Hitachi Posts Revenue Decline and Loss
TOKYO, JAPAN
Business Wire via Dow Jones
May 27, 1999 10:57 AM
Hitachi, Ltd. (NYSE:HIT) today announced results for the fiscal year 1998, ended March 31, 1999.
Recorded sales for the period were 7,977,374 million yen ($65,929 million), a 5% decrease from the preceding year. Net loss was 338,794 million yen ($2,800 million).
Fiscal 1998 continued to be marked by the sluggish state of the Japanese economy. While the government made further efforts to stabilize the financial system and expanded investment in public works, the private sector implemented large cutbacks in investments in plant and equipment. Moreover, with unemployment reaching record highs, concerns over job security depressed consumer spending and housing investment.
Recession continued to dog other economies in the Asia region. The U.S. economy continued to grow, helped by strong consumer spending and a high level of housing investment and private-sector investment in plant and equipment. Europe managed to maintain steady growth.
In Information Systems & Electronics, computer operations posted an increase in sales. Disk array subsystems did well, but sales of mainframes decreased outside Japan. In Japan, systems integration services posted higher sales, with companies investing in IT to improve efficiency.
The semiconductor sector posted decreases in both sales and earnings resulting from the sharp drop in the prices of memory products combined with the fact that sales of system LSIs fell short of expectations. Sales and earnings were also lower in display components, where there is intense competition in the area of liquid-crystal displays and color display tubes.
In Power & Industrial Systems, sales by the power business were lower as Japan's electric power companies continued to hold off on investing in new plant and equipment. Sales of industrial systems were also adversely affected by lower levels of investment in plant and equipment by Japan's private sector.
In Consumer Products, in Japan, air conditioners posted higher sales while sales of TVs decreased. Asia's economic woes took their toll on overseas sales.
In Materials, products registering gains included electronic components for mobile phones. However, the weakness of the economy resulted in lower sales in the chemical products, metal products and wire and cables sectors.
In Services & Other, lower revenues were posted by transport services and general trading operations, again reflecting the sluggish state of the economy. General trading companies did achieve higher sales of disk array subsystems, while sales of semiconductor manufacturing equipment decreased. Financial services did well.
The company spent 496,728 million yen ($4,105 million) on research and development, a decrease of 3% from the last fiscal year. R&D expenditures as a percentage of sales were 6.2%.
During the period, Hitachi's plant and equipment investment amounted to 585,718 million yen ($4,841 million), a decrease of 18% from a year earlier, with the top priority being given to the electronics sector.
All figures were converted at the rate of 121yen=US$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of March 31, 1999.
Note:
1) In accordance with tax effect accounting based on Statement of Financial Accounting Standards (SFAS) No. 109, "Corporate Income Tax Accounting," net deferred tax assets of domestic companies for the years ended March 31, 1999 and March 31, 1998 are calculated in accordance with normal tax rates applied to corporate income following revision of Japanese tax accounting for the fiscal years ended March 31, 2000 and March 31, 1999. As a result, the respective effects of 54,363 million yen ($449 million) and 27,053 million yen ($224 million) are charged to net income (loss) for the fiscal years ended March 31, 1999 and March 31, 1998, respectively.
1) In accordance with tax effect accounting based on Statement of Financial Accounting Standards (SFAS) No. 109, "Corporate Income Tax Accounting," net deferred tax assets of domestic companies for the years ended March 31, 1999 and March 31, 1998 are calculated in accordance with normal tax rates applied to corporate income following revision of Japanese tax accounting for the fiscal years ended March 31, 2000 and March 31, 1999. As a result, the respective effects of 54,363 million yen ($449 million) and 27,053 million yen ($224 million) are charged to net income (loss) for the fiscal years ended March 31, 1999 and March 31, 1998, respectively.
Note: SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," has not been implemented in the consolidated balance sheets as allowed by the U.S. Securities and Exchange Commission. If implemented, unrealized holding gains (not) of securities in the scope of SFAS No. 115 were included in measurement of these investments, and the balances of "Minority interests" and "Stockholders' equity" were increased as follows.
Note: The forecast for the year ending March 31, 2000 is
AMHitachi Posts Revenue Decline and Loss -2-
Business Wire via Dow Jones
forward-looking information which reflects management's current views with respect to certain future events and financial performance. Actual results may differ materially from this forecast. Further, this forward-looking information is based upon assumptions of future events which may not prove to be accurate. Factors that could cause actual results to differ materially from the forecast include, but are not limited to, rapid technological change, particularly in the Information Systems & Electronic segment; uncertainty as to Hitachi's ability to continue to develop products and to market products that incorporate new technology on a timely and cost-effective basis and achieve market acceptance; fluctuations in product demand and industry capacity, particularly in the Information Systems & Electronics segment and the Consumer Products segment; exchange rates and their fluctuations between the yen and other currencies in which Hitachi makes significant sales or in which Hitachi's assets and liabilities are denominated, particularly between the yen and the U.S. dollar; uncertainty as to Hitachi's access to liquidity or long-term financing, particularly in the context of restrictions or availability of credit prevailing in Japan; uncertainty as to Hitachi's ability to implement measures to reduce the potential negative impact of fluctuations in product demand and/or exchange rates; general economic conditions and the regulatory and trade environment of Hitachi's major markets, particularly the United States, Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese or other East Asian economies, or direct or indirect restriction by other nations of imports; uncertainty as to Hitachi's access to, or protection for, certain intellectual property rights, particularly rights to electronics and data processing technologies; Hitachi's dependence on alliances with other corporations in designing or developing certain products; the market prices of equity securities in Japan, declines in which may result in write-downs of equity securities Hitachi holds; and uncertainty as to the results of Hitachi's effort to deal with the Year 2000 problem.