OREANDA-NEWS. August 2, 2012. Toshiba Corporation (TOKYO: 6502) announced its consolidated results for the first quarter (April-June) of fiscal year (FY) 2012, ending March 31, 2013. All comparisons in the following are based on the same period a year earlier, unless otherwise stated.

Overview

 

 

(Yen in billions)

 

1Q of FY2012

Change from 1Q of FY2011

Net sales

1,268.9

-57.2

Operating income (loss)

11.5

+7.4

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

-14.7

-17.8

Net income (loss) attributable

to shareholders of the Company

-12.1

-12.6

The global economy remained in severe circumstances due to the effects of slowdown in economic growth in a part of emerging economies and continuing concerns for a recession triggered by persistent high unemployment in the United States and the financial positions of some European countries. In Japan, there are still concerns about the risk of negative impacts from overseas economies and shortages of power generation capacity, although the economy has returned to a path of gradual recovery, supported by reconstruction demand.

In these circumstances, Toshiba’s consolidated net sales were 1,268.9 billion yen (USD 16,061.6 million), a decrease of 57.2 billion yen. Even though the Social Infrastructure segment recorded a healthy performance, mainly in energy-related

businesses, the Digital Products and the Electronic Devices segments saw decreases that reflected the impacts of continued yen appreciation and market deterioration.

Consolidated operating income was 11.5 billion yen (USD 145.2 million), an increase of 7.4 billion yen. Although the Digital Products segment saw a decline, the Electronic Devices and the Social Infrastructure segments recorded increases. Income (Loss) from continuing operations before taxes and noncontrolling interests fell by 17.8 billion yen to -14.7 billion yen (USD -185.6 million), due to increased expenditure to promote steady business restructuring for strengthening profitability and the impact of yen appreciation. Net income (loss) attributable to shareholders of the Company was -12.1 billion yen (USD -153.2 million), a decrease of 12.6 billion yen.

Consolidated Results for the First Quarter FY2012 by Segment

(Yen in billions)

 

Net Sales

Operating Income (Loss)

 

Change*

 

Change*

Digital Products

339.9

-72.0

-17%

-3.6

-3.0

Electronic Devices

307.7

-25.4

-8%

9.4

+6.8

Social Infrastructure

500.2

+73.3

+17%

8.4

+11.6

Home Appliances

141.6

-7.9

-5%

0.1

-1.0

Others

80.8

-38.0

-32%

-2.4

-5.7

Eliminations

-101.3

-

-

-0.4

-

Total

1,268.9

-57.2

-4%

11.5

+7.4

(* Change from the year-earlier period)

Note: The hard disk drive (HDD) business was recognized as an electronic component business and reclassified from the Digital Products segment to the Electronic Devices segment and incorporated into the Semiconductor and Storage Products business in a July 1, 2011 reorganization. In the same reorganization, the optical disk drive (ODD) business was also recognized as an electronic component business, reclassified from the Digital Products segment to the Electronic Devices segment and transferred to a new division dedicated to the business. Results for the previous year have been retroactively reclassified to reflect these changes. In this release, HDDs and SSDs are referred to as the Storage Products business.

The Company sold and transferred all the shares of Toshiba Mobile Display Co., Ltd. to Japan Display Inc. in March 2012. The LCD business results for the previous year have been retroactively reclassified from the Electronic Devices to the Others segment.

Digital Products: Lower Sales and Deteriorated Operating Income (Loss)

The Digital Products segment saw overall sales decrease. The Visual Products business, which includes TVs, saw sales decline on a fall-off in demand against the same period a

year earlier, when the transition to terrestrial digital broadcasting spurred temporary demand growth. The PC business also recorded a decrease on sluggish sales in the United States, although unit sales rose in Japan and Europe.

Overall segment operating income (loss) deteriorated, mainly on the slowdown in demand for LCD TVs in Japan, although the progress of business restructuring in the Visual Products business have largely improved operations in comparison to the fourth quarter of previous year. The PC business secured operating income on wide ranging measures for cost reductions.

Electronic Devices: Lower Sales and Higher Operating Income

The Electronic Devices segment saw overall sales decrease. The Storage Products business saw sales rise on a healthy performance mainly in hard disk drives, but the Semiconductor business saw a decrease in sales due to continued yen appreciation and price declines in Memories.

The segment as a whole saw a gain in operating income as System LSIs moved into the black through business restructuring and the Storage Products business recorded higher operating income on higher sales, even though Memories saw effects of price reductions.

Social Infrastructure: Higher Sales and Higher Operating Income

The Social Infrastructure segment saw overall sales increase on growth in the Power Systems and the Social Infrastructure business, mainly in energy-related areas, reflecting the continued healthy performance of the Thermal & Hydro Power Systems business in the Japanese and overseas markets and the positive effect of the acquisition of Landis+Gyr AG The Elevator and Building Systems business and the Medical Systems business also reported higher sales.

The segment as a whole saw a significant rise in operating income and recorded its highest first quarter result ever. Despite the impact of yen appreciation, segment growth centered on energy-related areas, including a healthy performance by Thermal & Hydro Power Systems business in Japan and overseas, and positive results in Transmission and Distribution Systems and the Solar Photovoltaic Systems. In addition to that, the Medical Systems business also saw positive operating income.

Home Appliances: Lower Sales and Lower Operating Income

The Home Appliances segment recorded lower sales as the White Goods business saw declines in sales for home laundry equipment and refrigerators, although the Air-conditioning business recorded higher sales in industrial air-conditioning and the general lighting business also saw sales increase, mainly in LEDs.

While overall segment operating income saw a decline, due to lower sales in the White

3

Goods business, higher operating income on higher sales in the Air-conditioning business assured it remained in the black.

Others: Lower Sales and Deteriorated Operating Income (Loss)

The Others segment saw sales decrease and operating income deteriorate from the March 2012 transfer of all shares of Toshiba Mobile Display Co.,Ltd. to Japan Display Inc.

Note:

Toshiba Group’s Quarterly Consolidated Financial Statements are based on U.S. generally accepted accounting principles (“GAAP”).

Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales. This result is regularly reviewed to support decision-making in allocations of resources and to assess performance. Certain operating expenses such as restructuring charges and gains (losses) from sale or disposition of fixed assets are not included in it.

Mobile Broadcasting Corporation and the Mobile Phone business have been classified as discontinued operations in the consolidated accounts in accordance with Accounting Standards Codification (“ASC”) No.205-20, “Presentation of Financial Statements - Discontinued Operations”. The performances of these businesses are excluded from consolidated net sales, operating income (loss), and income (loss) from continuing operations, before income taxes and noncontrolling interests. Toshiba Group’s net income (loss) is calculated by reflecting these business results to income (loss) from continuing operations, before income taxes and noncontrolling interests.

Following the acquisition of Landis+Gyr AG in July 2011, the Company completed to allocate the acquisition amount to assets and liabilities according to ASC 805 “Business Combinations” in the current fiscal year. Results for FY2011 have been revised to reflect this change.

Prior-period data relating to the consolidated segment information has been reclassified to conform with the current classification, mainly due to changes of the structure of Toshiba Group’s internal organization in FY 2011.

Financial Position and Cash Flows for the First Quarter of FY2012

Total assets decreased by 183.1 billion yen from the end of March 2012 to 5,569.6 billion yen (USD 70,501.0 million).

Shareholders’ equity, or equity attributable to the shareholders of the Company, decreased to 791.3 billion yen (USD 10,016.5 million), a decrease of 72.2 billion yen from the end of March 2012. This reflects payment of dividends and a decrease in accumulated other comprehensive loss due to impacts from continued yen appreciation and worldwide declines in global stock prices.

Total interest-bearing debt increased by 110.4 billion yen from the end of March 2012 to 1,346.2 billion yen (USD 17,041.0 million). This reflects an increase in demand for funds due to the increase in orders of the Social Infrastructure segment.

As a result of the foregoing, the shareholders’ equity ratio at the end of June 2012 was

14.2%, a 0.8-point decline from the end of March 2012, and the debt-to-equity ratio at the end of June 2012 was 170%, a 27-point increased from the end of March 2012.

Free cash flow was -92.7 billion yen, 0.4 billion yen higher than the same period of the previous year.

Performance Forecast for FY2012

Toshiba Group’s business projections for its consolidated results for the fiscal year 2012 remain unchanged from the projections announced on May 8, 2012.

Others

(1)        Changes in significant subsidiaries during the period (changes in Specified Subsidiaries (“Tokutei Kogaisha”) involving changes in the scope of consolidation): None

(2)        Use of simplified accounting procedures, and particular accounting procedures in preparation of quarterly consolidated financial statements:

Income taxes

Interim income tax expense (benefit) is computed by multiplying income before income taxes and noncontrolling interests for the three months ending June 30, 2012 by a reasonably estimated annual effective tax rate for FY 2012, ending March 31, 2013. The estimated annual effective tax rate reflects a projected annual income before income taxes and noncontrolling interests and the effect of deferred taxes.

(3)        Change in accounting policies:

None