Fujitsu 2000 Annual Report Download - page 17

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million), due to such factors as the inclusion of NIFTY
Corporation as a consolidated subsidiary.
Accordingly, operating income rose ¥17.6 billion, to
¥149.9 billion ($1,414 million). Operating income as a per-
centage of net sales improved 0.4 of a percentage point, to
2.9%.
Other Income and Expenses
Net Income (Loss)
Other income and expenses improved ¥7.5 billion, to
–¥75.1 billion (–$708 million), while interest and dividend
income less interest charges improved ¥8.8 billion, to
–¥36.9 billion (–$348 million), due to a reduction in inter-
est-bearing liabilities. On the other hand, foreign exchange
losses increased by ¥8.8 billion to ¥25.6 billion ($242 mil-
lion). As we are gradually shifting our severance benefit
plans to contributory defined plans in order to fortify our
pension assets, pension costs increased by ¥17.4 billion
over the previous period.
In addition, we recorded a gain of ¥20.4 billion ($192
million) from the sale of shares in a Finnish subsidiary of
ICL PLC and ¥22.1 billion ($209 million) in gains on sales
of marketable securities and other factors, totaling ¥42.6
billion ($402 million), down ¥12.0 billion from the previous
year. We recorded ¥37.9 billion ($358 million) in restruc-
turing costs, down ¥5.7 billion from last year, related to
continued restructuring activities. Fujitsu's restructuring
costs accounted for ¥14.7 billion ($138 million) of this
amount, while those of our domestic and overseas sub-
sidiaries, including ICL and Amdahl Corporation, totaled
¥23.2 billion ($219 million). In fiscal 1998, we recorded a
charge of ¥38.1 billion related to the restructuring of the
Pathway Project being carried out by ICL.
As a result of these factors, income before income taxes
and minority interests increased 50.8% from the previous
fiscal term, to ¥74.8 billion ($706 million). After deducting
corporate income tax of ¥28.3 billion ($267 million) and
minority interests of ¥3.7 billion ($35 million), net income
improved ¥56.3 billion, to ¥42.7 billion ($403 million),
compared with a net loss during fiscal 1998. Net income
per share was ¥22.1 ($0.208), and return on equity was
3.5%.
Segment Information
Because of the change in the status of Fujitsu Leasing Co.,
Ltd. during this period from an affiliated company to a con-
solidated subsidiary, we have added an additional business
segment (Financing) to the previous five segments
(Services and Software, Information Processing,
Telecommunications, Electronic Devices and Other
Operations).
Net Sales and Operating Income by Business Segment (¥ Billion)
Increase
(Decrease)
Years ended March 31 1999 2000 rate(%)
Net Sales
(including intersegment sales)
Services and software . . . . . . . . . . . . ¥2,092 ¥2,053 (1.9)%
Information processing . . . . . . . . . . 2,102 1,884 (10.4)
Telecommunications . . . . . . . . . . . . 691 784 13.4
Electronic devices . . . . . . . . . . . . . . . 609 716 17.5
Financing . . . . . . . . . . . . . . . . . . . . . —119 —
Other operations . . . . . . . . . . . . . . . 320 346 8.1
Intersegment elimination . . . . . . . . . (573) (648) —
Consolidated net sales . . . . . . . . . . . . . ¥5,242 ¥5,255 0.2 %
Operating Income
Services and software . . . . . . . . . . . . ¥166 ¥134 (18.9)%
Information processing . . . . . . . . . . 94 38 (58.7)
Telecommunications . . . . . . . . . . . . 15 17 9.6
Electronic devices . . . . . . . . . . . . . . . (83) 20 —
Financing . . . . . . . . . . . . . . . . . . . . . —3—
Other operations . . . . . . . . . . . . . . . 73(50.6)
Unallocated operating costs
and expenses/intersegment
elimination . . . . . . . . . . . . . . . . . . . (67) (67) —
Consolidated operating income . . . . . . ¥132 ¥149 13.4%
Business Segment Information
Services and Software
Fiscal 1999 consolidated services and software sales rose
4.8% domestically, to ¥1,320.8 billion ($12,461 million),
while overseas sales in this category fell 15.4%, to ¥654.5
billion ($6,175 million). Together, these sales declined
2.9%, to ¥1,975.4 billion ($18,636 million). Bolstering
domestic sales in this category were steady increases in our
network services business, focusing primarily on outsourc-
ing, while overseas, favorable developments in European
PFI projects and other matters contributed to sales.
However, Y2K-related concerns caused a slowdown in
domestic and overseas systems integration sales, and over-
seas sales in this segment were also adversely affected by
yen appreciation, which reduced the value of sales by over-
seas subsidiaries by ¥110.0 billion ($1,037 million) when
compared to the value as calculated at last year's exchange
rate, and as a result, overall sales for the category declined.
Affected by such factors as the lower performance of ICL
and DMR Consulting Group, Inc. owing to Y2K-related
issues, operating income for this sector slipped 18.9%, to
¥134.9 billion ($1,273 million).
Information Processing
Domestic sales of information processing systems and
equipment fell 2.6%, to ¥1,047.1 billion ($9,878 million),
and overseas sales dropped 23.2%, to ¥558.1 billion
($5,265 million). As a result, consolidated sales for the cate-
gory as a whole decreased 10.9%, to ¥1,605.3 billion
Management’s Discussion and Analysis of Operations