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FUJITSU LIMITED Annual Report 2001
2001
FUJITSU LIMITED
Annual Report

Table of contents

  • Page 1
    FUJITSU LIMITED Annual Report 2001

  • Page 2
    Annual Report 2001 CONTENTS Consolidated Financial Highlights To Our Shareholders Interview with President Akikusa Services/ Services and Software Platforms / Information Processing Platforms / Telecommunications Technologies / Electronic Devices Environmental Activities & Contributions to Society...

  • Page 3
    ... foreign exchange market rate as of March 31, 2001. Net Income (Loss) Net Sales (Â¥ Billion) (Â¥ Billion) Operating Income Net Income (Loss) per Share (Â¥) (Â¥ Billion) Cash Flows from Operating Activities (Â¥ Billion) Cash Flows from Operating Activities per Share (Â¥) 596 Shareholders' Equity...

  • Page 4
    ... improved, boosted by such factors as higher corporate investment in information technology and greater demand for personal digital appliances and personal computers, and economic conditions in both the U.S. and Europe were still positive. The market environment rapidly deteriorated in the second...

  • Page 5
    3

  • Page 6
    ... of being the leading solutions vendor in Japan. As customers' business activities become more globalized, we will pool the expertise, services and products of the Fujitsu Group, including DMR Consulting and ICL, in order to offer high-quality, locally attuned solutions to customers throughout the...

  • Page 7
    ... the new broadband Internet era will bring, and concentrating resources in our core businesses, we will work to raise profitability and enhance corporate value. We have begun concerted efforts to increase the value of "Fujitsu" as a global brand. In addition, combining the concepts of quality and...

  • Page 8
    ... areas as Unix servers and storage systems, and we concentrated on new types of communications infrastructure, such as photonic transmission and 3G mobile networks. In services, which we are developing and expanding based on these technologies and platforms, we focused on growing our business in new...

  • Page 9
    ... carry out your strategy? As we advance the Fujitsu Group's corporate strategy to the next phase, I believe that the following three points are especially important. The first is to gain a firm grasp of the changes in the business environment that the broadband Internet will bring. Our vision of the...

  • Page 10
    ... Era of Broadband Internet Interview with President Akikusa Close Links among Our Three Core Businesses The Fujitsu Group seems to be putting considerable effort into the much-discussed programming language XML (eXtensible Markup Language). XML is a shared language for exchanging such information...

  • Page 11
    ... software business, the Fujitsu Group ranks number three in the world and number one in Japan. The major points that distinguish us from the competition in this field are our world-class human resources and our systems construction capabilities and know-how. In our Internet-related services business...

  • Page 12
    ... the Era of Broadband Internet Interview with President Akikusa Pursuing "Internet Management" techniques and expertise that we have developed in the process of manufacturing high-performance LSI chips for our own servers and communications devices. Our system LSI business provides solutions to...

  • Page 13
    ... to foster the development of human resources to manage the Fujitsu Group of tomorrow. As part of that effort, we established our Global Knowledge Institute for training the next generation of world-class management leaders on a group-wide basis. Managers in the broadband Internet era will have to...

  • Page 14
    ... system problems and speed recovery times. In the software business, we are working to improve earnings by expanding our offerings of middleware to support systems construction for the broadband Internet era and applying the concept of selection and concentration to our product offerings in packaged...

  • Page 15
    ... the broadband Internet era is one of the Fujitsu Group's greatest strengths. In our personal computer business, we are putting efforts into "always on" broadband Internet and wireless technology, especially Bluetooth. We are also expanding our global marketing efforts, particularly in the notebook...

  • Page 16
    ... order from Dynegy Connect, the communications subsidiary of a major U.S. electric power company. We are building on these accomplishments to reinforce our leadership position in the photonics field. In 3G mobile communications, particularly W-CDMA, we will intensify efforts to expand our business...

  • Page 17
    ..., including communication networks and digital AV appliances. The Fujitsu Group holds the leading market position in Japan for flash memory and is also among the global leaders in this category, an achievement which stems from our technological edge in areas such as compact packaging and superior...

  • Page 18
    ... support for local governments with advanced environmental programs, including environmental know-how incorporating Fujitsu's own experience, advanced Internet-focused information and communications technologies, and our abundant experience in building information systems for local governments...

  • Page 19
    ...and exchange programs. For example, the Japan-America Institute of Management Science (JAIMS), which Fujitsu founded in Hawaii in 1972, brings together business people from all over the world, with the goal of fostering effective business leaders for the global age. The Foundation for International...

  • Page 20
    Toward the Era of Broadband Internet Members of the Board and Auditors ( From left: Tadashi Sekizawa, Tadayasu Sugita, Takashi Takaya, Akio Moridera, Naoyuki Akikusa ) MEMBERS OF THE BOARD CHAIRMAN Tadashi Sekizawa PRESIDENT and CEO Naoyuki Akikusa SENIOR EXECUTIVE VICE PRESIDENTS Tadayasu Sugita...

  • Page 21
    ...Year Summary 20 Management's Discussion and Analysis of Operations 21 Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report 26 28...

  • Page 22
    ...expenditure Capital expenditure Number of employees Net sales by business segment (excluding intersegment sales): Services and software Information processing Telecommunications Electronic devices Financing Other operations Total Net sales by customers' geographic location: Japan Europe The Americas...

  • Page 23
    ...31, 2001, the Fujitsu Group's domestic operating environment was characterized by a modest recovery in the Japanese economy in the first half of the fiscal year resulting from increased corporate IT investment and increased consumer demand for digital appliances and personal computers. Overseas, the...

  • Page 24
    ... ¥2,016.8 billion ($16,265 million). Domestically, the expanding use of the Internet led to higher sales in our services business, such as systems integration and outsourcing. However, overseas sales were affected by cutbacks in corporate IT investments in Europe and the United States, and overall...

  • Page 25
    ...and market products to support active use of the Internet resulted in increased sales of UNIX servers and personal computers for individual consumers. However, due in part to a drop in demand for global servers in overall domestic sales declined. Overseas, sales of small form factor hard disk drives...

  • Page 26
    ... R&D and parent company management division Major Capital Expenditures: * Services and Software - Outsourcing facilities for our network services business * Information Processing - Development facilities for UNIX systems Net sales (including intersegment sales) Japan ...Â¥4,224 Europe ...817 The...

  • Page 27
    ..., which offers UNIX servers, Intel Architecture (IA) servers, and storage systems, and Fujitsu Software Technology Corporation, which develops and sells software products such as storage management software. In addition, the number of affiliates for which the equity method was applied increased...

  • Page 28
    ...(Note 6) Lease receivables (Note 15) Other investments and long-term loans (Notes 4, 6, 9 and 11) Total investments and long-term loans 361,510 151,572 283,833 796,915 334,984 110,410 338,865 784,259 2,701,484 890,403 2,732,782 6,324,669 Property, plant and equipment (Notes 7 and 9): Land Buildings...

  • Page 29
    ...(Note 9) Accrued retirement benefits (Note 10) Provision for loss on repurchase of computers Other long-term ...2001-1,977,227,929 shares Capital surplus Retained earnings Unrealized gains on securities, net of taxes Foreign currency translation adjustments Treasury stock Total shareholders' equity...

  • Page 30
    ...2001 Net sales Operating costs and expenses: Cost of sales Selling, general and administrative expenses (Note 18) ¥5,242,986 ¥5,255,102 ¥5,484,426 $44,229,242 Operating income Other income (expenses): Interest and dividend income Equity in earnings of affiliates, net...of common stock: Basic ...

  • Page 31
    ...2001 U.S. Dollars (thousands) (Note 3) 2001 Common stock: Balance at beginning of year Exercise of warrants Conversion of bonds Increase as a result of merger...) (5,871) - - 41,524 $3,900,879 Unrealized gains on securities, net of taxes: Balance at beginning of year Increase Balance at end of year...

  • Page 32
    ... from investing activities (B): Purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Purchases of intangible assets (Increase) in investments and long-term loans (Increase) decrease in short-term investments Other, net Net cash used in investing activities...

  • Page 33
    ... sales of communications products and computer systems are generally recognized upon acceptance by the customers, whereas revenues from sales of personal computers, peripherals, other equipment and electronic devices are recognized when the products are shipped. (f) Marketable securities Marketable...

  • Page 34
    ... on net income, as indicated in Note 10. (m) Provision for loss on repurchase of computers Certain computers manufactured by the Group are sold to Japan Electronic Computer Company Limited ("JECC"), other leasing companies and financial institutions for leasing to the ultimate users under contracts...

  • Page 35
    .... (q) Change in significant accounting policy Prior to and for the year ended March 31, 1999, the Company and its consolidated subsidiaries in Japan treated finance leases in the same way as operating leases, which is generally accepted in Japan. As Fujitsu Leasing Co., Ltd. became a consolidated...

  • Page 36
    ... consolidated financial statements Detachable stock purchase warrants (Note 9) Other current liabilities Total shareholders' equity 2000 2001 ¥-1,971 +1,971 ¥ - - $ - - 3. U.S. Dollar Amounts The Company and its consolidated subsidiaries in Japan maintain their books of account in yen. The...

  • Page 37
    ...other investments and long-term loans. The Company does not regard JECC as an affiliate as it is unable to exercise significant influence over JECC's affairs. JECC's principal business is the leasing of computers and peripherals which it purchases from its seven shareholders. At March 31, 2001, JECC...

  • Page 38
    ..., Plant and Equipment Changes in property, plant and equipment resulted from the following: Yen (millions) Years ended March 31 2000 2001 U.S. Dollars (thousands) 2001 Land Balance at beginning of year, net Additions Translation differences Other, net Balance at end of year, net Buildings Balance...

  • Page 39
    ...Â¥452,219 $ 30,476 3,616,451 - $3,646,927 Long-term debt at March 31, 2000 and 2001 consisted of: Yen (millions) 2000 2001 U.S. Dollars (thousands) 2001 Loans, principally from banks and insurance companies, due 2000 to 2024 with interest rates ranging from 0.08% to 11.70% at March 31, 2000 and...

  • Page 40
    ...the Fujitsu Welfare Pension Fund, entitles employees upon retirement at the normal retirement age to either a lump-sum payment or pension annuity payments for life commencing at age 60 or a combination of both based on their length of service, basic salary as of the retirement date and the number of...

  • Page 41
    ... employees voluntarily terminated their services at the balance sheet date. Considering the above trust scheme, the adoption of the new accounting standard had no material impact on net income for the year ended March 31, 2001. The major defined benefit pension plan outside Japan is the ICL pension...

  • Page 42
    ... of computers Intercompany profit on inventory and property, plant and equipment Accrued enterprise taxes Other Gross deferred tax assets Less: Valuation allowance Total deferred tax assets Deferred tax liabilities: Gains on establishment of stock holding trust for retirement benefit plan Retained...

  • Page 43
    ... 1999 reflected the issuance of stock in connection with the merger of Fujitsu Towa Electron Ltd. with the Company in October 1998. 13. Commitments and Contingent Liabilities Commitments outstanding at March 31, 2001 for purchases of property, plant and equipment were approximately ¥76,405 million...

  • Page 44
    ...exchange contracts ¥584 Yen (millions) 2000 Fair value Carrying value Interest rate and currency swap contracts Options contracts: Purchased Written ¥ - 171 145 ¥252 122 107 15. Leases... 2001, future minimum lease payments to be received within one year under non-cancelable operating leases ...

  • Page 45
    ...Foreign exchange gains (losses), net Amortization of unrecognized prior service cost (pension expense) Amortization of unrecognized obligation for retirement benefits Loss on disposal of property, plant and equipment Expenses for issuance and offering of securities Loss on devaluation of marketable...

  • Page 46
    ... a system to deliver social benefit payments through the postal service. 19. Segment Information Business Segment Information Yen (millions) Years ended March 31 Services & Software Information TelecomProcessing munications Electronic Devices Financing Other Elimination & Operations Corporate...

  • Page 47
    ...), Memory IC (Flash memory, FRAM, FCRAM), LCD, Semiconductor package, Compound semiconductor, SAW device, Electro-mechanical component, PDP (5) Financing Leasing business (6) Other Operations Electronic material, Electronics-applied component, Audio/Navigation equipment, Audio electronic device...

  • Page 48
    ... by geographical location. 2. The principal countries and regions belonging to geographic segments other than Japan: (1) Europe U.K., France,... and general and administrative expenses at the Company. 4. Corporate assets included in "Elimination & Corporate" at March 31, 1999, 2000 and 2001 amounted...

  • Page 49
    ..., in order to reorganize the function of network system engineering within the Group. The share exchange ratio was one share of Fujitsu Systems Construction Ltd. for 0.741 shares of the Company's common stock. For dividends purpose, it is deemed that newly issued shares were issued at April 1, 2001...

  • Page 50
    CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors FUJITSU LIMITED We have examined the consolidated balance sheets of Fujitsu Limited and consolidated subsidiaries (the "Group") as of March 31, 2000 and 2001, and the related consolidated statements of operations, shareholders' equity and cash ...

  • Page 51
    ... Overseas: Frankfurt, London, Swiss Shareholder Information For further information, please contact: Fujitsu Limited Investor Relations Telephone: +81-3-3213-4160 Facsimile: +81-3-3216-9365 (As of March 31, 2001) Unlisted Fujitsu Network Communications, Inc. Amdahl Corporation DMR Consulting Group...

  • Page 52
    FUJITSU LIMITED 6-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8211, Japan Telephone:+81-3-3213-4160 Facsimile:+81-3-3216-9365 Internet:http://www.fujitsu.com/ ©2001 FUJITSU LIMITED Printed in Japan BA0017-1M This annual report is printed on recycled paper.