Toshiba 1998 Annual Report Download - page 31

Toshiba Corporation Annual Report 1998 29.
Europe—Sales in Europe increased 13 percen t from the prior fiscal year, main ly because of growth in PC results.
CD-ROM drives, hard disk drives an d other PC periph erals, an d m edical system s also perform ed well. Lower m em ory
prices were responsible for a sm all decline in sem iconductor sales.
Net Incom e
Cost of sales increased 1 percen t to ¥3,960.2 billion (US$30,001 million ). Selling, general an d adm inistrative expen ses
were up 2 percen t to ¥1,416.0 billion (US$10,728 m illion ). Operating in com e was down 58 percen t com pared with
th e previous year, to ¥82.3 billion (US$623 m illion). Declines in prices of such important products as PCs, sem icon -
ductors and con sumer products outpaced progress in raisin g m anufacturin g efficien cies an d cutting costs. Deprecia-
tion and advertisin g expenses in creased wh ile R&D and person nel expen ses were lower.
In form ation & com m un ication system s operating in com e decreased 69 percent com pared with th e previous year,
to ¥43.1 billion (US$326 m illion). This was m ainly attributable to lower PC sales volum es an d prices in th e United
States an d PC in ventory reduction s. Electronic devices & materials operatin g incom e rose 116 percen t com pared with
th e previous year, to ¥40.5 billion (US$306 m illion) as the ben efits of h igher sales of discrete devices an d logic ICs,
along with cost cutting, were greater than the im pact of the drop in m em ory sales prices. In addition , good results
were seen overseas in cathode ray tubes and lith ium -ion batteries. Power & in dustrial systems operatin g incom e was
down 48 percen t com pared with th e previous year, to ¥18.7 billion (US$141 m illion) because of a decline in sales of
power plants an d equipm en t to Japanese utilities. Consum er products had an operating loss of ¥45.3 billion (US$343
m illion), com pared with a loss of ¥15.9 billion in the prior fiscal year. A poor perform ance by air condition ers, lower
sales prices of refrigerators and wash ing machin es, an d a restructuring of the dom estic consum er product m arketin g
com panies were all beh ind the rise in the operating loss. In Asia, th e curren cy crisis brough t down operating in com e
in this segm en t. Services & oth er reported a 34 percent increase in operatin g incom e to ¥24.8 billion (US$188 m illion)
because of a n ewly consolidated subsidiary.
Toshiba estim ates that th e n et effect of foreign exchan ge m ovemen ts during the fiscal year was a ¥38.0 billion
increase in operating incom e. Th is is due to the following factors. Foreign exchan ge movem en ts raised n et sales by
¥60.0 billion and raised procuremen t expenses by ¥22.0 billion . Foreign exch ange losses in n on-operating expenses
increased by ¥11.8 billion because of th e fall in Asian curren cies.
Net fin ancial expenses rose from ¥31.6 billion in the previous year, to ¥32.5 billion (US$246 m illion ) because of
increases in in terest paym en ts by subsidiaries an d other factors. By category, in terest expen ses rose by ¥2.6 billion
to ¥54.0 billion (US$409 m illion), interest received in creased by ¥1.3 billion to ¥12.6 billion (US$96 m illion), and
dividends received increased by ¥0.4 billion to ¥8.9 billion (US$67 m illion). Declinin g in terest rates in Japan
lim ited th e growth in expen ses to som e degree. Oth er incom e in cludes a substantial gain on the sale of shares of
Time Warn er Inc.
In com e before incom e taxes and m in ority in terest decreased 85 percen t from the prior year to ¥18.7 billion
(US$142 m illion). In com e taxes were down to ¥24.5 billion (US$185 m illion). In com e taxes includes a ¥8.7 billion
(US$66 m illion) ch arge due to the revaluation of deferred tax assets an d liabilities resultin g from th e reduction in
Japan’s corporate in com e tax rate. Equity in incom e of affiliated com panies was down to ¥11.7 billion (US$88 m illion ),
prim arily because of lower earnin gs at a Brazilian con sumer products m an ufacturin g and sales affiliate. Net incom e
was down 89 percen t to ¥7.3 billion (US$56 m illion) and both basic an d diluted earnin gs per sh are were ¥2.28
(US$0.02). Cash dividen ds applicable to th e fiscal year were unchan ged at ¥10.00 (US$0.08).
SEGMENT INFORMATION
The following segm ent inform ation is based on Japanese accoun tin g standards. Beginnin g with th e fiscal year
en ded March 31, 1998, Toshiba h as expan ded its in dustry segm ent reporting to m ake the inform ation m ore useful
an d respond to rising dem ands from finan cial statem en t users for m ore detailed segm en t inform ation . The th ree
segments reported in prior years—In form ation/Com m un ication System s an d Electronic Devices, Heavy Electrical
Apparatus, an d Con sumer Products and Oth ers—h ave been reorgan ized into four segm ents: Information &
Com m un ication System s, Electronic Devices & Materials, Power & Industrial Systems, and Consum er Products. A
fifth segm en t called Services & Other h as been added to en com pass finan cial services, real estate leasin g and sales,
an d oth er activities. Con solidated fin ancial data for previous years have been reclassified to conform with th e
current classification an d segm en ts.