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## Management’s Discussion and Analysis of Operations 

million), due to such factors as the inclusion of NIFTY Corporation as a consolidated subsidiary. 

Accordingly, operating income rose ¥17.6 billion, to ¥149.9 billion ($1,414 million). Operating income as a per- centage of net sales improved 0.4 of a percentage point, to 2.9%. 

## Other Income and Expenses Net Income (Loss) 

Other income and expenses improved ¥7.5 billion, to –¥75.1 billion (–$708 million), while interest and dividend income less interest charges improved ¥8.8 billion, to –¥36.9 billion (–$348 million), due to a reduction in inter- est-bearing liabilities. On the other hand, foreign exchange losses increased by ¥8.8 billion to ¥25.6 billion ($242 mil- lion). As we are gradually shifting our severance benefit plans to contributory defined plans in order to fortify our pension assets, pension costs increased by ¥17.4 billion over the previous period. 

In addition, we recorded a gain of ¥20.4 billion ($192 million) from the sale of shares in a Finnish subsidiary of ICL PLC and ¥22.1 billion ($209 million) in gains on sales of marketable securities and other factors, totaling ¥42.6 billion ($402 million), down ¥12.0 billion from the previous year. We recorded ¥37.9 billion ($358 million) in restruc- turing costs, down ¥5.7 billion from last year, related to continued restructuring activities. Fujitsu's restructuring costs accounted for ¥14.7 billion ($138 million) of this amount, while those of our domestic and overseas sub- sidiaries, including ICL and Amdahl Corporation, totaled ¥23.2 billion ($219 million). In fiscal 1998, we recorded a charge of ¥38.1 billion related to the restructuring of the Pathway Project being carried out by ICL. 

As a result of these factors, income before income taxes and minority interests increased 50.8% from the previous fiscal term, to ¥74.8 billion ($706 million). After deducting corporate income tax of ¥28.3 billion ($267 million) and minority interests of ¥3.7 billion ($35 million), net income improved ¥56.3 billion, to ¥42.7 billion ($403 million), compared with a net loss during fiscal 1998. Net income per share was ¥22.1 ($0.208), and return on equity was 3.5%. 

## Segment Information 

Because of the change in the status of Fujitsu Leasing Co., Ltd. during this period from an affiliated company to a con- solidated subsidiary, we have added an additional business segment (Financing) to the previous five segments (Services and Software, Information Processing, Telecommunications, Electronic Devices and Other Operations). 

<img src='content_image/2728.jpg'>

## Business Segment Information 

## Services and Software 

Fiscal 1999 consolidated services and software sales rose 4.8% domestically, to ¥1,320.8 billion ($12,461 million), while overseas sales in this category fell 15.4%, to ¥654.5 billion ($6,175 million). Together, these sales declined 2.9%, to ¥1,975.4 billion ($18,636 million). Bolstering domestic sales in this category were steady increases in our network services business, focusing primarily on outsourc- ing, while overseas, favorable developments in European PFI projects and other matters contributed to sales. However, Y2K-related concerns caused a slowdown in domestic and overseas systems integration sales, and over- seas sales in this segment were also adversely affected by yen appreciation, which reduced the value of sales by over- seas subsidiaries by ¥110.0 billion ($1,037 million) when compared to the value as calculated at last year's exchange rate, and as a result, overall sales for the category declined. Affected by such factors as the lower performance of ICL and DMR Consulting Group, Inc. owing to Y2K-related issues, operating income for this sector slipped 18.9%, to ¥134.9 billion ($1,273 million). 

## Information Processing 

Domestic sales of information processing systems and equipment fell 2.6%, to ¥1,047.1 billion ($9,878 million), and overseas sales dropped 23.2%, to ¥558.1 billion ($5,265 million). As a result, consolidated sales for the cate- gory as a whole decreased 10.9%, to ¥1,605.3 billion 

