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Fujitsu Limited
Annual Report
2012
Moving Ahead,
Realizing Our Vision

Table of contents

  • Page 1
    Fujitsu Limited Annual Report 2012 Moving Ahead, Realizing Our Vision

  • Page 2
    ... cloud computing and other cutting-edge information and communication technology (ICT) utilization, Fujitsu is taking advantage of previously underutilized value emerging from human knowledge and behavior, as well as changes in the social environment, to deliver solutions to society across a broad...

  • Page 3
    FUJITSU LIMITED ANNUAL REPORT 2012 001 Promoting smart cities as a model for regional revitalization in Japan The world faces a host of problems today, including rapid urbanization and energy woes resulting from populations being concentrated in cities, as well as the need to cope with ...

  • Page 4
    ... solution is ICT, which enables conditions at several farmland locations to be centrally managed, and related work logs to be converted into a variety of formats. In the future, we hope to utilize ICT at food production sites as the starting point for contributing to more abundant food resources...

  • Page 5
    FUJITSU LIMITED ANNUAL REPORT 2012 003 HEALTH CARE Using big data analysis to predict risk of diabetes with a high degree of accuracy Fujitsu employees are taking part in an experimental program that aims to predict the risk of diabetes by analyzing all manner of health-related data-for example, ...

  • Page 6
    004 FUJITSU LIMITED ANNUAL REPORT 2012 COSMETIC SUPPORT Skin analysis service developed from Fujitsu's strength in image processing technology Intelligent Services Business Unit Strategic Planning Division Senior Manager Hayuru Ito Fujitsu, in cooperation with a cosmetics maker, has developed ...

  • Page 7
    ... LIMITED ANNUAL REPORT 2012 005 Using cloud computing to create a comfortable society for people and animals Fujitsu is taking the first steps toward a better society for both people and companion animals by utilizing cloud services to store a broad range of data concerning pets, including health...

  • Page 8
    006 FUJITSU LIMITED ANNUAL REPORT 2012 Supporting the reconstruction effort in disaster-stricken areas, while pioneering solutions for Japan's social issues Following the Great East Japan Earthquake on March 11, 2011, local governments and communities were thrown into turmoil in trying to cope ...

  • Page 9
    FUJITSU LIMITED ANNUAL REPORT 2012 007 Contents 000 ICT Solutions are giving shape to a brighter tomorrow Performance Highlights A Message from Management Michiyoshi Mazuka, Chairman Masami Yamamoto, President Management An overview of the Fujitsu Group's current status and future direction 008 ...

  • Page 10
    008 FUJITSU LIMITED ANNUAL REPORT 2012 Performance Highlights Fujitsu Limited and Consolidated Subsidiaries Years ended March 31 2003 2004 2005 2006 Financial Data POINT 1 Net sales ...Sales outside Japan ...Ratio of sales outside Japan (%) ...Operating income ...Operating income margin (%)...

  • Page 11
    FUJITSU LIMITED ANNUAL REPORT 2012 009 Yen (millions) 2007 2008 2009 2010 2011 2012 Year-on-Year Change (%) 2012/2011 U.S. Dollars (thousands) 2012...54,482,610 18,367,024 1,284,195 520,817 Management $ 2,926,951 (2,327,195) 599,756 (1,694...POINT 3 POINT 4 The balance of interest-bearing loans was...

  • Page 12
    010 FUJITSU LIMITED ANNUAL REPORT 2012 Financial Data Net Sales and Ratio of Sales Outside Japan (Â¥ Billions) Net Sales -1.3% 4,679...2009 2010 2011 49.1 2012 -112.3 2008 2009 2010 2011 2012 0 2008 (Years ended March 31) (Years ended March 31) Total Assets and Monthly Inventory Turnover Rate...

  • Page 13
    ...100 0 2008 2009 2010 2011 2012 0 2008 2009 2010 2011 2012 (Years ended March 31) (Years ended March 31) Non-financial Data (ESG Indicators) Trends in Total Greenhouse Gas Emissions (Whole Group and Global) (10,000 tons) 250 200 150 100 50 0 Trends in Women Managers (Non-Consolidated...

  • Page 14
    ... LIMITED ANNUAL REPORT 2012 A Message from Management The broadening range of sophisticated ICT applications has sparked unprecedented changes in many aspects of lifestyles and business. The proliferation of smartphones, sensors, cloud services, and other technologies has prompted the development...

  • Page 15
    FUJITSU LIMITED ANNUAL REPORT 2012 013 vertically integrated strengths on a global scale, from services such as cloud and managed services to supercomputers, smartphones, and other products, as well as semiconductors and other technologies, we believe that we can, as a partner, meet the needs of ...

  • Page 16
    014 FUJITSU LIMITED ANNUAL REPORT 2012 A Conversation with the President A Clear Vision The business environment was challenging during fiscal 2011 due to the effects of the European debt crisis and large-scale natural disasters. However, Fujitsu gradually began to see the benefits of its shift ...

  • Page 17
    ...we paid an annual dividend of ¥10 per share as originally planned. To page 021 Q.6 Message to shareholders and investors Fujitsu believes in the power of ICT to transform society, and will leverage its strengths as a global ICT company originating in Japan to help resolve the world's problems. To...

  • Page 18
    016 FUJITSU LIMITED ANNUAL REPORT 2012 A review of fiscal 2011 Q.1 A.1 Looking back, what was the year ended March 31, 2012 like for Fujitsu? How would you rate Fujitsu's business performance? Operating income fell short of initial projections, amounting to ¥105.3 billion in an extremely ...

  • Page 19
    ... A.2 After reviewing the results for fiscal 2011, what are some of the objectives and urgent measures for the current term, fiscal 2012? Fujitsu has designated fiscal 2012 as a "year to rekindle growth," and is bolstering capabilities in the three areas of sales interactions, system engineering (SE...

  • Page 20
    ... Integration Infrastructure Services Businesscentric Perspective Software Integration System Products Network Products Ubiquitous Products Marketing Customer Contact SE Power Technology Enhancement * Business supporting overseas expansion and development by Japanese companies; short for Japan...

  • Page 21
    ...business operations. One of Fujitsu's strengths is an integrated vertical model that begins with services, such as system integration and cloud services, and extends to products such as supercomputers, servers, and smartphones, as well as to technology, specifically semiconductors. We meet customer...

  • Page 22
    ... FUJITSU LIMITED ANNUAL REPORT 2012 Improving corporate value Q.5 A.5 Many people are looking to ICT to help resolve social issues. Tell us about the type of company Fujitsu aims to become, and your approach to social contributions. Together with applying ICT to the challenge of resolving global...

  • Page 23
    ...message do you have for shareholders and investors? Fujitsu believes in the power of ICT to transform society, and as a Japanese global ICT company exemplifying the best of what Japan has to offer, will help to resolve the world's pressing problems. We believe Fujitsu's customers to be the whole of...

  • Page 24
    ... for LSI devices and electronic components, server-related revenues fell on a decline in business deals for large-scale systems. These negative factors were largely balanced out, though, by increased sales of mobile phones atop broader uptake of smartphones, as well as mobile phone base stations and...

  • Page 25
    FUJITSU LIMITED ANNUAL REPORT 2012 023 impact of exchange rate fluctuations, however, sales were essentially unchanged from the previous fiscal year. Similarly, while sales were lower for electronic components and UNIX servers, PC sales grew in Turkey, the Middle East, Russia, and other emerging ...

  • Page 26
    024 FUJITSU LIMITED ANNUAL REPORT 2012 Feature: Returning to the Starting Point for Growth Smart cities Health promotion Strategies to Realize Our Vision Market Environment In the wake of the 2008 global economic crisis, the global IT market has been led by emerging markets, which continue to ...

  • Page 27
    ...and business-centric axes. The customer-centric axis integrates global industry sectors and regions from the customer's perspective. On the business-centric axis, we integrate technologies, products and resources from across the entire Fujitsu Group to create a new integrated services model. Through...

  • Page 28
    ...HDD prices triggered by the flooding in Thailand ease, coupled with benefits from structural reforms in the car audio and navigation system business. In product businesses, we intend to further solidify Fujitsu's already dominant position in areas such as servers, software and mobile phones in Japan...

  • Page 29
    ...in fiscal 2010. In the Group's core business, Technology Solutions, we are making steady progress in boosting profit margins, with a target for fiscal 2012 of 6%. Targeting Top- and Bottom-Line Growth Our consolidated business forecasts for fiscal 2012 are as follows: we are projecting net sales of...

  • Page 30
    ... local customers)" as "One Fujitsu," including in Japan, we aim to become the engine that will drive the Fujitsu Group's growth. Corporate Senior Vice President Rod Vawdrey Business scope expansion and development in emerging markets Advancement into Emerging Markets Expanding overseas sales is...

  • Page 31
    ...build HR management systems and bolster educational systems to enable optimal human resource utilization across regions. South Africa RDC Services desks Application center Remote Infrastructure Management center New Zealand RDC Malaysia GDC Portugal GDC Global and Regional Delivery Centers Northern...

  • Page 32
    ... FUJITSU LIMITED ANNUAL REPORT 2012 Business Overview For the fiscal year ended March 31, 2012 Fujitsu delivers total solutions in the field of information and communication technology. Along with multifaceted services provision, our comprehensive business encompasses the development, manufacture...

  • Page 33
    ...• Fujitsu Broad Solution & Consulting Inc. • Fujitsu Marketing Limited • Fujitsu System Solutions Limited* • Fujitsu FIP Corporation • NIFTY Corporation • Fujitsu FSAS Inc. • PFU Limited • Fujitsu Network Communications, Inc. • Fujitsu Services Holdings PLC • Fujitsu America, Inc...

  • Page 34
    032 FUJITSU LIMITED ANNUAL REPORT 2012 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 ...

  • Page 35
    ...LIMITED ANNUAL REPORT 2012 033 Our Strength Fujitsu's services business holds the leading market share in Japan and the third-largest share worldwide. We provide services across a wide range of countries and regions, including Europe, the Americas, Asia, and Oceania. Outsourcing services are a key...

  • Page 36
    ... Europe in 2012 due to deterioration in the real economy caused by government debt problems. Although there are uncertainties such as the US presidential Operational Review and Initiatives Fiscal 2011 Business Results Sales from the Services sub-segment (Solutions/System Integration, Infrastructure...

  • Page 37
    ... cloud platforms by utilizing our Fujitsu Global Cloud Platform, deployed in 2011 to six locations around the world, and other platforms. In this way, Fujitsu will provide consistent, high-quality ICT services globally to support all customers in their endeavors, no matter where they do business...

  • Page 38
    036 FUJITSU LIMITED ANNUAL REPORT 2012 Technology Solutions/System Platforms System products and network products are the foundation of ICT infrastructure. System products comprise the servers (such as mainframes, UNIX, mission-critical x86 servers), storage systems and middleware on which ...

  • Page 39
    ... cloud computing and other promising business areas, as well as storage systems able to hold increasingly vast amounts of data. In 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...

  • Page 40
    038 FUJITSU LIMITED ANNUAL REPORT 2012 Market Trends 2011 Global Market Trends System Products: The Japanese server market expanded by 3.9% in 2011 to US$6.2 billion. Year-on-year expansion came atop growth in shipments of supercomputers ? and x86 servers for the IT services and telecommunications...

  • Page 41
    ... profitability by promoting cost reductions, together with developing new business fields using networks, such as home networks and domains specializing in related services. In the optical transmission system business, we will further solidify our market position in Japan and North America with...

  • Page 42
    ..., and driving the development of tablet PCs. We also have a product lineup in the Japanese market that capitalizes on high domestic standards of quality. In mobile phones, along with conventional features phones, Fujitsu is developing smartphones and tablet devices under the new ARROWS brand. In...

  • Page 43
    ... in-vehicle technologies to provide car navigation systems and other types of automotive electronics that make the driving experience safer and more comfortable. PC Market Share in Japan 2011 (Unit Basis) 1 2 3 4 5 6 7 n Company A 24.2% n Fujitsu 17.3% n Company B 12.2% n Company C 8.7% n Company...

  • Page 44
    ... the mobile phone business merger with Toshiba Corporation, and a wide lineup of new models centered on smartphones. GRAPH 1 GRAPH 2 GRAPH 3 Mobile Phone Shipment Forecast for Japan (Thousands of units) 50,000 40,000 30,000 20,000 10,000 0 Global PC Market Share in 2011 (Unit Basis) 1 n Company...

  • Page 45
    ... sales of slate PCs in the medical and educational fields, and in Asia-Pacific and China, on developing consumer demand. In mobile phones, Fujitsu is developing such products as the high-spec, water-resistant ARROWS F-10D smartphone utilizing a quad-core CPU, the high-quality, compact and water...

  • Page 46
    ... REPORT 2012 Device Solutions LSI devices and electronic components comprise Fujitsu's Device Solutions. Fujitsu Semiconductor, the Fujitsu Group's operating company in semiconductors, provides LSI devices found in products such as digital home appliances, automobiles, mobile phones, and servers...

  • Page 47
    ...and are increasingly energy efficient as a result of the emphasis we place on the environment. Fujitsu Semiconductor is expanding its business globally through development and sales sites in Japan, the Americas, Europe, and Asia. 2011 Global ASIC Market Share (based on sales) 1 2 3 4 n Company A 21...

  • Page 48
    ...$336.5 billion, for an average annual growth rate of 4.0%* between 2012 and 2014. * Semiconductor market estimates according to World Semiconductor Trade Statistics (WSTS), spring 2012 forecast. Operational Review and Initiatives Fiscal 2011 Business Results Net sales in this segment totaled ¥584...

  • Page 49
    FUJITSU LIMITED ANNUAL REPORT 2012 047 flooding in Thailand. Electronic component sales also fell due to decreased demand for semiconductor packages. Sales outside Japan were also lower, even excluding the impact of foreign exchange rates. In LSIs, sales were brisk for image processing LSIs used ...

  • Page 50
    ... FUJITSU LIMITED ANNUAL REPORT 2012 Major Announcements and IR Activities in Fiscal 2011 2011 4 5 6 7 8 9 10 Technology Solutions April 12, 2011 Fujitsu and Oracle Deliver Enhanced SPARC Enterprise M3000 Server April 26, 2011 Fujitsu Launches New PRIMEQUEST 1000 Series Model May 25, 2011...

  • Page 51
    ... LIMITED ANNUAL REPORT 2012 049 11 12 2012 1 2 3 4 5 August 16, 2011 Fujitsu launches 4-way rack server PRIMERGY RX600 S6 August 30, 2011 Fujitsu Develops World's First Cloud Platform to Leverage Big Data September 2, 2011 Fujitsu Wins ICT Infrastructure Support Contract from McDonald's UK...

  • Page 52
    ... along customer and business lines, further clarifying the account sales structure and bolstering sales capabilities in both quantitative and qualitative terms as we pursue higher sales. In the system products business, mainly servers, Fujitsu is working to launch products into growth markets and...

  • Page 53
    FUJITSU LIMITED ANNUAL REPORT 2012 051 equipped with Intel's latest CPU announced in early March 2012 ahead of rivals (only one other Japanese company has announced similar plans), we aim to increase sales by providing products sooner, especially to customers seeking high performance. In the ...

  • Page 54
    052 FUJITSU LIMITED ANNUAL REPORT 2012 EMEA Market Trends Europe, Middle East, Africa last year due to supply shortfalls caused by HDD component shortages in the wake of flooding in Thailand. The PC market, meanwhile, is anticipated to grow 7.0% over the previous year on the back of sharp growth ...

  • Page 55
    FUJITSU LIMITED ANNUAL REPORT 2012 053 offerings. Meanwhile, sales channel reinforcement via the introduction of telesales, online sales and other tools will strengthen our x86 server and PC-centered product business. By advancing cross-selling in tandem with services, we will aim for stable ...

  • Page 56
    ...in 2012. Furthermore, we are raising the added value of infrastructure services, including cloud business deals, and promoting a greater rate of return by focusing on the application businesses of partner companies such as SAP, Oracle, Salesforce.com, and Microsoft. In the platform products business...

  • Page 57
    FUJITSU LIMITED ANNUAL REPORT 2012 055 structure enhancements. Plans call for applying this same model to storage and PCs to spur revitalization in the platform products business as a whole. In Canada, along with maintaining our traditional strengths in consulting and the solutions business, we ...

  • Page 58
    ...Guangdong Province opened in April to the greatest extent possible, and pursue business deals for private cloud services as one of Fujitsu's core middleware products. For the platform business, we will raise sales to existing customers by focusing on value-added businesses that offer x86 servers and...

  • Page 59
    ... our offshore resources. Fujitsu Technology Solutions will lead our strategy and planning of the ICT infrastructure business in India, which will improve business in terms of both scale and management quality. We will also aggressively expand our sales of system products such as x86 servers. In the...

  • Page 60
    058 FUJITSU LIMITED ANNUAL REPORT 2012 Research & Development Our Mission in R&D As our fundamental R&D policy, we pursue initiatives to create new value for our customers and to achieve our Corporate Vision of contributing to the creation of a networked society that is fulfilling and secure, ...

  • Page 61
    .... This research was supported in part by Japan's Ministry of Economy, Trade and Industry's Project for the Program to Develop and Demonstrate Basic Technology for Next-Generation High-Reliability, EnergySaving IT Equipment for Fiscal 2010 and Fiscal 2011. The newly developed technology enables...

  • Page 62
    060 FUJITSU LIMITED ANNUAL REPORT 2012 Topics Realizing a Human Centric Intelligent Society To make the Human Centric Intelligent Society-creating new value in the real world through Human Centric IT-a reality, Fujitsu is researching and developing advanced technologies along two axes-"convergence...

  • Page 63
    ... Fujitsu to develop both Ubiquitous Business Strategy Headquarters Product Department I, Mobile Products Division Senior Manager Kenetsu Furuki *1 Smartphone Desire to Purchase Study: Research conducted by Fujitsu in December 2011 (573 mobile phone users aged 55 and older) *2 User Interface...

  • Page 64
    ...key corporate asset supporting business activities. Moreover, Fujitsu employees are acutely aware of the role that technologies backed by intellectual property play in enabling customers to rely with confidence on the products and services we deliver. Intellectual Property Strategy We are promoting...

  • Page 65
    ... engineers to utilize the ATMS/IR.net 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. Performance Patents Issued in Japan in 2011...

  • Page 66
    ... will 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...

  • Page 67
    ...organization for personal gain. Responsibility n We use Field Innovation to find new approaches and the inspiration to improve 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...

  • Page 68
    ...2011, Fujitsu has utilized the ISO 26000 social responsibility standard (issued November 2010) as a means of deepening its own CSR activities. A team drawn from across the Fujitsu Group compiled a checklist based on the seven core themes of the ISO 26000 standard, and set about confirming the status...

  • Page 69
    ... to roll out new services for its 10 million users and handle feature expansion. The Fujitsu Group's IT platforms will support globalization in Morocco and other emerging economies around the world. Responsibility Provision of a New Cloud Service to Support Water and Sewer Operations Amid rising...

  • Page 70
    ... 2009 to 2012. CO2 Reduction Targets and Achievements under Green Policy Innovation (10,000 tons) 1,500 1,200 900 600 300 560 452 108 183 211 955 998 1,195 1,517 Reducing Greenhouse Gas Emissions The Fujitsu Group is working to reduce emissions of greenhouse gases associated with Group business...

  • Page 71
    ... efforts to conserve biodiversity through ICT utilization. In Hokkaido, Japan, for example, the Group took part in a project in the village of Tsurui to protect Japanese cranes, in cooperation with the Wild Bird Society of Japan. Fujitsu's role was to conduct remote monitoring studies to examine the...

  • Page 72
    ... companies overseas. In addition to imparting strategic thinking and leadership skills, GOLD helps participants gain a better understanding of Fujitsu's history and business. The select group of middle-level managers worldwide chosen for the program visit Fujitsu bases in Europe, Asia, North America...

  • Page 73
    ... solutions Socially Responsible Investment (SRI) Fujitsu has been incorporated into the SRI stock indexes and SRI funds listed below. Name of Index Dow Jones Sustainability Indexes (Asia Pacific) Rating Company Dow Jones Indexes (U.S.), SAM Group (Switzerland) Name of Fund Sumishin SRI Japan Open...

  • Page 74
    ... Jun. 2012 Chairman and 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. 2007 Corporate Senior Vice President Jan. 2010 Corporate Senior Executive...

  • Page 75
    ...* Jun. 2012 Director, Fujitsu Limited* Corporation Jun. 2011 Director, Fujitsu Limited* Jun. 2011 Chairman, Seiwa Sogo Tatemono Co., Ltd. Jun. 2012 President and Representative Director, Chuo Real Estate Co., Ltd. Responsibility *2 CFO: Chief Financial Officer *3 CSO: Chief Strategy Officer...

  • Page 76
    ...to conduct risk management. The board directors are responsible for the development and operation of this system. In the case of Fujitsu, the auditors receive regular reports on the system's operational status from the Fujitsu Way Unit, the department overseeing Fujitsu's internal control system. We...

  • Page 77
    ... to develop as a global ICT company, then it has to be capable of offering services well into the future and earn its customers' trust. For these reasons, in addition to a sound financial base, Fujitsu must be brimming with a desire to achieve this vision; and this desire must be shared by employees...

  • Page 78
    ... affiliates, the following companies are publicly listed on Japanese stock exchanges: Fujitsu Frontech Limited, Fujitsu Broad Solution & Consulting Inc., NIFTY Corporation, Shinko Electric Industries Co., Ltd., FDK Corporation, Fujitsu Component Limited.

  • Page 79
    ... reported to securities exchanges on which Fujitsu is listed in Japan notifying them that he is an independent director. Yoko Ishikura Ms. Ishikura has expertise for innovation and business strategies in global competition. Moreover, Ms. Ishikura has never been an executive of a major shareholder...

  • Page 80
    ... major shareholder nor has he held an executive management position with a major trading partner of the Company, and therefore the Company believes he is independent. Fujitsu therefore has identified him as an independent director in reports to stock exchanges on which the Company is listed in Japan...

  • Page 81
    ... director in reports to stock exchanges on which the Company is listed in Japan. Yoshikazu Amano j Mr. Amano is a former Senior Managing Officer of Toyota Motor Corporation, a company with which Fujitsu has business dealings. However, taking into account the scale of Fujitsu's sales, this is...

  • Page 82
    ... and Determination of Compensation Amounts Executive Compensation Policy To secure exceptional human resources required to manage the Fujitsu Group as a global ICT company, and to further strengthen the link between its financial performance and shareholder value, while at the same time improving...

  • Page 83
    ... 34 certified public accountants, 31 accounting assistants, and another 33 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 operations...

  • Page 84
    ... on the Company website the same day it is sent to shareholders as part of our policy to disclose information in a prompt, accurate, and fair manner. To clarify the results of voting at the Annual Shareholders' Meetings, in addition to public notification of the results of the Shareholders' Meetings...

  • Page 85
    ... system to our overseas consolidated subsidiaries, receiving integrated global ISO 14001 certification. With respect to CSR activities, 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...

  • Page 86
    084 FUJITSU LIMITED ANNUAL REPORT 2012 Supplemental Explanation Other We are promoting a customer-centric management perspective in order to be a trusted and valued partner to our customers. In order that all employees adopt a customer-centric mindset and apply it to their daily work, we are ...

  • Page 87
    ... violations in relation to the execution of work. (3) Regulations and other systems relating to loss mitigation a. Senior management strives to maintain the Fujitsu Group's business continuity, increase its corporate value and sustainably expand its business activities. In order to deal with...

  • Page 88
    ... meetings. b. In cases where risks arise that could affect management or financial results, or where there is an awareness of major compliance violations in connection with the execution of business activities, senior management as well as employees of Fujitsu and Group companies immediately report...

  • Page 89
    FUJITSU LIMITED ANNUAL REPORT 2012 087 • Risk Management Committee This committee sets out risk management rules and risk management guidelines for risks inherent in Fujitsu's business activities. The committee also places risk management promotion officers in Fujitsu and its Group companies. ...

  • Page 90
    ... and Public Relations Department jointly review decisions, events, and financial results gathered as explained above to confirm the timeliness and accuracy of the information in relation to disclosing it to investors. The Company's representative director and president conducts a final review of...

  • Page 91
    ... results, financial base, and other aspects of its operations. Examples of such risks are listed below. 1) Economic Trends in Key Markets The Fujitsu Group provides ICT services, server and storage products, network products, as well as semiconductors and other components, to clients in corporate...

  • Page 92
    ... a global ICT business environment, the Fujitsu Group works with a large number of companies through business alliances, technology collaborations, joint ventures, and other means, a practice that we intend to actively continue in the future. If, however, as a result of managerial, financial, or...

  • Page 93
    .... While the Group is also setting rules on quality control throughout the company, 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...

  • Page 94
    ...our corporate social responsibility, while at the same time continuing to provide a stable flow of high-quality, highly reliable products and services, which our customers rely on for their business. Last fiscal year there were several large-scale disasters, including the Great East Japan Earthquake...

  • Page 95
    FUJITSU LIMITED ANNUAL REPORT 2012 093 Facts & Figures FINANCIAL SECTION 094 Five-Year Summary 095 Management's Discussion and Analysis of Operations 104 Consolidated Balance Sheets 106 Consolidated Income Statements Consolidated Statements of Comprehensive Income 107 Consolidated Statements of ...

  • Page 96
    094 FUJITSU LIMITED ANNUAL REPORT 2012 Five-Year Summary Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Years ended March 31 2008 2009 2010 2011 2012 U.S. Dollars (thousands) 2012 Net sales Operating income Operating income margin Income (loss) before income taxes and minority ...

  • Page 97
    ...billion yen) YoY Change 2012 Change (%) 1. Analysis of Results Business Environment In the global economy during fiscal 2011, the increasingly serious government debt problems in Europe had an adverse impact on the real economy, including a negative growth rate. In the United States, despite signs...

  • Page 98
    096 FUJITSU LIMITED ANNUAL REPORT 2012 Sales in Japan were essentially unchanged from fiscal 2010. The decline in sales due to customers' production adjustments precipitated by the flooding in Thailand mainly impacted products such as car audio and navigation systems, and LSI devices. In addition ...

  • Page 99
    ... devices, car audio and navigation systems, and services businesses outside Japan. In LSI devices, as part of the restructuring program to optimize manufacturing capabilities, the Company decided to transfer the Iwate Plant, one of its front-end manufacturing centers, to Denso Corporation, recording...

  • Page 100
    ... Corporation's mobile phone business, and expansion of the smartphone market. Sales of mobilewear sub-segment's car audio and navigation systems decreased, mainly as a result of the suspension of automobile manufacturing due to the Great East Japan Earthquake and the flooding in Thailand. Sales...

  • Page 101
    ... capacity utilization of manufacturing lines in response to the decline in demand. Electronic components earnings were affected by lower sales and rising prices for certain materials. Outside Japan, earnings from electronic components were impacted by falling sales and exchange rates. In April 2012...

  • Page 102
    ...FUJITSU LIMITED ANNUAL REPORT 2012 The Americas Net sales amounted to ¥277.5 billion ($3,385 million), a decrease of 7.0% from fiscal 2010. Revenue declined for car audio and navigation systems and LSI devices, with sales also sluggish in the services business, centered on the United States. Sales...

  • Page 103
    ...) at the end of fiscal 2011. Outside Japan, the level increased by ¥34.5 billion to ¥108.9 billion ($1,328 million), due mainly to an increase in retirement benefit obligations stemming from a drop in the discount rate*3 used by a UK subsidiary. The future minimum lease payment required under non...

  • Page 104
    ... 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 customized software under development contracts, is recognized...

  • Page 105
    FUJITSU LIMITED ANNUAL REPORT 2012 103 Property, Plant and Equipment Depreciation for property, plant and equipment is computed principally by the straight-line method at rates based on the estimated useful lives of the respective assets, reflecting the likely period over which the value of the ...

  • Page 106
    ...FUJITSU LIMITED ANNUAL REPORT 2012 Consolidated Balance Sheets Fujitsu Limited and Consolidated Subsidiaries Yen (millions) At March 31 Notes 2011 2012 U.S. Dollars (thousands) (Note 2) 2012...Intangible assets: Software Goodwill Others ...Financial Statements are an integral part of these statements.

  • Page 107
    ... benefits Provision for loss on repurchase of computers Provision for recycling expenses Provision for product warranties Others Total long-term liabilities Total liabilities Net assets Shareholders' equity: Common stock Capital surplus Retained earnings Treasury stock, at cost Total shareholders...

  • Page 108
    106 FUJITSU LIMITED ANNUAL REPORT 2012 Consolidated Income Statements Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Years ended March 31 Notes 2011 2012 U.S. Dollars (thousands) (Note 2) 2012 Net sales Operating costs and expenses: Cost of sales Selling, general and ...

  • Page 109
    ...net of taxes Common stock Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Foreign currency translation adjustments Subscription rights to shares Minority interests in consolidated subsidiaries Total net assets Balance at April 1, 2010 Increase (decrease...

  • Page 110
    ..., plant and equipment Purchases of intangible assets Purchases of investment securities Proceeds from sales of investment securities Proceeds from acquisition of subsidiaries' stock resulting in change in scope of consolidation Proceeds from transfer of business Other, net Net cash used in investing...

  • Page 111
    ... (c) Revenue recognition Revenue from sales of ICT systems and products excluding customized software under development contracts (the "customized software") is recognized upon acceptance by the customers, whereas, revenue from sales of PCs, other equipment and electronic devices is recognized when...

  • Page 112
    110 FUJITSU LIMITED ANNUAL REPORT 2012 (f) Derivative financial instruments The Group uses derivative financial instruments mainly for the purpose of hedging against the risk of fluctuations in foreign exchange rates and interest rates on receivables and payables denominated in foreign currencies....

  • Page 113
    ... an estimated amount. (o) 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. (p) Provision for...

  • Page 114
    ... of defined benefit pension plans in subsidiaries outside Japan with no adjustment. The amendment to IAS 19 is considered to have a significant impact on the Group's consolidated financial statements. In the consolidated balance sheet, net assets are expected to decrease due mainly to the immediate...

  • Page 115
    ... the expected average remaining service lives of employees, in line with the "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements." The accounting standard requires retrospective application. The Group will therefore restate...

  • Page 116
    114 FUJITSU LIMITED ANNUAL REPORT 2012 Yen (millions) Years ended March 31 2011 2012 U.S. Dollars (thousands) 2012 Buildings Balance at beginning of year Additions Depreciation Impairment loss Translation differences Other, net Balance at end of year Machinery and equipment Balance at beginning ...

  • Page 117
    ... in Japan. *1 The unsecured convertible bonds due 2011 were issued on August 31, 2007 and redeemed at the maturity date on May 31, 2011. The applicable interest rate was 1.60% up to May 27, 2009. 1.75% was applied on and after May 28, 2009, as the weighted average share price on 10 consecutive days...

  • Page 118
    ... "cost of sales" for the same periods were ¥9,549 million and ¥8,452 million ($103,073 thousand), respectively. Major items that comprise "Selling, general and administrative expenses" are salaries and research and development expenses. The salaries for the years ended March 31, 2011 and 2012 were...

  • Page 119
    FUJITSU LIMITED ANNUAL REPORT 2012 117 For the year ended March 31, 2012 Restructuring charges Restructuring charges are in relation to the LSI device business, the car audio and navigation systems business and the services business outside of Japan. In the LSI device business, as part of ...

  • Page 120
    ... in the years before the adoption of the standard. Impairment loss Referred mainly to an investment property determined to be sold. Loss on changes in retirement benefit plan Referred to the costs related to the changes to a defined contribution pension plan by consolidated subsidiaries in Japan.

  • Page 121
    ... Gains (losses) during the term Reclassification adjustments Amount before related income tax effects Income tax effect Foreign currency translation adjustments Share of other comprehensive income of associates accounted for using the equity method Gains (losses) during the term Reclassification...

  • Page 122
    ... customers. The certificates of deposit are held for fund management and the shares are held for maintaining and strengthening business relationship with the customers. Shares are exposed to market price fluctuation risk and financial risk of the company invested. The Group also loans to customers...

  • Page 123
    ... related to borrowings and corporate bonds. (3) Risk Management of Financial Instruments (i)Management of Credit Risk The Group strives to mitigate collection risk in accordance with credit management standards and procedures in selling goods and services. A unit independent from the sales units...

  • Page 124
    ...FUJITSU LIMITED ANNUAL REPORT 2012 2. Fair Value of Financial Instruments Amounts recorded on the consolidated balance sheet as of March 31, 2011 and 2012... which do not qualify for hedge accounting (ii)Transactions which qualify for hedge accounting Total derivative transactions ¥ 266,698 ...

  • Page 125
    ... in shares in affiliates or available-for-sale securities are defined as "Financial Instruments for which it is extremely difficult to determine the fair value," because no market price is available and it is not possible to estimate the future cash flow in accordance with "Accounting Standard...

  • Page 126
    124 FUJITSU LIMITED ANNUAL REPORT 2012 12. Available-for-sale Securities At March 31, 2011 and 2012, available-for-sale securities included in "Cash and cash equivalents," "Short-term investments" and "Others" of "Investments and long-term loans" are stated as follows. Unlisted securities for ...

  • Page 127
    ... obtained from the financial institutions. *2 Foreign exchange forward transactions accounted for by the fair value hedge accounting attribute to a transaction by a subsidiary outside Japan which adopts International Financial Reporting Standard (IFRS). At March 31, 2011 1 Not applicable for the...

  • Page 128
    ... Company and the majority of the consolidated subsidiaries in Japan participate in contributory defined benefit plans which cover substantially all employees. The major contributory defined benefit plan (the "Plan"), which is referred to as the Fujitsu Corporate Pension Fund, entitles employees upon...

  • Page 129
    ... 31, 2006 in Fujitsu Corporate Pension Fund in which the Company and certain consolidated subsidiaries in Japan participate. Components of net periodic benefit cost Yen (millions) Years ended March 31 2011 2012 U.S. Dollars (thousands) 2012 Service cost Interest cost Expected return on plan assets...

  • Page 130
    128 FUJITSU LIMITED ANNUAL REPORT 2012 Assumptions used in accounting for the plans At March 31 2011 2012 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Method of allocating prior service cost 2.5% 2.9% Straight-line method over the employees' average ...

  • Page 131
    FUJITSU LIMITED ANNUAL REPORT 2012 129 Assumptions used in accounting for the plans At March 31 2011 2012 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Mainly 5.6% Mainly 7.2% Straight-line method over the employees' average remaining service period ...

  • Page 132
    130 FUJITSU LIMITED ANNUAL REPORT 2012 The significant components of deferred tax assets and liabilities at March 31, 2011 and 2012 are as follows: Yen (millions) At March 31 2011 2012 U.S. Dollars (thousands) 2012 Deferred tax assets: Tax loss carryforwards Accrued retirement benefits Excess of ...

  • Page 133
    ... product and service type in order to manage costs and devise global business strategies, and business groups that are organized along industry and geographic lines, integrating sales groups with systems engineers covering customers. This reportable segment consists of Solutions/Systems Integration...

  • Page 134
    132 FUJITSU LIMITED ANNUAL REPORT 2012 3. Amounts of Net Sales, Profit or Loss, Assets and Other Items by Reportable Segments Yen (millions) Reportable segments Year ended March 31 Technology Solutions Ubiquitous Solutions Device Solutions Total Other Operations Elimination & Corporate ...

  • Page 135
    ... Related Information (1) Information by products and services Sales to external customers Yen (millions) Years ended March 31 2011 2012 U.S. Dollars (thousands) 2012 Technology Solutions Services System Platforms Ubiquitous Solutions Personal Computers and Mobile Phones Mobilewear Device Solutions...

  • Page 136
    ... property, plant and equipment are classified by countries or regions based on locations of the Group. (3) Information about major customer Net Sales Yen (millions) 2012 U.S. Dollars (thousands) 2012 Years ended March 31 2011 NTT Group Related segment: Technology Solutions, Ubiquitous Solutions...

  • Page 137
    FUJITSU LIMITED ANNUAL REPORT 2012 135 20. Earnings per Share Yen Years ended March 31 2011 2012 U.S. Dollars 2012 Basic earnings per share Diluted earnings per share ¥26.62 25.75 ¥20.64 20.55 Yen (millions) $0.252 0.251 U.S. Dollars (thousands) 2012 Years ended March 31 2011 2012 Net ...

  • Page 138
    136 FUJITSU LIMITED ANNUAL REPORT 2012 Independent Auditor's Report

  • Page 139
    FUJITSU LIMITED ANNUAL REPORT 2012 137 Facts & Figures

  • Page 140
    ... the assets, liabilities, financial position and profit or loss of Fujitsu Limited and the undertakings included in the consolidation taken as a whole; and (ii) the management report includes a fair review of the development and performance of the business and the position of Fujitsu Limited and the...

  • Page 141
    FUJITSU LIMITED ANNUAL REPORT 2012 139 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 142
    140 FUJITSU LIMITED ANNUAL REPORT 2012 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 and, in principle, all business processes relating ...

  • Page 143
    ... Limited Fujitsu TEN Limited Fujitsu Toshiba Mobile Communications Limited*2 Fujitsu Personal System Limited Fujitsu Marketing Limited Fujitsu Mobile-phone Products Limited EMEA Unlisted Fujitsu Services Holdings PLC Fujitsu Technology Solutions (Holding) B.V. The Americas Unlisted Fujitsu America...

  • Page 144
    ... Corporation 4-5, Marunouchi 1-chome Chiyoda-ku, Tokyo 100-8212, Japan 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...

  • Page 145
    ... society, by harnessing the power of information and communication technology (ICT). Employing over 170,000 people to support customers in more than 100 countries, Fujitsu is the Japanese global ICT company. We are delivering on our brand promise. ©2012 Fujitsu Limited Printed in Japan BA0039-1AP