Fujitsu 2004 Annual Report Download - page 33

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Services segment, strong results by our electronic devices
sales company and higher sales to telecommunications carri-
ers led to an increase in overall sales in Europe.
Operating income was ¥6.6 billion ($63 million), an
improvement of ¥3.0 billion compared to the prior year,
largely related to strong performance in Electronic Devices.
The Americas
Net sales were ¥254.4 billion ($2,401 million), a decline of
1.2% compared to the previous year. This was primarily
because of decreased revenue from the FIH group, lower
sales of transmission systems, and lower sales of HDDs for
servers due to price declines.
The operating loss amounted to ¥13.1 billion ($124 mil-
lion). Although, the FIH group still ended with a loss,
restructuring initiatives completed in fiscal 2002 in trans-
mission systems helped to reduce losses in that sector by
¥5.6 billion compared to the previous year.
Other
Sales in other regions, including Asia and Australia, totaled
¥362.1 billion ($3,416 million), an increase of 30.0% over
the previous year. The increase related primarily to higher
sales of electronic devices used in digital equipment and
HDDs used in notebook PCs.
Operating income improved by ¥0.7 billion yen, to ¥13.5
billion ($127 million).
Net Sales and Operating Income by Geographic Segment (¥ Billions)
Increase
(Decrease)
Years ended March 31 2003 2004 rate (%)
Net sales
(including intersegment sales)
Japan..................................................... ¥3,888¥4,071 4.7%
Europe ................................................... 543 563 3.7
The Americas ........................................ 278 274 (1.2)
Other...................................................... 464 579 24.8
Intersegment elimination ....................... (556) (721)
Consolidated net sales............................ ¥4,617 ¥4,766 3.2%
Increase
(Decrease)
Operating income (loss)
Japan..................................................... ¥ 160 ¥203 ¥42
Europe ................................................... 3 63
The Americas ........................................ (18) (13) 5
Other...................................................... 12 13 0
Unallocated operating costs
and expenses/intersegment
elimination ........................................... (58) (60) (2)
Consolidated operating income .............. ¥ 100 ¥ 150 ¥49
3. Capital Resources and Liquidity
Improvement in Financial Strength
As a result of the deterioration of performance following the
collapse of the IT boom and the large charges stemming from
restructuring initiatives, there had been significant deteriora-
tion in the company’s financial condition. In fiscal 2003, in
addition to working to improve the profitability of our busi-
ness operations, we took various steps to restore our financial
strength, such as selling marketable securities in order to raise
the efficiency of asset utilization and converting our Flash
memory business, leasing business, and FDK into equity
method affiliates.
We also continued efforts to reduce inventories to a target
level of 500 billion yen, a reduction by half from their peak
level of approximately 1,000 billion yen. At the end of fiscal
2003, inventories had been reduced to ¥521.1 billion ($4,916
million), just shy of our target. Going forward, we will accel-
erate the implementation of Toyota-style manufacturing
innovation throughout the Group and establish new targets in
line with progress in applying the percentage-of-completion
method in our software and services business.
Shareholders’ equity reached ¥827.1 billion ($7,804 mil-
lion), and the shareholders’ equity ratio rebounded to 21.4%.
This increase was a reflection of recovery in earnings from
our business operations, gains on sales of marketable securi-
ties, transfer of the substitutional portion of the employees’
pension funds, and the effect of Fanuc shares not being
accounted for as an equity method affiliate but revaluated at
fair market value.
We achieved the target we set at the beginning of the fis-
cal year to reduce interest-bearing loans to 1,500 billion yen
or below, ending the year with a balance of ¥1,277.1 billion
($12,048 million). The D/E ratio also improved to 1.54 from
2.51 in the prior fiscal year.
Going forward, we will strive to attain a D/E ratio below
1.0, and continue to pursue higher earnings from our business
operations and generate stronger cash flow.
Assets, Liabilities, and Shareholders’ Equity
Total assets at the end of fiscal 2003 were ¥3,865.5 billion
($36,468 million), a reduction of ¥359.7 billion from the end
of the previous year. This was attributable to the shift of our
Flash memory operation, leasing operation and FDK to equi-
ty method affiliates, as well as to sales of marketable
securities and other measures that we pursued to improve
asset efficiency.
We reduced total current assets by ¥56.0 billion from the
end of the previous year. Although cash and cash equivalents
increased, inventories shrank and, as a result of shifting the
leasing business to an equity method affiliate, lease receiv-
ables also declined.
Investments and long-term loans declined by ¥74.5 billion
from the end of the prior fiscal year, primarily as a result of
such factors as the sales of Fanuc shares and the shift to equi-
ty method affiliate for the leasing operation. Property, plant
and equipment less accumulated depreciation decreased by
¥187.5 billion, due to the shift to equity method affiliate for
the Flash memory business and selectivity in new capital
expenditure.
Combining current and long-term liabilities, total liabili-
ties amounted to ¥2,847.9 billion ($26,867 million), a
reduction of ¥460.4 billion compared to the end of the prior
fiscal year. The reduction of ¥486.6 billion in interest-bearing
loans was accomplished as a result of restored profitability in
business operations, sales of marketable securities, and the
shift to equity method affiliate for the leasing operation.
Total shareholders’ equity was ¥827.1 billion ($7,804
million), and the shareholders’ equity ratio increased to
21.4%. This increase was attributable to such factors as
For reference:
Net Sales by Customers’ Geographic Location
(¥ Billions)
Japan Europe The Americas Other
(Years ended March 31)