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Cost of Sales, Selling, General & Administrative Expenses,
and Operating Income
In fiscal 2008, cost of sales totaled ¥3,491.5 billion ($35,628 million),
gross profit was ¥1,201.4 billion ($12,260 million), and the gross profit
margin was 25.6%, largely unchanged from the previous year.
Gross profit declined ¥169.8 billion year on year, as beneficial
effects from higher sales and greater cost efficiency in the Services
business in Japan were outweighed by sharply lower sales of logic
LSI devices, electronic components, PCs and other products, trig-
gered by the rapid decline in market conditions and yen apprecia-
tion emerging in the second half of the fiscal year. Although profit
margins worsened for logic LSI devices, mobile phones and HDDs,
the lower sales in components businesses and consumer products,
which have low profit margins, kept the overall profit margin on par
with that of the previous fiscal year.
Selling, general and administrative (SG&A) expenses were
¥1,132.7 billion ($11,558 million), down ¥33.6 billion year on year.
This result primarily reflected a reduction in expenses due to the
effects of currency exchange rates, which offset negative factors
such as increased retirement benefit costs caused by a worsening
environment for management of pension assets in the previous
year, and an increase in strategic upfront investments mainly in
Technology Solutions.
As a result, operating income was ¥68.7 billion ($702 million),
¥136.2 billion lower than the previous fiscal year.
Other Income (Expenses) and Net Income (Loss)
Other expenses, net, totaled ¥182.0 billion ($1,858 million), a sub-
stantial ¥86.5 billion increase from the previous fiscal year. This
sharp deterioration was the result of equity in losses of affiliates,
net, of ¥34.0 billion ($347 million), coupled with poor business per-
formance at the Company’s joint venture in PC and server sales and
component-related affiliates in Europe, and a sharp expansion in
losses related to structural reforms. We also recorded an impair-
ment loss on non- current assets of ¥58.9 billion ($601 million), ¥54.1
billion ($553 million) in restructuring charges, and a ¥18.7 billion
($191 million) valuation loss on our holdings of publicly listed shares,
reflecting a steep decline in market prices, as other expenses. The
impairment loss on non-current assets was primarily related to our
LSI business. Prompted by lower profitability, we have conserva-
tively estimated amounts deemed recoverable in the future, and
posted losses related to advanced logic LSI facilities (buildings and
300mm wafer production facilities at the Mie Plant Fab No. 2) based
on our revised future usage plans. These plans are prefaced on our
transition to a business model where mass production of the 40nm
generation advanced logic LSI products is outsourced. Restructur-
ing charges consisted mainly of losses from the transfer of the HDD
business, costs incurred in the scheduled disposal and removal of
facilities as part of production structure realignment in the LSI busi-
ness, and structural reform costs in our component business and
business outside Japan.
Fujitsu reported a net loss of ¥112.3 billion ($1,147 million), rep-
resenting a decline of ¥160.4 billion from net income reported in the
previous fiscal year. The substantial loss posted in equity in losses of
affiliates, net, and increased losses from loss-making subsidiaries
where the posting of deferred tax assets is not possible, resulted in a
high tax burden relative to the loss before income taxes and minor-
ity interests reported.
Condensed Consolidated Statements of Operations
(Billions of yen)
Years ended March 31 2008 2009
YoY
Change
Increase
rate (%)
Net sales. . . . . . . . . . . . . . . . . . . . 5,330.8 4,692.9 (637.8) (12.0)
Cost of sales . . . . . . . . . . . . . . . . 3,959.5 3,491.5 (468.0) (11.8)
Gross profit . . . . . . . . . . . . . . . . . 1,371.3 1,201.4 (169.8) (12.4)
Selling, general and
administrative expenses . . . 1,166.3 1,132.7 (33.6) (2.9)
Operating income . . . . . . . . . . 204.9 68.7 (136.2) (66.5)
Other income (expenses) . . . (95.5) (182.0) (86.5) —
Income (loss) before income
taxes and minority interests . . 109.4 (113.3) (222.7) —
Net income (loss) . . . . . . . . . . . 48.1 (112.3) (160.4) —
078 ANNUAL REPORT 2009
FUJITSU LIMITED
Management’s Discussion and Analysis of Operations