Fujitsu 2000 Annual Report Download - page 16

19
Net Sales
In fiscal 1999, the year ended March 31, 2000, the Fujitsu
Group's domestic operating environment was character-
ized by signs of recovery in some categories of personal
consumption, such as personal computers. Nevertheless,
the economy as a whole failed to rebound, affected partly
by continued sluggish corporate capital investment levels.
The European and U.S. economies expanded, and Asian
economies continued to recover. At the same time, the
business environment for the Fujitsu Group as a whole
remained challenging, owing to global corporate efforts to
rein in IT-related investments out of concern for the ramifi-
cations of Year 2000 (Y2K) problems.
In this environment, consolidated net sales remained
essentially unchanged from the preceding term, at
¥5,255.1 billion ($49,576 million). Domestic information
system sales declined as a result of companies reducing
investment, however PC sales to individual consumers
increased, and our outsourcing business as well as flash
memory and logic semiconductor businesses expanded.
Consequently, domestic sales rose 7.2%, to ¥3,352.8 bil-
lion ($31,630 million).
Conversely, overseas sales fell 10.1%, to ¥1,902.2 bil-
lion ($17,945 million). Among the factors affecting these
sales were restrained global capital investment, owing to
Y2K-related concerns, and the October 1999 merger of
our European PC manufacturing and sales subsidiary with
a unit of Germany's Siemens AG, which resulted in shift to
the equity accounting method for the new joint venture
company. Also, there was a decrease in the value of over-
seas sales due to yen appreciation.
The average exchange rate during the year rose from
¥128 to ¥112 against the U.S. dollar, and from ¥212 to
¥180 against the British pound. This yen appreciation
caused a decrease of approximately ¥267.0 billion ($2,519
million) in the value of sales after yen conversion, as com-
pared to the value if calculated at the previous year's
conversion rate.
Cost of Sales
Selling, General & Administrative Expenses
Operating Income
Cost of sales totaled ¥3,796.9 billion ($35,819 million), an
increase of 0.5% from fiscal 1998. The cost of sales ratio
for the year was 72.3%.
Gross profit was down slightly, to ¥1,458.1 billion
($13,756 million). Affected by Y2K concerns, sales of glob-
al servers declined. This factor, combined with price erosion
in small form factor hard disk drives, reduced gross profit
margin from 28.0% to 27.7%.
However, owing to successful efforts to improve the
efficiency of selling expenses while at the same time pro-
moting leading-edge R&D, selling, general and
administrative expenses
declined by ¥25.6 billion, to
¥1,308.2 billion ($12,341
million), and sales, general
and administrative expenses
as a percentage of net sales
dropped 0.7 of a percentage
point, to 24.8%. We contin-
ued to aggressively invest in
advanced technology for
future growth areas such as
next-generation telecommu-
nications systems for
IMT-2000. As a result, R&D
expenditure rose 1.5%, to
¥401.0 billion ($3,783 mil-
lion). As a proportion of net
sales, R&D expenditure
increased 0.1 percentage
point, to 7.6%. In addition,
amortization of goodwill
grew ¥5.8 billion over fiscal
1998, to ¥27.6 billion ($260
'96 '97 '98 '99 '00
(%)
2.9
2.5
3.6
4.2
5.2
149
132
177
189
194
Operating Income
(¥ Billion)
Ratio of Operating Income
to Net Sales
(%)
(Years ended March 31)
'96 '97 '98 '99 '00 '96 '97 '98 '99 '00
(%)
7.6
7.5
7.8
7.8
9.2
401
395
387
352
346
Net Sales by Business Segment
(excluding intersegment sales)
(¥ Billion)
R&D Expenditure
(¥ Billion)
Ratio of R&D Expenditure
to Net Sales
( % )
5,242
4,985
4,503
3,761
5,255
(Years ended March 31)
Services and Software
Information Processing
Telecommunications
Electronic Devices
Financing
Other Operations
(Years ended March 31)
Management’s Discussion and Analysis of Operations