Fujitsu 2005 Annual Report Download - page 33

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Annual Report 2005
proprietary technologies, with the result that we could be un-
able to effectively prevent the manufacture and sale of similar
products developed by third parties using the Group’s own in-
tellectual property. Moreover, the creation of comparable or
superior technologies by other companies could erode the value
of the Group’s intellectual property. The Group has instituted
internal policies, including stringent clearance procedures prior
to launching new products and services, to ensure that no
infringement of other companies’ intellectual property occurs.
However, there is the possibility that the Group’s products or
technologies may be found to infringe on other companies’
intellectual property. In addition, the Group has previously
instituted a program to compensate employees for innovations
that they make in the course of their work, and will continue to
implement this program in the future in accordance with the
revision of Japan’s patent laws. Nevertheless, the Group faces
potential risk from lawsuits initiated by employees in regard to
compensation for innovation created in the workplace.
(5) Human Resources
The growth and profitability of the Fujitsu Group depends
heavily on human resources. As such, a major issue for the
Group is the ability to recruit and foster talented researchers,
system engineers, managers and other key personnel; the in-
ability to do so could negatively impact Group growth and
profitability.
(6) Environmental Pollution
While committed to minimizing environmental burden in
accordance with the Fujitsu Group Environmental Policy, the
Group cannot guarantee that environmental pollution will
never occur as a result of its operations. Moreover, although
we monitor soil and wastewater as well as engage in clean-up
activities at former factory sites, this does not mean that pol-
lution will not be found at such sites in the future. In the event
that environmental pollution were to occur or be identified,
clean-up and other costs could be incurred that adversely affect
Group earnings.
(7) Information Management
In order to safeguard the personal and confidential informa-
tion of customers and business partners, the Group has estab-
lished strict regulations and instituted training programs for
employees. Nevertheless, the Group cannot absolutely guar-
antee that information will not be leaked. In the unlikely event
that this should occur, trust in the Fujitsu Group could decline
and the Group may be obligated to pay damages to customers.
(8) Credit Ratings and Other Factors that Affect Trust
in the Group
In addition to having a major influence on capital procurement,
credit ratings by outside institutions serve as reliable sources
of information when conducting transactions with business
partners. Lower credit ratings caused by failure to meet
earnings targets, deteriorating financial conditions and other
reasons could influence our ability to procure needed funds,
and place the Group at a disadvantage in bidding for projects
and in other business dealings.
7. Natural Disasters and Unforeseen Incidents
Natural disasters and other unforeseen situations could have
a major impact on the business results and financial standing
of the Fujitsu Group. Examples of the potential risks posed
are found below.
(1) Damage From Earthquakes, Other Natural Disasters
and Accidents
The Group has taken measures to make its business sites more
resistant to earthquakes and conducts regular inspections and
disaster readiness drills. Nevertheless, there is a possibility that
the Group may be prevented from continuing operations due
to damage to facilities and equipment or interruptions in the
supply of electricity or water as a result of earthquakes and
other natural disasters and accidents. Such occurrences could
interrupt shipments to customers or disrupt shipments of parts
for the Group’s internal use, thereby affecting factory produc-
tion at other Group business sites. Semiconductor fabs and
other plants where high-precision processing is carried out are
particularly susceptible to the effects of earthquakes and simi-
lar events. In the wake of such incidents, some time may be
required to resume normal operations due to the array of highly
specialized equipment and devices used at these sites. Damage
caused by natural disasters may also hinder our ability to pro-
vide information system support for Group customers, which
could interrupt their business activities.
We have a well-developed system in place to ensure the
integrity and stable operation of critical in-house networks,
which are a key element of our business infrastructure. How-
ever, the Group cannot guarantee its ability to prevent inva-
sive computer viruses and other disruptions from impeding
network operations.
(2) Geopolitical Risk
Conflicts, political instability, currency crises, natural disas-
ters, epidemics or other events in nations or regions where the
Fujitsu Group operates could have a significant impact on its
businesses.