FINANCIAL SECTION ManagementGLYPH<213>s Discussion and Analysis of Operations lion), a decrease of ·6.5 billion from the previous year, reflecting the continuing redemption of corporate bonds that contributed to the reduction in interest-bearing loans. Also with respect to other income (expenses), we record- ed gains on sales of marketable securities and the transfer of the substitutional portion of our employees’ pension funds to the Japanese government, and losses from restructuring charges and other items. Further details are provided in the “Explanation of Extraordinary Items in Other Income (Expenses)” section below.  The amortization of unrecognized obligation for retire- ment benefits was ·56.9 billion ($537 million), an increase of ·13.0 billion compared to the prior year. This occurred because weakness in equity markets during the prior fiscal year resulted in a larger actuarial variance. After factoring in these items, income before income taxes and minority inter- ests was ·157.0 billion ($1,481 million). Income taxes were ·92.2 billion ($870 million), and the effective tax rate with respect to income before income taxes and minority interests was 58.7%. Because of differences in consolidated and non-consolidated capital gains recorded on the sales of Fanuc shares, this exceeded the statutory income tax rate. Current income tax in fiscal 2003 amounted to ·34.1 billion ($322 million) and was primarily recorded for domestic subsidiaries in the Software & Services segment. Deferred income tax was ·58.0 billion ($548 million), most- ly reflecting the reversal of deferred tax assets for the Company and its consolidated domestic subsidiaries. Minority interests were ·15.1 billion ($142 million), an increase of ·11.8 billion over the prior year. This was due mainly to the increase in profits of such publicly listed domestic companies as Fujitsu Support and Service Inc., Fujitsu Business Systems Ltd., and Shinko Electric Industries Co., Ltd., as well as of Fujitsu TEN Limited. Consolidated net income for the year was ·49.7 billion ($469 million), representing the first net profit posted since fiscal 2000.  During fiscal 2003, in addition to aggressive sales of assets aimed at improving our financial strength, we transferred the substitutional portion of our employees’ pension funds in order to reduce the unrecognized obligation of retirement benefits and lower the asset management risk related to pen- sion assets. The breakdown of the recognized losses was ·28.9 bil- Thus, in North America, Fujitsu Computer Systems and Fujitsu Consulting were made direct subsidiaries of Fujitsu Limited, and FIH is being liquidated. Along with these measures, we took a one-time charge for the amortization of goodwill associated with the acquisition of Amdahl, the pre- decessor of FIH, as well as for currency translation adjustments on past investments. The scope of the personnel reductions from these meas- ures, primarily in North America and Europe, was approximately 1,000 employees globally.  In software and services, we realigned the operations of Fujitsu Consulting Holdings, Inc. (the former DMR), which had been a subsidiary of FIH, to focus on the North American market. In conjunction with this, Fujitsu Consulting’s operations in Spain were sold to a third party, and other European operations were merged into Fujitsu Services Holdings PLC (the former ICL). Operations in Australasia were merged into Fujitsu Australia Limited. These moves also enabled a reduction in overlapping func- tions and personnel, and the elimination of assets.  We merged two computer hardware sales operations in the US, Fujitsu PC Corporation (focusing on PCs), and Fujitsu Technology Solutions Inc. (focusing on servers), a subsidiary of Fujitsu IT Holdings, Inc. (“FIH,” formerly Amdahl), integrating them into the newly established Fujitsu Computer Systems Corporation. This merger created a uni- fied organization for hardware offerings and enabled a reduction in overlapping functions and personnel, as well as the disposal of assets. In addition to securitizing the land and buildings of newly constructed Fujitsu Solution Square (located in Kamata, Tokyo), we aggressively sold properties, including those that had been used for employee recreation, realizing sales proceeds of ·29.3 billion ($276 million). We applied for an exemption from the obligation to pay benefits for future employee services related to the substitu- tional portion of the employees’ pension funds in which the Company and our domestic subsidiaries participate. On March 23, 2004, we received the approval for the exemption from the Minister of Health, Labour and Welfare. Accordingly, as of the date of approval, we recognized the elimination of both the employee retirement obligations and pension assets corresponding to the substitutional portion, reporting the resulting gain in other income (expenses). To better serve customers expanding their business on a global basis, we are enhancing our ability to offer leading- edge hardware and software worldwide under a unified presence (our “One FUJITSU” initiative), and to continually provide high-quality one-stop solutions in each region.  28 Explanation of Extraordinary Items in Other Income (Expenses) In order to strengthen the profitability of our global busi- ness and our software and services business in Japan, we implemented various measures to improve our business structure, resulting in the following restructuring charges. At the request of Fanuc, we sold approximately 37 mil- lion shares of our shareholdings in the company. The proceeds from the sales were ·217.5 billion ($2,052 mil- lion), and the gains realized were ·117.0 billion ($1,104 million). As a result of the sales, our ownership interest in Fanuc was reduced to 18.64% (including shares held in our pension trust account), and we therefore no longer treated it as an equity method affiliate. Because the capital gains on these sales were taxable on a non-consolidated basis, the contribution of the sales proceeds to consolidated net income in the fiscal year was limited to ·28.1 billion ($265 million). Including gains from the sales of Fanuc shares, total gains on the sales of marketable securities were ·134.6 billion ($1,270 million).  Æ  Global Restructuring Focusing on Æ Restructuring Charges ....................·164.2 billion ($1,549 million) Æ Gain on Transfer of Substitutional Portion of EmployeesGLYPH<213> Æ Gain on Sales of Property, Plant and Equipment Æ Gain on Sales of Marketable Securities ...............................................·134.6 billion ($1,270 million) North America.................·75.7 billion ($715 million) Pension Funds .......................·146.5 billion ($1,382 million) ....................................................·13.6 billion ($129 million)