Epson 2010 Annual Report Download - page 26

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Reflecting these factors, Epson booked operating income of ¥18,227 million, an improvement of ¥19,815 million
from the previous fiscal year.
Operating income in each business segment is analyzed below. Note that from the fiscal year under review the
operating expenses of certain incubation projects, in line with their transfer from the “Other” segment to
corporate R&D, will be charged to the information-related equipment, electronic devices, and precision
equipment segments.
In the information-related equipment segment, operating income increased ¥7,887 million, or 26.2%, to ¥38,030
million. This was the combined result of the decline in gross profit on lower sales and a stronger yen being offset
by lower selling, general and administrative (SG&A) expenses, including advertising, sales promotions, labor,
shipping, and R&D costs. There was also an additional ¥3,654 million in reallocated operating expenses.
The electronic devices segment recorded an operating loss of ¥9,266 million, an improvement of ¥8,982 million.
While net sales declined, the loss was partially offset by the increase in gross profit on lower depreciation
expenses associated with the business structure improvement expenses and impairment loss recorded in the
previous fiscal year, and lower labor, R&D, and other SG&A expenses. There was also an additional ¥1,105
million in reallocated operating expenses.
The precision products segment was down ¥2,203 million from the previous fiscal year with an operating loss of
¥4,111 million. This was due to the decline in gross profit on lower revenue. There was also an additional ¥292
million in reallocated operating expenses.
In the other segment, while there was an operating loss of ¥6,669 million, the loss was ¥5,403 million less than
that of the prior fiscal year. There was also a ¥5,052 million reduction in operating expenses.
Non-operating income and expenses
Non-operating income minus non-operating expenses amounted to a net loss of ¥4,351 million, a decrease of
¥11,241 million from the previous fiscal year’s ¥6,889 million. This was primarily due to two factors. First,
interest income fell to ¥1,259 million, down from ¥4,288 million the previous fiscal year as a result of lower
overseas interest rates precipitated by the global financial crisis. Second, the ¥3,146 million in foreign exchange
gains from the previous fiscal year was offset by ¥5,076 million in foreign exchange losses in the year under
review.
Ordinary income
As a result, ordinary income increased ¥8,573 million, or 161.7%, to ¥13,875 million.
Extraordinary income and losses
Extraordinary income minus extraordinary expenses amounted to a net loss of ¥14,675 million, a decrease of
¥80,186 million from ¥94,861 million in the previous fiscal year. This was primarily due to an impairment loss
on business assets in the small- and medium-sized display business in the period under review amounting to
¥7,269 million. This compares to extraordinary losses totaling ¥76,244 million in the previous fiscal year due to
business restructuring expenses and impairment loss on business assets resulting from worsening profitability in
the quartz device business, and further steps in setting the direction of the small- and medium-sized display and
semiconductor businesses based on the new SE15 long-range vision.
Loss before income taxes and minority interests
As a result, Epson recorded a loss before income taxes and minority interests of ¥799 million, down ¥88,760
million from the previous period.
Income taxes
Income taxes decreased ¥7,198 million to ¥18,989 million. Certain income taxes increased commensurate with
increased income at overseas subsidiaries. However, taxable income declined from the previous fiscal year at the
group of domestic companies presenting a consolidated tax return, despite writing down deferred tax assets that