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NEW Horizons,
NEW Growth
ANNUAL REPORT 2010
FUJITSU LIMITED

Table of contents

  • Page 1
    New Horizons, New Growth ANNUAL REPORT 2010 FUJITSU LIMITED

  • Page 2
    FUJITSU LIMITED Annual Report 2010 Shaping Your Every Day Making Life More Comfortable and Convenient 7 : 00 am New york To page 034 Technology Solutions/ System Platforms

  • Page 3
    FUJITSU LIMITED Annual Report 2010 001 11 : 10 am Tokyo 8 : 00 am LoNdoN A check-up at the hospital Electronic medical record systems replace paper-based systems for recording vital patient data, such as medical diagnosis and prescriptions. Beyond systems, Fujitsu is working to build electronic ...

  • Page 4
    002 FUJITSU LIMITED Annual Report 2010 Shaping Your Every Day Making Life More Comfortable and Convenient 1 : 00 pm LoNdoN To page 030 Technology Solutions/Services

  • Page 5
    ... water services sector. From management of water meter reading, billing, and other water utility fees to quality management for water mains, Fujitsu's information communication technology plays a vital role in supplying the public with safe, clean water. A platform for the future The Fujitsu Group...

  • Page 6
    004 FUJITSU LIMITED Annual Report 2010 Shaping Your Every Day Making Life More Comfortable and Convenient 3 : 00 pm Tokyo To page 038 Ubiquitous Product Solutions

  • Page 7
    FUJITSU LIMITED Annual Report 2010 005 5 : 00 pm wASHINgToN d.C. A safe trip home Fujitsu's Intelligent Transport Systems help make your driving experience a safer one by constantly assessing road conditions and warning you of dangers. For example, the system sounds an alarm when it senses that ...

  • Page 8
    006 FUJITSU LIMITED Annual Report 2010 To page 042 Device Solutions Shaping Your Every Day 7 : 00 pm HoNg koNg Making Life More Comfortable and Convenient

  • Page 9
    ...LIMITED Annual Report 2010 007 8 : 30 pm oSAkA ICT on night watch At night, Fujitsu solutions provide computerized control of the host of electrical, air conditioning, disaster prevention and other types of equipment found in offices, government buildings, schools and factories. Even after people...

  • Page 10
    008 FUJITSU LIMITED Annual Report 2010 fujitsu's Pledge to Customers: Significance of Brand Promise A brand promise expresses the value a company delivers to its customers. The Fujitsu Group's new brand promise, "shaping tomorrow with you," articulates the importance Fujitsu places on working ...

  • Page 11
    ...key markets (particularly in Japan, North America, Europe and Asia, including China); rapid changes in the high-technology market (particularly semiconductors, PCs, mobile phones, etc.); fluctuations in exchange rates or interest rates; fluctuations in capital markets; intensifying price competition...

  • Page 12
    ...US$1, which was the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2010. PoINT 1 PoINT 2 In fiscal 2009, ending March 31, 2010, operating income rose ¥25.6 billion year on year, to ¥94.3 billion. Lackluster ICT investment, mainly in Japan and Europe, was offset by structural...

  • Page 13
    FUJITSU LIMITED Annual Report 2010 011 (Years ended March 31) (Years ended March 31) Yen (millions) 2010 Year-on-Year Change (%) 2010/2009 U.S. Dollars (thousands) 2010 Net Sales and Ratio of Sales Outside Japan (Â¥ Billions) 6,000 5,100.1 4,791.4 5,330.8 4,692.9 Operating Income and ...

  • Page 14
    ... and transportation. In this way, Fujitsu is working resolutely towards a "Human Centric Intelligent Society," where everyone has access to sophisticated services that are supported by a complex but invisible infrastructure. In June 2010, Fujitsu celebrated its 75th year in business. Under a new...

  • Page 15
    FUJITSU LIMITED Annual Report 2010 013 A Message From Management Left: Michiyoshi Mazuka Chairman Right: Masami Yamamoto President

  • Page 16
    014 FUJITSU LIMITED Annual Report 2010 A Conversation with the President Fujitsu's fundamental stance, and one of its strengths, is our commitment to working from the customers' viewpoint to resolve the issues they face, thereby building solid relationships of trust. As the cloud computing era ...

  • Page 17
    FUJITSU LIMITED Annual Report 2010 015 A Conversation With the President Aspirations as fujitsu's New President Over my career, I have consistently been involved with businesses on the cutting edge of innovation. I plan to make the most of my experiences to craft business models that are based ...

  • Page 18
    ... a user's own PC or a server on a company's in-house network. Toward an Era of Human Centric ICT Practical Wisdom Creating Knowledge, Supporting Human Activities Human Centric Wealth of Services Transforming Business Processes Scope of ICT Usage Network Centric Improving Productivity Computer...

  • Page 19
    FUJITSU LIMITED Annual Report 2010 017 Q.2 A.2 *1 Vertically integrated business model: A business model in which Fujitsu serves as a one-stop provider of hardware, software, and services solutions. Please discuss Fujitsu's new executive management structure. A Conversation With the President We...

  • Page 20
    018 FUJITSU LIMITED Annual Report 2010 A Conversation with the President * fab-lite: A semiconductor business model in which a company minimizes its own production scale, with the bulk of production outsourced to external foundries. This configuration allows for a greater degree of management ...

  • Page 21
    ...With the President Fujitsu is determined to contribute to society by realizing our long-term vision of a "Human Centric Intelligent Society." We will promote a three-part business strategy based on thinking about our customers' customers, globalization, and environmental sustainability. Fujitsu has...

  • Page 22
    ... relations with customers are what make this possible. The second is our locally based subsidiaries, many of which joined the Fujitsu Group through mergers and acquisitions, like Fujitsu Services in the UK and Fujitsu Technology Solutions in Germany. These have given Fujitsu an intimate knowledge...

  • Page 23
    ... ample reserves at given profit levels, we aim to increase the return of profits to shareholders, including through the repurchase of our shares. In fiscal 2009, operating income exceeded initial estimates despite the ICT services business having failed to meet targets for the year. Furthermore...

  • Page 24
    ...in software- and service-related areas. Adverse conditions also continue in the consumer sector-while PC sales volumes have risen for models compatible with the latest operating systems, there is a growing preference for low-priced products, and the replacement cycle for mobile phones has lengthened...

  • Page 25
    ...statements reflect predictions based on management's judgment and objectives, as well as conditions and assumptions, at the end of fiscal 2009 (March 31, 2010). As such, future results may differ materially from these projections. Kazuhiko Kato Corporate Executive Vice President and Chief Financial...

  • Page 26
    ... (2010-) UK/ Ireland Nordics Continental Europe Before European Realignment (Start of 2009) Continental Europe Services FS Fujitsu Services FTS Fujitsu Technology Solutions Products Fujitsu UK & Ireland Fujitsu Nordic Fujitsu Continental Europe, Middle East, Africa & India Two major European...

  • Page 27
    ... Telstra Corporation Limited, Australia's largest telecom carrier, thereby enabling Fujitsu to further strengthen its sales to the public sector as well as the SAP solutions business. This led to an outsourcing services contract with the airline Qantas. Fujitsu Technology Solutions (Holdings) B.V.

  • Page 28
    ... cloud-related technologies in Japan, along with a highly reliable shared cloud platform for expanding them globally, and will begin offering services in Japan in October 2010, followed by a phased roll-out to Australia, Singapore, the U.S., the UK, and Germany. Until now, Fujitsu's global business...

  • Page 29
    ... Annual Report 2010 027 Message From Richard Christou Currently, over 60% of the Fujitsu Group's sales are from Japan even though Japan accounts for only about 8% of the global ICT market. For Fujitsu to achieve growth over the medium- and long-term, it is imperative that we expand our business...

  • Page 30
    ... LIMITED Annual Report 2010 Business overview For the fiscal year ended March 31, 2010 Fujitsu delivers total solutions in the field of information and communication technology. Along with multifaceted services provision, our comprehensive business encompasses the development, manufacture, sales...

  • Page 31
    ... Corporation • PFU Limited • Fujitsu Network Communications, Inc. • Fujitsu Services Holdings PLC • Fujitsu Australia Limited • Fujitsu Asia Pte Ltd, others * Fujitsu Business Systems Ltd. will be renamed Fujitsu Marketing Limited on October 1, 2010. Fujitsu offers the PCs, mobile phones...

  • Page 32
    ...LIMITED Annual Report 2010 operational review and outlook Technology Solutions/Services Fujitsu provides solutions/system integration services that integrate ICT system consulting, design, application development and hardware installation, as well as infrastructure services centered on outsourcing...

  • Page 33
    031 Operational Review and Outlook Technology Solutions/Services

  • Page 34
    032 FUJITSU LIMITED Annual Report 2010 operational review and outlook Technology Solutions/Services 2009 Global Market Trends MArkeT TreNdS The value of Japan's IT services market in 2009 declined a significant 3.8% year on year to US$53.7 billion. The decline was due to delayed effects of the ...

  • Page 35
    ... regions, centering our efforts on North America and Australia. Infrastructure Services: In Japan, Fujitsu opened the new annex of the Fujitsu Tatebayashi System Center in November 2009. This state-of-the-art facility meets the highest industry standards in every respect, including high security and...

  • Page 36
    ... network products, Fujitsu holds a large market share for the optical transmission systems and mobile phone base stations used by mobile communications carriers in Japan, backed by its advanced technology and support capabilities. We also have the leading market share in the highly competitive North...

  • Page 37
    035 Operational Review and Outlook Technology Solutions/System Platforms

  • Page 38
    036 FUJITSU LIMITED Annual Report 2010 operational review and outlook Technology Solutions/System Platforms 2009 Global Market Trends MArkeT TreNdS System Products: In 2009, the server market in Japan contracted 18.8% year on year to US$5.6 billion. Cutbacks in corporate IT investment ...

  • Page 39
    ...DOCOMO in Japan, we will leverage our advantages in LTE base stations and alliances with other companies to offer total solutions and develop peripheral services, with an eye to achieving business expansion. (Years ended March 31) Operational Review and Outlook Technology Solutions/System Platforms...

  • Page 40
    038 FUJITSU LIMITED Annual Report 2010 operational review and outlook Ubiquitous Product Solutions Fujitsu offers the PCs, mobile phones and other products indispensable for a ubiquitous networked society. In PCs, we provide a full, global lineup of desktop and notebook PCs. In mobile phones, we ...

  • Page 41
    039 Operational Review and Outlook Ubiquitous Product Solutions

  • Page 42
    040 FUJITSU LIMITED Annual Report 2010 operational review and outlook Ubiquitous Product Solutions 2009 Global Market Trends MArkeT TreNdS Total PC shipments in Japan declined 4.2% year on year in 2009 to 13.86 million units. The corporate market contracted significantly as companies curtailed IT...

  • Page 43
    ... open button. We will also create new business fields with leading products for human centric computing. On June 17, 2010, Fujitsu and Toshiba Corporation reached a basic agreement to merge their mobile phone businesses. This agreement is scheduled to culminate in the establishment of a new company...

  • Page 44
    ... Annual Report 2010 operational review and outlook Device Solutions Fujitsu's lineup of device solutions comprises LSI devices and electronics components. Through the Group company Fujitsu Semiconductor Limited, we supply LSI devices used in digital consumer electronics, automobiles, mobile phones...

  • Page 45
    043 Operational Review and Outlook Device Solutions FUJITSU LIMITED Annual Report 2010

  • Page 46
    044 FUJITSU LIMITED Annual Report 2010 operational review and outlook Device Solutions 2009 Global Market Trends MArkeT TreNdS The value of the global semiconductor market declined by 9.0%* year on year to US$226.3 billion in 2009, compared with a 2.8% contraction in 2008. g GRAPH 2 The market ...

  • Page 47
    ... our business globally. In China and other emerging growth markets, we are working to develop our microcontroller solutions business. We have established a new division responsible for our China business, and have bolstered our engineering systems for product development and local customer support...

  • Page 48
    046 FUJITSU LIMITED Annual Report 2010 Major Announcements and Ir Activities in fiscal 2009 MAY 7, 2009 JULY 15, 2009 AUGUST 7, 2009 Technology Solutions Fujitsu wins technology services deal with Qantas MAY 18, 2009 Fujitsu announces acquisition of shares in IT subsidiary of AUTOBACS SEVEN ...

  • Page 49
    ... for next-generation intelligent network and mobile platforms JANUARY 4, 2010 Fujitsu wins the UK's biggest desktop and thin client outsource deal MARCH 1, 2010 Fujitsu and Tokyo Stock Exchange launch next-generation "arrowhead" trading system JANUARY 19, 2010 Fujitsu and Japan Atomic Energy...

  • Page 50
    ... capabilities to support efforts by NAA to contribute to dependable and comfortable air travel. INITIATIVeS goINg forwArd Initiatives Going Forward In the Japanese market, Fujitsu is working to expand its business through the provision of services based on quality products and solutions. We will...

  • Page 51
    .... In order to support more effective use of ICT on the customer side, Fujitsu's new core of consultants, called "Field Innovators," are making proposals to customers from an operational perspective. We employ customer-focused analysis and make optimal proposals from the planning stages in order to...

  • Page 52
    ...recovery, with IT investment in Western Europe remaining weak. IT investment is expected to be affected by public-sector spending cuts in particular, but is also likely to grow in areas where organizations use IT to make cost reductions, such Volvo Car Corporation CUSTOMER SOLUTION PROFILE Fujitsu...

  • Page 53
    FUJITSU LIMITED Annual Report 2010 051 as procurement, shared services, offshoring, and outsourcing of infrastructure and business processes. The size of the IT services market is expected to be roughly on par with the previous fiscal year, edging up 0.7% year on year. The market condition remains...

  • Page 54
    ... to support both mission-critical business applications and mass market high-definition video, Internet access, and advanced voice services," said Ihab Tarazi, vice president of global network planning for Verizon. "With the launch of our multiyear packet optical transport platform strategy, Verizon...

  • Page 55
    ... around October 2010. Fujitsu is also planning to broaden its offerings of related services, including point-of-sale and self check-out systems for retail industry customers. We will continue to utilize offshore assets in the United States and Canada, but also mainly in India, the Philippines, and...

  • Page 56
    ...its core business of technology solutions. For services, we intend to deploy the expertise and experience in ICT infrastructure services of our local operations in Hong Kong to expand throughout mainland China, supporting both Japanese and Chinese corporate customers with superior ICT infrastructure...

  • Page 57
    ... and expand our outsourcing business in order to increase the presence of the Fujitsu Group in the outsourcing business field. We will also utilize the subsidiaries acquired in fiscal 2009 to strengthen our presence among local governments and in financial markets. In India, we plan to continue our...

  • Page 58
    ... policy supports the overarching goals of creating new value for customers and achieving our Corporate Vision of contributing to the creation of a networked society that is rewarding and secure, bringing about a prosperous future that fulfills the dreams of people throughout the world. our MISSIoN...

  • Page 59
    ... outpatient. The result is an improvement in patient services and a simultaneous reduction in hospital operating costs. *4 Compared to previous Fujitsu Frontech products. Image displayed using color e-paper (4) New Ways of Using Mobile Phones with the Launch of the World's First Separable...

  • Page 60
    ... is promoting the following four themes under Core Strategic Themes. (1) Human Centric Computing Fujitsu will integrate ubiquitous devices with a cloud infrastructure to create new technology solutions and services in healthcare, energy management and other human centered activities. (2) Intelligent...

  • Page 61
    FUJITSU LIMITED Annual Report 2010 059 "arrowhead" STory Developing the Next-Generation "arrowhead" Trading System World-class system brings 2-millisecond trading to Tokyo's stock exchange On January 4, 2010, the Tokyo Stock Exchange (TSE) introduced a cutting-edge nextgeneration trading system ...

  • Page 62
    ... product planning and conceptual design phases. This effort to fuse business and intellectual property is delivering clear results, as Fujitsu takes steps to protect technologies and establish viable patent rights. General mail address Mail authorization number- Operator-Operator status No. 1-Staff...

  • Page 63
    ... system* to efficiently and effectively research patents held by other companies. Patents by Business Segment * An ASP-based service which searches laid-open patent applications and prosecution history data provided by the Japan Patent Office. Intellectual Property Patents Issued in Japan in 2009...

  • Page 64
    ... statements for achieving our Corporate Vision. PrINCIPLeS The principles we adhere to in all business dealings and actions in accordance with Corporate Values. Code of CoNduCT The rules and guidelines followed by everyone in the Fujitsu Group. BuSINeSS PoLICy Our current strategies pursued...

  • Page 65
    ... LIMITED Annual Report 2010 063 CorPorATe VISIoN CorPorATe VALueS PrINCIPLeS Code of CoNduCT BuSINeSS PoLICy Through our constant pursuit of innovation, the Fujitsu Group aims to contribute to the creation of a networked society that is rewarding and secure, bringing about a prosperous future...

  • Page 66
    ... ways to work and live. Multifaceted support from ICT solutions is an increasingly important part of these efforts. As a global ICT solutions corporation, the Fujitsu Group develops advanced environmental technologies, and makes products and services employing these technologies available throughout...

  • Page 67
    ... tons Customer Offerings Fujitsu's green ICT Green Policy Solutions (Solutions) Software/Services (Outsourcing and consulting) Environmental and Social Activities By ICT Of ICT Green Policy Products (ICT infrastructure) Platforms, networks, software, ubiquitous technologies, electronic devices...

  • Page 68
    ... technology (ICT) solutions to help solve various environmental issues for its customers and for society, and to make the products and services it offers, as well as business activities more environmentally friendly. Fiscal 2009 was the final year for the Fujitsu Group Environmental Protection...

  • Page 69
    ... for people with visual impairments as a valuable job creation program. EMEA Support for Elementary Schools and Students In the United Kingdom, Fujitsu's Impact on Society (IOS) program organizes volunteer groups at each of its major business locations. As a part of this program, employees visited...

  • Page 70
    ... Sep. 2009 Chairman, President and Representative Director Apr. 2010 Chairman and Representative Director* Masami Yamamoto President Birth: January 11, 1954 Apr. 1976 Joined Fujitsu Limited Jun. 2004 Executive Vice President, Personal Systems Business Group Jun. 2005 Corporate Vice President Jun...

  • Page 71
    ...-General, Commerce and Information Policy Bureau Jul. 2007 Commissioner, Japan Patent Office Aug. 2009 Advisor, Fujitsu Limited Apr. 2010 Corporate Executive Vice President, CSO*,*2 Jun. 2010 Corporate Executive Vice President and Director* *2 CSO: Chief Strategy Officer * to present *1 CFO: Chief...

  • Page 72
    070 FUJITSU LIMITED Annual Report 2010 Interview with Auditors Corporate governance is increasingly important for companies like Fujitsu which are pursuing global business expansion to enhance corporate value. This interview with the company's outside auditors, Megumi Yamamuro and Hiroshi Mitani, ...

  • Page 73
    FUJITSU LIMITED Annual Report 2010 071 execution divisions, including advice regarding management and how to improve effectiveness. In October 2009, Fujitsu established an Executive Nomination Committee and a Compensation Committee, and its new management execution structure now has many younger ...

  • Page 74
    072 FUJITSU LIMITED Annual Report 2010 Interview with Auditors Yamamuro: Looking back on the events since the president's resignation on September 25, 2009, there were some things that could have been handled better in terms of the processes employed, but I think the decision was correct. I gave ...

  • Page 75
    ... Limited Corporate Governance Report is provided for reference only. The original Japanese-language report was filed with the Tokyo Stock Exchange on June 21, 2010 under TSE securities code 6702. I. Basic Stance on Corporate Governance and Other Basic Information 1. Basic Stance The Fujitsu Group...

  • Page 76
    ...reports to stock exchanges in Japan. Mr. Ito is a Director and Senior Advisor of Fuji Electric Holdings Co., Ltd., the holding company of the Fuji Electric Group, which holds 5.45% of Fujitsu's shares as well as an additional 5.75% of Fujitsu's shares as trust account assets for employee retirement...

  • Page 77
    ...of economic, social and other factors that affect the management of a company due to his service as a public prosecutor and as a member of the Fair Trade Commission. Mr. Mitani has never been an executive of a major shareholder or major business partner of Fujitsu, or held another such position that...

  • Page 78
    076 FUJITSU LIMITED Annual Report 2010 Corporate governance Other Issues Relating to Major Activities of Outside Auditors In fiscal 2009, there were seventeen regularly scheduled or special meetings of the Board of Directors, for which the three outside auditors (Tamiki Ishihara, Megumi Yamamuro ...

  • Page 79
    ... by a further 29 certified public accountants, 21 accounting assistants and another 41 persons, all associated with Ernst & Young ShinNihon LLC. The Fujitsu Way Promotion Council promotes internal control relating to the Fujitsu Way and financial reporting in the Fujitsu Group and forms the core of...

  • Page 80
    ... Fujitsu Group Sustainability Report. Additionally, all materials accompanying the invitation notice to the Annual Shareholders' Meeting are posted on our website. The officer in charge of IR activities is the CFO; the division in charge of IR activities is the Public and Investor Relations Division...

  • Page 81
    ... based on the Fujitsu Way, each business unit is promoting thorough adherence to our Code of Conduct and our customer-centric management perspective in order to earn the trust and meet the expectations of our stakeholders. Further details are listed in the Fujitsu Group Sustainability Report that we...

  • Page 82
    ... 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...

  • Page 83
    ... Vision, Corporate Values, Principles, and Code of Conduct. [Status of Internal Control System] Fujitsu has established a department with executive responsibility for internal controls. The company is continuing its steps to implement an even more robust operational execution structure by reviewing...

  • Page 84
    ...the Fujitsu Group, which are based on the Fujitsu Group Environmental Policy and the Fujitsu Group Environmental Protection Program. As a result of our Project EAGLE initiative to build an internal control system for effective and reliable financial reporting, in fiscal 2009 the accounting auditors...

  • Page 85
    ... prices for customers' products and services, a decline in the size of customers' businesses, or customers' reduced market share, could negatively impact Group sales and earnings. Alongside corporate clients, national and local governments represent another important customer base for the Fujitsu...

  • Page 86
    ... in the ICT sector. Today, new entrants continue to emerge in market areas where the Fujitsu Group has a competitive advantage, thus entailing the risk that we may lose our competitive edge, or fail to secure a clear competitive advantage in future business operations. 3) Competition in Technology...

  • Page 87
    ... occurring in products, including software. While the Group is also promoting software modularization, standardization of development work, and enhanced security measures in order to improve the quality of system development and other services in the technology solutions business, the possibility...

  • Page 88
    ... to customers. 8. Risks Associated With Financial Statements For details, please refer to "Critical Accounting Policies and Estimates" on page 96. 8) Credit Ratings and Other Factors that Affect the Group's Credit In addition to having a major influence on financing, credit ratings by outside...

  • Page 89
    FUJITSU LIMITED Annual Report 2010 087 FACTs & FIGUREs Financial Section 088 089 098 100 101 102 103 134 Five-Year Summary Management's Discussion and Analysis of Operations Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Net Assets ...

  • Page 90
    ...ratio (times) Free cash flow Average exchange rate (yen) U.S. Dollar Euro Pound Sterling R&D expenses Capital expenditure Depreciation Number of employees Net sales by business segment (excluding intersegment sales): Technology Solutions Ubiquitous Product Solutions Device Solutions Other Operations...

  • Page 91
    ... of the hard disk drive (HDD) business, and the effect of exchange rate fluctuations. Sales in Japan declined by 8.2%. Sales of system integration services and ATM- and POS-related solutions services to customers in the manufacturing, retail/distribution, and financial services industries 0 2,000...

  • Page 92
    ... sales of mobile phones and electronic components. These factors outweighed increased retirement benefit costs triggered by worsening investment conditions for pension assets in the previous fiscal year, a loss provision related to Japan's next-generation supercomputer, and lower service business...

  • Page 93
    ... as companies cut spending. Sales were also hurt by drops in prices for server-related products and the downturn in the demand cycle for mobile phone base stations. Sales outside of Japan rose 21.0%, but excluding the effects of the consolidation of Fujitsu Technology Solutions and exchange rate...

  • Page 94
    ... with the Company's wide-ranging services and to deliver optimal services and products to customers on a global basis. * Fujitsu Business Systems Ltd. will be renamed Fujitsu Marketing Limited on October 1, 2010. Business realignment and exchange rate fluctuations boosted profits by approximately...

  • Page 95
    ... the services business and car audio and navigation systems. Japan In Japan, the Company reported consolidated sales of ¥3,400.5 billion ($36,565 million), a decrease of 10.3% compared to fiscal 2008. Sales of system integration services and ATM- and POS-related solutions services to customers in...

  • Page 96
    ... result of the Company's open-market purchase of its own shares to make an allotment to minority shareholders of Fujitsu Business Systems Ltd.*1 (Fujitsu Business Systems), in order to convert that company into a wholly owned subsidiary. In addition, while total valuation and translation adjustments...

  • Page 97
    ... commitment lines. To procure funds from global capital markets, the Company has acquired bond ratings from Moody's Investors Service (Moody's), Standard & Poor's (S&P), and Rating and Investment Management's Discussion and Analysis of Operations 200 100 38.1 23.4 0 2006 2007 2008 2009 2010...

  • Page 98
    ...FUJITSU LIMITED Annual Report 2010 Management's Discussion and Analysis of Operations Condensed Consolidated Statements of Cash Flows (Billions of yen) YoY 2010 Change the Financial Instruments and Exchange Law of Japan. The preparation of the consolidated financial statements requires management...

  • Page 99
    ... LIMITED Annual Report 2010 097 capacity utilization rate, or business realignment, associated with rapid changes in the operating environment or other factors. Provision for Product Warranties Some of the Group's products are covered by contracts that require the Group to repair or exchange...

  • Page 100
    ... Annual Report 2010 Consolidated Balance sheets Fujitsu Limited and Consolidated Subsidiaries Yen (millions) At March 31 Notes 2009 2010 U.S. Dollars (thousands) (Note 2) 2010 Assets Current assets: Cash and cash equivalents Short-term investments Receivables, trade Allowance for doubtful accounts...

  • Page 101
    FUJITSU LIMITED Annual Report 2010 099 Yen (millions) At March 31 Notes 2009 2010 U.S. Dollars (thousands) (Note 2) 2010 Liabilities and net assets Liabilities Current liabilities: Short-term borrowings and current portion of long-term debt 7, 12 Lease obligation 5, 12 Payables, trade 12, 15 ...

  • Page 102
    100 FUJITSU LIMITED Annual Report 2010 Consolidated statements of Operations Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Years ended March 31 Notes 2008 2009 2010 U.S. Dollars (thousands) (Note 2) 2010 Net sales Operating costs and expenses: Cost of sales Selling, general and ...

  • Page 103
    FUJITSU LIMITED Annual Report 2010 101 Consolidated statements of Changes in Net Assets Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Shareholders' equity Valuation and translation adjustments Deferred Unrealized Foreign gain and gains or losses currency Subscription on hedge loss ...

  • Page 104
    102 FUJITSU LIMITED Annual Report 2010 Consolidated statements of Cash Flows Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Years ended March 31 Notes 2008 2009 2010 U.S. Dollars (thousands) (Note 2) 2010 Cash flows from operating activities (A): Income (loss) before income taxes ...

  • Page 105
    ... The accompanying consolidated financial statements of Fujitsu Limited (the "Company") and its consolidated subsidiaries (together, the "Group") have been prepared in accordance with the regulations under the Financial Instruments and Exchange Law of Japan and accounting principles and practices...

  • Page 106
    104 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements (e) Marketable securities Marketable securities included in "short-term investments" and "investments and long-term loans" are classified as either held-to-maturity investments, which are the debt securities which ...

  • Page 107
    FUJITSU LIMITED Annual Report 2010 105 (n) Retirement benefits The Company and the majority of the consolidated subsidiaries have retirement benefit plans. Under the significant defined benefit plans, the actuarial valuation used to determine the pension costs is the projected unit credit method....

  • Page 108
    106 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements 3. Inventories Inventories at March 31, 2009 and 2010 consist of the following: Yen (millions) At March 31 2009 2010 U.S. Dollars (thousands) 2010 Finished goods Work in process Raw materials and supplies Total ...

  • Page 109
    FUJITSU LIMITED Annual Report 2010 107 5. Leases The following is a summary of acquisition cost, accumulated depreciation, book value of leased assets, and minimum lease payments required under finance leases, which were recorded in the corresponding asset accounts, at March 31, 2009 and 2010. Yen...

  • Page 110
    ... FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements Long-term debt (including current portion) Yen (millions) At March 31 2009 2010 U.S. Dollars (thousands) 2010 a) Long-term borrowings Long-term borrowings, principally from banks and insurance companies, due from 2009...

  • Page 111
    ... of service, base salary and the number of years of participation in the Plan. The contributions of the Company and the subsidiaries covered by the Plan and their employees are made to the Fujitsu Corporate Pension Fund which is an external organization. Notes to Consolidated Financial Statements

  • Page 112
    ...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 (including its consolidated subsidiaries, "FS") and Fujitsu Technology Solutions...

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    FUJITSU LIMITED Annual Report 2010 111 Assumptions used in accounting for the plans At March 31 2009 2010 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Method of allocating prior service cost Method of allocating net obligation at transition 2.5% 2.8% ...

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    112 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements Assumptions used in accounting for the plans At March 31 2009 2010 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Mainly 6.9% Mainly 8.0% Straight-line method over the ...

  • Page 115
    ... 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...

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    ... exposed to exchange rate fluctuation risk. Investment securities are comprised primarily of shares in companies with which the Group has business alliances and negotiable deposit. Shares are exposed to market price fluctuation risk and financial risk of the company invested. Trade liabilities such...

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    FUJITSU LIMITED Annual Report 2010 115 The Group enters into derivative transactions based on regulations established by the Company. Based on policies approved by the Chief Financial Officer (CFO), the finance division undertakes particular transactions and records them and also confirms the ...

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    116 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements (Note 1) Calculation method relating to fair value of Financial Instruments Current assets (1) Cash and cash equivalents, (2) Short-term investments and (3) Receivables, trade The fair value of these items ...

  • Page 119
    FUJITSU LIMITED Annual Report 2010 117 14. Derivative Financial Instruments 1. Derivative transactions which do not qualify for hedge accounting Yen (millions) Contract Amount Contract Amount Over 1 Year Contract Amount Contract Amount Over 1 Year U.S. Dollars (...

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    118 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements Yen (millions) Contract Amount Contract Amount Over 1 Year At March 31, 2009 Fair Value Gain/Loss Foreign Exchange Forward Contracts To buy foreign currencies U.S. Dollars Other ...

  • Page 121
    FUJITSU LIMITED Annual Report 2010 119 15. Supplementary Information to the Consolidated Balance Sheets Receivables, trade from and payables, trade to affiliates at March 31, 2009 and 2010 are as follows: Yen (millions) At March 31 2009 2010 U.S. Dollars (thousands) 2010 Receivables, trade ...

  • Page 122
    ...FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements Gain on sales of investment securities Gain on sales of investment securities for the year ended March 31, 2008 referred mainly to the sales of shares in affiliates such as Japan Cablenet Holdings Limited. Gain on sales...

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    FUJITSU LIMITED Annual Report 2010 121 For the year ended March 31, 2009, impairment losses related mainly to the LSI business. The Group recognized impairment losses of ¥49,944 million on advanced logic LSI-related assets (Mie Plant 300mm Fab No. 2 buildings and production machinery) due to the ...

  • Page 124
    122 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements [Proceeds from transfer of business] Proceeds from transfer of the HDD business. The breakdown below shows the decline in assets and liabilities resulting from the transfer of HDD business, along with consideration ...

  • Page 125
    ......Car audio and navigation systems Mobile communication equipment and Automotive electronic equipment * Sales, operating income (loss), total assets and others of the HDD business in the second half (October 2009 through March 2010) are not included in the table above (Ubiquitous Product Solutions...

  • Page 126
    124 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements Geographic Segment Information Yen (millions) Years ended March 31 Japan EMEA The Americas APAC & China Elimination & Corporate Consolidated 2008 Sales Unaffiliated customers Intersegment Total sales Operating ...

  • Page 127
    ... changed its name to Fujitsu Technology Solutions (Holding) B.V. For the year ended March 31, 2010 (Related-party transactions) No significant transactions. (Note to significant affiliate) Not applicable for the year. 21. Share-based Payment Plans 1. Account and amount of stock options charged as...

  • Page 128
    ... ended March 31 2009 2010 Exercised price ¥3,563 ¥3,563 $38.31 (ii) Resolution at shareholders' meeting on June 26, 2001 Position and number of people entitled to stock options Number of shares for stock options Date granted Conditions to be vested Corresponding service period Exercisable...

  • Page 129
    ... Fujitsu Frontech Limited (the Company's subsidiary) (i) Resolution at Board of Directors on July 23, 2008 Position and number of people entitled to stock options 4 members of the Board of Directors (excluding external board members) 8 corporate vice presidents (excluding persons holding concurrent...

  • Page 130
    ... LIMITED Annual Report 2010 Notes to Consolidated Financial statements 3. Estimation method for fair value per share of stock options The per share fair value of the stock options of Fujitsu Frontech Limited, granted during the year ended March 31, 2009 was estimated as follows, (1) Valuation...

  • Page 131
    ... April 2009) into a consolidated subsidiary. Fujitsu Technology Solutions, which mainly operates in Germany, one of the biggest ICT markets in Europe, will help the Company promote the globalization of its products business. In addition, the Company will offer high value-added services to customers...

  • Page 132
    ..., FDK (listed on second section, Tokyo Stock Exchange) has undertaken reforms of its business structure with the aim of leveraging its materials technologies to strengthen its products lineup, particularly power systems and high frequency devices. The sharp downturn in worldwide economic conditions...

  • Page 133
    ... Its Objectives To meet customers' diversifying ICT needs in a timely fashion and strengthen the Technology Solutions business, including platforms and ICT solutions, for medium-size businesses in Japan, the Company allotted treasury stock to shareholders of FJB in exchange for common stock of...

  • Page 134
    132 FUJITSU LIMITED Annual Report 2010 Notes to Consolidated Financial statements 2) Exchange Ratio for each Type of Shares; Method for Calculating the Exchange ratio ; Number and Valuation of Shares Distributed Exchange ratio for each type of shares: Method for calculating the exchange ratio: ...

  • Page 135
    FUJITSU LIMITED Annual Report 2010 133 To facilitate the transfer, the Company will hold a stake of 19.9% in Toshiba Storage Device until the end of December 2010, after which it will become a wholly owned subsidiary of Toshiba. HDD media business: The Company established a new company, Showa ...

  • Page 136
    134 FUJITSU LIMITED Annual Report 2010 Independent Auditors' Report

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    FUJITSU LIMITED Annual Report 2010 135 Independent Auditors' Report

  • Page 138
    ... LIMITED Annual Report 2010 Director's Responsibility statement Pursuant to the U.K. DTR4 I, Masami Yamamoto, being Representative Director of Fujitsu Limited confirm, to the best of my knowledge, that: (i) the financial statements, prepared in accordance with Japanese GAAP, give a true and fair...

  • Page 139
    FUJITSU LIMITED Annual Report 2010 137 Management's Report on Internal Control Over Financial Reporting 1. Basic Framework of Internal Control Over Financial Reporting Masami Yamamoto, President and Representative Director of Fujitsu Limited (the "Company"), and Kazuhiko Kato, Corporate Executive ...

  • Page 140
    ...LIMITED Annual Report 2010 Management's Report on Internal Control Over Financial Reporting In regard to those "significant business locations/units," the Company determined that sales, accounts receivables and inventories were the accounts closely associated with the Company's business objectives...

  • Page 141
    ... Number of Percentage of shares held shares held (thousands) (%) Principal shareholders Fuji Electric Systems Co., Ltd. State Street Bank and Trust Company (Standing Proxy, The Hong Kong and Shanghai Banking Corporation Limited Tokyo Branch) Fuji Electric Holdings Co., Ltd. Japan Trustee Services...

  • Page 142
    140 FUJITSU LIMITED Annual Report 2010 4. AllianceBernstein Japan Ltd., in conjunction with two affiliates, submitted a change in large shareholding report dated June 30, 2009 to the Director General of the Kanto Local Finance Bureau containing the following information that the companies were ...

  • Page 143
    ...) Percentage of total shares outstanding (%) stock Exchange Listings: Japan: Tokyo, Osaka, Nagoya Overseas: London Independent Auditors: Ernst & Young ShinNihon LLC shareholder Information: For further information, please contact: Fujitsu Limited Public & Investor Relations Telephone: +81-3-6252...

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    FUJITSU LIMITED Shiodome City Center, 1-5-2 Higashi-Shimbashi Minato-ku, Tokyo 105-7123, JAPAN Tel. +81-3-6252-2220 www.fujitsu.com Legibility Considerations We have reviewed this report using our ColorSelector tool to choose a highly accessible color combination so that the text and figures will ...