Oki 2008 Annual Report Download - page 27

25
Free cash flows, which are the total of cash from operating activities
and investing activities, were positive, totaling ¥19.7 billion, a turn-
around of ¥38.5 billion from negative cash flows in the previous fiscal
year of ¥18.8 billion.
Net cash used in financing activities amounted to ¥19.4 billion. This
was mainly attributable to the redemption of corporate bonds and the
contracted repayment of long-term debt.
Accounting for the aforementioned activities, cash and cash equiva-
lents as of the fiscal year-end stood at ¥49.8 billion, unchanged from
the previous fiscal year-end.
CAPITAL EXPENDITURES, DEPRECIATION AND RESEARCH
AND DEVELOPMENT EXPENSES
As a short-term structural reform measure, the OKI Group cutback its
capital expenditure from estimates set at the beginning of the period.
As a result investment decreased ¥12.3 billion year on year to ¥25.4 bil-
lion. Depreciation of property, plant and equipment declined ¥0.5 bil-
lion to ¥26.8 billion in line with the drop in capital expenditures.
Research and development expenses also contracted ¥3.1 billion year
on year to ¥18.2 billion.
OUTLOOK FOR THE YEAR ENDING MARCH 31, 2009
During the fiscal year under review, the U.S. economy showed clear-cut
signs of deceleration on the back of the subprime loan issue and crude
oil price hikes. In addition, the European economy was stagnant, with
rising fears about inflation. While robust growth in emerging markets
is expected to continue, the economic outlook for post-Beijing Olympic
China appears anemic due to the impact of economic trends in the
United States and Europe. The Japanese economy is also anticipated to
slow, reflecting the weak performance of exporting companies caused
by the U.S. economic decline and the strong yen. Furthermore, the
business environment surrounding the OKI Group is intensifying against
the backdrop of accelerating global competition and the saturation of
the domestic market.
Under these circumstances, the OKI Group will continue to pursue
its Mid-term Business Plan announced in October 2007, working to
implement structural reform initiatives aimed at enhancing earnings
capacity.
In the fiscal year ending March 31, 2009, the OKI Group is anticipat-
ing sales to contract ¥22.0 billion year on year in the Info-Telecom Sys-
tems segment to ¥337.0 billion. Operating income, on the other hand,
is expected to climb ¥9.7 billion to ¥8.0 billion. On an individual market
basis, overall sales to financial systems businesses are forecast to fall,
with earnings unchanged from the fiscal year under review. While sales
to financial institutions are expected to remain firm on the back of con-
tinued demand growth in China, sales to the postal service are antici-
pated to fall sharply as demand settles following privatization. In
businesses targeting the telecom system market, earnings are forecast
to improve. This is attributable to efforts undertaken during the fiscal
year under review to accelerate business selection and focus initiatives,
resulting in lower sales in unprofitable businesses and models. Further-
more, OKI expects to increase equipment sales in line with the contin-
ued advance of broadband networks, generating an overall upswing in
revenue and earnings. In the information systems business, OKI fore-
casts a drop in revenue and an increase in earnings owing mainly to
selected orders in low-profit projects and efforts to commercialize the
equipment business.
In the semiconductors segment, OKI is forecasting a ¥74.2 billion
year-on-year decline in sales to ¥64.0 billion and a ¥4.8 billion worsen-
ing in operating income to a ¥1.0 billion operating loss. Sales and oper-
ating income in this segment are anticipated to decline in the second
half of fiscal 2009, due to the signing of a definitive agreement with
Rohm Co., Ltd. to transfer shares of its semiconductor subsidiary. OKI
announced it has signed a basic agreement to transfer shares of its
semiconductor business to Rohm on May 28, 2008. Further details can
be found on our web site.
In the Printer segment, we will target revenue and earnings growth
by promoting further sales of consumables. To this end, OKI will
aggressively launch new high-value-added products to the market
while strengthening sales of printers in markets where consumable
prices are appropriately set. Through these means, segment sales are
anticipated to climb ¥4.2 billion to ¥190.0 billion while operating
income is forecast to decline ¥1.6 billion to ¥7.0 billion.
In other segments, the OKI Group is forecasting sales of ¥38.0 bil-
lion and operating income of ¥1.0 billion. As a result, overall Group
sales for the fiscal year ending March 31, 2009 are estimated to total
¥629.0 billion. Consolidated operating income is forecast at ¥7.0 billion.
0
10
20
30
40
33.5
26.6
27.3
26.8
2006
37.7
2007
25.4
2008
Capital Expenditures / Depreciation
Billions of yen
Capital Expenditures Depreciation
0
10
20
30
2.9%
2006
19.6
21.3
3.0%
2007
18.2
2.5%
2008
R&D Expenses / R&D Expenses to Net Sales
Billions of yen
R&D Expenses R&D Expenses to Net Sales (%)