Fujitsu 2010 Annual Report Download - page 98

Condensed Consolidated Statements of Cash Flows
(Billions of yen)
Years ended March 31 2009 2010
YoY
Change
I Cash flows from operating activities . . 248.0 295.3 47.2
II Cash flows from investing activities (224.6) 1.0 225.6
I+II Free cash flow . . . . . . . . . . . . . . . . . . . . 23.4 296.4 272.9
[Excluding special items] . . . . . . . . . . . . . . [7.8] [111.6] [103.7]
III Cash flows from financing activities (47.8) (405.3) (357.4)
IV Cash and cash equivalents at end
of year . . . . . . . . . . . . . . . . . . . . . . . . . . . 528.1 420.1 (108.0)
Note: “Free cash flow excluding special items” refers to free cash flow excluding
proceeds from sales of investment securities, purchase of shares in subsidiar-
ies, and transfer of businesses.
4. Capital Expenditure
In fiscal 2009, capital expenditure totaled ¥126.4 billion ($1,360
million), a decline of 24.6% from ¥167.6 billion in the previous fiscal
year. This decline was primarily attributable to a switch to a “fab-lite”
business model*1 in the LSI business and the transfer of the HDD
business. This was partially offset by spending in Technology
Solutions, one of the Group’s core operations. Capital expenditure
here included the opening of a new annex at one of the Group’s key
bases in Japan, the Tatebayashi System Center, to expand the out-
sourcing business, as well as the upgrade and expansion of datacen-
ters and other outsourcing facilities overseas, primarily in the U.K.
*1 A semiconductor business model that minimizes capital expenditures and improves
management flexibility. Instead of a company retaining 100% of its own production
capacity, a majority of production is outsourced to foundry producers.
5. Consolidated Subsidiaries
At the end of fiscal 2009, the Company had 540 consolidated sub-
sidiaries, comprising 195 companies in Japan and 345 overseas,
representing an increase of 60 from last year’s total of 480. The main
reason for the increase in new companies was the consolidation of
former equity-method affiliates Fujitsu Technology Solutions (name
changed from Fujitsu Siemens Computers (Holding) B.V. in April
2009) and FDK. The consolidation of these two companies resulted
in the consolidation of 35 subsidiaries of Fujitsu Technology
Solutions (as of April 1, 2009, the date of business combination) and
14 subsidiaries of FDK as subsidiaries of the Company.
The number of affiliates accounted for by the equity method as
of the fiscal year-end totaled 20, unchanged from a year earlier. This
figure reflected an increase of five companies and a decrease of five
companies, among them Fujitsu Technology Solutions and FDK.
6. Critical Accounting Policies and Estimates
Accounting Principles and Practices
The accompanying consolidated financial statements of the Group
have been prepared in accordance with accounting principles and
practices generally accepted in Japan and the regulations under
the Financial Instruments and Exchange Law of Japan. The prepara-
tion of the consolidated financial statements requires management
to make estimates and assumptions that affect the amount of the
assets, liabilities, contingent assets and contingent liabilities
reported at the end of the fiscal year, as well as the amount of
revenue and expenses recognized during that term. Actual results
may differ from these estimates. The following assumptions and
estimates based on the application of accounting principles are
those that the management believes may have a material impact
on the consolidated financial statements.
Revenue Recognition
Revenue from sales of ICT systems and products, excluding cus-
tomized software under development contracts, is recognized
upon acceptance by the customers, whereas revenue from sales of
personal computers, other peripheral equipment and electronic
devices is recognized when the products are delivered to the
customers. Revenue from customized software under develop-
ment contracts is recognized on a percentage-of-completion basis.
The Group stringently assesses the potential revenue recover-
able on projects for which estimated costs have exceeded esti-
mated revenue, and recognizes as losses the amounts assessed as
non- recoverable. If the estimated costs relating to such contracts
increase further in the future, additional losses may be recognized.
Inventories
Inventories are carried at the acquisition cost. However, should the
net realizable value (“NRV”) at the fiscal year-end fall below that of
the acquisition cost, inventories are subsequently listed based on
the NRV, with the difference in value between the acquisition cost,
in principle, booked as cost of sales. Inventories outside the normal
operating cycle are calculated at an NRV that reflects future
demand and market trends. The Group may experience substantial
losses in cases where the NRV drops dramatically as a result of
deterioration in the market environment compared to forecasts.
Property, Plant and Equipment
Depreciation for property, plant and equipment is computed
principally by the straight-line method at rates based on the esti-
mated useful lives of the respective assets, reflecting the likely
period over which the value of the assets can be realized under
normal business conditions. In the future, some equipment and
facilities may become obsolete or may be repurposed as a result of
technical innovation or other factors. In such cases, their actual
useful lives may be recognized as shorter than their originally
estimated useful lives. Losses may occur as a result.
In addition, impairment losses may be recognized in cases in
which there is a decline in expected future cash flows from assets
due to production facilities becoming idle, a decrease in the
096 FUJITSU LIMITED Annual Report 2010
Management’s Discussion and Analysis of Operations