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04 TOSHIBA Annual Report 2013
Management's Discussion and Analysis
Billions of yen
Year ended March 31 2013 2012
Net sales 5,800.3 6,100.3
Operating income (Note 1) 194.3 202.7
Operating income ratio (%) 3.4 3.3
Return on equity (ROE) (%) (Note 2) 8.2 8.1
Shareholders' equity ratio (%) 16.9 15.0
Debt/equity ratio (%) 142 143
Total investments (Note 3) 420.1 437.9
R&D expenditures 305.9 319.9
Return on investment (ROI) (%) (Note 4) 7.3 8.6
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, Ltd. etc., which are companies accounted for by the equity method.
4) ROI is operating income divided by total equity plus total debts.
5) Following the acquisition of Landis+Gyr AG in July 2011, the Company completed the allocation of the cost of the acquisition to assets and liabilities, according to ASC 805 "Business Combinations"
in the current fiscal year. Results for the fiscal year ended March 31, 2012 has been revised to reflect this change.
The Group's consolidated net sales for the year ended March 31, 2013 were 5,800.3 billion yen ($61,705.1 million), a
decrease of 300.0 billion yen against the previous year. Although the Social Infrastructure segment including the Power
Systems and Social Infrastructure businesses, the Elevator and Building Systems business and the Medical Systems
business saw higher sales, as did the Home Appliances segment, overall sales were lower, due to divestiture of the LCD
business and lower sales in the Digital Products and Electronic Devices segments due to market downturns.
Consolidated operating income (loss) was 194.3 billion yen ($2,067.2 million), a decrease of 8.4 billion yen, mainly due to
the divestiture of the LCD business, although the Electronic Devices segments recorded a significant increase in operating
income and the Social Infrastructure segment and the Home Appliances segment also saw increases.
This resulted in operating income ratio as 3.4%, same as the previous year, and a decreased ROE as 8.2%. Also ROI
decreased by 1.3 points to 7.3%.
Shareholders' equity, or equity attributable to the shareholders of the Company, was 1,034.5 billion yen ($11,004.9
million), an increase of 171.0 billion yen from the end of March 2012. This reflects a rise in net income (loss) attributable to
shareholders of the Company and a significant improvement in the accumulated other comprehensive income, due to
the acceleration in yen depreciation and ensuing upturn in the stock market since the end of 2012.
Total interest-bearing debt increased by 235.8 billion yen since the end of March 2012 to 1,471.6 billion yen ($15,655.1
million). This reflected a rise of capital requirements to meet increased orders in the Social Infrastructure segment and for
strategic investments for future growth.
As a result of the foregoing, the shareholders' equity ratio at the end of March 2013 was 16.9%, a 1.9-point increase from
the end of March 2012, and the debt-to-equity ratio was 142%, a 1-point decrease from the end of March 2012.
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 the year ended March 31, 2013, the Group strongly promoted
strategic investments in new businesses for enhancement of global competitiveness and future growth. As a result, the
Group invested 420.1 billion yen in total, including capital expenditure and investments & loans for M&A.