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FY2012

- ended March 2013 (For 174th Fiscal Period)

Presentation for FY2012 Q3 Results

For First 9 months and 3rd Quarter ended December, 2012   - January 31, 2013

Key Points of the presentation

Net sales decreased YoY*, mainly due to lower sales in Digital Products and Electronic Devices and the transfer of the LCD business, although Social Infrastructure recorded significantly higher sales on the strength of healthy performances in Thermal Power Systems, Nuclear Power Systems, Elevators and Medical Systems and a solid performance by Social Infrastructure Systems including Landis+Gyr.

Net Sales: 4,043.0 billion yen (YoY: -310.9 billion yen)

Operating income increased YoY, due to the highest ever operating income in Social Infrastructure and higher operating income in Electronic Devices, supported by improving profitability in Memories in the 3Q.
Income before income taxes and noncontrolling interests and Net income increased YoY, supported by improved currency exchange.

Operating Income: 98.3 billion yen (YoY: +10.7 billion yen)
Income before income taxes and noncontrolling interests: 91.0 billion yen (YoY: +64.3 billion yen)
Net Income: 54.5 billion yen (YoY: +45.7 billion yen)

*YoY: year-on-year comparison

Q & A

Q1. Could you please explain the main points of the FY2012 consolidated results for the first nine months and the third quarter?
Social Infrastructure recorded significantly higher sales on the strength of healthy performances in Thermal Power Systems, both in Japan and overseas, Nuclear Power Systems in overseas markets, Elevators and Medical Systems, and a solid performance by Social Infrastructure Systems including Landis+Gyr, the world's leading Smart Meter company. However, our overall net sales decreased YoY*, largely due to lower sales in Digital Products and Electronic Devices and the March 2012 transfer of the LCD business.
In terms of income for the first nine months, operating income, income before income taxes and noncontrolling interests and net income all increased YonY, supported by significantly-increased income in the 3Q (October-December).
Operating income increased YoY, a result reflecting the highest ever operating income in Social Infrastructure and higher operating income in Electronic Devices, supported by improving profitability in Memories in the Q3.
Income before income taxes and noncontrolling interests and Net income showed a significant YoY increase, a result supported by improvement in foreign exchange income (loss).

*YoY: year-on-year comparison

Q2. Could you please give us your forecasts for FY2012 full-year results?
Our FY2012 full-year consolidated forecast remains unchanged from the projections that we announced on October 31, 2012. To recap, we anticipate net sales of 6,100 billion yen; operating income of 260 billion yen; income before taxes of 190 billion yen; and net income of 110 billion yen. Although the LCD TVs business faces some difficulties, the performances of the Memory business and Social Infrastructure business are expected to improve, and we aim to attain our operating income target of 260 billion yen.
We have revised out estimated exchange rate for Q4 (January-March) to 85 yen to the dollar and 100 yen to the euro.
Q3. Could you please tell us about the FY2012 business results for the first nine months in the semiconductor & storage business?
We recorded lower sales, which mainly reflected lower demand for Discretes and System LSIs, and despite a recovery in demand for Memories under a production adjustment program that we initiated in the Q2 (July-September).
Nonetheless, we saw higher operating income, a result that reflects positive effects from structural reform in System LSIs, higher demand for Memories, and a healthy performance in Storage Products in the first six months. Memories improved significantly in Q3 due to a production adjustment and increased sales of higher value added products.
Q4. Could you please tell us about the FY2012 business results for the first nine months in the Social Infrastructure segment?
We were able to report significantly higher sales that were supported by healthy performances in Thermal Power Systems, both in Japan and overseas, and in overseas sales of Nuclear Power Systems. Elevators and Medical Systems also saw higher overseas sales. In addition to this, solid results in Social Infrastructure Systems, including Landis+Gyr, also made a positive contribution.
The highest ever operating income recorded by the segment was achieved by a strong performance in Thermal Power Systems, a solid performance in Nuclear Power Systems in overseas markets, and by higher sales and operating income in Photovoltaic Systems, Transmission and Distribution Systems, Elevators, and Medical Systems.
Q5. How did the Digital Products segment and Home Appliances segment perform?
The lower sales Digital Products segment was the result of a significant fall-off in demand for LCD TVs in Japan combined with lower demand for PCs mainly in the United States. The segment as a whole saw lower operating income, on the continuing decline in demand for LCD TVs in Japan and reduced sales of PCs, even though the LCD TV business saw a YoY improvement in Q3 (October-December).
The Home Appliance segment saw a slight decrease in overall sales, on lower unit sales of White Goods, including washing machines and refrigerators, even though both LED Lighting systems and Industrial Air-conditioning systems recorded higher sales.
Operating income was also lower, on reduced sales in White Goods, despite as increase in operating income in LED Lighting systems.
Q6. Free cash flow for the first nine months was minus 258.9 billion yen. Why was that?
The main cause underlying the minus 107.3 billion yen cash flow from operating activities was an increased demand for working capital, notably in the Social Infrastructure segment. Cash flow from investing activities was minus 151.6 billion yen, though this includes a strategic investment. We anticipate an improvement in working capital in the fourth quarter, during which time we will also continue to promote accelerated collection of receivables, to reinforce inventory control, and to make carefully selected capital investments in response to market conditions. Toshiba's sales and earnings tend to be concentrated in the Q4, particularly in the Social Infrastructure segment and we expect higher income in Q4 to contribute to improvement in cash flow, and at this point we forecast free cash flow moving up toward zero at the end of FY2012.

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