Toshiba 2009 Annual Report Download - page 55

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SCOPE OF CONSOLIDATION
As of the end of March 2009, Toshiba Group comprised Toshiba Corporation and 537 consolidated subsidiaries and its
operating segments were in the Digital Products, Electronic Devices, Social Infrastructure, Home Appliances and Others.
122 consolidated subsidiaries were involved in Digital Products, 59 in Electronic Devices, 217 in Social Infrastructure, 71
in Home Appliances and 68 in Others.
The number of consolidated subsidiaries was 13 less than at the end of March 2008.
199 affiliates were accounted for by the equity method as of the end of March 2009.
RESULTS OF OPERATIONS
NET SALES AND NET INCOM E (LOSS)
In the latter half of FY2008, the global economy worsened rapidly as the subprime loan crisis in the United States became a
full-blown global financial crisis that started to impact significantly on the real economy from the third quarter. Europe,
which had been relatively healthy, joined the United States by falling into recession, and the economies of China and other
parts of Asia, which had enjoyed continuing expansion, also slowed dramatically. As a result, the global economy is caught in
an extensive recession.
The Japanese economy also went into recession, and is in an extremely severe condition characterized by substantial
declines in exports and capital spending, a sharp downturn incorporate profits, rapidly worsening employment and shrunken
consumer spending.
In these circumstances, Toshiba Group addressed the need to secure profit on acompany-wide basis. However, consoli-
dated sales in FY2008 were 6,654.5 billion yen, a decrease of 1,010.8 billion yen. This result was strongly influenced by the
shrinkage of the overall market caused by the fast-spreading global recession, steeper than expected declines in semiconduc-
tor prices, and by yen’s sharp appreciation.
Consolidated operating income (loss) worsened by 496.6 billion yen to -250.2 billion yen. Electronic Devices, particularly
in the Semiconductor business, Digital Products, Home Appliances and Others, all saw significant income deterioration,
although Social Infrastructure maintained a high level of profit. Income (loss) from continuing operations, before income
taxes and minority interest worsened by 544.3 billion yen to -279.3 billion yen. This difference resulted mainly from a
decrease in non-operating profit plus a loss from a write-down of securities. Net income (loss) worsened by 471.0 billion yen
to -343.6 billion yen, which reflected such factors as a drawdown in deferred tax assets.
Taking these situations into consideration, we have raised 319.2 billion yen through issuance of new shares by way of pub-
lic offering and third-party allotment accompanying secondary offering for over-allotment and issued 180.0 billion yen unse-
cured subordinated bonds in order to raise funds for future capital expenditures and improve our financial position.
KEY PERFORM ANCE INDICATORS
Following are the key performance indicators (“KPIs”) that the Management of the Group uses in managing its business.
The Company executes proactive managements, including strategic allocation of resources grounded in the Group strategy
of achieving sustained growth with profit. For such perspective, growth of sales is indispensable and accordingly net sales is
one such KPI. Another KPI is operating income ratio (ratio of operating income to net sales) because growth is not sustain-
able without adequate profit. Also, return on equity (ROE) is KPI.
Active capital investment and R&D activity is indispensable for growth of the Group and accordingly capital expenditure
and R&D expenditure are KPIs. Also, it is important to maintain a stable financial base for active capital expenditure and
R&D, and accordingly shareholders’ equity ratio (ratio of total shareholders’ equity to total assets) and debt-to-equity ratio
are other KPIs for the Company.
Billions of yen
Year ended M arch 31 2009 2008
Net sales 6,654.5 7,665.3
Operating income ratio (%) (3.8) 3.2
Return on equity (ROE) (%) (46.8) 12.0
Shareholders’ equity ratio (%) 8.2 17.2
Debt/equity ratio (%) 405 123
Capital expenditures (Note) 425.2 618.9
R&D expenditures 378.3 393.3
(Note) Capital expenditure is on an ordering amount basis.