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50 Fujitsu Limited
Europe
Net sales were ¥632.5 billion (US$5,361 million), up 6.0% year on year.
Despite the impact of the transfer of flat panel display businesses, sales
grew primarily due to a strong performance by our outsourcing busi-
ness in the UK.
Operating income was ¥22.9 billion (US$194 million), an increase
of ¥11.2 billion compared to fiscal 2004. This reflected the benefits of
higher sales from Fujitsu Services, as well as the impact of change in
accounting policies.
The Americas
Net sales were ¥363.4 billion (US$3,080 million), up 21.6% year on year.
Operating income increased by ¥9.2 billion to ¥13.5 billion (US$115
million). This growth in sales and income was mainly attributable to
strong sales of optical transmission systems, as well as expansion in the
UNIX server and consulting businesses in North America.
Others
Net sales were ¥718.8 billion (US$6,092 million), an increase of 19.2%
compared to a year earlier. Operating income rose ¥2.7 billion to ¥14.9
billion (US$126 million). Stronger sales of HDDs were the primary
reason for the overall increase in sales and income.
Net Sales and Operating Income by Geographic Segment
(including intersegment)
(¥ Billions)
Increase
(Decrease)
Years ended March 31 2005 2006 Rate (%)
Net sales
Japan . . . . . . . . . . . . . . . . . . . . ¥4,024 ¥3,944 (2.0)
Europe . . . . . . . . . . . . . . . . . . . 596 632 6.0
The Americas . . . . . . . . . . . . . . 298 363 21.6
Others . . . . . . . . . . . . . . . . . . . 602 718 19.2
Intersegment elimination . . . . . (760) (867)
Consolidated net sales . . . . . . . ¥4,762 ¥4,791 0.6
Increase
Years ended March 31 2005 2006 (Decrease)
Operating income (loss)
Japan . . . . . . . . . . . . . . . . . . . . ¥187 ¥185 ¥ (1)
Europe . . . . . . . . . . . . . . . . . . . 11 22 11
The Americas . . . . . . . . . . . . . . 4 13 9
Others . . . . . . . . . . . . . . . . . . . 12 14 2
Unallocated operating costs
and expenses/
intersegment elimination . . . . . (55) (55) 0
Consolidated operating income . . ¥160 ¥181 ¥21
3. Capital Resources and Liquidity
Improvement in Financial Condition
Since fiscal 2003, in response to a significant deterioration in the Group’s
financial condition as a result of the collapse of the IT bubble, we have
made progress in improving the soundness of our financial position.
Specifically, in the year under review, operating cash flow improved due
to a recovery in earnings from business operations and greater efficiency
in utilizing working capital, and we used this to reduce interest-bearing
loans. As of March 31, 2006, the balance of interest-bearing loans was
¥928.6 billion (US$7,870 million), below our target of ¥1,000 billion.
Likewise, the D/E ratio was reduced to 1.01, close to our medium-term
goal of 1.0. In addition, during fiscal 2005, the Fujitsu Welfare Pension
Fund (the “Plan”), in which the Company and its consolidated subsid-
iaries in Japan participate, received approval from the government for
revisions to the pension system and for the return of the past substitu-
tional portion of the Plan. As a result of significant improvement in the
financial markets during the second half of the fiscal year, the unrecog-
nized obligation for retirement benefits at March 31, 2006 was dissolved.
Assets, Liabilities and Shareholders’ Equity
Total assets at the end of fiscal 2005 were ¥3,807.1 billion (US$32,264
million), an increase of ¥166.9 billion from the end of the previous fiscal
year. Total current assets were ¥1,932.7 billion (US$16,379 million), a
decrease of ¥48.7 billion from the end of the last fiscal year as a result of
greater efficiency in utilizing working capital. Total fixed assets increased
to ¥1,874.3 billion (US$15,885 million), up ¥215.7 billion compared to
the end of the last fiscal year. This was primarily due to an increase in prop-
erty, plant and equipment less accumulated depreciation from capital
expenditures and an increase in the market value of marketable securities.
2002
2003
2004
2005
2006
5,006
4,617
4,766
4,762
4,791
Japan
Europe
The Americas
Others
(¥ Billions)
■ For reference: Net Sales by Customers’
Geographic Location
(Years ended March 31)