Toshiba 2011 Annual Report Download - page 69

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SCOPE OF CONSOLIDATION
As of the end of March 2011, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 498
consolidated subsidiaries and its principal operations were in the Digital Products, Electronic Devices, Social
Infrastructure and Home Appliances business domains.
Of the consolidated subsidiaries, 106 were involved in Digital Products, 39 in Electronic Devices, 221 in Social
Infrastructure, 58 in Home Appliances and 74 in Others.
The number of consolidated subsidiaries was 44 less than at the end of March 2010. 202 affiliates were accounted for by
the equity method as of the end of March 2011.
RESULTS OF OPERATIONS
NET SALES AND INCOME (LOSS)
Despite uncertainties stemming from fiscal austerity and financial conditions in parts of Europe, the global economy
continued to recover, supported by economic stimulus packages in a number of countries. Most notably, the Chinese and
other Asian economies continued their expansion, driven by domestic demand. The economies of the United States and
Europe also saw gradual recovery. While there are still concerns stemming from the recent rise in crude oil prices and the
state of government financial positions in some countries of Europe, the global economy is expected to continue to
recover.
In Japan, the economy showed signs of an upturn, reflecting the improvement in the global economy and the effect of
economic stimulus packages, but unprecedented human suffering and property damage were wrought by the Great East
Japan Earthquake of March 11, 2011. People’s lives and economic activities were affected significantly by rolling blackouts
due to power shortages, problems in the supply chain resulting from damage to materials manufacturing facilities and
disrupted logistics systems, and the outlook still remains uncertain.
In these circumstances, the Group promoted measures to secure a return to the path of sustained growth with steadily
higher profit and implemented a thoroughgoing business structure transformation in order to enhance high growth with
profitability. The Group also steadily advanced business structure reforms, further promoting strategic allocation of
managerial resources and improving operational capabilities, in order to put in place a profit-making system that will
enable the Group to generate profit regardless of the market situation. While some subsidiaries halted production for a
time following the earthquake, its impact on the overall business performance of the Group companies was relatively
limited. With respect to procurement, every effort is being made to secure materials and parts, including promoting
adoption of substitutes, to minimize impacts on production.
The Company’s consolidated net sales for FY2010 were 6,398.5 billion yen, an increase of 107.3 billion yen against the
previous year. This result mainly reflected higher sales in the Visual Products business, including TVs, and in the
Semiconductor business, including Memories, and was achieved despite yen appreciation and the impact of the Great East
Japan Earthquake. Consolidated operating income increased by 115.1 billon yen to 240.3 billion yen. This result reflected
significant improvements in the Semiconductor business and the LCD business, a healthy performance by the Home
Appliance segment and the continued high profit level of the Social Infrastructure segment. The Digital Products
segment, the Electric Devices segment, the Social Infrastructure segment and the Home Appliance segment all secured
profit.
Income from continuing operations before income taxes and noncontrolling interests improved by 161.1 billion yen to
195.5 billion yen, net income (loss) attributable to shareholders of the Company improved by 157.5 billion yen to 137.8
billion yen.
Consolidated operating income and net income (loss) attributable to shareholders of the Company returned to the
levels recovered in fiscal year 2007, prior to the financial crisis.
KEY PERFORMANCE INDICATORS
Following are the key performance indicators (“KPIs“) that the Management of the Group uses in managing its business.
Net sales and operating income are basic indicators to measure the business results of the Group. Operating income is
regularly reviewed to support decision-making in allocations of resources and to assess performance. Operating income
ratio (ratio of operating income to net sales) is also KPIs. To assess financial position of the Group, the Management
emphasizes shareholders’ equity ratio (ratio of equity attributable to shareholders of the Company to total assets) and
debt-to-equity ratio. Active capital investment and R&D activity is indispensable for growth of the Group and accordingly
capital expenditure and R&D expenditure are KPIs. To measure efficiency of investments and business results, the
Management uses ROI (return on investment) and ROE (return on equity), respectively.