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FUJITSU LIMITED Annual Report 2002
FUJITSU LIMITED
Annual Report
2002

Table of contents

  • Page 1
    FUJITSU LIMITED Annual Report 2002

  • Page 2
    Annual Report 2002 CONTENTS Consolidated Financial Highlights To Our Shareholders Solution Profiles Environmental Activities Social Contributions Management Five-Year Summary Management's Discussion and Analysis of Operations Consolidated Balance Sheets Consolidated Statements of Operations ...

  • Page 3
    ...the approximate Tokyo foreign exchange market rate on March 31, 2002. Cash dividends per share of common stock for the year ended March 31, 2002 are the total of interim and year-end dividends approved by the Company's board of directors on October 24, 2001 and at the Annual Shareholders' Meeting on...

  • Page 4
    ...higher value-added business through an orientation toward software and services; 2) focusing more tightly on core technologies and products; and 3) enhancing the competitiveness of the Group. Electronic Devices We closed our Gresham semiconductor facility in the U.S. and consolidated our fabrication...

  • Page 5
    3

  • Page 6
    ... storage systems manufacturing. We exited from the business of small form factor hard disk drives for desktop PCs and have instead concentrated on hard disk drives for servers, where value-added is higher and growth prospects are better. Telecommunications In the network equipment business, in light...

  • Page 7
    ... throughout our business lines. In our software and services business we are enhancing our service offerings that focus on developing and operating customers' systems, such as consulting, training and security diagnostics. In our product businesses, such as SoC, servers and network equipment, we are...

  • Page 8
    ... of our software development activities. In 1992, we pioneered an easy-to-understand menu of standardized IT service offerings in Japan, called PROPOSE. Based on this model, our services business initially revolved around our existing systems integration business, expanding over time into consulting...

  • Page 9
    ... telecommunications and information processing, and to build high value-added information systems, differentiates Fujitsu in the market and will help increase sales and profitability. Electronic Devices Business - Focusing on Advanced Semiconductor Solutions In our electronic devices business...

  • Page 10
    ..., plasma displays, LCDs, SAW filters, and components, as well as small form factor hard disk drive operations, will be positioned as independent businesses. These moves will serve to increase the value of the Fujitsu Group as a whole. New Corporate Governance Structure To strengthen management...

  • Page 11
    ...of our determination to serve as a trusted partner who can utilize IT to help our customers unleash infinite possibilities for their business success. We will continue to concentrate on providing customercentric IT solutions for the global marketplace. At the same time, we have made environmentalism...

  • Page 12
    ... government's tax-web portal service and a citizen smartcard service, and in England it is deploying e-Government terminal for administrative applications various administrative applications systems. In Japan, too, we are providing comprehensive solutions to advance electronic government, including...

  • Page 13
    ... shipment management system. To support the development of Toyota's global business, we are building a supply-chain management system that integrates production, distribution and sales, and a web-based procurement system. These systems run on Fujitsu's PRIMEPOWER Unix servers and use our Interstage...

  • Page 14
    ... of operations; today they must also seek new ways to improve customer service and reduce total cost of ownership. Nordstrom, a leading department store chain with over 100 locations in 25 states throughout the U.S., gave Fujitsu Transaction Solutions Inc. 12 TeamPoS2000 point-of-sale system

  • Page 15
    ...to implement a nationwide POS system for its stores. Fujitsu's TeamPoS2000 terminals and GlobalSTORE software solution, with its open platform, ease of maintenance and extensive functionality, enables Nordstrom to respond to a wide variety of customer needs and hold overall system costs to a minimum...

  • Page 16
    ... was implemented with support from the Malaysian government, the Japanese Consulate General in Kota Kinabalu, the Japan International Cooperation Agency, and the Japan International Forestry Promotion and Cooperation Center, as well as monetary contributions from Fujitsu employees and the personal...

  • Page 17
    ... of Fujitsu, the Japan-America Institute of Management Science (JAIMS) is observing its thirtieth anniversary this year. Participants in the JAIMS program, who come from all over the world, hone their cross-cultural communication abilities and business skills through internships in global companies...

  • Page 18
    Management Board of Directors Corporate Executive Officers Naoyuki Akikusa Corporate Center President, CEO & COO Takashi Takaya Takahiko Okada Kazuhiko Kato Group Support Chairman of the Board Representative Director CFO and Head of Corporate Center... Director Electronic Devices Business Group ...

  • Page 19
    ... Summary 18 Management's Discussion and Analysis of Operations 19 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 24 26...

  • Page 20
    ... 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 Asia...

  • Page 21
    ..., and sales of optical transmission systems were sharply lower. In addition, our exit from the business of small form factor hard disk drives for desktop PCs, the severe deterioration in demand for electronic devices, and lower sales in our European and U.S. services businesses all contributed to an...

  • Page 22
    ... Holdings PLC" as of April 2002) and DMR Consulting of the U.S. (renamed "Fujitsu Consulting Inc." as of April 2002) as part of our global push in IT services. Exited business of small form factor hard disk drives for desktop PCs; restructured manufacturing operations for servers and storage systems...

  • Page 23
    ...and storage equipment for large-scale systems increased, and new cellular phones introduced in the second quarter sold well, but demand for PCs dropped significantly, resulting in lower overall domestic sales. Overseas, our exit from the business of small form factor hard disk drives for desktop PCs...

  • Page 24
    ... Services and Software: Outsourcing facilities and network infrastructure Information Processing: Development and manufacturing facilities for servers and notebook PC hard disk drives Telecommunications: Development and production facilities for 3G wireless base stations Electronic Devices...

  • Page 25
    ... network solutions sector, merging and reorganizing other domestic subsidiaries to make them more competitive, and reorganizing the Amdahl Group and ICL Group. In April 2002, DMR Consulting Group, Inc. was renamed Fujitsu Consulting Inc., and ICL PLC became Fujitsu Services Holdings PLC. The number...

  • Page 26
    ... Yen (millions) 2002 Assets Current assets: Cash and cash equivalents Short-term investments (Note 4) Receivables, trade (Notes 9 and 16) Allowance for doubtful accounts Inventories (Note 5) Current portion of lease receivables (Note 15) Other current assets (Note 11) Total current assets ¥ 309...

  • Page 27
    ... (thousands) (Note 3) 2002 Liabilities, minority interests and shareholders' equity Current liabilities: Short-term borrowings (Note 9) Current portion of long-term debt (Note 9) Payables, trade (Note 16) Accrued expenses Customers' advances Accrued income taxes Other current liabilities (Note 11...

  • Page 28
    ...2002 Net sales Operating costs and expenses: Cost of sales Selling, general and administrative expenses (Note 18) ¥5,255,102 ¥5,484,426 ¥5,006,977 $37,646,444 Operating...taxes and minority interests Income taxes (Note 11): Current... Amounts per share of common stock: Basic earnings (loss) (Note...

  • Page 29
    ... Yen (millions) 2002 Common stock: Balance at beginning of year Exercise of warrants Conversion of bonds Increase as a result of stock exchange Balance at end ...797) $ 78,323 ¥ 19,035 Revaluation surplus on land, net of taxes: Balance at beginning of year Increase Balance at end of year 4,311 4,...

  • Page 30
    ... (Increase) decrease in other current assets Increase (decrease) in payables, trade Increase in other current liabilities Other, net Cash generated from operations Interest paid Interest received Dividends received Income taxes paid Net cash provided by operating activities ¥ 74,857 ¥ 157,564...

  • Page 31
    .... (e) Revenue recognition Revenues from 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...

  • Page 32
    ... 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 which require that the Group repurchase the computers if they are returned by...

  • Page 33
    ... rule has not been defined in Japan. The Company and its consolidated subsidiaries in Japan devalued property, plant and equipment in accordance with accounting principles generally accepted in Japan. The effects on the aggregate value of property, plant and equipment based on IAS No.36 are...

  • Page 34
    ...66,188) Of the affiliates accounted for by the equity method, the carrying and market values of the shares of the publicly listed companies at March 31, 2001 and 2002 were as follows: Yen (millions) 2002 U.S. Dollars (thousands) 2002 At March 31 2001 Carrying value Market value ¥ 247,951 690,253...

  • Page 35
    ... revalued its own land used for business operations to the fair value by adopting the Land Revaluation Law of Japan on March 31, 2002. Revaluation surplus on land, net of taxes, was stated in a separate component of shareholders' equity. This revaluation surplus of ¥1,421 million ($10,684 thousand...

  • Page 36
    ...debt at March 31, 2001 and 2002 consisted of: Yen (millions) 2001 2002 U.S. Dollars (thousands) 2002 Loans, principally from banks and insurance companies, due 2001 to 2025 with interest ... 50,000 50,000 - 50,000 50,000 30,000 50,000 50,000 100,000 80,000 $ 63,707 3,665,857 297,872 - 248,353 117,120...

  • Page 37
    ... Dollars (thousands) 2002 Property, plant and equipment, net Receivables, trade and other current assets ¥19,465 35 ¥19,500 ¥17,013 - ¥17,013 $127,917 - $127,917 As is customary in Japan, substantially all loans from banks (including short-term loans) are made under general agreements which...

  • Page 38
    ... in Japan have unfunded lump-sum retirement plans which, in general, cover all employees who retire before a retirement age prescribed by in their internal codes. The employees are entitled to the benefits primarily based on their length of service and basic salary as of the retirement date...

  • Page 39
    ... 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 40
    ... 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 from establishment of stock holding trust for retirement benefit plan Retained...

  • Page 41
    ...the Annual Shareholders' Meeting held on June 25, 2002, and will be included in the following year's consolidated balance sheet. An increase arising from exchange offer procedures during the year ended March 31, 2002 reflected the issuance of stock which the Company made Fujitsu Systems Construction...

  • Page 42
    ..., present value, unearned finance income, and an accumulated allowance for uncollectible minimum lease payments receivable, under finance leases operated by Fujitsu Leasing Co., Ltd. at March 31, 2001 and 2002. 2001 Yen (millions) 2002 U.S. Dollars (thousands) 2002 Minimum lease payments receivable...

  • Page 43
    ... 2001 Yen (millions) 2002 U.S. Dollars (thousands) 2002 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...

  • Page 44
    ...to exit from the business of small form factor magnetic disk drives for desktop PCs. Of the total amount of restructuring charges, ¥417,053 million ($3,135,737 thousand), the amounts related to Services & software, Information processing, Telecommunications and Electronic devices business were ¥42...

  • Page 45
    ..., Storage equipment (Magnetic and Magnetooptical disk drives), Terminals (Financial terminals, POS systems), Mobile phone handsets (3) Telecommunications Switching systems (Digital switching systems, IPswitching nodes), Transmission systems (Fiberoptic transmission systems, Optical submarine cable...

  • Page 46
    ... segments other than Japan: (1) Europe U.K., France, Spain, Sweden, Germany, Finland, the Netherlands (2) The Americas U.S.A., Canada (3) Others China, Thailand, Vietnam, the Philippines, Singapore, Taiwan, Australia 3. Unallocated operating costs and expenses reported in "Elimination & Corporate...

  • Page 47
    ...certain long-term and short-term debt, the making of certain strategic investments in growth areas such as the Services and Software business, and for other general corporate purposes. •The number of acquisition rights issued: 50,000 •Security of the Bonds: Unsecured and unguaranteed •Exercise...

  • Page 48
    FINANCIAL SECTION 46

  • Page 49
    ... trading name to Fujitsu Services Holdings PLC on April 2, 2002.) Affiliates - Equity Method Applied Only JAPAN Listed Fanuc Ltd. Fujitsu General Ltd. Advantest Corporation Shareholder Information For further information, please contact: Fujitsu Limited Public & Investor Relations EUROPE Unlisted...

  • Page 50
    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/ Printed in Japan BA0019-1M This report is printed on 100% recycled paper with ink containing less than 15% oil-based solvent.