Fujitsu 2014 Annual Report Download - page 110

was also the impact of the balance reversal on the liquidation of US
subsidiary Fujitsu Management Services of America, Inc. Unrealized
gain and loss on securities had a positive impact due to a rise in stock
prices. For pension plans outside of Japan that were reflected on the
Company’s balance at the beginning of fiscal 2013, the impact of the
increased liability caused by the weaker yen is included in remeasure-
ments of defined benefit plans, net of taxes.
Comprehensive income, representing the total of other compre-
hensive income and income before minority interests, was ¥104.9
billion ($1,019 million).
2. Segment Information
Information by Operating Segment
Sales and Operating Income by Segment
The reportable segments were consolidated into the three segments
of “Technology Solutions,” “Ubiquitous Solutions,” and “Device Solu-
tions,” based on organizational structure, the characteristics of the
products and services, and the similarities in sales markets. The
“Other Operations” segment includes operations not included in the
reportable segments, such as Japan’s Next-Generation Supercomputer
project, facility services and the development of information systems
for Group companies, and welfare benefits for Group employees.
Sales (including intersegment sales) and operating income by
segment for fiscal 2013 are shown as follows:
(Unit: billion yen)
Years ended March 31 2013 2014
YoY
Change
Change
(%)
Technology
Solutions
Net sales . . . . . . . 2,942.3 3,243.0 300.6 10.2
Operating income . . 173.9 209.1 35.1 20.2
[
Operating income
margin
] . . . . . . . [5.9%] [6.4%] [0.5%]
Ubiquitous
Solutions
Net sales . . . . . . . 1,090.2 1,125.4 35.2 3.2
Operating income . . 9.6 (22.1) (31.7) —
[
Operating income
margin
] . . . . . . . [0.9%] [(2.0%)] [(2.9%)]
Device
Solutions
Net sales . . . . . . . 540.3 600.2 59.9 11.1
Operating income . . (14.2) 28.3 42.6 —
[ Operating income
margin
] . . . . . . . [(2.6%)] [4.7%] [7.3%]
Other
Operations/
Elimination
& Corporate
Net sales . . . . . . . (191.2) (206.3) (15.0) —
Operating income . . (81.0) (72.8) 8.2 —
Consolidated
Net sales . . . . . . . 4,381.7 4,762.4 380.7 8.7
Operating income . . 88.2 142.5 54.2 61.5
[
Operating income
margin
] . . . . . . . [2.0%] [3.0%] [1.0%]
Technology Solutions
The Technology Solutions segment delivers products, software, and
services to customers in an optimal, integrated package of compre-
hensive services. These consist of Solutions/Systems Integration,
which are services for the construction of information and communi-
cation systems, Infrastructure Services, which are primarily outsourc-
ing and maintenance services, System Products, which covers mainly
the servers and storage systems that comprise ICT platforms, and
network products, which are used to build communications infra-
structure, such as mobile phone base stations and optical transmis-
sion systems.
Consolidated segment net sales amounted to ¥3,243.0 billion
($31,486 million), up 10.2% from fiscal 2012. Sales in Japan
increased 6.1%. In system integration services, sales increased,
primarily in the public sector and financial services sector, as custom-
ers expanded their investment spending. In network products, while
demand for 3G communications equipment to deal with the larger
volume of communications traffic has passed its peak, overall sales
increased on spending by telecommunications carriers to expand
LTE*1 service area coverage and increase transmission speeds.
Server-related sales rose due to the contribution of large-scale sys-
tems deals in the public sector. In infrastructure services, although
sales of outsourcing services remained steady, sales were adversely
impacted by a shift from packaged products that include connection
fees to stand-alone products in the ISP*2 business, along with a
greater emphasis on profitability that resulted in a loss of subscrib-
ers. Sales outside Japan increased 18.2% but were essentially
unchanged on a constant-currency basis. Sales of optical transmis-
sion systems increased in North America as investment by telecom-
munications carriers rebounded, but sales of the new UNIX server
model were weak.
Segment operating income amounted to ¥209.1 billion ($2,030
million), up ¥35.1 billion compared to fiscal 2012. In Japan, despite a
higher burden of upfront development expenditures in network
products and the effect of higher server-related procurement costs
due to the weaker yen, operating income rose on increased sales of
system integration services and network products, in addition to the
impact of workforce-related measures. Outside Japan, although
profitability deteriorated for certain projects in Australia, operating
income benefited from the impact of structural reforms in Europe,
higher sales of optical transmission systems in North America, and
lower amortization expenses for goodwill.
Outside Japan, a series of workforce-related measures have been
implemented to strengthen management fundamentals. In fiscal
2012, these measures were primarily implemented in Fujitsu’s hard-
ware business on the European continent, whereas in fiscal 2013
they were mainly undertaken at the services businesses in the Nordic
region, the Americas, and Australia.
*1 LTE: An abbreviation for Long Term Evolution, a standard for high-speed
mobile communications which improves upon the third-generation (3G)
standard.
*2 Internet Service Provider business. This refers to the provision of value-added
services in the domain of services supporting safe, secure and trouble-free
Internet usage, and includes the provision of internet connectivity services,
security, and troubleshooting support via phone or onsite visits.
Ubiquitous Solutions
The Ubiquitous Solutions segment contains ubiquitous terminals or
sensors–including personal computers and mobile phones, as well as
car audio and navigation systems, mobile communication equip-
ment, and automotive electronic equipment–that collect and utilize
various information and knowledge generated from the behavioral
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS
108 FUJITSU LIMITED ANNUAL REPORT 2014