Management’s Discussion and Analysis of Operations Siemens. Our operating income for this region declined, and we posted an operating loss of ¥10.4 billion ($98 mil- lion). Lower information systems sales by Amdahl and yen appreciation negatively affected sales in this region, but boosted by the strong performance of our transmission business, sales in the Americas rose 2.1%, to ¥585.4 billion ($5,523 million). Increased sales and business restructuring, together with a smaller loss by our U.S. semiconductor plant, resulted in a ¥5.7 billion operating-level improve- ment, and we recorded an operating loss of ¥13.2 billion ($125 million) in this region. Sales in this geographic segment, which includes Asian markets outside Japan, increased 0.6%, to ¥251.0 billion ($2,368 million). Operating income soared 41.8%, to ¥19.3 billion ($182 million).  Responding to increased demand for semiconductors and focusing our investments in growth areas, we expanded capital expenditure in fiscal 1999 by 12.8%, or ¥36.9 bil- lion to ¥325.7 billion ($3,072 million). By business segment, outlays for services and software totaled ¥64.7 billion ($610 million), ¥89.2 billion ($841 million) for infor- mation processing, ¥35.5 billion ($334 million) for telecommunications, ¥113.6 billion ($1,071 million) for electronic devices, of which ¥87.9 billion ($829 million) was invested in semiconductors, and ¥9.8 billion ($92 mil- lion) in other operations. The Americas Major capital expenditure included:  * Services and software — Outsourcing facilities for the network services business, server expansion and infra- structure related to the consolidation of NiftyServe and InfoWeb into @nifty * Information processing — Magnetic disk drive develop- ment and manufacturing facilities, printed circuit board production facilities, UNIX systems R&D facilities Other 22 Capital Expenditure Net Sales and Operating Income by Geographic Segment (¥ Billion) Increase (Decrease) Years ended March 31 1999 2000 rate (%) Net sales (including intersegment sales) Japan  . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,986 ¥4,224 6.0% Europe  . . . . . . . . . . . . . . . . . . . . . . . . 1,059 817 (22.8) The Americas  . . . . . . . . . . . . . . . . . . . 669 663 (0.9) Other  . . . . . . . . . . . . . . . . . . . . . . . . . 572 549 (4.1) Intersegment elimination  . . . . . . . . . . (1,044) (1,000) — Consolidated net sales . . . . . . . . . . . . . ¥5,242 ¥5,255 0.2% Operating income Japan  . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 209 ¥ 227 8.9% Europe  . . . . . . . . . . . . . . . . . . . . . . . . 0 (10) — The Americas  . . . . . . . . . . . . . . . . . . . (19) (13) — Other  . . . . . . . . . . . . . . . . . . . . . . . . . 13 19 41.8 Unallocated operating costs and expenses/intersegment elimination  . . . . . . . . . . . . . . . . . . . . (71) (73) — Consolidated operating income  . . . . . . ¥ 132 ¥ 149 13.4% Capital Expenditure (¥ Billion) Increase (Decrease) Years ended March 31 1999 2000 rate (%) Services and software  . . . . . . . . . . . . . . ¥ 48 ¥ 64 32.4% Information processing  . . . . . . . . . . . . 79 89 11.6 Telecommunications  . . . . . . . . . . . . . . 41 35 (13.9) Electronic devices  . . . . . . . . . . . . . . . . . 97 113 16.0 [Semiconductor production]  . . . . . . . [80] [87] [9.4] Financing  . . . . . . . . . . . . . . . . . . . . . . . — — — Other operations  . . . . . . . . . . . . . . . . . 9 9 1.8 Corporate*  . . . . . . . . . . . . . . . . . . . . . . 11 12 13.5 Capital expenditure  . . . . . . . . . . . . . . . ¥288 ¥325 12.8% Domestic  . . . . . . . . . . . . . . . . . . . . . . . . 207 227 9.8 Overseas  . . . . . . . . . . . . . . . . . . . . . . . . 81 98 20.1 * Nonallocable capital expenditure for shared R&D and parent company manage- ment division Capital Expenditure Total Assets (¥ Billion) (¥ Billion) Coverage of Capital  Expenditure (Times) Total Assets Turnover Rate (Times) 288 435 435 403 1.38 0.84 0.65 0.42 325 1.46 ( Times ) (Years ended March 31) '96 '97 '98 '99 '00 1.03 5,112 5,123 4,727 4,324 5,134 1.02 1.01 1.00 0.94 ( Times ) (Years ended March 31) '96 '97 '98 '99 '00