Fujitsu 2007 Annual Report Download - page 53

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securing of large-scale contracts in the UK, as well as investment in
cutting-edge logic LSI technologies, and ongoing and active upfront stra-
tegic investment in hardware and software centered on technology
solutions in Japan.
■ Operating Income and Operating Income Margin
Operating Income (¥ Billions)
Operating Income Margin (%)
100.4 2.2
2003
2004 150.3 3.2
2005 160.1 3.4
2006 181.4 3.8
2007 182.0 3.6
(Years ended March 31)
Other Income (Expenses) and Net Income
Other income, net totaled ¥32.4 billion (US$275 million). Net interest
expense, comprising interest and dividend income and interest charges,
was ¥4.2 billion (US$36 million), an improvement of ¥4.3 billion com-
pared to the previous fiscal year. Equity in earnings of affiliates was ¥6.9
billion (US$59 million), an improvement of ¥8.4 billion year on year.
This mainly reflected the exclusion of Spansion Inc., which posted a loss
in the previous fiscal year, from the Company’s equity-method affiliates
following the sale of some shares in this company in November 2006.
Amortization of unrecognized obligation for retirement benefits was
¥3.1 billion (US$27 million). This was a substantial improvement of
¥25.0 billion compared to a year earlier due to revisions to the Company’s
pension system in Japan in September 2005 and an improvement in share
prices at the end of the previous fiscal year. In addition, we booked a gain
on sales of marketable securities of ¥77.3 billion (US$655 million) and
a gain on change in interest of ¥2.1 billion (US$18 million) under other
income. This reflected the sale of some shares in Fanuc Ltd. related to a
tender offer for this company’s treasury stock, and the sale of a portion
of shares and a third-party offering related to the initial public offering
(IPO) for consolidated subsidiary NIFTY Corporation. Meanwhile,
under other expenses, we recorded an impairment loss of ¥9.9 billion
(US$85 million) on fixed assets in the optical transmission systems busi-
ness and other operations, and losses on sales of marketable securities of
¥2.2 billion (US$19 million) related to the sale of some shares in
Spansion Inc., which listed in December 2005.
We recognized ¥96.2 billion (US$816 million) as income taxes,
which combines current and deferred income taxes, against ¥214.4
billion (US$1,818 million) of income before income taxes and
minority interests.
Net income for fiscal 2006 was ¥102.4 billion (US$868 million), an
increase of ¥33.8 billion compared to a year earlier. Thanks to the sub-
stantial improvement in amortization of unrecognized obligation for
retirement benefits, gain on sales of investment securities and other fac-
tors, this was a record figure for the Company, exceeding the previous
record-high of ¥89.0 billion in fiscal 1984.
2. Segment Information
The following section provides information on net sales (including
intersegment sales) and operating income in each of our principal busi-
ness segments. From the fiscal year under review, the Company adopted
a new method for allocating operating expenses. For year-on-year com-
parisons, previous year figures for operating income have been adjusted
to reflect this change.
Technology Solutions
Consolidated net sales in this segment, which includes the System Plat-
forms and Services sub-segments, were ¥3,157.0 billion (US$26,755
million), up 5.8% over fiscal 2005. In Japan, despite strong sales in the
Services sub-segment, sluggish sales of mobile phone base stations and
server-related products led to a 0.2% decline for the segment as a whole.
Overseas sales increased by 19.9% as a result of continued strength in
outsourcing and other services as well as higher sales of UNIX serv-
ers and other products in System Platforms. Operating income for
the segment was ¥163.6 billion (US$1,387 million), an increase of
¥10.5 billion compared to the previous year. Although there was a
decline in profitability in our optical transmission systems and retail
solutions businesses in North America and our network business in
the UK, higher Services earnings in Japan and overseas enabled us to
post a more than ¥10.0 billion increase in overall operating income
for Technology Solutions.
Our ETERNUS 8000/4000 series open-standard storage systems
received a “best Japan brand” award in recognition of their world-leading
performance and high reliability. These storage systems have also
received very high marks from our customers, and we plan to further
strengthen global sales.
Annual Report 2007 51