Fujitsu 1998 Annual Report Download

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Crafting leading-edge IT
solutions for customers
around the world
http://
www.
fujitsu.
co.jp/
annual report 1998

Table of contents

  • Page 1
    http:/ / Cr a ftin g le a d in g -e d g e IT s olu tion s for cu s tom e r s a r ound the wor ld www. annual report 1 9 9 8 fujits u. co.jp/

  • Page 2
    ...a n cia l High ligh ts 0 2 ...Me s s a ge to Shareholders 0 5 ...Investors' FAQ 0 8 ...Fujitsu's Global Solutions Business Structure 1 2 ...Re vie w of Op e r a tion s 1 2 ...In for m a tion Pr oce s s s in g 1 6 ...Telecom m u n ica tion s 1 8 ...Ele ctr on ic De vice s 2 0 ...Fu jits u in th e Com...

  • Page 3
    ... l Highlights Crafting leading-edge IT solutions for customers around the world Yen (millions) (except per share data and number of employees) For the years ended March 3 1 ,1 9 97 and 1 9 9 8 1 9 97 U.S. dollars (thousands) (except per share data) 1998 1998 Net Sales ...Operating Income ...Net...

  • Page 4
    ...the Asia/ Oceania region, our 1990 acquisition of ICL helped us to extend our reach to Europe as well. Likewise, by making long-time partner Amdahl Corporation a full-fledged member of the Fujitsu Group last September, we made clear our intention to build our solutions business in North America, the...

  • Page 5
    ... while Amdahl and ICL will take the lead in North America and Europe, respectively. Supporting these efforts are Fujitsu's abundant know-how and solid track record in constructing sophisticated, large-scale systems, as well as the talents of the Group's 52,000 highly qualified services and software...

  • Page 6
    ... in DRAM prices and amortization of goodwill and restructuring costs associated with the Amdahl acquisition. However, by pushing to commercialize high value-added products in the electronic devices field and other measures, we are actively working to make our business and management more efficient...

  • Page 7
    ... devices group supplies the core products essential to the competitiveness of the other two groups. Although earnings have been hurt by the steep plunge in DRAM market prices, system LSIs and flash memory devices are growing as a share of sales. T he group is expected to contribute to profits...

  • Page 8
    ... Japan's largest corps of such experts. Including customer engineers, our service personnel worldwide number 52,000. T he tools, documentation and information management systems needed to provide leadingedge solutions are firmly in place. Fujitsu's communications technology, our FENICS domestic...

  • Page 9
    ... businesses, mainly logic devices, and will place particular emphasis on system LSI for digital AV applications and for the IT industry, including Fujitsu itself. We have no plans for withdrawing from the DRAM field. Indeed, leading-edge DRAM development is essential to support progress in system...

  • Page 10
    Fujitsu's Globa l Solutions Business Structure Fujitsu annual report 1 9 9 8 FUJ ITS U ICL AMDAHL Fujitsu's Global Solutions Business Structure 8 8

  • Page 11
    ... services of consistently high quality to customers worldwide, we announced our Global Solution Link concept in 1997. This concept lays the groundwork for effectively linking Amdahl, ICL, Fujitsu Australia Limited and other The Americas Japan Asia & Oceania Fujitsu's Global Solutions Business...

  • Page 12
    Fujitsu's Globa l Solutions Business Structure Fujitsu annual report 1 9 9 8 DAVID. B. WRIGHT [President, Amdahl Corporation] Amdahl is focused on helping its Global 2000 customers develop, deploy and manage mission-critical information systems. As a $2.2 billion subsidiary of Fujitsu Ltd., Amdahl...

  • Page 13
    ... to assemble global solutions. Fujitsu, ICL and Amdahl serve many customers that operate on a multinational basis. T his points to opportunities to develop global accounts. T hrough regional bases at Amdahl in the U.S., ICL in Europe, Fujitsu in Japan and Fujitsu Asia Pte. Limited in Southeast Asia...

  • Page 14
    ... 25% of sales; the personal computer-related business, including HDDs, increased 9% and represented 33% of sales. Despite one-time costs relating to the Amdahl acquisition, earnings rose on higher margins for services and software. Profitability is expected to improve even further in fiscal 1998 and...

  • Page 15
    ... LLC., to expand marketing of the GLOVIA integrated Enterprise Resource Planning (ERP) package that supports accounting, personnel, production management and sales management functions. T he strength of Fujitsu's solutions business lies in its vast array of superior hardware and software prod- ucts...

  • Page 16
    ...-scale servers based on Fujitsu's CMOS technology. Fujitsu is also supplying CMOS global servers to Siemens Nixdorf Informationssysteme AG on an Fujitsu's Server Business Strategies °System and Network Oriented Products °Advanced System Technology °Best Mix of In-house & Open Technology °Global...

  • Page 17
    .... In desktops for corporate use, we commenced build-to-order service, tailoring memory, hard disks and other components to order, with the same service for notebooks scheduled to begin in the summer of 1998. About 60% of Fujitsu's PCs are supplied to corporations. T he personal computer is thus an...

  • Page 18
    ... SONET optical transmission business in the U.S. has significantly contributed to success in Asia, Australia and China. •Broadband access-focus on AT M-PON, xDSL (Japan, U.S., UK, etc.) SWITCHING •Apply Fujitsu's experience from information highway projects such as North Carolina Information...

  • Page 19
    ... a commercial application, to a communications company in Australia. In the field of broadband Asynchronous T ransfer Mode (AT M) switching, our FET EX-150 ESP broadband switches were installed by Hong Kong T elecom to power its Interactive Media Service. And in Spain, Fujitsu captured an order from...

  • Page 20
    ...other semiconductors were profitable, the Electronic Devices group recorded a loss overall because of falling DRAM prices. Logic IC sales were up, mainly the result of growth in sales of system LSIs built around the SPARClite microcontroller. Sales of flash memories surged, driven by demand related...

  • Page 21
    ... devices, mainly system LSIs, and in the memory field, flash memory production capacity will be expanded while DRAM output is held back. These moves are designed to raise the overall profitability of the semiconductor division. Responding to rising demand, Fujitsu boosted production capacity for SAW...

  • Page 22
    ... fiscal 2000 has been set as the target date for obtaining ISO14001 certification at the main offices in the service and development division. A Fujitsu Recycling Center in Japan. Here discarded personal computers and other office equipment are collected for recycling. computers and other products...

  • Page 23
    ... institutions, centering on the Japan-America Institute of Management Science (JAIMS). • Academ ic and Educational Support of Education and International T rade and Industry, the EU and others. Fujitsu engages in a wide range of other community activities: for example, support for Japan's only...

  • Page 24
    Fina ncia l Section Fujitsu annual report 1 9 9 8 CON T E N T S 23 Five-Year Summary 24 Management's Discussion and Analysis of Operations 28 Consolidated Balance Sheets 30 Consolidated Statements of Income 31 Consolidated Statements of Shareholders' Equity 32 Consolidated Statements of Cash Flows ...

  • Page 25
    ...Amounts per share of common stock: Basic earnings (loss) ...Diluted earnings ...Cash dividends ...Shareholders' equity ...R&D expenditure ...Capital expenditure ...Number of employees ...Net sales by main product: Information processing ...Telecommunications ...Electronic devices ...Other operations...

  • Page 26
    ... Ele ctr o n ic De v ice s Other Operations G ross profit increased 8 % to ¥1,466.5 billion ($11,110 million), although the gross profit margin declined from 30% to 29%. The margin was adversely affected by lower DRAM prices, a drop in PC prices overseas, a loss at Amdahl Corporation and other...

  • Page 27
    ... at the lower of cost or market, weak stock prices in Japan, mainly among fi- '9 8 -3 8 nancial institutions, resulted in a substantial valuation loss. A sufficient volume of investment securities was sold to generate earnings to offset these losses. Latent profits on investments in Results...

  • Page 28
    ... difficult operating environment as Japan's economy stagnated. In addition, telecommunications providers limited capital spending and DRAM prices fell sharply. Sales and earnings were aided by a large increase in sales of hard disk drives and growth in services and software. Others tions, ¥206...

  • Page 29
    ...; • Electronic devices - new facilities at the Mie Works to support development of leading-edge technology, equipment to increase output of flash memories at Fujitsu AMD Semiconductor Limited, 8-inch wafer production equipment at the Wakamatsu Works to upgrade logic IC activities, and equipment to...

  • Page 30
    Fin an cial S ection Cons olida te d Ba la nce She e ts Fujitsu annual report 1 9 9 8 U.S. dollars Yen (millions) At March 3 1 1997 (thousands) (Note 2 ) 1998 1998 Assets Current assets: Cash and cash equivalents ...Short-term investments (Note 4 ) ...Receivables, trade (Note 1 3 ) ...Allowance ...

  • Page 31
    ...) 1997 (thousands) (Note 2 ) 1998 1998 Liabilities and shareholders' equity Current liabilities: Short-term borrowings (Note 8 ) ...Current portion of long-term debt (Note 8 ) ...Payables, trade (Note 1 3 ) ...Accrued expenses ...Customers' advances ...Accrued income taxes ...Employees' savings...

  • Page 32
    ...Fujitsu annual report 1 9 9 8 U.S. dollars Yen (millions) Years ended March 3 1 1996 1997 (thousands) (Note 2 ) 1998 1998 Net sales ...Operating costs and expenses: Cost of goods sold...,8 4 1 ) 7 9 4 ,6 2 9 Income before income taxes ...Income taxes (Note 1 0 ): Current ...Deferred ... 1 2 7 ,6 8...

  • Page 33
    Fin an cial S ection Cons olida te d Sta te m e nts of Sha r e holde r s ' Equity U.S. dollars Yen (millions) Years ended March 3 1 1996 1997 (thousands) (Note 2 ) 1998 1998 Common stock: Balance at beginning of year ...Exercise of warrants ...Conversion of bonds ...Balance at end of year ...Â¥ ...

  • Page 34
    ... Cash flows from investing activities: Acquisitions of property, plant and equipment ...Proceeds from sales of equipment ...(Increase) in investments and long-term loans ...(Increase) decrease in short-term investments ...Acquisition of Amdahl Corporation , net of cash acquired ...Other, net ...Net...

  • Page 35
    ... Revenue recognition Revenues from sales of communications products and computer systems are generally recognized upon acceptance by the customers, while revenues from sales of personal computers and other equipment and electronic devices are recognized when the products are shipped. (f) Marketable...

  • Page 36
    ...investment management companies to supplement the public welfare pension plan. The plans entitle eligible employees upon retirement to receive either a lump-sum payment or annuity payments for life, or a combination of both. Most consolidated subsidiaries outside Japan have defined benefit plans and...

  • Page 37
    ...1997 U.S. dollars (thousands) 1998 1998 Current assets ...Other assets, including property, plant and equipment...) Current liabilities ...Long-term liabilities ...Net assets ...¥ 4 8 6 ,1 3 6 1 2 4 ,8 2 3 7 5 7 ,4 8 7 Yen (millions) 1996 1997 1998 1998 Net sales ...Net income ... ¥ 8 5 9 ...

  • Page 38
    ...6 4 6 ,2 1 2 $ 1 ,9 4 2 ,0 9 1 4 ,8 9 5 ,5 4 5 computer equipment which it purchases from its seven shareholders. At March 3 1 , 1 9 9 7 and 1 9 9 8 , JECC's issued share capital was ¥ 6 5 ,7 0 0 million ($4 9 7 ,7 2 7 thousand). Its net sales for the years ended March 3 1 , 1 9 9 6 , 1 9 9 7 and...

  • Page 39
    Long-term debt at March 3 1 , 1 9 9 7 and 1 9 9 8 consisted of: Yen (millions) 1997 U.S. dollars (thousands) 1998 1998 Loans, principally from banks and insurance companies, due from 1 9 9 7 to 2 0 1 3 at interest rates ranging from 0 .7 6 % to 8 .3 0 % at March 3 1 , 1 9 9 7 and 1 9 9 8 : ...

  • Page 40
    ... employees of the Company and most subsidiaries in Japan are covered by contributory defined benefit pla ns which include a substitutional portion of the benefits under the National Welfare Pension Plan of Japan ("the NWP Plan"). The plans require that the liability reserve and annual contributions...

  • Page 41
    ...led ¥ 4 ,7 0 1 m illion, ¥ 5 ,1 3 2 m illion a nd ¥ 5 ,5 7 8 m illion ($ 4 2 ,2 5 8 thousa nd), respectively. Most subsidiaries outside Japan have defined benefit pension plans and/ or defined contribution pension plans covering substantially all employees. The major plan is the ICL Group Pension...

  • Page 42
    ... te d Fina ncia l Sta te m e nts Fujitsu annual report 1 9 9 8 The Commercial Code further provides that an amount equal to at least 1 0 % of cash dividends and bonuses to directors and statutory auditors paid by a company and its subsidiaries in Japan from retained earnings be appropriated to the...

  • Page 43
    ... and Exchange Law of Japan. Industry segm ent inform ation In the information technology industry, the Group operates in one business segment. The Group, as a total supplier, supplies products and services which satisfy customers' needs by incorporating leading-edge technologies. Geographic...

  • Page 44
    ...Fujitsu annual report 1 9 9 8 Years ended March 3 1 Yen (millions) Japan Overseas Elimination Consolidated 1996 Net sales Unaffiliated customers... 7 Yen (millions) Japan Europe The Americas Other Elimination Consolidated 1998 Net sales Unaffiliated customers ...Intersegment ...Total ...Operating...

  • Page 45
    ...Re por t The Boar d of Dir ector s FUJITSU LIMITED We have examined the consolidated balance sheets of Fujitsu Limited and consolidated subsidiaries (the "Group") as of March 3 1 , 1 9 9 7 and 1 9 9 8 , and the related consolidated statements of income, shareholders' equity and cash flows for each...

  • Page 46
    Boa r d of Dir e ctor s Fujitsu annual report 1 9 9 8 Chairman Tadashi Sekizawa Vice Chairman Michio Naruto President Naoyuki Akikusa Senior Executive Vice Presidents Tadashi Sekizawa Naoyuki Akikusa Takesi Maruyama Masuo Tanaka Keizo Fukagawa Executive ...

  • Page 47
    ...Japan Stock Exchange Listings Japan: Tokyo, Osaka, Nagoya Overseas: Frankfurt, London, Zurich, Basel, Geneva Shareholder Information Europe Subsidiaries ICL PLC Fujitsu Computers (Europe) Ltd. Fujitsu Europe Limited Fujitsu Microelectronics Limited Fujitsu Telecommunications Europe Limited Fujitsu...

  • Page 48
    ∞ FUJITSU LIMITED 6-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8211, Japan Phone: +81-3-3213-4160 Fax: +81-3-3216-9365 Fujitsu's Home Page on the Internet URL: http://www.fujitsu.co.jp/ ©1998 FUJITSU LIMITED Printed in Japan BA0010-2M This entire report is printed on recycled paper.