Toshiba 2012 Annual Report Download - page 74

04 TOSHIBA Annual Report 2012
Management's Discussion and Analysis
Billions of yen
Year ended March 31 2012 2011
Net sales 6,100.3 6,398.5
Operating income (Note 1) 206.6 240.3
Operating income ratio (%) 3.4 3.8
Return on equity (ROE) (%) (Note 2) 8.5 16.6
Shareholders' equity ratio (%) 15.1 16.1
Debt/equity ratio (%) 142 125
Total investments (Note 3) 437.9 361.0
R&D expenditures 319.9 319.7
Return on investment (ROI) (%) (Note 4) 8.7 10.4
Notes: 1) Operating income is derived by deducting the cost of sales and selling, general and administrative expenses from net sales. This result is regularly reviewed to support decision-making in
allocations of resources and to assess performance. Certain operating expenses such as restructuring charges and gains (losses) from the sale or disposition of fixed assets are not included in it.
2) ROE is net income attributable to shareholders of the Company divided by equity attributable to shareholders of the Company.
3) Total investments including capital expenditure and investments and loans for M&A are on an ordering amount basis. The amount of investments for PPE includes the Group's portion in the
investments made by Flash Forward, LLC etc., which are companies accounted for by the equity method.
4) ROI is operating income divided by total equity plus total debts.
The Company's consolidated net sales for FY2011 were 6,100.3 billion yen (US$74,393.4 million), a decrease of 298.2 billion
yen against the previous year. Although the Social Infrastructure segment saw higher sales, overall sales were lower,
mainly due to sales decreases in the Digital Products and Electronic Devices segments, reflecting the impacts of sharp
yen appreciation, the Great East Japan Earthquake, the floods in Thailand and market downturns. Consolidated operating
income (loss) was 206.6 billion yen (US$2,520.1 million), a decrease of 33.7 billion yen. Although the Electronic Devices
segment and the Social Infrastructure segment saw increases, the Digital Products segment saw deterioration. This
resulted in a decreased operating income ratio and ROE, 3.4% and 8.5%, respectively. Also, ROI decreased by 1.7 points to
8.7%.
Shareholders' equity, or equity attributable to the shareholders of the Company, was 867.3 billion yen (US$10,576.4
million), the same level as at the end of March 2011. There was a decrease of 46.4 billion yen in accumulated other
comprehensive loss, reflecting impacts from fluctuations in foreign exchange rates and a downturn in stock market prices
and the payment of a dividend to shareholders, but net income (loss) attributable to shareholders of the Company stood
at a positive 73.7 billion yen.
Total interest-bearing debt increased by 154.5 billion yen from the end of March 2011 to 1,235.8 billion yen (US$15,070.3
million).
As a result of the total assets increase resulting from strategic investments, the shareholders' equity ratio at the end of
March 2012 was 15.1%, a 1.0-point decline from the end of March 2011, and the debt-to-equity ratio at the end of March
2012 was 142%, a 17-point increase from the end of March 2011.
The Group strongly promotes capital expenditure and investments & loans. The Group sets “Shiftable funds”, which
enables the Company to make speedy and flexible decisions of investments in response to change of business
environment, and executes strategic investments. In FY 2011, the Group strongly promoted strategic investments
including acquisition of Landis+Gyr AG (“L+G”) for enhancement of global competitiveness and future growth. As a
result, the Group increased total investments, including capital expenditure and investments & loans for M&A, from
previous year to 437.9 billion yen.