Fujitsu 2013 Annual Report Download - page 108

As a result of the above factors, cash and cash equivalents at the
end of fiscal 2012 were ¥284.5 billion ($3,027 million), an increase
of ¥17.8 billion compared to the end of fiscal 2011.
To ensure efficient funding when the need for funds arises, the
Group views the maintenance of an appropriate level of liquidity as
an important policy with respect to its financing activities. “Liquidity”
refers to cash and cash equivalents and the total unused balance of
financing frameworks based on commitment lines established with
multiple financial institutions. As of March 31, 2013, the Group had
liquidity of ¥482.3 billion ($5,131 million), of which ¥284.5 billion
($3,027 million) was cash and cash equivalents and ¥197.7 billion
($2,104 million) was the yen value of unused commitment lines.
To raise funds from global capital markets, the Group has
acquired bond ratings from Moody’s Investors Service (Moody’s),
Standard & Poor’s (S&P), and Rating and Investment Information,
Inc. (R&I). As of March 31, 2012, the Company had bond ratings
(long-term/short-term) of A3 (long-term) from Moody’s, A– (long-
term) from S&P, and A+ (long-term) and a-1 (short-term) from R&I.
As of March 31, 2013, the Company’s bond ratings (long-term/short-
term) were A3 (long-term) from Moody’s, BBB+ (long-term) from
S&P, and A (long-term) and a-1 (short-term) from R&I.
4. Capital Expenditure
In fiscal 2012, capital expenditure totaled ¥121.7 billion ($1,295
million), a decrease of 13.4% from ¥140.6 billion spent in the previ-
ous fiscal year. In the Technology Solutions segment, capital expendi-
tures totaled ¥59.5 billion ($633 million) 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 for car audio and navigation systems. In the Device
Solutions segment, expenditures totaled ¥40.4 billion ($431 mil-
lion), mainly for LSI device and electronic components manufactur-
ing facilities.
5. Consolidated Subsidiaries
At the end of fiscal 2012, the number of consolidated subsidiaries in
Japan totaled 197, and the number outside Japan totaled 317, for a
total of 514 subsidiaries. This represents a net decrease of 24 subsid-
iaries from 538 at the end of fiscal 2011, comprising 19 subsidiaries
added through acquisition or establishment, and 43 subsidiaries
removed through liquidation or sale.
The number of affiliated companies accounted for by the equity
method as of the fiscal year-end totaled 26, 8 more than a year earlier.
6. Critical Accounting Policies and Estimates
The accompanying consolidated financial statements of the Group
have been prepared in accordance with accounting principles and
practices generally accepted in Japan and the regulations under the
Financial Instruments and Exchange Law of Japan. The preparation of
the consolidated financial statements requires management to make
assumptions and estimates that affect the amount of the assets,
liabilities, contingent assets and contingent liabilities reported at the
end of the fiscal year, as well as the amount of revenue and expenses
recognized during that term. Actual results may differ from these
estimates. The following assumptions and estimates based on the
application of accounting principles are those that the management
believes may have a material impact on the consolidated financial
statements.
Revenue Recognition
Revenue from sales of ICT systems and products, excluding custom-
ized software under development contracts, is recognized upon
acceptance by the customers, whereas revenue from sales of per-
sonal computers, other peripheral equipment and electronic devices
is recognized when the products are delivered to the customers.
Revenue from customized software under development contracts is
recognized on a percentage-of-completion basis.
The Group stringently assesses the potential revenue recoverable
on projects for which estimated costs have exceeded estimated
revenue, and recognizes the amounts assessed as non-recoverable
as losses. If the estimated costs relating to such contracts increase
further in the future, additional losses may be recognized.
Inventories
Inventories are carried at the acquisition cost. However, should the
net realizable value (“NRV”) at the fiscal year-end fall below that of
the acquisition cost, inventories are subsequently measured based
on the NRV, with the difference in value between the acquisition cost
and the NRV, in principle, booked as cost of sales. Inventories outside
the normal operating cycle are calculated at an NRV that reflects
future demand and market trends. The Group may experience sub-
stantial losses in cases where the NRV drops dramatically as a result
of deterioration in the market environment compared to forecasts.
Property, Plant and Equipment
Depreciation for property, plant and equipment is computed princi-
pally 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 assets can be realized under normal business
conditions. In the future, some equipment and facilities may become
obsolete or may be repurposed as a result of technical innovation or
other factors. In such cases, their actual useful lives may be reduced
to shorter than their originally estimated useful lives. As such, there
is a risk that depreciation expenses may increase.
106 FUJITSU LIMITED ANNUAL REPORT 2013