Fujitsu 1998 Annual Report Download - page 27

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Operating income climbed 5% to
¥211.2 billion ($1,600 million),
which was 4% of net sales, about the
same as in the prior fiscal year.
Net financial expenses, which is
interest and dividend income less
interest charges, increased by ¥4.3
billion ($32 million) to ¥43.8 billion
($332 million). Foreign exchange
movements, especially the sudden fall
in Asian currencies, resulted in foreign
exchange losses of ¥9.4 billion ($71
million), compared with a gain of
¥22.5 billion in the prior fiscal year.
Amortization of goodwill rose by
¥23.0 billion ($174 million) to ¥33.9
billion ($256 million). This is prima-
rily attributable to the amortization of
¥20.0 billion in goodwill resulting from
the acquisition of Amdahl Corpora-
tion, a wholly owned subsidiary. The
¥20.0 billion ($151 million) represents
a lump-sum amortization of ¥15.2 bil-
lion ($115 million) and amortization
of ¥4.8 billion ($36 million), which is
the fiscal 1997 portion of goodwill to
be amortized over a ten-year period.
As investment securities are valued
at the lower of cost or market, weak
stock prices in Japan, mainly among fi-
nancial institutions, resulted in a sub-
stantial valuation loss. A sufficient
volume of investment securities was
sold to generate earnings to offset these
losses. Latent profits on investments in
affiliates amounted to ¥389.9 billion
($2,954 million) at the fiscal year-end,
an increase of ¥102.0 billion ($773
million) over the previous year.
Other income (expenses) – other,
net in the prior fiscal year included a
¥4.9 billion charge for losses on dis-
posal of magnetic head inventories as a
part of restructuring expenses at FDK
Corporation. No such restructuring
charge was expensed in this year.
Income before income taxes
decreased 27% to ¥104.8 billion ($794
million), but income taxes rose by
¥12.0 billion ($91 million) to ¥108.5
billion ($822 million). Minority inter-
ests increased by ¥5.5 billion ($41 mil-
lion) to ¥9.7 billion ($73 million).
Equity in earnings of affiliates im-
proved by ¥15.2 billion ($115 million)
to ¥18.9 billion ($143 million), mostly
reflecting higher earnings at Fanuc
Ltd. and Advantest Corporation. This
improvement also reflects the fact that
equity method losses at Amdahl
Corporation no longer applied after
Amdahl became a consolidated subsid-
iary in the second half of fiscal 1997.
Net income fell 88% to ¥5.5 billion
($42 million) and net income per share
was ¥3.0 ($0.023). This resulted in a
return on equity of 0.5%. Cash divi-
dends per share applicable to fiscal
1997 were unchanged at ¥10 ($0.076).
Results by Geographical Area
Net Income
(¥ Billion) Years ended March 31
-38
45
63
46
6
’98’96 ’97’95
’94
’98’96 ’97’95’94
330 324
346 353
387
R&D Expenditure
(¥ Billion) Years ended March 31