Presentations & Events


- ended March 2007 (For 168th Fiscal Period)

Presentation for FY2006 Q1 Results

For 1st Quarter ended June, 2006   - July 31, 2006

Outline of the presentation

1. Consolidated results for the first quarter of FY2006

Net Sales 1,452.8 billion yen (+12% YoY)
Operating income 20.8 billion yen (+22.7 billion yen YoY)
Income before income taxes and minority interest 21.9 billion yen (+25.5 billion yen YoY)
Net income[1] 4.0 billion yen (+12.9 billion yen YoY)
  • All business segments posted increased sales and improved income (loss) from a year earlier period, as a result of business development grounded in the Group strategy of achieving high growth with steady profitability.

2. Financial Position and Cash Flows

  • Total assets increased by 117.1 billion yen from the end of March 2006 to 4,844.2 billion yen.
  • Shareholders' equity decreased by 13.1 billion yen to 989.1 billion yen from the end of March 2006.
  • Total debt increased by 262.4 billion yen from the end of March 2006 to 1,179.9 billion yen.
  • As a result of the foregoing, the debt-to-equity ratio as of the end of June 2006 was 119%, a 27-point deterioration since the end of March 2006.
  • Free cash flow was minus 106.3 billion yen, a decrease of 105.1 billion yen from the year-earlier period.

3. Consolidated Projection for FY2006

  • Toshiba's business projections for the first half and the full-year of FY2006 remain unchanged from the projections announced on April 28, 2006.

Q & A Session

Q1. Is operating income for the company as a whole the same as in your original projection? Is consolidated operating income for the Semiconductor business in the first quarter of fiscal year 2006 in line with the original projection?
In terms of the company as a whole, the Social Infrastructure segment result was an improvement against the original projection. The main factors contributing to the improved performance in Social Infrastructure segment were increased sales and increased operating income from the digital broadcasting system business in Japan. Sales and operating income for the Semiconductor business were in line with the original target.
Q2. What risk factors do you anticipate in your efforts to achieve operating income of 55 billion yen for the first half of the fiscal year?
We are sure the Semiconductor business will achieve the targets contained in our plan. The Social Infrastructure segment has improved significantly year-on-year in the first quarter and we will make further effort to improve results of the segment in the first half against the previous year. The main factor contributing to potential deterioration against our target could well be the PC business. The fact is that we face difficulties in securing a surplus for the first half, the result of significant price decline caused by fierce competition for market share in the US PC market. We are now discussing countermeasures for dealing with this situation. But Toshiba Group still aims to increase operating income to a minimum of 55 billion yen for the first half of the fiscal year.
Q3. Please break down your first quarter Semiconductor sales of 246.6 billion yen by division.
We do not disclose details by division. For your reference, in our financial plan for the full fiscal year 2006, we see a Semiconductor business composition of 18% Discrete, 42% System LSI, and 40% Memory.
Q4. Please tell us about the factory operation ratio for the Semiconductor business.
Apart from the bipolar line at Kitakyushu Operations, all major facilities are running at full capacity.
Q5. Please tell us about your expectations for bit growth rate, the rate of unit price decline, and your ability to meet demand.
The production volume for NAND Flash memory in the first quarter was 115 million units per month, equivalent to 64 Mbyte. Future production volumes are expected to be 200 million units in the second quarter and 230 million units in the third quarter.

Price decline ratio is expected to remain at an average annualized rate of 40%. We were able to meet 90-95% of demand in the first quarter. On the strength of increasing demand for the Christmas sales season and increased utilization in MCP (multi-chip package) for mobile phones, we expect to be able to meet 85 % of demand in the second quarter and 70% in the third quarter.
Q6. Has the situation improved in the LCD business?
Operating income for the full year is expected to reach 6 billion yen, due to a robust performance by mobile phones and music players. Although sales prices for panels for mobile phones declined by 30%, we expect sales to expand by 7% on increased volume. We started operation of a new manufacturing facility in Ishikawa prefecture, Japan, and achieved higher yields at our Singapore facility.
Q7. Has the TV business improved?
We aim to obtain more than a 15% share of the 26-inch or larger liquid crystal TV market in Japan, and over a 10% share worldwide. We are looking for a surplus in the second half of FY2006 through the cultivation of a new brand, REGZA, and its differentiated products that employ advanced image processing technology, and by promoting cost reductions.
Q8. Has the storage devices business improved?
In the storage business, both hard disk drives (HDD) and optical disc drives (ODD) recorded improved operating income. The ODD business was almost at the break-even point in the first quarter.
Q9. Please reconfirm the situation regarding the acquisition of Westinghouse. Have you made any changes from the original plan in terms of co-partners, source of funding, or anything else?
There is no change in the acquisition process. We obtained approval from CFIUS (Committee on Foreign Investment in the United States) in June, and we will complete the acquisition procedures by September, including the completion of our application for approval under EU antitrust regulations. Regarding financing, we will continue borrowing, and are considering extending it to also include long term loans, not just the short term loans that we have raised so far.

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