24,768 million

($266,323 thousand) and goodwill of Y18,376 million ($197,591 thousand). The weighted-average amortization period of software for the year ended March 31, 2010 was approximately 4.9 years.

The weighted-average amortization periods for other intangible assets were approximately 11.5 years and 11.9 years for the years ended March 31, 2010 and 2009, respectively. Amortization expenses of other intangible assets subject to amortiza-tion for the years ended March 31, 2010 and 2009 are Y42,410 million ($456,022 thousand) and Y48,584 million, respective-ly. The future amortization expense for each of the next 5 years relating to intangible assets currently recorded in the consoli-dated balance sheets at March 31, 2010 is estimated as follows:

Thousands of Year ending March 31 Millions of yer U.S. dollars 2011 Y 43,885 S

471,882 2012 39,469 424,398 2033 30,916 332,430 2014 23,804 255,957 2015 13,683 147,129 Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The changes in the carrying amount of goodwill for the years ended March 31, 2010 and 2009 are as follows:

Thousands of Mdlions of yen U.S. dollars Year ended March 31 2010 2009 2010 Balance at beginning of year V 310,715 Y 328,552

$3,341,022 Goodwill acquired during the year 18,376 6,709 197,591 Foreign currency translation adjustments (13,857)

(24,546)

(149,000)

Balance at end of year V 31S,234 Y 310,715

$3,389,613 As of March 31, 2010 and 2009, goodwill allocated within Social Infrastructure is Y286,157 million ($3,076,957 thousand) and Y281,220 million, respectively. The rest were mainly allocated within Digital Products.

Goodwill acquired during the year ended March 31, 2010 is mainly related to the acquisition of Chevalier (HK) Limited and its subsidiaries (Social Infrastructure).

11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT Short-term borrowings at March 31, 2010 and 2009 consist of the following:

Millions of yen Thousands of U.S. dollars March 31 2010 2009 2010 Loans, principally from banks, including bank overdrafts, with weighted-average interest rate of 2.38% at March 31, 2010 and 1.34% at March 31, 2009:

Secured

?

708 Y

29 7,613 Unsecured 31,259 485,054 336,118 Commercial paper with weighted-average interest rate of 0.12% at March 31, 2010 and 1.26% at March 31, 2009 15,000 259,000 161,290 Euro yen medium-term notes of a subsidiary, with weighted-average interest rate of 0.27% at March 31, 2010 and 0.93% at March 31, 2009 4,380 3,888 47,097 V 51,347 Y 747,971

$ 552,118 Substantially all of the short-term borrowings are with banks which have written basic agreements with the Company to the effect that, with respect to all present or future loans with such banks, the Company shall provide collateral (including sums on deposit with such banks) or guarantors immediately upon the bank's request and that any collateral furnished pursuant to such agreements or otherwise will be applicable to all indebtedness to such banks.

At March 31, 2010, the Company had unused committed lines of credit from short-term financing arrangements aggregat-ing Y362,304 million ($3,895,742 thousand), of which Y9,304 million ($100,043 thousand) was in support of the Company's commercial paper. The lines of credit expire on various dates from April 2010 through March 2011. Under the agreements, the Company is required to pay commitment fees ranging from 0.100 percent to 0.250 percent on the unused portion of the 36

lines of credit.

Long-term debt at March 31, 2010 and 2009 consist of the following:

Millions of yen Thousands of U.S. dollars 2010 March 31 Loans, principally from banks and insurance companies, due 2010 to 2029 with weighted-average interest rate of 1.34% at March 31, 2010 and due 2009 to 2029 with weighted-average interest rate of 1.40% at March 31, 2009:

Secured Unsecured Unsecured yen bonds, due 2010 to 2016 with interest ranging from 1.05% to 2.20% at March 31, 2010 and due 2010 to 2016 with interest ranging from 1.20% to 2.20% at March 31, 2009 Interest deferrable and early redeemable subordinated bonds:

Due 2069 with interest rate of 7.50% at March 31, 2010 Zero Coupon Convertible Bonds with stock acquisition rights:

Due 2009 convertible Due 2011 convertible at ¥542 per share at March 31, 2010 Euro yen medium-term notes of subsidiaries, due 2011 to 2014 with interest ranging from 1.31% to 1.67% at March 31, 2010 and due 2009 to 2014 with interest ranging from 0.60% to 2.60% at March 31, 2009 Capital lease obligations 2010 2009 Y

254 595,581 715,577 6,404,097 240,000 180,000 130,000 2,580,645 1,935,484 95,010 992 55,372 1,166,955 (206,017)

V 960,938 41,420 95,010 23,586 56,834 1,062,681 (285,913)

Y 776,768 1,021,613 10,667 595,398 12,547,904 (2,215,237)

$10,332,667 Less-Portion due within one year Certain of the secured loan agreements contain provisions, which permit the lenders to require additional collateral.

Substantially all of the unsecured loan agreements permit the lenders to require collateral or guarantees for such loans. Certain of the secured and unsecured loan agreements may require prior approval by the banks and trustees before any distributions (including cash dividends) may be made from current or retained earnings.

Assets pledged as collateral for short-term borrowings at March 31, 2010 were property, plant, equipment, long-term receiv-ables and investments with a book value ofY2,499 million ($26,871 thousand).

The aggregate annual maturities of long-term debt, excluding those of capital lease obligations, are as follows:

Thousands of Year ending March 31 Millions of yen U.S. dollars 2011

¥ 190,085 S

2,043,925 2012 207,255 2,228,549 2013 182,072 1,957,764 2014 226,826 2,438,989 2015 34,498 370,946 Thereafter 270,847 2,912,333 Y 1,111,583

$ 11,952,506 37

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010

12. ISSUANCE OF CONVERTIBLE BOND In July, 2004, Toshiba Corporation issued Y50,000 million Zero Coupon Convertible Bonds due 2009 (the "2009 Bonds")

and V100,000 million Zero Coupon Convertible Bonds due 2011 (the "2011 Bonds").

The bonds include stock acquisition rights which entitle bondholders to acquire common stock under certain circum-stances, and are exercisable on and after August 4, 2004 up to, and including. July 7, 2009 (in the case of the 2009 Bonds) and up to, and including, July 7, 2011 (in the case of the 2011 Bonds).

About the 2009 Bonds, exercisable period of the stock acquisition rights ended, and the principal amount of Bonds was redeemed at maturity.

The 2011 Bonds initial conversion prices are Y542, subject to adjustment for certain events such as a stock split, consolida-tion of stock or issuance of stock at a consideration per share which is less than the current market price.

(Conditions allowing exercise of stock acquisition rights)

The period prior to (but not including)

In the case that as of the last trading day of any calendar quarter, the closing July 21, 2008 (in the case of the 2009 Bonds) price of the shares for any 20 trading days in a period of 30 consecutive or July 21, 2010 (in the case of the 2011 trading days ending on the last trading day of such quarter is more than Bonds) 120% of the conversion price in effect on each such trading day.

The period on or after July 21, 2008 (in the At any time after the closing price of the shares on at least one trading case of the 2009 Bonds) or July 21, 2010 (in day is more than 120% of the conversion price in effect on each such the case of the 2011 Bonds) trading day.

The 2009 Bonds and the 2011 Bonds were not converted into shares of common stock for the year ended March 31, 2010.

The 2009 Bonds and the 2011 Bonds were converted into 17,035 shares and 553,505 shares of common stock for the year ended March 31, 2009. In accordance with the Corporation Law of Japan, the issuance of common stock in connection with the conversion of convertible bonds is accounted for by crediting one-half or more of the conversion price to common stock and the remainder to additional paid-in capital.

The additional 175,295,212 shares relating to the potential conversion of the 2011 Bonds are excluded from the calculation of net loss per share attributable to shareholders of Toshiba Corporation for the year ended March 31, 2010 due to their anti-dilutive effect.

The additional 70,562,186 shares and 175,295,212 shares relating to the potential conversion of the 2009 Bonds and the 2011 Bonds are excluded from the calculation of net loss per share attributable to shareholders of Toshiba Corporation for the year ended March 31, 2009 due to their anti-dilutive effect.

13. ACCRUED PENSION AND SEVERANCE COSTS All employees who retire or are terminated are usually entitled to lump-sum severance indemnities or pension benefits deter-mined by reference to service credits allocated to employees each year according to the regulation of retirement benefit, length of service and conditions under which their employment terminates. The obligation for the severance indemnity bene-fit is provided for through accruals and funding of the defined benefit corporate pension plan.

Certain subsidiaries in Japan have tax-qualified non-contributory pension plans which cover all or a part of the indemnities payable to qualified employees at the time of termination. The funding policy for the plans is to contribute amounts required to maintain sufficient plan assets to provide for accrued benefits, subject to the limitation on deductibility imposed by Japanese income tax laws.

The changes in the benefit obligation and plan assets for the years ended March 31, 2010 and 2009 and the funded status at March 31, 2010 and 2009 are as follows:

38

Millions of yen Thousands of U.S. dollars 2010 March 31 Change in benefit obligation:

Benefit obligation at beginning of year Service cost Interest cost Plan participants' contributions Plan amendments Actuarial loss (gain)

Benefits paid Acquisitions and divestitures Foreign currency exchange impact 2010 2009 V1,380,791 47,904 44,282 3,889 108 117,277 (77,711) 11,273 (3,903)

Y 1,463,335 52,574 39,697 3,940 (1,694)

(99,518)

(73,622) 2,813 (6,734)

$14,847,215 515,097 476,151 41,817 1,161 1,261,043 (835,602) 121,215 (41,968)

Benefit obligation at end of year

¥1,523,910

¥ 1,380,791

$16,386,129 Change in plan assets:

Fair value of plan assets at beginning of year V 660,699 Y 828,457

$ 7,104,290 Actual return on plan assets 117,554 (187,207) 1,264,022 Employer contributions 60,896 64,358 654,796 Plan participants' contributions 3,889 3,940 41,817 Benefits paid (47,262)

(46,165)

(S08,194)

Acquisitions and divestitures 7,586 3,171 81,570 Foreign currency exchange impact (2,479)

(5,855)

(26,656)

Fair value of plan assets at end of year

¥ 800,883 Y 660,699

$ 8,611,645 Funded status f (723,027)

Y (720,092)

$ (7,774,484)

Amounts recognized in the consolidated balance sheet at March 31, 2010 and 2009 are as follows:

Thousands of Millions of yen U.S. dollars March 31 2010 2009 2010 Other assets V

3,312 Y

35,613 Other current liabilities (719)

(696)

(7,732)

Accrued pension and severance costs (725,620)

(719,396)

(7,802,365) f (723,027)

Y (720,092)

$ (7,774,484)

Amounts recognized in accumulated other comprehensive loss at March 31, 2010 and 2009 are as follows:

Thousands of Millions of yen U.S. dollars March 31 2010 2009 2010 Unrecognized actuarial loss

¥ 562,602 Y 572,120

$ 6,049,484 Unrecognized prior service cost (24,655)

(27,440)

(265,108)

¥ 537,947 Y 544,680

$ 5,784,376 The accumulated benefit obligation at March 31, 2010 and 2009 are as follows:

Thousands of Millions of yen U.S dollars March 31 2010 2009 2010 Accumulated benefit obligation

¥1,437,097 Y 1,299,807

$15,452,656 The components of the net periodic pension and severance cost for the years ended March 31, 2010 and 2009 are as follows:

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Service cost V

47,904 Y

52,574 515,097 Interest cost on projected benefit obligation 44,282 39,697 476,151 Expected return on plan assets (24,218)

(31,708)

(260,409)

Amortization of prior service cost (2,762)

(2,210)

(29,699)

Recognized actuarial loss 32,426 21,884 348,667 Settlement loss 114 1,225 Net periodic pension and severance cost f

97,746 Y

80,237

$ 1,051,032 I

39

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 Other changes in plan assets and benefit obligation recognized in the other comprehensive loss for the years ended March 31, 2010 and 2009 are as follows:

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Current year actuarial loss V

23,941 Y 119,397 257,430 Recognized actuarial loss (32,426)

(21,884)

(348,667)

Prior service cost due to plan amendments 38 (1,694) 409 Amortization of prior service cost 2,762 2,210 29,699 V

(5,685)

Y 98,029 (61,129)

The estimated prior service cost and actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic pension and severance cost over the next year are summarized as follows:

Thousands of Millions of yen U.S. dollars Year ending March 31 2011 2011 Prior service cost Y

(2,268)

S (24,387)

Actuarial loss 30,356 326,409 The Company expects to contribute V55,363 million ($595,301 thousand) to its defined benefit plans in the year ending March 31, 2011.

The following benefit payments are expected to be paid:

Thousands of Year ending March 31 Millions of yen U S. dollars 2011 Y 83,177 894,376 2012 88,990 956,882 2013 86,698 932,237 2014 85,153 915,624 2015 90,247 970,398 2016-2020 479,964 5,160,903 Weighted-average assumptions used to determine benefit obligations as of March 31, 2010 and 2009 and net periodic pen-sion and severance cost for the years then ended are as follows:

March 31 2010 2009 Discount rate 2.7%

3.3%

Rate of compensation increase 3.1%

3.1%

Year ended March 31 2010 2009 Discount rate 3.3%

2.8%

Expected long-term rate of return on plan assets 3.5%

3.9%

Rate of compensation increase 3.1%

3.0%

The Company determines the expected long-term rate of return in consideration of the target allocation of the plan assets, the current expectation of long-term returns on the assets and actual returns on plan assets.

The Company's investment policies and strategies are to assure adequate plan assets to provide for future payments of pen-sion and severance benefits to participants, with reasonable risks. The Company designs the basic target allocation of the plan assets to mirror the best portfolio based on estimation of mid-term and long-term return on the investments. The Company periodically reviews the actual return on the investments and adjusts the portfolio to achieve the assumed long-term rate of return on the investments. The Company targets its investments in equity securities at 40 percent or more of total investments, and investments in equity and debt securities at 75 percent or more of total investments.

The equity securities are selected primarily from stocks that are listed on the securities exchanges. Prior to investing, the Company has investigated the business condition of the investee companies, and appropriately diversified investments by type of industry and other relevant factors. The debt securities are selected primarily from government bonds, municipal 40

bonds and corporate bonds. Prior to investing, the Company has investigated the quality of the issue, including rating, inter-est rate, and repayment dates and has appropriately diversified the investments. Pooled funds are selected using strategies consistent with the equity securities and debt securities described above. Hedge funds are selected following a variety of strategies and fund managers, and the Company has appropriately diversified the investments. Real estate is selected for the eligibility of investment and expected return and other relevant factors, and the Company has appropriately diversified the investments. As for investments in life insurance company general accounts, the contracts with the insurance companies include a guaranteed interest and return of capital.

The three levels of input used to measure fair value are more fully described in Note 5. The plan assets that are measured at fair value at March 31, 2010 by asset category are as follows:

Millions of yen March 31, 2010 Cash and cash equivalents Equity securities:

Japanese companies Foreign companies Pooled funds Debt securities:

Government bonds Municipal bonds Corporate bonds Pooled funds Level 1 16,633 111,412 42,033 Level 2 Level 3 249,493 955 19,001 148,924 Millions of yen Total V

16,633 111,412 42,033 249,493 82,272 955 19,001 148,924 Other assets:

Hedge funds Real estate Life insurance company general accounts Other assets 82,272 10,781 4,978 91,530 22,871 91,530 22,871 10,781 4,978 Total V 252,350 i

434,132 V 114,401 V 800,883 Thousands of U.S. dollars March 31, 2010 Level I Level 2 Level 3 Total Cash and cash equivalents 178,849 178,849 Equity securities:

Japanese companies 1,197,978 1,197,978 Foreign companies 451,968 451,968 Pooled funds 2,682,720 2,682,720 Debt securities:

Government bonds 884,645 884,645 Municipal bonds 10,269 10,269 Corporate bonds 204,312 204,312 Pooled funds 1,601,333 1,601,333 Other assets:

Hedge funds 984,194 984,194 Real estate 245,925 245,925 Life insurance company general accounts 115,925 115,925 Other assets 53,527 53,527 Total

$ 2,713,440

$4,668,086

$1,230,119

$ 8,611,645 Notes:

1) These funds invest in listed equity securities consisting of approximately 40% Japanese companies and 60% foreign companies.

2) This category includes approximately 60% Japanese government bonds and 40% foreign government bonds.

3) These funds invest in approximately 30% Japanese government bonds, 30% foreign government bonds, 40% municipal bonds and corporate bonds.

41

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 Each level into which assets are categorized is based on inputs used to measure the fair value of the assets, and does not neces-sarily indicate the risks or ratings of the assets.

Level 1 plan assets represent marketable equity securities and government bonds, which are valued based on quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 plan assets represent pooled funds that invest in equity securities and debt securities, corporate bonds and life insurance company general accounts. Pooled funds are valued at their net asset values that are calculated by the sponsor of the fund. Corporate bonds are valued based on quoted market prices for identical assets in inactive markets. Life insurance company general accounts are valued based on contracts.

Level 3 plan assets represent hedge funds and real estate, which are valued based on unobservable inputs as the markets for the assets are not active at the measurement date.

An analysis of the changes in Level 3 plan assets measured at fair value for the year ended March 31, 2010 are as follows:

Millions of yen Year ended March 31, 2010 Hedge funds Real estate Toral Balance at beginning of year 4

84,898 V

22,928

?

107,826 Actual return:

Relating to assets sold (2,191)

(2,191)

Relating to assets still held 10,877 (1,588) 9,289 Purchases, issuances and settlements (2,054) 1,531 (523)

Balance at end of year V

91,530 V

22,871 V 114,401 Thousands of U.S dollars Year ended March 31. 2010 Hedge funds Real estace Toual Balance at beginning of year

$ 912,882

$ 246,538

$1,159,420 Actual return:

Relating to assets sold (23,559)

(23,559)

Relating to assets still held 116,957 (17,07S) 99,882 Purchases, issuances and settlements (22,086) 16,462 (5,624)

Balance at end of year S 984,194

$ 245,925

$ 1,230,119 Certain of the Company's subsidiaries provide certain health care and life insurance benefits to retired employees. Such bene-fits have no material impact on the consolidated financial statements of the Company.

14. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred and amounted to Y323,248 million ($3,475,785 thousand) and Y378,261 million for the years ended March 31, 2010 and 2009, respectively.

15. ADVERTISING COSTS Advertising costs are expensed as incurred. Advertising costs amounted to Y30,067 million ($323,301 thousand) and Y46,632 million for the years ended March 31, 2010 and 2009, respectively.

16. OTHER INCOME AND OTHER EXPENSE FOREIGN EXCHANGE GAINS AND LOSSES For the years ended March 31, 2010 and 2009, the net foreign exchange impacts were Y6,686 million ($71,892 thousand) gain and Y38,128 million loss, respectively.

GAINS ON SALES OF SECURITIES The gains on sales of securities for the years ended March 31, 2010 and 2009 were Y1,855 million ($19,946 thousand) and Y76,436 million, respectively. For the year ended March 31, 2009, the gains on sales of securities were related mainly to Toshiba building Co., Ltd. (NREG Toshiba building Co., Ltd.).

GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS For the years ended March 31, 2010 and 2009, the sale and disposal of fixed assets resulted in net impacts of Y22,364 million

($240,473 thousand) loss and Y7,307 million gain, respectively. Gains on sales of fixed assets were Y7,970 million ($85,699 42

thousand), and losses on disposal of fixed assets were Y30,334 million ($326,172 thousand) for the year ended March 31, 2010.

Gains on sales of fixed assets were Y22,685 million, and losses on disposal of fixed assets were Y15,378 million for the year ended March 31, 2009.

17. IMPAIRMENT OF LONG-LIVED ASSETS Due to general price erosion and severe market competition, the Company recorded impairment losses of Y3,203 million

($34,441 thousand) related primarily to the property, plant and equipment of the LCD business for the year ended March 31, 2010. The impairment loss is included in cost of sales in the accompanying consolidated statements of income.

For the year ended March 31, 2010, the Company recorded impairment loss ofY15,817 million ($170,075 thousand) related to the stock transfer agreement of AFPD PTE., LTD. ("AFPD"), a manufacturing subsidiary in Singapore. The Company reduced book value of property, plant and equipment of AFPD in accordance with the transfer price of AFPD stock. This impairment loss is included in other expense in the accompanying consolidated statements of income. As of March 31, 2010, the carrying amount of property, plant and equipment in AFPD is Y10,618 million ($114,172 thousand). The Company expects to transfer AFPD stock on July 1, 2010.

These impairment losses are both related to Electronic Devices segment.

The amount of impairment losses, except for Mobile Broadcasting Business, were not significant for the year ended March 31, 2009.

18. INCOME TAXES The Company is subject to a number of different income taxes which, in the aggregate, result in an effective statutory tax rate in Japan of approximately 40.7 percent for the years ended March 31, 2010 and 2009.

A reconciliation tablebetween the reported income tax expense and the amount computed by multiplying the income (loss) from continuing operations, before income taxes and noncontrolling interests by the applicable statutory tax rate is as follows:

Millions of yen Thousands of U.S. dollars Year ended March 31 2010 2009 2010 Expected income tax expense (benefit)

?

10,160 Y (113,656) 109,247 Increase (decrease) in taxes resulting from:

Tax credits (2,106)

(3590)

(22,645)

Non-deductible expenses for tax purposes 3,565 2,255 38,333 Dividends 228 19,985 2,452 Net changes in valuation allowance 25,255 159,965 271,559 Effect of income tax rate change 3,023 Net decrease in deferred tax liabilities due to the.enacted change in tax law (12,819)

Tax rate difference relating to foreign subsidiaries (11,613)

(6,483)

(124,871)

Deferred tax liabilities on undistributed earnings of foreign subsidiaries 4,040 9,954 43,441 Other 159 (4,311) 1,710 Income tax expense f

29,688 Y 54,323 319,226 The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2010 and 2009 are as follows:

Miltons of yen Thousands of U.S dollars March 31 2010 2009 2010 Gross deferred tax assets:

Inventories V 20,418 Y 21,845 219,548 Accrued pension and severance costs 116,687 114,158 1,254,699 Tax loss carryforwards 288,567 247,304 3,102,871 Pension liability adjustment 213,856 210,906 2,299,527 Accrued expenses 108,128 130,779 1,162,667 Depreciation and amortization 49,329 65,115 530,419 Other 139,965 111,487.

1,505,000 936,950 901,594 10,074,731 Valuation allowance for deferred tax assets (284,227)

(275,427)

(3,056,204)

Deferred tax assets V 652,723 Y 626,167

$ 7,018,527 J

43

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 Thousands of Millions of yen U.S. dollars March 31 2010 2009 2010 Gross deferred tax liabilities:

Inventories

?

(6,119)

Y (6,702)

(65,796)

Property, plant and equipment (19,755)

(24,204)

(212,419)

Unrealized gains on securities (39,550)

(17,808)

(425,269)

Gain on securities contributed to employee retirement benefit trusts (17,381)

(17,381)

(186,893)

Undistributed earnings of foreign subsidiaries and affiliates (56,122)

(44,524)

(603,462)

Goodwill and other intangible assets (68,596)

(69,903)

(737,591)

Other (12,365)

(12,069)

(132,957)

Deferred tax liabilities (219,888)

(192,591)

(2,364,387)

Net deferred tax assets V1 432,835 Y 433,576

$ 4,654,140 Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2010 and 2009 were Y57,802 mil-lion ($621,526 thousand) and Y60,380 million, respectively.

The net changes in the total valuation allowance for the years ended March 31, 2010 and 2009 were an increase of Y8,800 million ($94,624 thousand) and an increase ofY161,558 million, respectively.

The Company's tax loss carryforwards for each of the corporate and local taxes at March 31, 2010 amounted to Y669,247 million ($7,196,204 thousand) and Y726,725 million ($7.814,247 thousand), respectively, the majority of which will expire during the period from 2011 through 2017. The Company utilized tax loss carryforwards of Y24,240 million ($260,645 thou-sand) and Y10,829 million ($116,441 thousand) to reduce current corporate and local taxes, respectively, during the year ended March 31, 2010.

Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating sufficient tax-able income prior to their expiration or the Company exercising certain available tax strategies. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets, less the valuation allowance, will be realized. The amount of such net deferred tax assets considered realizable, however, could be reduced in the near term if esti-mates of future taxable income during the carryforward period are reduced.

A reconciliation table of the beginning and ending amount of unrecognized tax benefits is as follows:

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Balance at beginning of year V

4,360 Y 5,103 46,882 Additions for tax positions of the current year 804 378 8,645 Additions for tax positions of prior years 40 1,263 430 Reductions for tax positions of prior years (464)

(389)

(4,989)

Lapse of statute of limitations or closed audits (29)

(1,875)

(312)

Foreign currency translation adjustments (218)

(120)

(2,344)

Balance at end of year V

4,493 Y 4,360 48,312 The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are V3,838 million

($41,269 thousand) and ¥922 million at March 31, 2010 and 2009, respectively.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the consoli-dated statements of income. Both interest and penalties accrued as of March 31, 2010 and 2009, and interest and penalties included in income taxes for the years ended March 31, 2010 and 2009 are not material.

The Company believes its estimates and assumptions of unrecognized tax benefits are reasonable and based on each of the items of which the Company is aware at March 31, 2010, no significant changes to the unrecognized tax benefits are expected within the next twelve months.

The Company files income tax returns in Japan and various foreign tax jurisdictions. In Japan, the Company is no longer subject to regular income tax examinations by the tax authority for years before the fiscal year ended March 31, 2008 with few exceptions. In other major foreign tax jurisdictions, the Company is no longer subject to regular income tax examinations by tax authorities for years before the fiscal year ended March 31, 2006 with few exceptions.

44

19. EQUITY COMMON STOCK The total number of authorized shares of the Company is 10,000,000,000.

The change in the total number of shares issued for the years ended March 31, 2010 and 2009 are as follows:

Shares Year ended March 31 2010 2009 Shares issued at beginning of year 3,237,602,026 3,237,031,486 Increase due to issuance of new shares 1,000,000,000 Increase due to conversion of convertible bonds with stock acquisition rights 570,540 Shares at end of period 4,237,602,026 3,237,602,026 Toshiba Corporation issued 897,000,000 shares by way of public offering on June 3, 2009 and 103,000,000 shares by way of third-party allotment on June 23, 2009, respectively. As a result, stated capital and additional paid-in capital of the Company increased by Y159,620 million ($1,716,344 thousand) and Y157,921 million ($1,698,075 thousand) from both issuances, respectively.

RETAINED EARNINGS Retained earnings at March 31, 2010 and 2009 included a legal reserve of Y25,103 million ($269,925 thousand) and Y22,429 million, respectively. The Corporation Law of Japan provides that an amount equal to 10% of distributions from retained earnings paid by Toshiba Corporation and its Japanese subsidiaries be appropriated as a legal reserve. No further appropria-tions are required when the total amount of the additional paid-in capital and the legal reserve equals 25% of their respective stated capital. The Corporation Law of Japan also provides that additional paid-in capital and legal reserve are available for appropriations by the resolution of the stockholders.

The amount of retained earnings available for dividends is based on Toshiba Corporation's retained earnings determined in accordance with generally accepted accounting principles in Japan and the Corporation Law ofJapan.

Retained earnings at March 31, 2010 included the Company's equity in undistributed earnings of affiliated companies accounted for by the equity method in the amount of Y60,122 million ($646,473 thousand).

ACCUMULATED OTHER COMPREHENSIVE LOSS An analysis of the changes in accumulated other comprehensive loss, net of tax, for the years ended March 31, 2010 and 2009 are shown below:

Thousands of U S. dollars Mdfions of yen Year ended March 31 2010 2009 2010 Net unrealized gains and losses on securities:

Balance at beginning of year V 21,639 Y 53,461 232,677 Current year change 51,587 (31,822) 554,699 Balance at end of year V 73,226 Y 21,639 787,376 Foreign currency translation adjustments:

Balance at beginning of year V (222,773)

Y (117,552)

$ (2,395,408)

Current year change (8,694)

(10S,221)

(93,484)

Balance at end of year V (231,467)

Y (222,773)

$ (2,488,892)

Pension liability adjustments:

Balance at beginning of year V (314,578)

Y (256,839)

$ (3,382,559)

Current year change 11,230 (57,739) 120,753 Balance at end of year V (303,348)

Y (314,578)

$ (3,261,806)

Net unrealized gains and losses on derivative instruments:

Balance at beginning of year V

(2,284)

Y (1,284)

(24,559)

Current year change (377)

(1,000)

(4,054)

Balance at end of year V

(2,661)

Y (2,284)

(28,613)

Total accumulated other comprehensive loss:

Balance at beginning of year V (517,996)

Y (322,214)

$ (5,569,849)

Current year change 53,746 (195,782) 577,914 Balance at end of year V (464,250)

Y (517,996)

$ (4,991,935) 45

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2010 and 2009 are shown below:

Pre-tax amounc Millions of yen Tax beneflt (expense)

Nei-of-kax arnount For the year ended March 31, 2010:

Net unrealized gains and losses on securities:

Unrealized holding gains arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Foreign currency translation adjustments:

Currency translation adjustments arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Pension liability adjustments:

Pension liability adjustments arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Net unrealized gains and losses on derivative instruments:

Unrealized losses arising during year Less: reclassification adjustment for losses included in

¥ 71,573 2,972 (7,241) f (21,747)

V 49,826 (1,211)

(1,707) 1,761 (8,948) 254 254 (9,030) 28,383 (660) 3,429 (11,552) 225 (5,601) 16,831 (435) net loss attributable to shareholders of Toshiba Corporation 64 (6) 58 Other comprehensive income i 86,315 V (32,569)

¥ 53,746 For the year ended March 31, 2009:

Net unrealized gains and losses on securities:

Unrealized holding losses arising during year Y (96,887)

V 39,103 Y (57,784)

Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation 43,881 (1 7,919) 25,962 Foreign currency translation adjustments:

Currency translation adjustments arising during year (107,197) 1,974 (105,223)

Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation 2

2 Pension liability adjustments:

Pension liability adjustments arising during year (117,018) 47,612 (69,406)

Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation 19,674 (8,007) 11,667 Net unrealized gains and losses on derivative instruments:

Unrealized gains arising during year 4,270 (1,754) 2,516 Less: reclassification adjustment for gains included in net loss attributable to shareholders of Toshiba Corporation (5,930) 2,414 (3,516)

Other comprehensive loss Y (259,205)

Y 63,423 Y (195,782)

\\1 46

Thousands of U.S dolis Pre-tax amount Tax benefit (expense)

Net-of-tax amount For the year ended March 31, 2010:

Net unrealized gains and losses on securities:

Unrealized holding gains arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Foreign currency translation adjustments:

Currency translation adjustments arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Pension liability adjustments:

Pension liability adjustments arising during year Less: reclassificationadjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Net unrealized gains and losses on derivative instruments:

Unrealized losses arising during year Less: reclassification adjustment for losses included in net loss attributable to shareholders of Toshiba Corporation Other comprehensive income S

769,602

$ (233,839)

S 535,763 31,957 (77,860)

(13,021)

(18,355) 18,936 (96,215) 2,731 2,731 (97,097) 305,194 (7,097) 36,871 (124,215)

(60,226) 180,979 (4,678) 2,419 688 (64) 624 928,118

$ (350,204) 577,914 TAKEOVER DEFENSE MEASURE The Company introduced a plan for countermeasures to any large-scale acquisitions of the Company's shares (the "Plan"),

based on the shareholders' approval of the Plan for the purpose of protection and enhancement of the corporate value of the Company and the common interests of shareholders.

Specifically, if an acquirer commences or plans to commence an acquisition or a tender offer that would result in the acquir-er holding 20% or more of the shares issued by the Company, the Company will require the acquirer to provide the necessary information in advance to its board of directors. The Special Committee that solely consists of outside directors who are inde-pendent from the Company's management will, at its discretion, obtain advice from outside experts, evaluate and consider the details of the acquisition, disclose to the Company's shareholders the necessary information regarding the acquisition, evaluate, consider and disclose any alternative proposal presented by the Company's representative executive officers, and negotiate with the acquirer. If the acquirer does not comply with the procedures under the Plan, or the acquisition would damage the corpo-rate value of the Company or the common interests of its shareholders, and if the acquisition satisfies the triggering require-ments set out in the Plan, the countermeasures (a gratis allotment of stock acquisition rights (shinkabu yoyakuken no mushou wariate), with a condition of which will be that they cannot be exercised by acquirers or the like and subject to call to the effect that the Company can acquire stock acquisition rights from those other than such acquirers in exchange for shares of the Company) are to be implemented in accordance with the recommendation by the Special Committee or the resolution passed at the general meeting for confirming shareholders' intention and the Company will ensure the corporate value of the Company and the common interests of shareholders.

-I 47

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010

20. NET EARNINGS (LOSS) PER SHARE The following reconciliation table of the numerators and denominators sets forth the computation of basic and diluted net loss per share attributable to shareholders of Toshiba Corporation for the years ended March 31, 2010 and 2009.

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Loss from continuing operations attributable to shareholders of Toshiba Corporation f (19,317)

Y (329,780)

$ (207,709)

Loss from discontinued operations attributable to shareholders of Toshiba Corporation (426)

(13,779)

(4,581)

Net loss attributable to shareholders of Toshiba Corporation

¥ (19,743)

Y (343,559)

$ (212,290)

Thousands of shares Year ended March 31 2010 2009 Weighted-average number of shares of common stock outstanding for the year 4,004,801 3,235,763 Incremental shares from assumed conversions of dilutive convertible debentures Weighted-average number of shares of diluted common stock outstanding for the year 4,004,801 3,235,763 Yen U.S. dollars Year ended March 31 2010 2009 2010 Loss from continuing operations per share attributable to shareholders of Toshiba Corporation:

-Basic V

(4.82)

Y (101.92)

(0.05)

-Diluted (4.82)

(101.92)

(0.05)

Loss from discontinued operations per share attributable to shareholders of Toshiba Corporation:

-Basic v

(0.11)

Y (4.26)

(0.00)

-Diluted (0.11)

(4.26)

(0.00)

Net loss per share attributable to shareholders of Toshiba Corporation:

-Basic f

(4.93)

Y (106.18)

(0.05)

-Diluted (4.93)

(106.18)

(0.05)

Due to their anti-dilutive effect, incremental shares from assumed conversions of dilutive convertible debentures are excluded from the calculation of diluted net loss per share attributable to shareholders of Toshiba Corporation for the years ended March 31, 2010 and 2009.

21. FINANCIAL INSTRUMENTS (1) DERIVATIVE FINANCIAL INSTRUMENTS The Company operates internationally, giving rise to exposure to market risks from fluctuations in foreign currency exchange and interest rates. In the normal course of its risk management efforts, the Company employs a variety of derivative financial instruments, which are consisted principally of forward exchange contracts, interest rate swap agreements, currency swap agreements and currency options to reduce its exposures. The Company has policies and procedures for risk management and the approval, reporting and monitoring of derivative financial instruments. The Company's policies prohibit holding or issuing derivative financial instruments for trading purposes.

The Company is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instru-ments, but the Company does not anticipate any credit-related loss from nonperformance by the counterparties because the counter-parties are financial institutions of high credit standing and contracts are diversified across a number of major financial institutions.

The Company has entered into forward exchange contracts with financial institutions as hedges against fluctuations in foreign currency exchange rates on monetary assets and liabilities denominated in foreign currencies. The forward exchange contracts related to accounts receivable and payable, and commitments on future trade transactions denominated in foreign currencies, mature pri-marily within a few years of the balance sheet date.

Interest rate swap agreements, currency swap agreements and currency options are used to limit the Company's exposure to losses in relation to underlying debt instruments and accounts receivable and payable denominated in foreign currencies resulting from 48

adverse fluctuations in foreign currency exchange and interest rates. These agreements mature during the period 2010 to 2015.

Forward exchange contracts, interest rate swap agreements and currency swap agreements are designated as either fair value hedges or cash flow hedges, except for some contracts, depending on accounts receivable and payable denominated in foreign curren-cies or commitments on future trade transactions and the interest rate characteristics of the underlying debt as discussed below.

Fair Value Hedge Strategy The forward exchange contracts and currency swap agreements utilized by the Company effectively reduce fluctuation in fair value of accounts receivable and payable denominated in foreign currencies.

The interest rate swap agreements utilized by the Company effectively convert a portion of its fixed-rate debt to a floating-rate basis.

The gain or loss on the derivative financial instruments designated as fair value hedges is offset by the loss or gain on the hedged items in the same location of the consolidated statements of income.

Cash Flow Hedge Strategy The forward exchange contracts utilized by the Company effectively reduce fluctuation in cash flow from commitments on future trade transactions denominated in foreign currencies for the next 5 years.

The interest rate swap agreements utilized by the Company effectively convert a portion of its floating-rate debt to a fixed-rate basis for the next 6 years.

The Company expects to reclassify Y24 million ($258 thousand) of net income on derivative financial instruments from accumulated other comprehensive loss to net income (loss) attributable to shareholders of Toshiba Corporation during the next 12 months due to the collection of accounts receivable denominated in foreign currencies and the payments of accounts payable denominated in foreign currencies and variable interest associated with the floating-rate debts.

Derivatives Not Designated as Hedging Instruments Strategy The Company has entered into certain forward exchange contracts, interest rate swap agreements, currency swap agreements andcurrency options to offset the earnings impact related to fluctuations in foreign currency exchange rates on monetary assets and liabilities denominated in foreign currencies and in interest rates on debt instruments. Although some of these con-tracts have not been designated as hedges as required in order to apply hedge accounting, the contracts are effective from an economic perspective. The changes in the fair value of those contracts are recorded in earnings immediately.

The Company's forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap agree-ments, currency swap agreements and currency options outstanding at March 31, 2010 and 2009 are summarized below:

Thousands of Millions of yen U.S. dollars March 31 2010 2009 2010 Forward exchange contracts:

To sell foreign currencies Y183,818 Y196,828

$1,976,538 To buy foreign currencies 133,862 162,506 1,439,376 Interest rate swap agreements 249,050 270,300 2,677,957 Currency swap agreements 182,468 86,021 1,962,022 Currency options 41,984 451,441 49

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 (2) FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of the Company's financial instruments and the location in the consolidated balance sheets at March 31, 2010 and 2009 are summarized as follows:

Millions of yen March 31 Location Derivatives designated as hedging instruments:

Assets:

Forward exchange Prepaid expenses and contracts other current assets Interest rate Prepaid expenses and swap agreements other current assets Currency swap Prepaid expenses and agreements other current assets Liabilities:

Forward exchange Other current contracts liabilities Interest rate Other liabilities swap agreements Currency swap Other liabilities agreements Derivatives not designated as hedging instruments:

Assets:

Forward exchange Prepaid expenses and contracts other current assets Interest rate Prepaid expenses and swap agreements other current assets Liabilities:

Forward exchange Other current liabilitil contracts Currency swap Other current liabilitiE agreements Currency options Other current liabilitil 2010 2009 Thousands of U.S. dollars 2010 323 Y

• 734 3,473 9

255 (506)

(5,168)

(409) 73 97 207 (6,081)

(2,541) 2,742 (5,441)

(S5,570)

(4,398) 1,163 12,505 I

es es (807)

(13)

Li rcý (4,32S)

(8,677)

(140) k j

ý

/

ZI Millions of yen 2010 2009 Carryng Carryng March 31 amount Fair value amount Fair value Nonderivatives:

Liabilities:

Long-term debt, including current portion V (1,111,583)

Y (1,121,241)

Y (1,005,847)

Y (996,085)

Thousands of U.S. dollars 2010 Carrying amount March 31 Nonderivatives:

Liabilities:

Long-term debt, including current portion Fair value S (11,952,506)

$ (12,056,355) 50

The above table excludes the financial instruments for which fair values approximate their carrying amounts and those related to leasing activities. The table also excludes marketable securities and other investments which are disclosed in Note 6.

In assessing the fair value of these financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at that time. For certain instruments, including cash and cash equiv-alents, notes and accounts receivable-trade, short-term borrowings, notes payable-trade, accounts payable-trade and accounts payable-other and accrued expenses, it is assumed that the carrying amount approximated fair value for the majority of these instruments because of their short maturities. Quoted market prices are used for a part of marketable securities and other investments. For long-term debt, fair value is estimated using market quotes, or where market quotes are not available, using estimated discounted future cash flows. Other techniques, such as estimated discounted value of future cash flows, and replacement cost, are used to determine fair value for the remaining financial instruments. These fair values are not necessarily indicative of the amounts that could be realized in a current market exchange.

The effect of derivative instruments on the consolidated statements of income for the year ended March 31, 2010 is as follows:

Millions of yen Amount ofgain (loss) recognized in OCI Amount Amount of gain (loss) reclassified from accumulated OCI into income (loss)

Amount Amount of gain (loss) recognized in income (loss)

(Ineffectine portion and amount excluded from effectiveness testing)

Amount recognized Location recognized Location recognized Cash flow hedge:

Forward exchange contracts i

922 Other expense V (58)

Other income V 1,681 Interest rate swap agreements (1,357)

Other expense (2)

Millions of yen Amount of gain (loss) recognized in income (loss)

Amount Location recognized Derivatives not designated as hedging instruments:

Forward exchange contracts Other income I 1,676 Currency options Other expense (162)

Thousands of U.S. dollars Amount of gain (loss)

Amount of gain (loss) recognized in income (loss)

Amount of gain (loss) reclassified from accumulated (Ineffective portion and amount excluded recognized in 0C 0Cl into income (loss) from effectiveness testing)

Amount Amount Amount recognized Location recognized Location recognized Cash flow hedge:

Forward exchange contracts

$ 9,914 Other expense

$ (624)

Other income

$18,075 Interest rate swap agreements (14,592)

Other expense (22)

Thousands of U.S. dollars Amount of gain (loss) recognized in income (loss)

Amount Location recognized Derivatives not designated as hedging instruments:

Forward exchange contracts Other income

$18,022 Currency options Other expense (1,742) 51

Notes to Consolidated Financial Statements

/

Toshiba Corporation and Subsidiaries March 31, 2010 The effect of derivative instruments on the consolidated statements of income for the 3 months ended March 31, 2009 is as follows:

Millions of Yen Amount of gain (loss) recognized in OCI Amount Amount of gain (loss) reclassified from accumulated OCI into income (loss)

Amount Amount of gan (loss) recognized in income (loss)

(Ineffective portion and amount excluded from effectiveness testing)

Amount recognized Location recognized Location recognized Cash flow hedge:

Forward exchange contracts Y 499 Other expense Y (281)

Other expense Y (64)

Interest rate swap agreements 394 Millions of yen Amount of gain (loss) recognized in income (loss)

Amount Location recognized Derivatives not designated as hedging instruments:

Forward exchange contracts Other expense Y (1,106)

Interest rate swap agreements Other income 2

22. LEASES The Company leases manufacturing equipment, office and warehouse space, and certain other assets under operating leases.

Rent expenses under such leases for the years ended March 31, 2010 and 2009 were Y150,780 million ($1,621,290 thousand) and Y128,010 million, respectively.

The Company also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2010 and 2009, the costs under capital leases were approximately Y90,300 million ($970,968 thousand) and Y78,100 million, and the related accumulated amortization were approximately Y34,500 million ($370,968 thousand) and Y21,200 million, respectively.

As of March 31, 2010 and 2009, the costs under capital leases from TFC and Toshiba Medical Finance Co., Ltd., affiliates of the Company, were approximately Y61,100 million ($656,989 thousand) and Y60,000 million, and the related accumulated amortization were approximately Y23,700 million ($254,839 thousand) and Y15,700 million, respectively.

Minimum lease payments for the Company's capital and non-cancelable operating leases as of March 31, 2010 are as fol-lows:

Year ending March 31 2011 2012 2013 2014 2015 Thereafter Total minimum lease payments Capital leases Y 17,649 13,103 8,045 5,344 3,286 17,317 64,744 (2,954 (6,418 55,372 (15,932 Y 39,440 Millions of yen Operating leases Y 84,901 62,529 46,058 18,122 7,415 27,865 V246,890 Thousands of U.s dollars Capital leases Operating leases

$ 189,774 S 912,914 140,893 672,355 86,506 495,247 57,462 194,860 35,333 79,731 186,204 299,624 696,172

$2,654,731 (31,763)

(69,011) 595,398 (171,312)

S 424,086 Executory costs Amounts representing interest Present value of net minimum lease payments Less-current portion 4~)

52

23. COMMITMENTS AND CONTINGENT LIABILITIES Commitments for the purchase of property, plant and equipment, and unconditional purchase obligation for license fee out-standing at March 31, 2010 totaled approximately Y48,019 million ($516,333 thousand).

At March 31, 2010, contingent liabilities, other than guarantees disclosed in Note 24, approximated Y1,439 million ($15,473 thousand) principally for recourse obligations related to notes receivable transferred.

24. GUARANTEES GUARANTEES OF UNCONSOLIDATED AFFILIATES AND THIRD PARTY DEBT The Company guarantees debt as well as certain financial obligations of unconsolidated affiliates and third parries to support the sale of the Company's products and services. Expiration dates vary from 2010 to 2020 or terminate on payment and/or cancellation of the obligation. A payment by the Company would be triggered by the failure of the guaranteed party to fulfill its obligation under the guarantee. The maximum potential payments under these guarantees were V95,735 million

($1,029,409 thousand) as of March 31, 2010.

GUARANTEES OF EMPLOYEES' HOUSING LOANS The Company guarantees housing loans of its employees. The term of the guarantees is equal to the term of the related loans which range from 5 to 25 years. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guaran-tee. The maximum potential payments under these guarantees were Y9,745 million ($104,785 thousand) as of March 31, 2010.

However, the Company expects that the majority of such payments would be reimbursed through the Company's insurance policy.

RESIDUAL VALUE GUARANTEES UNDER SALE AND LEASEBACK TRANSACTIONS The Company has entered into several sale and leaseback transactions in which certain manufacturing equipment was sold and leased back. The Company may be required to make payments for residual value guarantees in connection with these transac-tions. The operating leases will expire on various dates through February 2014. The maximum potential payments by the Company for such residual value guarantees were Y133,827 million ($1,439,000 thousand) at March 31, 2010.

GUARANTEES OF DEFAULTED NOTES AND ACCOUNTS RECEIVABLE The Company has transferred trade notes receivable and trade accounts receivable under several securitization programs.

Upon certain sales of trade notes and accounts receivable, the Company holds a repurchase obligation, which the Company is required to perform upon default of the trade notes and accounts receivable. The trade notes and accounts receivable generally mature within 3 months. The maximum potential payment for such repurchase obligation was Y8,066 million ($86,731 thou-sand) as of March 31, 2010.

The carrying amounts of the liabilities for the Company's obligations under the guarantees described above at March 31, 2010 were not significant.

WARRANTY Estimated warranty costs are accrued for at the time the product is sold to a customer. Estimates for warranty costs are made based primarily on historical warranty claim experience. The following is a reconciliation table of the product warranty accrual:

Thousands of Millions of yen U.S. dollars March 31 2010 2009 2010 Balance at beginning of year V 38,837 Y 43,578

$ 417,602 Warranties issued 35,080 35,827 377,205 Change in consolidated subsidiaries 5,187 55,774 Settlements made (33,948)

(37,512)

(365,032)

Foreign currency translation adjustments (975)

(3,056)

(10,484)

Balance at end of year

¥ 44,181 Y 38,837

$ 475,065 Change in consolidated subsidiaries includes the cost related to the acquisition of HDD business from Fujitsu Limited.

53

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010

25. LEGAL PROCEEDINGS In January 2007, the European Commission adopted a decision imposing fines on 19 companies, including Toshiba Corporation, for violating EU competition laws in the gas insulated switchgear market. Toshiba Corporation was individually fined F86.25 million and was also fined C4.65 million jointly and severally with Mitsubishi Electric Corporation. Following its own investigation, Toshiba Corporation contends that it has not found any infringement of EU competition laws, and it is bringing an action to the European Court of First Instance seeking annulment of the European Commission's decision.

The Company undertakes global business operations and is involved from time to time in disputes, including lawsuits. and other legal proceedings and investigations by relevant authorities. There is a possibility that such case may arise in the future.

Due to differences in judicial systems and the uncertainties inherent in such proceedings, the Company may be subject to a ruling requiring payment of amounts far exceeding its expectations. Any judgement or decision unfavorable to the Company could have a materially adverse effect on the Company's business, results of operations or financial condition. The possibility cannot be stated as nil that, under certain circumstances, an action is filed that has an extremely remote chance of a ruling that requires payment but involves an appeal for a significant amount of money.

The Company's Management believes that there are meritorious defenses to all of these legal procedures, including lawsuits and investigations. Based on the information currently available to both the Company and its legal counsel, Management believes that such legal procedures, if any, would not have a material adverse effect on the financial position or the results of operations of the Company.

26. ENVIRONMENTAL LIABILITIES The Japanese environmental regulation, "Law Concerning Special Measure against poly chlorinated biphenyl ("PCB") waste" requires PCB waste holders to dispose of all PCB waste by July 2016. The Company accrued Y9,030 million ($97,097 thou-sand) and Y10,426 million at March 31, 2010 and 2009, respectively, for environmental remediation and restoration costs for products or equipment with PCB which some Toshiba operations in Japan have retained.

The Westinghouse Group, a consolidated subsidiaries of the Company, is subject to federal, state and local laws and regula-tions relating to the discharge of pollutants into the environment, the disposal of hazardous wastes and other related activities affecting the environment, and which have had and will continue to have an impact on the Company. It is difficult to estimate the timing and ultimate costs to be incurred in the future due to uncertainties about the status of laws, regulations and tech-nology; the adequacy of information available for individual sites; the extended time periods over which site remediation occurs; the availability of waste disposal capacity; and the identification of new sites. The Company has, however, recognized an estimated liability of Y6,695 million ($71,989 thousand) and Y3,099 million as of March 31, 2010 and 2009, respectively, measured in current dollars, for those sites where it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The accrual will be adjusted as assessment and remediation efforts progress or as additional technical or legal information become available. Management is of the opinion that the ultimate costs in excess of the amount accrued, if any, would not have a material adverse effect on the financial position or the results of operations of the Company.

27. ASSET RETIREMENT OBLIGATIONS The Company records asset retirement obligations in accordance with ASC No.410 "Asset Retirement and Environmental Obligations" (formerly SFAS No.143 and FIN No.47).

Asset retirement obligation was related primarily to the decommissioning of nuclear power facilities. These obligations address the decommissioning, clean up and release for acceptable alternate use of such facilities.

The changes in the carrying amount of asset retirement obligations for the years ended March 31, 2010 and 2009 are as fol-lows:

Thousands of Millions of yen U.S. dollars Year ended March 31 2010 2009 2010 Balance at beginning of year V 25,458 Y 28,555

$ 273,742 Accretion expense 1,076 1,176 11,570 Liabilities settled (1,419)

(1,391)

(15,258)

Liabilities incurred 5,526 9

59,419 Foreign currency translation adjustments (999)

(2,891)

(10,742)

Balance at end of year V 29,642 Y 25,458

$ 318,731 54

28. BUSINESS COMBINATIONS The Company adopted ASC No.805 "Business Coombination" (formerly SFAS No.141R) ("ASC No.805") effective April 1, 2009. ASC No.805 establishes principles and requirements for how an acquirer recognizes and measures in its financial state-ments the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in the acquiree and the goodwill acquired in a business combination. ASC No.805 also requires to disclose to enable users of the financial statements to evalu-ate the nature and financial effects of the business combination.

On May 7, 2009, the Company acquired 52% of the outstanding shares of Nuclear Fuel Industries, Ltd. ("NFI"), from Furukawa Electric Co., Ltd. and Sumitomo Electric Industries, Ltd. with the intention of expanding the Company's Nuclear Power Systems business by establishing a market presence in Japan and building a fuel production platform in Asia.

The total purchase price for the acquisition was Y11,526 million ($123,935 thousand) in cash. Of the total price, Y13,680 million ($147,097 thousand) was allocated to property, plant and equipment, Y10,070 million ($108,280 thousand) to noncon-trolling interests, Y8,054 million ($86,602 thousand) to amortizable intangible asset, ¥248 million ($2,667 thousand) to net lia-bility assumed and Y110 million ($1,183 thousand) to goodwill. The acquired intangible assets primarily consisted of contract-ed customer, relationships. The Company is amortizing the intangible assets over a weighted-average estimated life of 16.5 years.

The operating results of NFI are included in the Company's consolidated financial statements from May 2009 onward.

On April 30, 2009, the Company and Fujitsu Limited ("Fujitsu") concluded an agreement on the transfer of Fujitsu's hard disk drive ("HDD") business to the Company for approximately Y30.0 billion ($322,581 thousand) in total, which was subsequent-ly adjusted to Y25.4 billion ($273,118 thousand). To effect the transfer, Fujitsu spun off its HDD business into a newly incor-porated entity called Toshiba Storage Device Corporation ("TSDC") and on October 1, 2009, the Company acquired 80.1%

of the shares of TSDC. The Company will acquire the remaining 19.9% of shares of TSDC from Fujitsu by the end of December 2010 and TSDC will become a wholly owned subsidiary of the Company. The Company expects to achieve great synergies from this acquisition by: (i) expanding market share in the comprehensive area of data storage by leveraging its posi-tion as a leading vendor of small form factor HDDs and integrating Fujitsu's enterprise HDD business; and (ii) fulfilling a wide range of storage device demand by adding solid state drive products to its product line, which will be newly developed by integrating its flash memory technology with Fujitsu's enterprise HDD technology.

Operating results of TSDC have been included in the Company's consolidated statement of income since October 2009.

The Company is in the process of allocating the purchase price to the assets acquired and liabilities assumed in accordance with ASC No.805, but the process has not finalized.

On December 15, 2009, the Company increased its ownership in its former affiliate Chevalier (HK) Limited and its sub-sidiaries ("Chevalier (HK)") by acquiring an additional 2% stake to 51% totaling approximately Y8.0 billion ($86,022 thou-sand) and consequently acquired a controlling financial interest of Chevalier (HK). The investment is intended to further strengthen the Company's presence in lifts and escalators industries of the global market, mainly in China and Southeast Asia.

The allocation of the fair value of the acquisition under ASC No.805 will be finalized when the valuation is completed.

29. SUBSEQUENT EVENT Disposition of Other Capital Surplus The Company resolved, at the board meeting held on May 7, 2010, the submission of the disposition of Toshiba Corporation's other capital surplus based on Article 452 of the Corporation Law ofJapan.

Therefore, the additional paid-in capital will be reduced by Y46,772 million ($502,925 thousand), and the retained earnings of the consolidated balance sheet will be increased by the same amount.

Fujitsu Limited and Toshiba Corporation Sign MOU to Merge Mobile Phone Businesses Fujitsu Limited ("Fujitsu") and Toshiba Corporation signed a memorandum of understanding ("MOU") to merge their mobile phone business on June 17, 2010. According to the MOU, Toshiba Corporation will transfer its mobile phone busi-ness to a new company to be established on October 1, 2010, and Fujitsu will acquire a majority of the shares in the company.

Fujitsu and Toshiba Corporation are in the process of examining the range and amount of assets and liabilities to be trans-ferred to the company. Fujitsu and Toshiba Corporation plan to sign a final contract at the end ofJuly 2010.

55

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010

30. SEGMENT INFORMATION Beginning with the fiscal year ended March 31, 2010, the Company adopted ASC No.280 "Segment Reporting" (formerly SFAS No.131) ("ASC No.280"). Segment information for the fiscal year ended March 31, 2009 has also been presented in accor-dance with ASC No.280.

The segments reported below are the components of the Company for which discrete financial information is available and whose results are regularly reviewed by the management of the Company to make decisions about allocation on resources and assess performance.

The Company evaluates the performance of its business segments based on segment operating income (loss). The Company's segment operating income (loss) is derived by deducting the segment's cost of sales and selling, general and admin-istrative expenses from net sales. Certain operating expenses such as restructuring charges and gains (losses) from the sales or disposal of fixed assets are not included in it.

The Company has 5 business segments, (1)Digiral Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home Appliances and (5)Others, identified in accordance with the similarities of the nature of the products, the production process-es and markets, etc.

Principal products that belong to each segment are as follows:

(1) Digital Products:

Personal computers, Visual products, Hard disk drives, Multi-function peripherals, Mobile phones, etc.

(2) Electronic Devices:

Semiconductors, Liquid crystal displays, etc.

(3) Social Infrastructure:

Energy-related equipment, Medical equipment, IT solutions, Elevators, etc.

(4) Home Appliances:

Refrigerators, Washing drying machines, Light fixtures, Air-conditioners, etc.

(5) Others :

Logistics Service, etc.

BUSINESS SEGMENTS Financial information by segments as of and for the years ended March 31, 2010 and 2009 are as follows:

Ar rrf nd for rhe year r'ndnd March :1. 2510 Millinn* c*f yen Digital Electronic Social Home Corporate and Products Devices Infrastructure Appliances Others Total Eliminations Consolidated Net sales (1) Unaffiliated customers V 2,264,283 V 1,253,854 V 2,238,487 Y 560,931 Y

64,044 V 6,381,599 V

V 6,381,599 (2) Intersegment 99,339 55,259 64,380 18,915 251,747 489,640 (489,640)

Total V 2,363,622 V 1,309,113 V 2,302,867 V 579,846 V 315,791 V 6,871,239 V (489,640)

V 6,381,599 Segment operating income (loss)

V 13,323 V

(24,212)

V 136,265 V

(5,386)

V (4,262)

V 115,728 V

1,463 V

117,191 Identifiable assets V 1,117,897 V 1,328,384 V 2,449,478 V 362,171 V 312,599 Y 5,570,529 V (119,356)

V 5,451,173 Depreciation and amortization 36,307 171,184 66,899 19,455 5,153 298,998 298,998 Capital expenditures 21,872 108,605 99,779 17,523 8,895 256,674 256,674 As of and for the year ended March 31, 2009 Millions ofyen Digital Electronic Social Home Corporate and Others Total Coprt Consolidated Products Devices Infrastructure Appliances Eliminations Net sales (1) Unaffiliated customers

¥ 2,376,084 Y 1,264,675 Y 2,28SS96 Y 651,411 Y

76,752 Y 6,654518 Y

Y 6,654,518 (2) Incersegment 91,440 60.239 110,613 22,834 257,546 542,672 (542,672)

Total Y

2,467,S24 Y 1,324,914 Y 2,396,209 Y 674,245 Y 334,298 Y 7,197,190 Y

(542,672)

Y 6,654,518 Segment operating income (loss)

Y (14,202)

Y (323,216)

Y 113,247 Y

(27,144)

Y 528 Y

(250.787)

Y 601 Y

(250,186)

Identifiable assets Y

954,909 Y

1,437,943 Y 2,427,465 Y

385.240 Y 321,551 Y 5,527,108 Y

(73,883)

Y 5,453,225 Depreciation and amortization 33,249 210,016 62,575 28,748 15,176 349,764 349,764 Capital expenditures 39.387 266,904 105,822 18,497 22,169 452,779 452,779

N As of and for rhe year ended March 31. 2010 Thousands of U.S. dollars Digital Electronic Social Home Others Total Corporate and Consolidated Products

'Devices Infrastructure Appliances Eliminations Net sales (1) Unaffiliated customers

$24,347,129

$13,482,301

$24,069,753

$6,031,516

$ 688,645

$68,619,344

$68,619,344 (2) Intersegment 1,068,161 594,183 692,258 203,387 2,706,957 5,264,946 (5,264,946)

Total

$25,415,290

$14,076,484

$24,762,011

$6,234,903

$3,395,602

$73,884,290

$(5,264,946)

$68,619,344 Segment operating income (Ioss) 143.258 (260,344)

$ 1,465,215

$ (57,914)

$ (45,828)

$ 1,244,387 15,731

$ 1,260,118 Idenufiable assets

$12,020,398

$14,283.699

$26,338,473

$3,894,312

$3,361,279

$ 59,898,161

$(1,283,398)

$58,614,763 Depreciation and amortization 390,398 1,840,688 719,344 209,193 55,409 3,215,032 3,215,032 Capital expenditures 235,183 1,167,796 1,072,892 188,419 95,645 2,759,935 2,759,935 Notes 1) Transfers between segments are made at arm's length prices.

2) Corporate assets, included in Corporate and Eliminations of Identifiable assets, are mainly marketable securities of Toshiba Corporation.

A reconciliation table between the total of the segment operating income (loss) and the income (loss) from continuing opera-tions, before income taxes and noncontrolling interests for the years ended March, 31, 2010 and 2009 are as follows:

Millions of yen Thousands of U.S. dollars Year ended March 31 2010 2009 2010 The total of the segment operating income (loss)

V 115,728 Y (250,787) 1,244,387 Corporate and Eliminations 1,463 601 15,731 Sub Total V

117,191 Y (250,186) 1,260,118 Interest and dividends 7,980 19,432 85,807 Equity in earnings of affiliates 22,38S 9,596 240,699 Other income 63,103 146,923 678,527 Interest (35,735)

(33,693)

(384,247)

Other expense (149,962)

(171,324)

(1,612,495)

Income (loss) from continuing operations, before income taxes and noncontrolling interests V

24,962 Y (279,252) 268,409 GEOGRAPHIC INFORMATION Net Sales Net sales by region based on the location of the customer for the years ended March 31, 2010 and 2009 are as follows:

Millions of yen Thousands of U.S. dollars Year ended March 31 2010 2009 2010 Japan V 2,878,494 Y 3,230,840

$ 30,951,548 Overseas

¥ 3,503,105 Y 3,423,678

$ 37,667,796 Asia 1,305,456 1,188,048 14,037,161 North America 1,135,297 1,082,798 12,207,495 Europe 843,S80 921,097 9,070,7S3 Others 218,772 231,735 2,352,387 Total

¥ 6,381,599 Y 6,654,S18

$ 68,619,344 57

Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2010 Property, plant and equipment Property, plant and equipment by region at March 31, 2010 and 2009 are as follows:

Millions of yen Thousands of U.S. dollars March 31 2010 2009 2010 Japan V

760,595 Y

874,872 8,178,441 Overseas

¥ 218,131 Y

214,707 2,345,494 Asia 119,867 127,310 1,288,892 North America 63,127 58,511 678,785 Europe 28,699 24,165 308,591 Others 6,438 4,721 69,226 Total V

978,726 Y 1,089,579

$ 10,523,935 Notes; 1) There are no individually material countries which should be separately disclosed.

2) There are no material sales to a single unaffiliated customer.

The following information is based on the locaion of Toshiba Corporation and its subsidiaries. In addition to the disclosure required by ASC No.280, the Company discloses this information in accordance with the Japanese Financial Instrument and Exchange Law.

GEOGRAPHIC SEGMENTS Geographic segments as of and for the years ended March 31, 2010 and 2009 are as follows:

As of and to, the near ended March 31.2010 Millions of see North Europe Others Total Corporate and Japan Asia America Eliminations Net sales (1) Unaffiliated customers V 3,272,070 V 1,044,274 V 1,194,545 V 763,374 V 107,336 V 6,381,599 V V 6,381,599 (2) Intersegmenc 1,994,936 788,538 23,285 13,059 20,330 2,840,148 (2,840,148)

Total V 5,267,006 V 1,832,812 V 1,217,830 V 776,433 V 127,666 V 9,221,747 V (2,840,148)

V 6,381,599 Segment operating income V

20,309 V

46,177 V

18,916 V 20,586 V

5,883 V

111,871 V 5,320 V

117,191 Identifiable assets V 3,910,036 V 1,023,728 V 754,616 V 471,706 V 68,296 V 6,228,382 V (777,209)

V 5,451.173 As of and for the year ended March 31. 2009 Millions of yen Japan Asia Europe Others Total Corporate Consolidated America Eliminations Net sales (1) Unaffiliated customers Y

3,582,690 Y

1,004,980 Y 1,088,520 9

879,464

¥ 98,864 Y 6,654,518 Y Y 6.654,518 (2) Intersegment 1,763,589 577,003 23,534 14,595 16,637 2,395,358 (2.395,358)

Total Y

5,346.279 Y 1,581,983 Y 1,112,054 Y 894,059 1 115,501 Y 9,049,876 Y (2,395,358)

Y 6,654,518 Segment operating income (loss)

Y (315,500)

Y 21,267 Y

17,761 9

6,137 Y

4,549 Y

(265,786) 9 15,600 Y

(250,186)

Identifiable assets Y

3.906,116 Y

699.372 Y

751,503 9 478,574

¥ 49,724 Y 5,885,289 Y

(432,064)

Y S,453,225 As ofand for the year ended March 31. 2010 Thousands of U.S. dollars Japan Asia North Europe Others Total Corporace Consolidated America Eliminations Net sales (1) Unaffiliated customers

$35,183,548

$11,228,753

$12,844,570

$8,208,322

$1,154,151

$68,619,344

$68,619,344 (2) Intersegment 21,450,925 8,478,903 250,376 140,420 218,602 30,539,226 (30,539,226)

Total

$56,634,473

$19,707,656

$13,094,946

$8,348,742o

$1,372,753

$99,158,570

$(30,539,226)

$68,619,344 Segment operating income 218,376 496,527 203,398

$ 221,355 63,258

$ 1,202,914 57,204

$ 1,260,118 Identifiable assets

$42,043,398

$ 11,007,828

$ 8,114,150

$5,072,107

$ 734,366

$66,971,849

$ (8,357,086)

$58,614,763 Notes: 1) Segmentation of countries or regions is based on geographical proximity.

2) Principal countries and regions that belong to segments other than Japan are as follows:

(1) Asia; China, South Korea (2) North America:

United States, Canada (3) Europe :

Germany, England (4) Others :

Australia

3) Corporate assets, included in Corporate and Eliminations of Identifiable assets, for the years ended March 31, 2010 and 2009 were V86,692 million (S932.172 thousand) and V96,860 million.

respectively, and are mainly marketable securities of Toshiba Corporation.

Ernst & Young ShinNihon LLC Hibiya Kokusai Bldg.

2-2-3 Uchisaiwai-cho Chiyoda-ku, Tokyo,.Japan 100-00 11 Tel: +813 3503 1191 Fax: +813 3503 1277 Report of Independent Auditors The Board of Directors and Shareholders of Toshiba Corporation We have audited the accompanying consolidated balance sheets of Toshiba Corporation and subsidiaries (the "Company") as of March 31, 2010 and 2009, and the related consolidated statements of income, equity, and cash flows for the years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial state-ments based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those stan-dards require that we plan and perform the audit to obtain reasonable assurance about whether the financial state-ments are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

In our report dated June 24, 2009, we expressed an opinion that, except for the omission of segment reporting infor-mation, the consolidated financial statement as of and for the year ended March 3 1, 2009 presented fairly, in all material respects, the consolidated financial position, results of operations and cash flows of Toshiba Corporation and subsidiaries, in conformity with U.S. generally accepted accounting principles. As described in Note 30, begin-ning with the fiscal year ended March 31, 2010, the Company adopted ASC No.280 "Segment Reporting" (formerly SFAS No. 131) and revised the disclosures in its consolidated financial statement as of and for the year ended March 31, 2009 to conform with U.S. generally accepted accounting principles. Accordingly, our present opinion on the consolidated financial statement as of and for the year ended March 31, 2009, as presented herein, is unqualified rather than qualified.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Toshiba Corporation and subsidiaries at March 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the Company adopted SFAS No.160 "Noncontrolling Interests in Consolidated Financial Statements" (ASC No.8 10 "Consolidation") effective April 1, 2009.

We also have reviewed the translation of the consolidated financial statements mentioned above into United States dollars on the basis described in Note 3. In our opinion, such statements have been translated on such basis.

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