Fujitsu 2006 Annual Report Download - page 45

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Annual Report 2006
by other companies could erode the value of the Group’s intel-
lectual 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, and
that earnings may be impacted by such consequences as the need
to pay for usage rights or cover costs associated with having to
modify designs. 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 imple-
ment 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 compensa-
tion 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 inability to do
so could negatively impact Group growth and profitability.
6) Environmental Pollution
While committed to minimizing environmental burden in
accordance with The FUJITSU Way and the Fujitsu Group
Environmental Policy, the Group cannot guarantee that envi-
ronmental pollution will not occur as a result of its operations.
Moreover, although we monitor soil and wastewater as well as
engage in cleanup activities at former factory sites, this does
not mean that pollution will not be found at such sites in the
future. In the event that environmental pollution were to occur
or be identified, cleanup and other costs could be incurred that
adversely affect Group earnings.
7) Information Management
In order to safeguard the personal and confidential information
of customers and business partners, the Group has taken such
measures as establishing strict regulations, instituting training
programs for employees, and providing consultation to business
subcontractors. 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 part-
ners. 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 sup-
ply of electricity or water as a result of earthquakes or other natu-
ral disasters and accidents. Such occurrences could interrupt
shipments to customers or disrupt shipments of parts for the
Group’s internal use, thereby affecting factory production 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 similar events. In
the wake of such incidents, some time may be required to resume
normal operations due to the array of highly specialized equip-
ment and devices used at these sites. Damage caused by natural
disasters may also hinder our ability to provide information sys-
tem 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. However, the
Group cannot guarantee its ability to prevent invasive computer
viruses and other disruptions from impeding network operations.
2) Geopolitical Risk
Conflicts, political instability, currency crises, natural disasters,
epidemics or other events in nations or regions where the Fujitsu
Group operates could have a significant impact on its businesses.