Fujitsu 2013 Annual Report Download - page 101

Solutions segment posted a significant decline in operating income
for fiscal 2012 after encountering intensifying competition over PCs
and mobile phones going into the second half. In addition, perfor-
mance in the Device Solutions segment was lackluster, mainly due to
a continuing operating loss in the core LSI device business.
The Group strives to minimize the impact of currency exchange
rate fluctuations on earnings. During fiscal 2012, fluctuations in
currency exchange rates had the effect of lowering operating income
by approximately ¥5.0 billion relative to the previous year. Losses in
the LSI device and electronic components businesses were improved
as the yen weakened against the U.S. dollar, however, the apprecia-
tion of the euro against the U.S. dollar, seen mainly in the first half of
fiscal 2012, increased the procurement cost of U.S. dollar- denominated
materials at European subsidiaries. For fiscal 2012, a one yen (¥1)
fluctuation in the currency exchange rate translated into an impact
on operating income of approximately ¥0.2 billion for the U.S. dollar,
¥0.1 billion for the euro, and ¥0.0 billion for the British pound.
Other Income (Expenses), Net Income and Comprehensive
Income
Other income (expenses) amounted to a net loss of ¥140.3 billion
($1,494 million), a deterioration of ¥101.8 billion from the previous
fiscal year. Although foreign exchange losses improved due to yen’s
appreciation, primarily in the second half and an increase in equity in
earnings of affiliates, net, the Group recorded restructuring charges of
¥116.2 billion ($1,236 million) and an impairment loss of ¥34.2
billion ($364 million) as other expenses.
The restructuring costs stem from ¥90.3 billion ($961 million) for
the LSI device business, ¥20.0 billion ($214 million) for business
outside Japan, and ¥5.8 billion ($62 million) for other businesses.
Restructuring costs for the LSI devices business consist of losses
relating to transfer of production facilities and personnel rationaliza-
tion expenses. The losses relating to transfer of production facilities
consist of two items. One is guarantees, for a set period of time, on a
portion of the operational costs of the Iwate Plant and test facilities
that were transferred. The other is personnel-related expenses in
accordance with the transfer of the LSI assembly and testing facili-
ties. The personnel rationalization included an early retirement
scheme for approximately 2,400 employees in and outside Japan
(under which, 1,963 people had applied in Japan as of the applica-
tion deadline in April 2013). The restructuring costs for business
outside Japan consist of personnel-related expenses, primarily for the
European subsidiary Fujitsu Technology Solutions (Holding) B.V.
(FTS) (including its consolidated subsidiaries). Other restructuring
charges include the losses mainly related to the personnel-related
expenses associated with rationalizations at managerial levels in
Japan conducted through an early retirement scheme (under which,
491 people had applied as of the application deadline in May 2013).
The impairment loss stems mainly from the European subsidiary
FTS (including its consolidated subsidiaries). In light of continued
deterioration of economic conditions in Europe, the business plan of
FTS was revised as investments planned at the time of acquisition are
less likely to be collectible, and an impairment loss was recorded on
the unamortized balance of goodwill and other intangible assets.
The Group reported a consolidated net loss of ¥72.9 billion
($776 million), representing a deterioration of ¥115.6 billion from
fiscal 2011. Income (loss) before income taxes and minority inter-
ests amounted to a ¥45.1 billion loss ($480 million), a year-on-year
deterioration of ¥111.8 billion. However, income taxes decreased
only ¥5.7 billion year-on-year to ¥24.2 billion ($258 million). The
tax burden was relatively high due to the expanded net loss
recorded by underperforming subsidiaries that have limits on recog-
nition of deferred tax assets. The Group posted income of ¥3.5
billion ($38 million) from minority interests, representing an
improvement of ¥9.5 billion from the previous fiscal year, as a result
of the recovering financial performance of a car audio and naviga-
tion equipment joint venture.
The Group views profitability and efficiency of invested capital in
businesses as important management indicators. For fiscal 2012, the
return on equity, calculated by dividing net income by average
owners’ equity, was negative 9.0%, a change from positive 5.1% in
the previous fiscal year. The change was mainly due to recording
large amounts under other expenses for business restructuring costs
and other items in the fiscal year under review.
Other comprehensive income totaled ¥36.4 billion ($387 mil-
lion), primarily as a result of an improvement in foreign currency
translation adjustment stemming from the ongoing depreciation of
the yen. Because the Group’s global business development primarily
revolves around service businesses, foreign currency fluctuations in
the value of the net assets of subsidiaries outside Japan are recorded
in other comprehensive income. Unrealized gain and loss on securi-
ties, net of taxes, recorded a gain following a rise in stock prices,
mainly in the second half.
Comprehensive income, representing the total of other compre-
hensive income and income before minority interests, was a loss of
¥32.9 billion ($351 million).
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FUJITSU LIMITED ANNUAL REPORT 2013
FACTS & FIGURES