(1)Policy
Toshiba is fully aware of the impact on business of the Y2K issue associated with computer systems (hardware, application programs, etc.) and equipment incorporating microprocessors. The Toshiba Group, including subsidiaries and affiliates worldwide, is tackling the problem with the utmost vigor.

(2)Organizational structure
Concerted efforts to deal with the Y2K issue began in April 1995. October 1998 saw establishment of the Year 2000 Solution Division, a corporate-level organization that reports directly to the president, and the initiation of the corporate Y2K-Project, under the leadership of a senior executive vice president and the deputy leadership of an executive vice president. The Y2K-Project embraces activities in all of Toshiba's operations, including the corporate staff divisions, in-house companies (including factories) and branch offices. Subsidiaries and affiliates in Japan and overseas also have initiated their own Y2K projects, which receive guidance from their supervisory organization in Toshiba. Employee awareness of Y2K-related issues is enhanced by means of in-house publicity and events and the company web site. Progress in Y2K readiness is reported periodically to the board of directors.

(3)Current situation
All Toshiba products have been checked for Y2K compliance. If any product requires Y2K action, Toshiba notifies customers to that effect, and measures are implemented following discussion with customers.
Toshiba provides information on Y2K compliance of mass-produced products on its web site, including notification of products that do not require Y2K measures. Where products require action but it is not possible for Toshiba to identify all the customers, the company provides information by means of newspaper advertisements requesting customers to contact Toshiba. The company also responds to inquiries from customers.

Toshiba is inspecting all of its facilities and systems in order to assure that its provision of products and services is not affected. As of September 1999, the company had almost completed replacing or remedying Y2K-affected facilities and systems and conducting Y2K compliance simulations according to the Y2K compliance plans. Plans are already in place to support minor adjustments such as setting dates on equipment, on and after January 1, 2000.
The company requested its suppliers to achieve Y2K compliance by September 1999. The company has monitored progress and compliance at its main suppliers through written inquiries and site visits.
Connectivity tests between Toshiba's IT systems and those of outside parties with which Toshiba has EDI links were almost completed in September and are expected to be finished by the end of November 1999.
Toshiba's budget for Y2K measures is included in the ordinary budget. Sufficient personnel have been secured for Y2K projects.

Information systems in Toshiba and Toshiba Group are being reconstructed through use of ERP packages, and Y2K measures are included in the reconstruction. Expenditures exclusively on Y2K measures are expected to total ¥17.3 billion, ¥14.2 billion of which had been expended by September 1999. Expenditure on existing plans that include Y2K measures, such as reconstruction of information systems, is expected to amount to ¥28.2 billion, of which ¥24.5 billion had been expended by September 1999. These expenditures are both necessary and sufficient as Y2K measures. The cost impact of the company's Y2K measures is slight within the context of Toshiba's overall operations, and funding is provided from cash flow from operating activities.

Expenditure on Y2K measures covers expenditure on in-house facilities and systems and expenditure on products. Expenditures on plans that include but are not limited to Y2K measures, such as system reconstruction, mainly concern measures for in-house facilities and systems. Expenditures also include the cost of labor required to implement Y2K measures and plans.

During the transitionaDuring the transitional period from the end of 1999 to the beginning of 2000 ( Dec. 25, 1999 to Jan. 12, 2000, as well as Feb. 28 to Mar. 1, 2000), Toshiba Corporation will establish a 24-hour-service inquiry hot line to support our customers. Staff working in Y2K-related areas will be on call throughout the transitional period.
Toshiba will do its utmost to ensure the Y2K compliance of its facilities and systems by means of simulation tests before 2000, data back up at 1999 year-end, start-up prior to the start of operations in 2000, and other measures. Systems and procedures for recovery of facilities and systems will be established in readiness for unexpected eventualities resulting from oversights or errors in countermeasures. At the same time, alternative operations will be devised by each department, based on evaluation of risks to facilities and systems, including risks to suppliers and parties with which Toshiba has EDI connections.
As a risk-management structure, Toshiba will set up a Y2K headquarters, drawing on the staff of its corporate staff division, in-house companies and subsidiaries and affiliates. The Y2K headquarters will take the lead in communications and decision making in the event of any emergency.
Contingency plans for each division and Toshiba itself were almost finalized by September 1999, through drawing up manuals, pilot cases and training courses. We are currently making the necessary preparations called for in the contingency plans, and all preparations, including rehearsal of an emergency communications channel, will be completed by the end of this year.

Toshiba and Toshiba Group are promoting Y2K solutions in terms of both products and facilities and systems, in an effort to ensure that customers are not affected and that there is no serious impact on business activities. However, Y2K problems are multifaceted and a problem may arise that cannot be solved by Toshiba and Toshiba Group alone. Consequently, it is not possible for Toshiba to be certain that its thorough preparations and implementation of measures will preclude Toshiba or the Toshiba Group from being the source of inconvenience to any third party. Toshiba is establishing systems and procedures to enable the accurate assessment of situations and swift judgment and to minimize risks.