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ON
TRACK
FOR
GREATER
GROWTH
FUJITSU LIMITED ANNUAL REPORT
2008

Table of contents

  • Page 1
    On Track fOr GreaTer GrOwTh FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 2
    ... facilitate management innovation and promote a unified direction for the Group as we expand our global business activities. As outlined below, the Fujitsu Way consists of four core elements-the Corporate Vision, Corporate Values, Principles, and Code of Conduct. The Corporate Vision embodies the...

  • Page 3
    ... ourselves, while delivering added value to our customers. n We provide global environmental solutions in all our business areas. n Fujitsu Group companies work together to accelerate our global business expansion. SharehOLderS and InVeSTOrS We seek to continuously increase our corporate value. We...

  • Page 4
    ... limitation, the following factors: general economic and market conditions in key markets (particularly in Japan, North America, europe and Asia, including China); rapid changes in the high-technology market (particularly semiconductors, PCs, etc.); fluctuations in exchange rates or interest rates...

  • Page 5
    ... 31) Net sales (left scale) overseas sales ratio (right scale) 1,500,000 0.64 0.5 3 2 0 0 2004 2005 2006 2007 2008 (As of March 31) Total assets (left scale) Monthly inventory turnover rate (right scale) 0.0 0 2004 2005 2006 2007 2008 (Years ended March 31) FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 6
    ... the business structure of our Group companies, thereby accelerating global business expansion. We stand committed to meeting the expectations of Fujitsu's shareholders and other investors by continuously raising corporate value through stable profit expansion and growth as we work to achieve...

  • Page 7
    a MeSSaGe frOM ManaGeMenT 005 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 8
    ... shareholders, business partners and the employees that make our business operations possible. Guiding this vision is an enduring commitment to managing from a customer-centric perspective, and on that basis, new initiatives that will focus our activities on improving the customer's business, global...

  • Page 9
    ... the strengths and weaknesses of the services business, which, as you know, is one of fujitsu's profit engines. I also have substantial work experience at sites outside Japan. I will rely on this outlook and experience in managing the fujitsu Group growth strategies going forward. I began my career...

  • Page 10
    ..., as did sales of PCs, mobile phones, and advanced technology logic products. outside Japan, in addition to contributions from acquisitions designed to increase the scale of our services business, we recorded healthy sales of UNIX servers, optical transmission systems, and PCs and mobile phones. As...

  • Page 11
    ... income margin Consolidated Technology Solutions Ratio of sales outside Japan Monthly inventory turnover 3.6% 5.2% 35.8% 0.93 times 3.8% 5.5% 36.1% 1.03 times* Over 5% Over 7% Over 40% 2 times* *Set as medium- to long-term target level (Years ended March 31) FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 12
    ..."Business Architects," who are skilled in identifying customers' critical requirements with respect to upstream system construction processes. of course, these new human resources alone cannot change our entire approach. So we launched an initiative to have all sales and system engineering personnel...

  • Page 13
    ...Ratio of sales outside Japan (%) neT SaLeS OuTSIde JaPan BY reGIOn and BuSIneSS IT MARKeT GRoWTH 2007-2010 Japan Services Software Servers PCs IT Market Total The Americas eMeA China APAC Worldwide to develop Fujitsu's business globally. In the Americas, US-based Fujitsu Network Communications has...

  • Page 14
    ... we announced as part of the Fujitsu Group environmental Protection Program (Stage V), which got under way from fiscal 2007. In December 2007, we unveiled our "Green Policy Innovation" initiative, a new set of measures that will leverage IT to help prevent global warming. The key thrusts of the...

  • Page 15
    ... March 31) Q.10 what is fujitsu's policy on returning profits to shareholders? a.10 Since business profitability has stabilized, we raised the year-end dividend to ¥5 per share in fiscal 2007. we plan to raise our annual dividend again in fiscal 2008. our basic policy on dividends is to offer...

  • Page 16
    ... a Fujitsu Group that further earns the trust of its shareholders, investors, customers and business partners, and whose contribution is felt both globally and in the local communities in which we operate. I also desire Fujitsu to be a company where our employees will find it rewarding to work and...

  • Page 17
    015 feaTure: On Track fOr GreaTer GrOwTh feaTure 1: BuILdInG On Our STrenGThS -fuJITSu'S OuTSOurcInG BuSIneSS feaTure 2: acceLeraTInG GLOBaL exPanSIOn -InITIaTIVeS BY reGIOn On Track fOr GreaTer GrOwTh FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 18
    ... growth Operating Income: Operating income margin over 10% 600 400 200 0 600.0 380.0 415.0 460.0 510.0 Outsourcing Business Domains Data centers on-site (LCM) Support desks Networks APM BPo 2005 2006 2007 2008 2009 (Target) 2010 (Target) (Years ended March 31) SaLeS Of fuJITSu SerVIceS...

  • Page 19
    ... the main outsourcing services available from Fujitsu's full-service menu. Business Process Outsourcing (BPO) Fujitsu manages a variety of common customer business processes in whole or in part, including human resources, accounting, purchasing, and contact centers. Application Portfolio Management...

  • Page 20
    ... equipped with more advanced security measures, such as cutting-edge palm vein ID and RFID technology. At the start of 2008, Fujitsu began globally expanding its base for meeting customer needs, particularly in Asia, with the opening of data centers in Thailand and South Korea. In Japan, plans going...

  • Page 21
    ... Business deals in fiscal 2007 • Start of four-year contract for operation and maintenance of mission-critical systems for Honda Motor (Japan) • Construction of shared disaster backup system for the Hokuhoku Financial Group (Japan) • Outsourcing contract signed with prominent home appliance...

  • Page 22
    ... data centers, this trend is set to spur increasing demand for business process outsourcing with respect to certain or all business operations. n Initiatives Going forward We will take aggressive steps to expand business in Japan, especially in the server and services markets. Where System Products...

  • Page 23
    feaTure 2: acceLeraTInG GLOBaL exPanSIOn 021 IT MarkeT fOrecaSTS (JaPan) (Billions of Dollars) 120 90 60 30 0 2007 2008 2009 2010 2011 108.7 111.2 113.5 115.4 116.4 Share Of 2007 IT SerVIceS MarkeT SaLeS In JaPan (reVenue BaSIS) Fujitsu 13.4% Company A 9.6% Company B 9.6% Company C 9.3% (Source...

  • Page 24
    ... solutions provider for our customers. Specifically, this transformation will entail expanding sales of the servers and other system products for which Fujitsu is well-known, coupled with the promotion of a bigger, more robust infrastructure services business, such as data centers and outsourcing...

  • Page 25
    ...) nexT-GeneraTIOn SOneT MarkeT Share In nOrTh aMerIca (reVenue BaSIS) Fujitsu 800 600 400 200 0 2007 2008 2009 2010 2011 Company A 22.0% Company B 17.0% Company C 16.0% (Source: IDC's Worldwide IT Spending Patterns: The Worldwide Black Book Q1 2008) (AMeRICAS: North and South America) 552.9 581...

  • Page 26
    ... added value. Promoting greater utilization of Fujitsu Siemens Computers' system products, moreover, will enable Fujitsu Services to avoid simple cost competition in the services that it offers, while retaining sales volume. In the communications field, where we operate mainly through UK subsidiary...

  • Page 27
    ...a complex, global infrastructure, while saving Reuters over 20% in operational costs. The solution will be supported by Fujitsu's multilingual service desks in Lisbon and Kuala Lumpur, with data center services provided from Singapore, the UK and the US, so users can gain access to services wherever...

  • Page 28
    ... solutions for optimizing IT infrastructure. In the ASeAN region, in addition to supplying servers and other products, our focus will be on IT infrastructure services, data centers, operations support and other outsourcing business. In oceania, we plan to leverage our well-developed service menu...

  • Page 29
    ...April 2008) (China: Including Hong Kong) heLPInG TO deVeLOP The wOrLd'S LarGeST IP neTwOrk uSInG SuBMarIne caBLe SYSTeMS -reliance Globalcom- Reliance Globalcom (formerly FLAG Telecom) provides a full line of telecommunications services in Asia. Affiliated with India's largest business conglomerate...

  • Page 30
    028 BuSIneSS OVerVIew Years ended March 31 Technology Solutions BreakdOwn Of neT SaLeS* neT SaLeS** (Billions of Yen) 4,000 3,157.0 3,272.2 3,000 2,928.3 2,934.4 2,983.9 56.6% Control room of the Fujitsu Tatebayashi System Center, Japan's largest outsourcing center GS21 series mainframes 2,000 ...

  • Page 31
    .../ OPeraTInG IncOMe MarGIn (Billions of Yen) 60 52.5 MAIN COMPANIES Shimane Fujitsu Limited Fujitsu Mobile-phone Products Limited Fujitsu Isotec Limited Fujitsu Personal System Limited Fujitsu (Thailand) Co., Ltd. Fujitsu Computer Products Corporation of the Philippines Fujitsu Computer Products of...

  • Page 32
    ... standard for open systems computing with fastest, most reliable Solaris/ SPARC servers June 1, 2007 Fujitsu Brazil opens South America's first Platform Solution Center June 27, 2007 Fujitsu Services awarded Government ICT Shared Services Framework JuLY 3, 2007 Fujitsu Network Communications chosen...

  • Page 33
    ... Consulting acquires geo-data specialist and IT consulting firm Intelec Geomatics of Canada March 3, 2008 Fujitsu's compact mobile WiMAX base station selected by UQ Communications March 5, 2008 Fujitsu supports capacity upgrade between Asia and europe with SeA-Me-We 4 aPrIL 7, 2008 Fujitsu signs...

  • Page 34
    032 OPeraTIOnaL reVIew and OuTLOOk Technology Solutions/System Platforms FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 35
    TechnOLOGY SOLuTIOnS/SYSTeM PLaTfOrMS 033 Fujitsu provides customers with advanced network equipment to support their IT infrastructure and advanced network systems, centered on high-performance, high-reliability servers fundamental to customers' critical systems. fIScaL 2007 PerfOrMance (Year-On...

  • Page 36
    ... the UK, along with changes in the network product mix and flagging sales of mobile phone base stations. *1 Total for optical transmission equipment, optical access devices, IP routers for carriers, switches, and mobile system infrastructure devices related to Fujitsu businesses. Market size based...

  • Page 37
    ... PRIMeQUeST mission-critical IA servers and our new line of SPARC enterprise UNIX servers developed in collaboration with Sun Microsystems, Inc. Fujitsu's promotion of these types of competitive products is accelerating global business expansion. With expansion in the market for data center services...

  • Page 38
    036 Technology Solutions/Services FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 39
    ... equipment. Centralized control at the center is conducted on a round-the-clock, year-round basis to support the stable operation of customers' information systems. c : fujitsu australia's data center control room The Australia Systems Center has been instrumental to Fujitsu's outsourcing services...

  • Page 40
    ... sector. By service type, in addition to system integration demand, customers are now relying more heavily on outsourcing. Accordingly, many firms opted to outsource system operations and non-core operations, such as data center-style outsourcing and business process outsourcing, during the...

  • Page 41
    ...meet growing data-center outsourcing demand in Japan, and will be compatible with newly emerging, highly integrated system and green IT needs. In line with the full-scale advancement of NGN, we will expand our SaaS business, whereby we leverage networks to offer a variety of application services. In...

  • Page 42
    040 Ubiquitous Product Solutions FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 43
    ...PrOducT SOLuTIOnS 041 Fujitsu's pursuit of manufacturing excellence, with an emphasis on speed and cost efficiency, enables it to offer the PCs, mobile phones and hard disk drives indispensable to a ubiquitous society. fIScaL 2007 PerfOrMance (Year-On-Year cOMParISOn) (Billions of Yen) Net Sales...

  • Page 44
    ... Shipments of 2.5-inch HDDs models for the mobile market rose 35.7% year on year to 164.45 million units, benefiting from a global increase in demand for notebook PCs. 2004 2005 2006 2007 2008 (Years ended March 31) PCs/Mobile Phones Hard Disk Drives * Including intersegment sales others OPeraTInG...

  • Page 45
    ... growth continues. The mobile market for 2.5-inch HDD products is projected to grow 25% to 270 million units, mainly due to growth in products for notebook PCs, joined by sales for use in digital home appliances, games consoles and other consumer products. GLOBaL Pc MarkeT fOrecaST (Millions of...

  • Page 46
    044 Device Solutions FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 47
    ... LSI chips and related electronic components are core technologies that we provide to customers inside and outside the Group as optimized solutions to help enhance the competitiveness of their products. fIScaL 2007 PerfOrMance (Year-On-Year cOMParISOn) (Billions of Yen) Net Sales Operating Income...

  • Page 48
    ...of advanced technology logic products based on 90nm process technology to the digital camera, mobile phone and server sectors grew. Coupled with the start of outsourced production of flash memory at semiconductor production facilities acquired from Spansion Japan Limited, sales in Japan increased 14...

  • Page 49
    ....5 58.2 47.3 49.6 2006 2007 2008 2009 2010 US europe Japan Asia-Pacific (Source: World Semiconductor Trade Statistics (WSTS)) nInitiatives Going Forward on March 21, 2008, Fujitsu reorganized its LSI business into a new subsidiary to form Fujitsu Microelectronics Limited. This move put in place...

  • Page 50
    ...emergence of a rewarding and secure networked society by consistently generating new value through innovation. The Group recognizes that intellectual property-as the end-result of our innovation-is a key corporate asset supporting our business activities. Accordingly, patents, copyrights, trademarks...

  • Page 51
    ... in technology for nextgeneration services, computer servers and networks, as well as the various electronic devices and materials which serve as building blocks for our products. This policy supports the overarching goals of creating new value for customers and achieving our Corporate Vision of...

  • Page 52
    ... laser technology, and the establishment of a start-up company to commercialize this technology. QD Laser was established as a joint venture between the corporate venture funds of Fujitsu and Mitsui Ventures. Integrated mobile WiMAXTM base station Broadone WX300 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 53
    ... the fujitsu Group The company is developing synergies in its R&D operations, to support the development of next-generation technologies which can be used in a number of separate core business segments. (3) next-generation terminals and services Cross-pollination between computers and mobile phones...

  • Page 54
    ...property is part of the Code of Conduct in the Fujitsu Way, which articulates the philosophy of the Fujitsu Group and the core values and principles guiding the actions of each of its employees. Accordingly, every employee recognizes intellectual property as a key corporate asset supporting business...

  • Page 55
    ... allows all our engineers to utilize the ATMS/IR system* to efficiently and effectively research patents held by other companies. * An ASP-based service which searches laid-open patent applications and prosecution history data provided by the Japan Patent Office. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 56
    ... environmental and social contributions. FUJITSU LIMITED ANNUAL REPORT 2008 enVIrOnMenTaL cOncePT "Green POLIcY 21" Green Policy Factories Pursuit of eco-friendly manufacturing we Make eVerY acTIVITY Green Green Policy Solutions Deploying IT to help realize a recyclingminded society GREEN POLICY...

  • Page 57
    ... Protocol left off. Atsuhisa Takahashi President, corporate environmental affairs unit fujitsu's role as a Global IT company In this context, we formulated "Green Policy 2020," a mediumterm environmental vision that will see the Fujitsu Group do its part to make a prosperous society that generates...

  • Page 58
    ... to customers Fujitsu green It Reducing burden through IT applications Reducing burden of IT infrastructure solutions Software/services (outsourcing, consulting, etc.) utilization of Zero cO2 emitting watergreen Power Fujitsu Microelectronics Europe GmbH has signed an agreement with Stadtwerke...

  • Page 59
    ... Project," with Fujitsu Microelectronics Asia receiving a citation from the government alongside the school as its corporate partner. Presentation ceremony at University of California, San Diego Students and teachers posing in front of an eco-cistern system FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 60
    ... Megumi Yamamuro (Professor, University of Tokyo Graduate Schools for Law and Politics) Ichiro Komura Tetsuo Urano Terumi Chikama Makoto Matsubara Jirou Sugawara Masami Yamamoto Tsuneaki Ohara Kiyonobu Ishida Hirokazu Uejima Tsuneo Kawatsuma Masaaki Hamaba FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 61
    ... Director Fuji Electric Holdings Co., Ltd. Haruki Okada Naoyuki Akikusa Senior executive advisor * Concurrently serve as corporate executive officers corporate Vice Presidents...Kobayashi Keiko Nakayama Makoto Umemura Norihiko Taniguchi Chikafumi Urakawa FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 62
    ... 3. Corporate Attributes Listed Exchanges and Sections: End of Fiscal Year: Industry: Number of Employees (consolidated): Annual Sales (consolidated): Parent Company: Number of Consolidated Subsidiaries: Tokyo, 1st Section; Osaka, 1st Section; Nagoya, 1st Section March 31 Electrical Appliances Over...

  • Page 63
    ...executive advisor to Fujitsu serves as a Director of Fuji Electric Holdings. Fujitsu has business dealings with the Fuji Electric Group. Because he has a high level of expertise in business administration. Because he has extensive knowledge of Fujitsu's business. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 64
    ... officer of the subject company or other designated interested party g: Receives compensation or other material benefit as senior executive of parent company or subsidiary of the subject company h : Has limited liability contract with subject company i : Other FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 65
    ... Status of Incentive Policies for Members of the Board: Introduced bonus system linked to the performance of the company, and introduced stock option plan. Supplemental Explanation To achieve clear management accountability, with respect to compensation paid to members of the board, we utilize...

  • Page 66
    ... 31, 2008) has been established to serve as an internal audit group. This division audits the internal affairs of the company and its affiliates, proposes improvements in their business practices, and regularly reports its audit findings to the Management Council. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 67
    ... Investor Relations Division. In addition to the above, along with posting materials from presentations made to institutional investors and securities analysts on our website, we broadcast streaming audio of these presentations. FUJITSU LIMITED ANNUAL REPORT 2008 Regular Presentations to Analysts...

  • Page 68
    ...the guide for the actions of the Group and its employees, is to bring about a prosperous future that fulfills the dreams of people throughout the world. As part of our Values, we strive to meet the expectations of all stakeholders, including customers, shareholders, investors, business partners, and...

  • Page 69
    ... Report Report corporate Internal audit division Audit Audit FUJITSU Way • FUJITSU Way Promotion Council • Risk Management Committee • Compliance Committee • Environmental Committee Instruction/direction Audit Supervision corporate executive Officers Business Group/Group Companies...

  • Page 70
    ... management promotes continuous improvement of internal control systems and reform of business processes. g. By having senior management and other business execution organs provide monthly financial reports and business operation reports, the Board of Directors observes and oversees the status of...

  • Page 71
    ... business a. Using the Fujitsu Way as a foundation, in order to continuously increase the value of the Fujitsu Group, Fujitsu will provide direction and support to senior management of each Group company for setting up efficient, law-abiding and appropriate business execution systems as detailed...

  • Page 72
    ... more robust operational execution structure by reviewing and revising its regulations and business operations. In addition, Fujitsu has established the Fujitsu Way, consisting of a Corporate Vision, Corporate Values, Principles, and Code of Conduct, which guides the Group and its employees in their...

  • Page 73
    ... first priority on corporate value and shareholder profits, we will pay careful attention to social trends and changes in the environment and continuously consider the possible need for protective measures. 2. Other Provisions Relating to Corporate Governance - FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 74
    ... Examples of such risks are listed below. 1) Economic Trends in Key Markets The Fujitsu Group provides IT products and services, telecommunications infrastructure equipment, as well as semiconductors, hard disk drives (HDDs) and other components, to corporate and institutional clients and consumers...

  • Page 75
    ... of PCs, digital home electronics, mobile phones, automobiles and other products in which these parts are used. Accordingly, soft demand and falling prices for customers' products, or a decline in customers' market share, could negatively impact Group sales and earnings. Alongside corporate clients...

  • Page 76
    ...defective products, opportunity losses, repair costs, and disposal costs for defective goods, plus the potential obligation to pay damages to customers. 2) Collaborations, Alliances and Technology Licensing To enhance competitiveness, the Fujitsu Group works with a large number of companies through...

  • Page 77
    ... on human resources. As such, a major issue for the Group is the ability to recruit and foster talented technical experts, system engineers, managers and other key personnel; the inability to do so could negatively impact the Group's growth and profitability. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 78
    ... affect the Group's earnings. 7) Information Management In order to safeguard the personal and confidential information of customers and business partners, the Group has taken such measures as establishing strict regulations, instituting training programs for employees, and providing consultation...

  • Page 79
    ... oF opeRatIons 088 consolIDateD Balance sheets 090 consolIDateD statements oF opeRatIons 091 consolIDateD statements oF changes In net assets 092 consolIDateD statements oF cash FloWs 093 notes to consolIDateD FInancIal statements 126 InDepenDent auDItoRs' RepoRt FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 80
    ... R&D expenses Capital expenditure Number of employees Net sales by business segment (excluding intersegment sales): Technology Solutions Ubiquitous Product Solutions Device Solutions Other Operations Total Net sales by customers' geographic location: Japan EMEA The Americas APAC & China Total 24...

  • Page 81
    ...technology logic devices were sluggish, sales in the Services business were strong, benefiting from increased sales of systems integration services, particularly to the financial services sector, as well as outsourcing services. Moreover, sales of PCs, mobile phones, and 90nm advanced logic products...

  • Page 82
    ... increase in the number of companies subject to consolidated corporate taxation and higher profits from core business operations. (%) 10 8 6 4 2 0 2004 2005 2006 2007 2008 (Years ended March 31) Operating Income (Left Scale) Operating Income Margin (Right Scale) FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 83
    ... services in Oceania. In Canada, meanwhile, we acquired two companies-a provider of business process optimization services and a provider of IT consulting and solutions. In Japan, we reinforced the service delivery capabilities of our remote data centers, which meet the security needs of customers...

  • Page 84
    ...the parent company's mobile phone production management division and customer service center with the manufacturing and maintenance divisions of several subsidiaries, including Fujitsu Wireless Systems Limited, a wholly owned company. By strengthening the Fujitsu Group's mobile phone production and...

  • Page 85
    ... increase. Japan In Japan, the Fujitsu Group reported sales of ¥4,229.7 billion (US$42,297 million), up 3.7% from fiscal 2006. Lower sales of mobile phone base stations and other products were outweighed by higher sales of services, PCs, and mobile phones. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 86
    ... March 31 2007 2008 3. Capital Resources and Liquidity (Â¥ Billions) Increase Rate (%) Improvement in Financial Condition In fiscal 2007, the Fujitsu Group continued to improve the soundness of its financial position, including by bolstering the profitability of its core businesses and boosting...

  • Page 87
    ... 2008 (As of March 31) Owners' Equity: net assets less minority interests Owners' Equity (Left Scale) Owners' Equity Ratio (Right Scale) free caSh fLOw (Â¥ Billions) 400 371.4 300 200 100 38.1 262.1 170.8 257.6 0 2004 2005 2006 2007 2008 (Years ended March 31) FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 88
    ... of 393. The increase in new companies in the Group primarily reflected M&A activity by UK subsidiary Fujitsu Services Holdings PLC as well as the establishment of new companies due to the spin-off of LSI and other business divisions. The number of affiliated companies accounted for by the equity...

  • Page 89
    ... straight-line method over employees' average remaining service period. Furthermore, revisions to accounting standards in countries where overseas subsidiaries are located and in Japan could potentially impact the Company's retirement benefit costs and obligations, as well as net assets. Marketable...

  • Page 90
    ... to and for the year ended March 31, 2007. The item is separately presented at March 31, 2008 in accordance with the early adoption of accounting standards for leases in Japan. The amounts in the consolidated balance sheets at March 31, 2007 have been reclassified. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 91
    ... current portion of long-term debt (Note 8) ¥ 226,250 Lease obligation (Note 14) 39,059 Payables, trade (Notes 15 and 19) 824,825 Accrued expenses (Note 19) 390,888 Customers' advances 76,407 Accrued income taxes 32,821 Provision for product warranties 16,922 Others (Notes 10 and 19) 200,393 Total...

  • Page 92
    ... STaTeMenTS Of OPeraTIOnS Fujitsu Limited and Consolidated Subsidiaries Years ended March 31 2006 2007 Yen (millions) 2008 U.S. Dollars (thousands) (Note 2) 2008 Net sales Operating costs and expenses: Cost of sales Selling, general and administrative expenses (Note 17) Operating income Other...

  • Page 93
    ...as a result of changes in accounting principles and practices in UK subsidiaries Increase as a result of business acquisition Purchase of treasury stock Sales of treasury stock Decrease as a result of deconsolidation of consolidated subsidiaries Others Net increase (decrease) during the term, except...

  • Page 94
    ...Limited wholly owned subsidiaries. The purchased treasury stock was exchanged for shares in these companies. Fujitsu Devices Inc. changed its corporate name to Fujitsu Electronics Inc. in October 2007. The details of the exchange of shares are set forth in Note 22. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 95
    ... 31, 2006, Fujitsu Services Holdings PLC, a UK subsidiary, and its consolidated subsidiaries (together, "FS") have voluntarily adopted IFRS in line with listed companies in the EU. Prior to the adoption of IFRS, FS had been applying the accounting principles and practices generally accepted in the...

  • Page 96
    ... recognition Revenue from sales of IT systems and products excluding customized software under development contracts (the "customized software") is recognized upon acceptance by the customers, whereas, revenue from sales of personal computers, other equipment and electronic devices is recognized...

  • Page 97
    .... Other intangible assets are amortized by the straight-line method at the rates based on the estimated useful lives of the respective assets. (j) Leases Assets acquired by lessees in finance lease transactions are recorded in the corresponding asset accounts. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 98
    ... PCs sold. (o) Income taxes The Group has adopted the asset and liability method of tax effect accounting in order to recognize income tax effect of all temporary differences in the recognition of assets and liabilities for tax and financial reporting purposes. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 99
    ...Net unrealized gain Available-for-sale securities Acquisition costs Carrying value (Market value) Net unrealized gain ¥ ¥ 599 607 8 ¥ ¥ 294 295 1 $ $ 2,940 2,950 10 ¥ 90,448 298,673 ¥208,225 ¥ 71,895 222,767 ¥150,872 $ 718,950 2,227,670 $1,508,720 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 100
    ...Spansion Inc. Net income (loss) for the year ended March 31, 2008 improved mainly due to the deconsolidation of Spansion Inc. in November 2006 and Japan Cablenet Holdings Limited in April 2007 and the increase in income of Fujitsu Siemens Computers (Holdings) B.V. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 101
    ... 31, 2007 and 2008, JECC's issued share capital was ¥65,700 million ($657,000 thousand). Its net sales for the years ended March 31, 2006, 2007 and 2008 amounted to ¥299,993 million, ¥298,591 million and ¥299,817 million ($2,998,170 thousand), respectively. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 102
    ... Property, Plant and Equipment Changes in property, plant and equipment, net of accumulated depreciation resulted from the following: Yen (millions) 2008 U.S. Dollars (thousands) 2008 Years...,829) ¥ 23,586 $ 313,320 1,742,070 7,400 (3,840) (1,808,290) $ 235,860 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 103
    ... average interest rate of 1.93% at March 31, 2007: due 2008 to 2020 with the weighted average interest rate of 1.80% at March 31, 2008: Secured Unsecured Total long-term borrowings 262 75,119 ¥ 75,381 ¥ 62 48,148 ¥ 48,210 ¥ $ 620 481,480 $ 482,100 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 104
    ... convertible bonds due 2011 [ ] represents interest rates if the volume-weighted average share price of 10 consecutive days is below ¥900, and the bonds are matured before May 18, 2011. On and after May 28, 2009 1.60% 0.00% [3.00%] 1.60% 0.00% [1.75%] FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 105
    ... 900 100,000 - 100 2009/5/28- 2010/5/24 Unsecured convertible bonds due 2011 2007/8/31 Common Stock Zero 900 100,000 - 100 2009/5/28- 2011/5/24 Date issued Stock to be issued Issue price of subscription rights to shares Conversion price of the bonds (Yen) Total issue price (Million Yen) Total issue...

  • Page 106
    ... system was revised. The majority of the consolidated subsidiaries outside Japan have defined benefit plans and/or defined contribution plans covering substantially all their employees. The major defined benefit pension plan provided outside Japan is the plan that Fujitsu Services Holdings PLC...

  • Page 107
    ... system revisions, Fujitsu Corporate Pension Fund in which the Company and certain consolidated subsidiaries participate, reported unrecognized prior service cost (reduced obligation) at September 1, 2005. Components of net periodic benefit cost Yen (millions) 2008 U.S. Dollars (thousands) 2008...

  • Page 108
    ... 31, 2006, Fujitsu Telecommunications Europe Limited, a consolidated subsidiary in the UK, recognized the full value of the unrecognized obligation immediately as accrued retirement benefits, in accordance with a new UK accounting standard for retirement benefits (Financial Reporting Standard 17...

  • Page 109
    ... outside Japan to third-party organizations. The assumptions used in accounting for the plans At March 31 2007 2008 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Mainly 5.5% Mainly 7.0% Straight-line method over the employees' average remaining service...

  • Page 110
    ... Provision for product warranties Intercompany profit on inventories and property, plant and equipment Other Gross deferred tax assets Less: Valuation allowance Total deferred tax assets Deferred tax liabilities: Gains from establishment of stock holding trust for retirement benefit plan Unrealized...

  • Page 111
    ...that would increase market risks. Furthermore, the counterparties to the derivative transactions are thoroughly assessed in terms of their credit risks. Therefore, the Group believes that its derivative financial instruments entail minimal market and credit risks. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 112
    ... currencies/pay Pound Sterling Total ¥58,183 6,648 10,178 1,782 ¥31,511 4,227 6,820 - ¥7,800 1,507 1,858 1,759 ¥(2,516) 739 (249) (8) 3,020 3,020 4,715 4,931 21,029 10,716 13 (9) (55) (191) (57) 736 174 (33) (191) (57) 736 174 ¥(1,414) FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 113
    ... of the currency exchange rate. 3. Option premiums are disclosed in brackets< >, and corresponding fair value and gains and losses are disclosed in the same line. 4. Derivative transactions which qualify for hedge accounting are excluded from the above table. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 114
    ... practices in the UK, at March 31, 2008, the Company disclosed the consolidated future lease payments. The amounts at March 31, 2007 have not been restated. Due to this change, the consolidated future minimum lease payments (required under non-cancellable operating leases) increased by ¥55,367...

  • Page 115
    ... Diluted weighted average number of shares 2,067,787 208,159 2,275,946 2,067,369 208,159 2,275,528 2,060,704 430,382 2,491,086 Yen U.S. Dollars Basic earnings per share Diluted earnings per share ¥32.83 29.54 ¥49.54 44.95 ¥23.34 19.54 $0.233 0.195 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 116
    ... relating to allocation of new shares of a subsidiary (NIFTY Corporation) to third parties. Gain on change in interest for the year ended March 31, 2008 referred mainly to listing of and capital increase in Chinese affiliate (Nantong Fujitsu Microelectronics Co., Ltd.) FUJITSU LIMITED ANNUAL REPORT...

  • Page 117
    ... for the optical transmission systems business, primarily as a result of delays in business performance recovery due to rapid changes in the business environment in North America and Japan, and recognized an impairment loss on asset groups not used in business. FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 118
    ... obligation for retirement benefits refers mainly to amortization of actuarial loss in Japan, prior service cost in Japan, which resulted from pension system revisions, and net obligation at transition for the consolidated subsidiaries in Japan. For the year ended March 31, 2008, the Company and its...

  • Page 119
    ...Business Segment Information Yen (millions) Technology Solutions Ubiquitous Product Solutions Device Solutions Other Operations Elimination & Corporate Years ended March 31 Consolidated 2006 Sales Unaffiliated customers Intersegment Total sales Operating...312,233 FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 120
    ... information systems), system support (information system and network maintenance and monitoring services), information system and network construction, custom terminal installation (ATMs, POS systems, etc.) (2) Ubiquitous Product Solutions...Personal computers, mobile phones, HDD (hard disk drives...

  • Page 121
    ... & Corporate Consolidated 2006 Sales Unaffiliated customers Intersegment Total sales Operating costs and expenses Operating income (loss) Total assets 2007 Sales Unaffiliated customers Intersegment Total sales Operating costs and expenses Operating income (loss) Total assets 2008 Sales Unaffiliated...

  • Page 122
    ... than Japan are as follows: (1) EMEA (Europe, Middle East and Africa) ...U.K., Spain, Germany, Finland, the Netherlands (2) The Americas ...U.S.A., Canada (3) APAC & China (APAC = Asia-Pacific) ...Australia, Thailand, Vietnam, the Philippines, Singapore, Korea, Taiwan, China 3. Unallocated operating...

  • Page 123
    ... and Exchange Law of Japan. For the years ended March 31, 2007 and 2008, the Company entered into the following transactions with its related party: Related party: Fujitsu Leasing Co., Ltd.; Common stock-Â¥1,000 million ($10,000 thousand) Its business: leasing and sales of IT equipment and...

  • Page 124
    ...100 21. Share-based Payment Plans The stock option activity is as follows:

  • Page 125
    ... of Business of the Companies Combined, Legal Framework 1) Names and Lines of Business of Companies Combined (i) Names of companies combined: Fujitsu Limited and its subsidiaries Fujitsu Access Limited, Fujitsu Devices Inc. and Fujitsu Wireless Systems Limited FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 126
    ... the exchange ratios For each common share of the companies, the number of Fujitsu Limited shares allocated and distributed was as follows: • Fujitsu Access Limited 0.86 share • Fujitsu Devices Inc. 2.70 shares • Fujitsu Wireless Systems Limited 13.36 shares FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 127
    ... and timely management decision-making. As part of the company split, a number of LSI subsidiaries and affiliates, including subsidiary Fujitsu Electronics Inc., will become subsidiaries of Fujitsu Microelectronics Limited. 2. Summary of the Accounting Treatment of the Transactions In accordance...

  • Page 128
    126 IndePendenT audITOrS' rePOrT FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 129
    ... review of the development and performance of the business and the position of Fujitsu Limited and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. Kuniaki Nozoe FUJITSU LIMITED ANNUAL REPORT 2008

  • Page 130
    ... Fujitsu Europe Limited Fujitsu Services Holdings PLC APAC• China unlisted Fujitsu Taiwan Ltd. Fujitsu Asia Pte. Ltd. Fujitsu Australia Limited Fujitsu Computer Products Corporation of the Philippines Fujitsu Microelectronics Asia Pte. Ltd. Fujitsu (Thailand) Co., Ltd. Capital: Common Stock...

  • Page 131
    ... above list of principal shareholders. The details of the change in shareholding report are as follows: number of shares held (thousands) Percentage of total shares outstanding (%) Shareholder Shareholder Barclays Global Investors, N.A. Barclays Global Investors Japan Limited Barclays Global Fund...

  • Page 132
    ... in order to help preserve forestry resources. • It uses vegetable oil inks that do not include volatile organic compounds. FUJITSU LIMITED Shiodome City Center, 1-5-2 Higashi-Shimbashi Minato-ku, Tokyo 105-7123, JAPAN Tel. +81-3-6252-2220 www.fujitsu.com ©2008 Fujitsu Limited Printed in Japan...