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Empowering New Potential in ICT
Fujitsu Limited
Annual Report
2013

Table of contents

  • Page 1
    Fujitsu Limited Annual Report 2013 Empowering New Potential in ICT

  • Page 2
    ... of cloud services for each customer's system, to build fast, reliable cloud environments. Cloud Services That Use Big Data Fujitsu is developing cloud services that use big data and integrating technologies for utilizing the data for provision to customers. We also supply software products that...

  • Page 3
    ..., the Group's businesses are conducted by approximately 170,000 employees in over 100 countries around the world. Dynamic Integrated Systems Dynamic Integrated Systems is the overall name for Fujitsu's vertically integrated system products. These include high-performance hardware and software of...

  • Page 4
    ... Business Technology Solutions are Fujitsu's core business segment. Here, Fujitsu delivers services, software, hardware, and more to customers in an optimal, integrated package of comprehensive services. Teams comprising sales representatives, who liaise directly with customers, systems engineers...

  • Page 5
    ... out the ingenuity of on-site personnel. Field innovators serve as partners who support customers' efforts to implement these sorts of activities. Field innovators are chosen from the ranks of managementlevel employees who have amassed experience in various business fields. They train for one...

  • Page 6
    ... fieldwork performed by field innovators on customers' business sites. Besides obtaining feedback directly from worksites via interviews and questionnaires, field innovators use a technique called "shadowing" to closely observe people, with the objective of recording their daily conduct in detail...

  • Page 7
    ... customers, while managing the project's budget, delivery schedule, and quality based on systems requirements and project plans. Following delivery, customers accept the system after testing to verify that the system functions properly according to the agreement. FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 8
    ... using a project management system, which allows all related parties, including the assigned system engineer and field innovator, to confirm the most recent status of business negotiations. Furthermore, by steadily executing and repeating this process, Fujitsu works to increase customer satisfaction...

  • Page 9
    ...efficiency. In providing solutions, we connect ICT more directly with management and use it to generate added value. In this way, Fujitsu aims to contribute to the development of its customers' businesses and work together with them to create a prosperous society. FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 10
    ... projects; and changes in accounting policies. Fujitsu has been incorporated into the SRI stock indexes below. Dow Jones Sustainability Indexes (Asia Pacific) FTSE4Good Index Series oekom research Morningstar Socially Responsible Investment Index 008 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 11
    ... responsibility. Opening Feature Fujitsu-AT THE HEART of a Human Centric Intelligent Society MANAGEMENT An overview of the Fujitsu Group's current status and future direction PERFORMANCE An overview of business performance by segment and by region, and a progress check on research & development...

  • Page 12
    ... year. Excluding one-time items such as the special contribution to the defined benefit corporate pension fund of a UK subsidiary company (¥114.3 billion), free cash flow amounted to ¥8.4 billion, which was ¥35.0 billion less than the previous fiscal year. 010 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 13
    ... retained earnings, on a non-consolidated basis, as of the end of fiscal 2012. For this reason, Fujitsu decided to forgo payment of a year-end dividend. The annual dividend for fiscal 2012 therefore consisted only of the interim dividend of ¥5 per share. FUJITSU LIMITED ANNUAL REPORT 2013 011

  • Page 14
    ... products centered on PCs and mobile phones and the impact of exchange rates. Net Income (Loss) (Â¥ Billions) 150 100 50 0 Free Cash Flow (Â¥ Billions) 400 93.0 55.0 42.7 296.4 -72.9 300 200 113.4 100 -50 -100 -150 0 23.4 49.1 -90.4 2013 (Years ended March 31) -112.3 2009 2010 2011 2012...

  • Page 15
    ... for the special contribution to a defined benefit corporate pension fund owned by Fujitsu's UK subsidiary, and for part of working capital. Fujitsu proceeded with R&D of various advanced technologies, from next-generation services to servers, networks, ubiquitous terminals, as well as devices and...

  • Page 16
    A MESSAGE FROM MANAGEMENT We are convinced that ICT will be a powerful force for creating new business value and transforming social infrastructure. 014 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 17
    ... creating new business value and transforming social infrastructure. The Fujitsu Group aims to harness ICT in innovative ways to find solutions to a range of issues, to realize a "Human Centric Intelligent Society" that is prosperous and secure. Staying true to our brand promise of "shaping tomorrow...

  • Page 18
    ... with underperforming businesses by restrucA review of fiscal 2012 turing the semiconductor The Technology Solutions segbusiness and structurally ment experienced steady growth, transforming the European primarily in Japan, but our system business. We will also make LSI, PC, and mobile phone reforms...

  • Page 19
    ...supported by the yen's depreciation and rising stock prices, but this had only a limited impact on our performance in fiscal 2012. In this market environment, the Technology Solutions segment experienced steady growth centered on Japan. However, the system LSI, PC, mobile phone, and other businesses...

  • Page 20
    ... of cloud computing systems by corporations, and the introduction of big data-related services. In our medium-term strategy, we see fiscal 2013 as a year to make a fresh start that paves the way for a sharp turnaround in earnings. Based on rigorous efforts to strengthen our management fundamentals...

  • Page 21
    ...9 Belgium 2 South Korea 1 India Thailand 2 Canada 2 Japan 66 USA Spain 1 Switzerland Portugal 1 Malaysia Philippines Costa Rica Bolivia 3 Singapore 8 Australia 2 South Africa Global Datacenters Global Delivery Centers Global Cloud Platform 1 Brazil FUJITSU LIMITED ANNUAL REPORT 2013 019

  • Page 22
    ... Transportation, Automotive Food, Agriculture Health, Medicine Modernization Big Data Social Innovation Social Business Innovation Mobile Cloud Integration Partner Cloud Partner Cloud A Broad Lineup of Cloud Services SaaS: Approx. 100 PaaS: 10 IaaS: 5 020 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 23
    ... ICT services to consumers are PCs and mobile phones. Leveraging this kind of user-interface technology for the creation of ICT services in the cloud era, we aim to work with our customers to generate new businesses based on the foundation of ubiquitous devices. FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 24
    ...CSR management at Group companies. The Fujitsu Group adheres to responsible management practices as a global enterprise. We support the United Nations Global Compact's 10 principles in the four areas of human rights, labor, the environment and anti-corruption. Guided by our brand promise of "shaping...

  • Page 25
    ... globally, we will expand the horizons of new service models together with customers. We hope that you will share in our strong expectations for Fujitsu's future endeavors. We are confident that there are abundant opportunities for us to achieve further growth. FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 26
    ... 2011, primarily as a result of efforts across the Group to generate cost efficiencies. There was also an increase in strategic investment in network-related technologies and cloud services. By segment, the Technology Solutions segment achieved higher sales year on year centered on services in Japan...

  • Page 27
    ...restructuring charges for business outside Japan consist of personnel-related expenses, primarily for the European subsidiary Fujitsu Technology Solutions (Holding) B.V. (FTS) Other restructuring charges include losses mainly related to the personnel-related expenses associated with rationalizations...

  • Page 28
    ... ICT systems from end to end." For each of these actions, Fujitsu is developing technologies and services centered on eight concepts, and will offer these to customers. In order to focus on the technologies and product development in line with these concepts, 026 FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 29
    ... levels of authentication and security functions required by business users. We are developing cutting-edge solutions, including enhancing the efficiency of on-site maintenance work using augmented reality technology. In such areas as sales, medicine, and nursing care, Fujitsu will create a world...

  • Page 30
    ...data can be utilized by people and in business activities. Fujitsu is supporting the utilization of this big data by providing cloud services, as well as software and vertically integrated system products installed and operated at customers' sites. We also offer consulting services by "curators" who...

  • Page 31
    ... and accounting Customer management HR and general affairs Commerce Fujitsu's Target Business Domains Through the advance of technology, Fujitsu will support modernization of customers' existing ICT assets, as well as their future innovation ICT Investment Projection Statements Marketing Sales...

  • Page 32
    ...with partners Data-utilization and value creation support services Analytics Big data platform Data utilization Procurement Production Distribution Sales Social Geography Weather Transportation Energy Government Internal company data External data 030 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 33
    ... hardware and software technologies, Fujitsu will progressively supply the Dynamic Integrated Systems family of products, which will be optimized for a wide array of customer service objectives. Products will include virtualization and cloud platforms, high-speed databases, and big data applications...

  • Page 34
    ..., 2013 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 and maintenance of the cutting-edge, high-quality products and electronic devices...

  • Page 35
    ... systems, mobile phone base stations In PCs, Fujitsu provides high-quality, high value-added products such as desktop PCs that can be easily operated away from the main unit using a wireless touchpad feature, a 2-way notebook PC that doubles as a tablet, and water- and dust-resistant Windows...

  • Page 36
    ... Systems East Limited Fujitsu Systems West Limited ScanSnap iX500 document scanner for easily and rapidly scanning documents and business cards Technology Solutions Results (See page 037 for numerical results from service operations) Yen (millions) Years ended March 31 2011 2012 2013 Net sales...

  • Page 37
    ...Private Cloud (Hosted Service) Specific to customer Public Cloud Specific to customer Modernization Cloud Integration Service Innovation (Multi-vendor, hybrid, integrated operation, industry specialization) Various SaaS(91 types), Packaged Software, SI FUJITSU Software Dynamic Integrated Systems...

  • Page 38
    ... 2016 0 2012 2013 2014 2015 2016 (Source: Gartner, "Market Share: IT Services 2012" 29 March 2013) (Source:IDC The Worldwide Black Book Q1 2013) (Source: IDC The Worldwide Black Book Q1 2013) Market Trends 2012 Global Market Trends The value of Japan's IT services market in 2012 increased...

  • Page 39
    ... those associated with big data. Cloud computing in Japan is spreading rapidly, and is available in a wide range of solutions and services, such as SaaS-model cloud services which leverage packaged software, PaaS and IaaS as infrastructure platforms, and private clouds. In response, we have upgraded...

  • Page 40
    ... 3 Gbps transmission ETERNUS VX740 storage for virtual environments FUJITSU PRIMEHPC FX10 supercomputer Technology Solutions Results (See page 041 for numerical results from system platform operations) Yen (millions) Years ended March 31 2011 2012 2013 Net sales External customers Inter...

  • Page 41
    ...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 American...

  • Page 42
    ... 2013 System Products: The server market in Japan is projected to decline by 6.3% to US$5.5 billion. The x86 server market is expected to maintain growth given the penetration of cloud computing and mobile devices; however, the mainframe server market is forecast to contract at a double-digit rate...

  • Page 43
    ... as we seek to increase sales of 100 Gbpsclass packet optical networking platforms in and outside of Japan, in order to cope with rapidly increasing data traffic. In mobile systems and network solutions, Fujitsu will aim to promote future business expansion on a global stage. Specifically, we will...

  • Page 44
    ... 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 STYLISTIC brands...

  • Page 45
    ...for Japan by Fujitsu Isotec Limited, and for other markets, mainly Europe, by Fujitsu Technology Solutions in Germany. We also offer lightweight, thin tablet PCs with high-spec, water- and dust-resistant features. In mobile phones and tablet PCs, we offer a diverse lineup of high-quality models with...

  • Page 46
    ... 2012 2013 2014 2015 2016 (Source: IDC, Worldwide Quarterly Mobile Phone Tracker, 2013Q1) * The above figures are as of the end of each fiscal year (March 31) (Source: Gartner, "Quarterly Statistics: Personal Computers, Worldwide by Region, 1Q13 Update" 6 May 2013) (Source: Japan Electronics...

  • Page 47
    ...-end PC sales in emerging markets. In North America, the focus will be on bolstering sales of tablet PCs in medical and educational fields, and in Asia-Pacific and China, on enhancing corporate sales activities. In mobile phones, Fujitsu is developing such products as the high-spec, water-resistant...

  • Page 48
    ... 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. Meanwhile, publicly listed consolidated...

  • Page 49
    ..., from imaging to wireless communications and security, 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. PERFORMANCE...

  • Page 50
    ...2012 and 2015. *1 Semiconductor market estimates according to World Semiconductor Trade Statistics (WSTS), spring 2013 forecast. *2 The WSTS semiconductor market estimates are premised on yen-U.S. dollar exchange rates of ¥79.7 in 2012, and ¥92.2 from 2013. 048 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 51
    ... made to develop Access Network Technology Limited, a subsidiary in the communications semiconductor field. Initiatives Going Forward The Fujitsu Group will continue working to optimize its manufacturing system in step with changes in the economic and business environment. As part of these...

  • Page 52
    ... Tablet PCs Bring ICT to Japan's Junior High School Classrooms May 9 Fujitsu Announces Summer 2012 Line of FMV Series of Personal Computers May 14 Fujitsu Uses ICT to Support Pet Health May 16 Fujitsu's Summer 2012 Eclipse Car Navigation Systems Feature Industry's Largest 9-Inch Screens and Market...

  • Page 53
    ...by Photographing a PC Screen with a Smartphone or Tablet March 11 Fujitsu and Saudi Industrial Property Authority "MODON" Enter Agreement on Development and Operation of Environmental Management System March 14 Fujitsu Develops First Optical Transmission Technology to Achieve 100 Gbps Using 10 Gbps...

  • Page 54
    ...on the new SPARC M10* model as a core product. In doing so, Fujitsu will work to capture a larger share of the UNIX market, with the aim of driving sales growth. In x86 servers, Fujitsu will continue to pursue greater development efficiency together with Fujitsu Technology Solutions (FTS) of Germany...

  • Page 55
    ... 3 4 40 2,000 20 1,000 2.8 2 0 2012 2013 2014 2015 2016 0 2009 2010 2011 2012 2013 0 (Source: Gartner, "Market Share: IT Services 2012" 29 March 2013) (Source: IDC The Worldwide Black Book Q1 2013) (Years ended March 31) Net sales (left scale) Operating income margin (right scale...

  • Page 56
    ... continental Europe, we will drive business expansion by leveraging our existing business platform in emerging markets, most notably those with high market growth rates such as India, Russia, and the Middle East. In the previous fiscal year, our European subsidiary Fujitsu Technology Solutions (FTS...

  • Page 57
    ... delivery and business processes, coupled with boosting assurance functions and cutting costs by stepping up the use of near-shore and offshore resources. CUSTOMER SOLUTION PROFILE Post Office New system by Fujitsu cuts Post Office support costs by half The Post Office is at the heart of UK cities...

  • Page 58
    ...-on-year increase of 5.8% recorded in 2012. The market for conventional PCs is expected to decline another 3.6% in 2013 after falling 7.6% in 2012. Sales of communication devices are projected to expand briskly by 9.3%, exceeding the 5.6% growth seen in 2012. 056 FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 59
    ...0 -0.4 2009 2010 2011 2012 -0.8 2013 -2 (Years ended March 31) 0 2012 2013 2014 2015 2016 -150 (Source: Ovum, Market Share Spreadsheet & Analysis: 1Q13 Global ON, May 2013) (Source: IDC The Worldwide Blackbook Q1 2013) (Americas: North and South America) Net sales (left scale) Operating...

  • Page 60
    ... support efforts to strengthen their IT systems. We will also develop business with global companies and local Chinese enterprises by working closely with local Fujitsu Group offices. By business sector, in the datacenter and cloud services business, we will promote business deals relating to cloud...

  • Page 61
    ... on driving further expansion in the healthcare and distribution-related solutions businesses, where we have established a strong market position. In India, we intend to continue efforts to increase business from Europe and the United States by boosting our offshore resources. Fujitsu Technology...

  • Page 62
    ..., Fujitsu will work to upgrade and expand its analysis templates and other resources. At the same time, Fujitsu plans to progressively roll out this technology onboard the FUJITSU Software Interstage Business Analytics Modeling Server, a middleware product for building analytics solutions. 2 Data...

  • Page 63
    ... goal by 2014. Fujitsu has developed an image-based communications technology where communications data invisible to the human eye is embedded in TV images and PC screens and communicated by having the recipient take a video of the image, using a camera installed in mobile phones and other devices...

  • Page 64
    ... fiscal 2013, for the "development of digital video coding LSI and transmission system". The technology recognized by this award is provided as a solution called • CEATEC AWARD 2012 Minister of Internal Affairs and Communications Award: "Akisai Food and Agriculture Cloud Service" • Innovation...

  • Page 65
    ... cloud-based server via smartphones and PCs. Besides enabling users to store data on the server, Fujitsu has set up a user-friendly website that allows users to create diaries centered on the health management of their pet dogs. Applying Sensing technology Cultivated through Mobile Phones to Health...

  • Page 66
    ... use regular meetings among Group companies to share information as well as promote specific measures. In this way, we foster a unified approach to intellectual property activities. High-Definition Digital Video Transmission Technology The spread of digital terrestrial broadcasting and large-screen...

  • Page 67
    ...Series-optical transport systems developed by the Fujitsu Group that have garnered acclaim for their sophisticated technology and full line of support services-has been adopted by major network carriers in Japan and North America. The series contributes to the spread of smartphones and user-friendly...

  • Page 68
    ... 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 in accordance with the Fujitsu Way. 066 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 69
    ... strive to meet the expectations of customers, employees and shareholders. We seek to continuously increase our corporate value. We think and act from a global perspective. What we value: Employees Customers Business Partners Technology Quality We respect diversity and support individual growth. We...

  • Page 70
    .... Since fiscal 2011, Fujitsu utilized the ISO 26000 social responsibility standard (issued November 2010) to create a survey, which it uses to ascertain the status of CSR activities at 117 affiliates (80 in Japan, 37 overseas; with 104 of these being more than 50% owned by Fujitsu Limited), and in...

  • Page 71
    ... users in France as part of its global business development. By providing this model, we aim to offer seniors both communication support and services. Looking ahead, Fujitsu will draw on its track record with users to continue providing value to society. * Karada Life: This health management service...

  • Page 72
    ... through our business activities, by promoting ICT uptake throughout all of society, and creating innovative technologies. Using ICT to Pursue Growth While Contributing to Solutions for Societal and Environmental Problems Ever since its founding in 1935, the Fujitsu Group has been guided by the...

  • Page 73
    ... on Biological Diversity. Overview of Mobile Phone System Cloud Service Researchers Members of the public Volunteers Anyone can easily take a photograph Cloud Platform (Fujitsu) Educational institutions Local governments NPOs Analysis and use of data FUJITSU LIMITED ANNUAL REPORT 2013 071

  • Page 74
    ... Global Knowledge Institute/Development Course (GKI/D) is a program that selects young, management-track employees and develops them into leaders to drive new business creation and business model innovation. In fiscal 2012, part of the program involved giving participants a front line, or customer...

  • Page 75
    ..., eyeing an era when virtually everything is connected to the Internet • Achieve stable operation of world-class IT systems • Develop and strengthen cyber security solutions Socially Responsible Investment (SRI) Fujitsu has been incorporated into the SRI stock indexes and SRI funds listed below...

  • Page 76
    ...2013 CTO*1, *2 CMO*1, *3 KAZUHIKO KATO Corporate Executive Vice President Number of years as director: 4 years Number of Fujitsu shares held: 49,194* Birth: November 13, 1951 Apr. 1976 Joined Fujitsu Limited Jun. 1996 General Manager, Controller and Accounting Division Jun. 2001 Member of the Board...

  • Page 77
    ...Member of the Policy Board, the Bank of Japan (until March, 2011) May 2011 Special Advisor, the Cannon Institute for Global Studies*1 Jun. 2013 Director, Fujitsu Limited*1 * *1 *2 *3 *4 *5 *6 Number of shares held as of March 31, 2013 To present CTO : Chief Technology Officer CMO : Chief Marketing...

  • Page 78
    ... is expected of external directors is to think about how Fujitsu, as a global company representing Japan, is viewed by the Japanese people and the rest of the world to ensure that its corporate culture does not diverge from commonly accepted social norms, to consider what is expected of it, and to...

  • Page 79
    ... In promoting its businesses, Fujitsu needs to consider its dignity as a company too. Contributing to the world as a whole can create a virtuous cycle that further improves Japan's image. What message do you have for shareholders and investors? As I have interacted with Fujitsu's corporate officers...

  • Page 80
    ...'s website. As of June 24, 2013, Fujitsu was listed on three securities exchanges in Japan, and complies with the regulations relating to corporate governance of each exchange. Moreover, Fujitsu also observes the Principles of Corporate Governance for Listed Companies of the Tokyo Stock Exchange...

  • Page 81
    ...interest in representing the interests of regular shareholders. Therefore, Fujitsu has reported to securities exchanges on which the Company is listed in Japan notifying them that he is an independent director, in accordance with the exchanges' listing rules. FUJITSU LIMITED ANNUAL REPORT 2013 079...

  • Page 82
    ...executive management position with a major trading partner of the Company, and Fujitsu has thus determined that there is no risk of a conflict of interest in representing the interests of regular shareholders, and has reported to securities exchanges on which the Company is listed in Japan notifying...

  • Page 83
    ... shareholder nor has he held an executive management position with a major business partner of the Company. Since the Company he is independent, the Company has reported to securities exchanges on which the Company is listed in Japan notifying them that he is an independent Audit & Supervisory Board...

  • Page 84
    ...external Audit & Supervisory Board members provide effective management oversight and auditing of the execution of duties throughout the entire Fujitsu Group by facilitating mutual communication during internal audits, statutory audits, and accounting audits. 082 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 85
    ... internal control relating to the Fujitsu Way and financial reporting in the Fujitsu Group and forms the core of operations to upgrade and evaluate internal control for the Group. During internal control audits by the accounting auditor and statutory auditors, the Fujitsu Way Promotion Council holds...

  • Page 86
    ..., and since the Annual Shareholders' Meeting held in June 2006 we have been using a platform to allow institutional investors to electronically exercise voting rights. Fujitsu participates in the electronic proxy voting platform operated by Investor Communications Japan (ICJ) as part of its efforts...

  • Page 87
    ... Fujitsu Way, the guide for the actions of the Group and its employees, is to bring about a prosperous future that fulfills the dreams of people throughout the world. As part of our Values, we strive to meet the expectations of all stakeholders, including customers, shareholders, investors, business...

  • Page 88
    ...• Fujitsu Way Promotion Council Internal • Risk Management & Compliance Committee Control Division • Environmental Committee Report Coordinate Internal audit Supervision Corporate Executive Officers Business Unit/Group Companies 1. Basic Stance on Internal Control System and Status [Basic...

  • Page 89
    ... 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 90
    ...ensure the appropriateness of Fujitsu Group business a. Using the Fujitsu Way as a foundation, in order to continuously increase the value of the Fujitsu Group, Fujitsu will provide direction and support to senior management of each Group company for setting up efficient, law-abiding and appropriate...

  • Page 91
    ... the status of the Company's internal structure for timely information disclosure. RESPONSIBILITY 1. Internal Structure for Timely Disclosure of Corporate Information The Company endeavors to quickly and accurately grasp information (decisions, events, and financial results) related to the business...

  • Page 92
    ... Unit Prior discussion Board of Directors Deliberation Management Council Deliberation Report Deliberation Decisions Business Divisions Business Unit Business Divisions Events Business Unit Financial Results-Related Information Corporate Finance Unit 090 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 93
    ... in our key markets, namely Japan, North America, Europe, and Asia (including China), can significantly impact Fujitsu Group operations. 1) Changes in Customers' ICT Investment Trends A growing proportion of our technology solutions and other businesses is with public institutions, such as the...

  • Page 94
    ..., we emphasize quality in our business activities. The Fujitsu Group aims to enhance quality to build and support a networked society where people can live in comfort and with peace of mind. We are committed to improving quality at the design and development 092 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 95
    .... 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 96
    7) Information Management In order to safeguard the personal and confidential information of customers, business partners, and the Fujitsu Group itself, the Group has taken such measures as establishing strict regulations, instituting training programs for employees, upgrading its information ...

  • Page 97
    ... Income Statements Consolidated Statements of Comprehensive Income 111 Consolidated Statements of Changes in Net Assets 112 Consolidated Statements of Cash Flows 113 Notes to Consolidated Financial Statements 142 Independent Auditor's Report FUJITSU LIMITED ANNUAL REPORT 2013 095 FACTS...

  • Page 98
    ... Standards Board of Japan, Statement No. 25) effective the year ended March 31, 2011. 4. Diluted earnings per share and dividend payout ratio on a consolidated basis for the year ended March 31, 2009 and 2013 are not disclosed due to the recording at net losses. 096 FUJITSU LIMITED ANNUAL REPORT...

  • Page 99
    ... fourth quarter (January-March, 2013), the impact on the real economy in fiscal 2012 has been limited. With regard to investment in information and communication technology (ICT) in Japan, spending on services has been recovering, although investment in hardware related to servers and so forth has...

  • Page 100
    ... conditions, and sales of PCs in Europe and optical transmission systems in North America were lower. The Technology Solutions segment comprises the Group's core businesses, including services, server-related, and Network Products businesses. Consolidated segment net sales increased year on year...

  • Page 101
    ... 2,400 employees in and outside Japan (under which, 1,963 people had applied in Japan as of the application deadline in April 2013). The restructuring costs for business outside Japan consist of personnel-related expenses, primarily for the European subsidiary Fujitsu Technology Solutions (Holding...

  • Page 102
    ...of optical transmission systems in North America and UNIX servers, as well as increased expenses related to retirement benefit obligations at a UK subsidiary. In light of continued deterioration of economic conditions in Europe and intensified competition, the Group has revised the business plan for...

  • Page 103
    ... capacity utilization rates have been declining. FUJITSU LIMITED ANNUAL REPORT 2013 Device Solutions The Device Solutions segment provides cutting-edge technology products, such as LSI devices used in digital home appliances, automobiles, mobile phones and servers, as well as electronic components...

  • Page 104
    ... in car audio and navigation systems were offset by lower revenue from PCs, mobile phones, and LSI devices. EMEA Geographic Information One of the Group's management priorities is to increase sales and raise profitability of its business in growing markets outside Japan. Geographic financial...

  • Page 105
    ...2009 2010 2011 2012 2013 FACTS & FIGURES (As of March 31) (As of March 31) (Years ended March 31) Interest-bearing loans (Left Scale) D/E ratio (Right Scale) Net D/E ratio (Right Scale) Owners' Equity (Left Scale) Owners' Equity Ratio (Right Scale) FUJITSU LIMITED ANNUAL REPORT 2013 103

  • Page 106
    ... an increase of ¥153.8 billion from the end of fiscal 2011. Short-term borrowings increased to finance a portion of working capital and a special contribution into defined benefit corporate pension fund of the Company's UK-based subsidiary. As a result, the 104 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 107
    ...corporate pension fund of the Company's UK subsidiary. Working capital increased due to sluggish sales of hardware such as PCs and mobile phones. Regarding business restructuring costs relating to the LSI device business and business outside Japan, cash outflows are expected in and after fiscal 2013...

  • Page 108
    ...) for expansion of datacenters in Japan, along with renewals of datacenters and plant facilities in Europe and other regions overseas. In the Ubiquitous Solutions segment, the Group spent ¥14.6 billion ($156 million), mainly for manufacturing facilities for new models of PCs and mobile phones, and...

  • Page 109
    ... computers once lease contracts are terminated. An estimated amount for the loss arising from such buybacks is provided at the time of sale and is recorded as a provision. Any future changes in the usage trends of end-users may result in changes to the provision. FUJITSU LIMITED ANNUAL REPORT 2013...

  • Page 110
    ...,617 254,585 1,992,798 Investments and other non-current assets: Prepaid pension cost 14 Deferred tax assets 16 Investments in and long-term loans to affiliates... The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 111
    ...retirement benefits Provision for loss on repurchase of computers Provision for product warranties Provision for recycling expenses Provision for restructuring charges Others Total long-term liabilities Total liabilities Net assets Shareholders' equity: Common stock Capital surplus Retained earnings...

  • Page 112
    ... Foreign currency translation adjustments Share of other comprehensive income of affiliates accounted for using the equity method Total other comprehensive income Comprehensive income Attributable to: Owners of the parent Minority interests 110 FUJITSU LIMITED ANNUAL REPORT 2013 ¥36,718 8 44 112...

  • Page 113
    ...,202 (994,096) $2,892,074 (234) $(3,617) (994,362) $8,857,117 121,383 $266,702 Balance at March 31, 2013 (in U.S. Dollars) $3,453,457 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. FUJITSU LIMITED ANNUAL REPORT 2013 111 FACTS & FIGURES

  • Page 114
    ... 78,819 184,277 2,837,213 5,617 $ 3,027,106 $ 128,000 9 9 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. * This is referred to as "free cash flow" in Management's Discussion and Analysis of Operations. 112 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 115
    ... Reporting Standards). However, certain items, such as amortization of goodwill, are adjusted in the process of consolidation based on "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (Accounting Standards Board of Japan...

  • Page 116
    ... are periods over which the Group expects to benefit from the acquired business. Computer software for sale is amortized based on the current year sales units to the projected total products' sales units. Computer software for internal use is amortized by the straight-line method over the estimated...

  • Page 117
    ... the consolidated financial statements for the year ended March 31, 2013. (p) Provision for loss on repurchase of computers Certain computers manufactured by the Group are sold to Japan Electronic Computer Co., Ltd. ("JECC") and other leasing companies for leasing to ultimate users under contracts...

  • Page 118
    ..., the filing date of the Annual Securities Report, regulated by the Financial Instruments and Exchange Law of Japan. The Group has not yet adopted these standards as of March 31, 2013. "Accounting Standard for Retirement Benefits" (Accounting Standards Board of Japan Statement No. 26, issued May 17...

  • Page 119
    ... by the Company's consolidated subsidiaries outside Japan to the income statement. However, in the process of the Group's consolidation, these are periodically recognized as an expense over the expected average remaining service lives of employees, in line with the "Practical Solution on Unification...

  • Page 120
    ...) 2013 Balance at beginning of year Additions Amortization Impairment loss Translation differences and others Balance at end of year ¥80,083 3,315 15,099 - (773) ¥67,526 ¥67,526 620 14,231 26,600 2,259 ¥29,574 $718,362 6,596 151,394 282,979 24,032 $314,617 118 FUJITSU LIMITED ANNUAL REPORT...

  • Page 121
    ... and notes issued by the Company: Secured Unsecured 3.0% unsecured bonds due 2018 1.49% unsecured bonds due 2012 1.73% unsecured bonds due 2014 0.307% unsecured bonds due 2013 0.42% unsecured bonds due 2015 0.398% unsecured bonds due 2014 0.623% unsecured bonds due 2016 0.331% unsecured bonds due...

  • Page 122
    ... equity in accordance with accounting principles and practices generally accepted in Japan. The aggregate annual maturities of long-term debt subsequent to March 31, 2013 are summarized as follows: Years ending March 31 Yen (millions) U.S. Dollars (thousands) 2014 2015 2016 2017 2018 and thereafter...

  • Page 123
    ... related to the European subsidiary Fujitsu Technology Solutions (Holding) B.V. Other than the above, ¥5,839 million ($62,117 thousand) of restructuring charges was recorded mainly for the personnel-related charges incurred for an early retirement incentive plan targeting managerial levels in Japan...

  • Page 124
    ...of Fujitsu Technology Solutions (Holding) B.V. were acquired. In the standalone financial statements of the Company, impairment losses on the investments in the subsidiaries (*) were recognized. Due to the recession in Europe and intensification of price competition in PCs and x86 servers, the Group...

  • Page 125
    ... systems businesses include impairment losses of ¥2,465 million. Loss on disaster Referred mainly to fixed costs associated with temporary plant shutdowns due to aftershocks following the Great East Japan Earthquake and customer-related factors. Loss on changes in retirement benefit plan...

  • Page 126
    ...: Other, net "Other, net" in cash flows from operating activities includes a special payment of ¥114,360 million (800 million Pound Sterling) into defined benefit pension schemes of Fujitsu Services Holding PLC (including its consolidated subsidiaries). 124 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 127
    ... fund management and the shares are held for maintaining and strengthening business relationships with customers. Shares are exposed to market price fluctuation risk and financial risk of the company invested. The Group also provides loans to customers. FACTS & FIGURES FUJITSU LIMITED ANNUAL REPORT...

  • Page 128
    ... risk 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...

  • Page 129
    ...Financial instruments categorized within "Others" of both "Current assets" and "Investments and other non-current assets" are not included, except for available-for-sale securities...accounting (ii) Transactions which qualify for hedge accounting ...FUJITSU LIMITED ANNUAL REPORT 2013 127 FACTS & FIGURES

  • Page 130
    ... to be irrecoverable. Available-for-sale securities with no available fair value are generally impaired when issuers' net assets in the balance sheet decrease to more than 50% below the acquisition cost due to a deterioration of issuers' financial conditions. 128 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 131
    ... Exchange Swap Contracts Receive Pound Sterling Pay Pound Sterling Others Total 15,672 15,647 15,024 - - 834 110 38 (38) ¥1,326 110 38 (38) ¥1,326 166,723 166,457 159,830 - - 8,872 1,170 404 (404) $ 14,106 1,170 404 (404) $14,106 FUJITSU LIMITED ANNUAL REPORT 2013 129 FACTS & FIGURES

  • Page 132
    ...2012 represent zero-cost options. In this contract, no premiums are received or paid due to the offsetting payables and receivables. The amounts of "Fair value" and the "Gain/Loss" for "Euro puts" and "Euro calls" are presented net of buying and selling positions. 130 FUJITSU LIMITED ANNUAL REPORT...

  • Page 133
    ... Contract amount Contract amounts over 1 year Yen (millions) FACTS & FIGURES Type of transaction Fair value Deferral hedge Option transaction to sell a stock Investment Securities ¥555 ¥555 ¥647 FUJITSU LIMITED ANNUAL REPORT 2013 The fair value is based on an option pricing model. 131

  • Page 134
    ... restated. *2 As a result of pension revisions, unrecognized prior service cost (reduced obligation) occurred for the year ended March 31, 2006 in Fujitsu Corporate Pension Fund in which the Company and certain consolidated subsidiaries in Japan participate. 132 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 135
    ... March 31, 2012 and 2013, respectively. Assumptions used in accounting for the plans At March 31 2012 2013 Discount rate*3 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 136
    ... Mainly 5.7% Straight-line method over the employees' average remaining service period *2 The discount rate used for the calculation of projected benefit obligation as of March 31, 2013 was revised to be in line with the market yields as of March 31, 2013. 134 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 137
    ...taxable income Decrease in deferred tax assets in accordance with changes in tax rate Other Effective income tax rates 40.6% (15.1%) 9.2% (0.2%) 6.2% (1.9%) (2.3%) 7.0% 1.5% 45.0% 37.9% (63.1%) (32.5%) 7.3% (6.4%) 5.6% 1.8% - (4.4%) (53.8%) FUJITSU LIMITED ANNUAL REPORT 2013 135 FACTS & FIGURES

  • Page 138
    ... the expiration of the tax loss carryforwards. With respect to deferred tax assets, the Group recorded a valuation allowance to cover the amount in excess of what we are likely to recover in the future. 17. Business Combinations No significant transactions. 136 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 139
    ... Products, which are used to build communications infrastructure, such as mobile phone base stations and optical transmission systems. (2) Ubiquitous Solutions The segment is organized into independent business management units along product lines and includes the sales departments. This reportable...

  • Page 140
    ...Reportable Segments Yen (millions) Reportable segments Years ended March 31 Technology Solutions Ubiquitous Solutions Device Solutions Total Other Operations Elimination & Corporate Consolidated 2013 Net sales External customers Inter-segment Total sales...,617 138 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 141
    ..." reportable segment. 4. Related Information (1) Information by products and services Sales to external customers Yen (millions) Years ended March 31 2012 2013 U.S. Dollars (thousands) 2013 Technology Solutions Services System Platforms Ubiquitous Solutions Personal Computers and Mobile Phones...

  • Page 142
    ..., NTT COMMUNICATIONS CORPORATION, NTT DOCOMO, Inc. and NTT DATA CORPORATION are included in NTT Group. 19. Related-party Transactions (Related-party transactions) No significant transactions. (Note to significant affiliate) Not applicable for the year. 140 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 143
    ...accordance with "Accounting Standard for Earnings Per Share" (Accounting Standards Board of Japan, Statement No. 2), although the Company has potentially diluted share. 21. Commitments and Contingent Liabilities Commitments outstanding at March 31, 2012 and 2013 for purchases of property, plant and...

  • Page 144
    INDEPENDENT AUDITOR'S REPORT 142 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 145
    FUJITSU LIMITED ANNUAL REPORT 2013 143 FACTS & FIGURES

  • Page 146
    ... 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 147
    ... of Fujitsu Limited (the "Company"), and Kazuhiko Kato, Corporate Executive Vice President and Director and Chief Financial Officer of the Company, are responsible for the design and operation of internal control over financial reporting for the Fujitsu Group's consolidated financial statements. The...

  • Page 148
    .... 3. Assessment Result As a result of performing the assessment in accordance with the above policy, the Company concluded that the design and operation of internal control over financial reporting for the Fujitsu Group were effective as of March 31, 2013. 146 FUJITSU LIMITED ANNUAL REPORT 2013

  • Page 149
    ... customers to use its computer servers and network for a hosting fee. Mobilewear A term coined by Fujitsu that mainly refers to car audio and navigation equipment, most notably car navigation systems, but also to mobile communication and automotive electronic equipment. Human Centric Intelligent...

  • Page 150
    ... "public cloud"). Smart phone Mobile phones offering voice calling and email that also enable users to customize functions by individually adding new software. Social data Processor core The central part of a microprocessor computer. The processor core performs basic calculations and processing...

  • Page 151
    ... Limited Fujitsu TEN Limited Fujitsu Toshiba Mobile Communications Limited 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 152
    ...of Japan, Ltd. (for trust) Japan Trustee Services Bank, Ltd. (for trust) Fujitsu Employee Shareholding Association SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS (Standing Proxy, The Hongkong and Shanghai Banking Corporation Limited Tokyo Branch) Asahi Mutual Life Insurance Company Mizuho Corporate Bank...

  • Page 153
    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 ...