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in Motion
Transformation
FUJITSU LIMITED Annual Report 2009
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Table of contents

  • Page 1
    FUJITSU LIMITED Annual Report 2009 Transformation in Motion

  • Page 2
    Anytime, Anywhere, Fujitsu "Eco-friendly design!" "Spectacular!" Fujitsu Limited ANNUAL REPORT 2009

  • Page 3
    ...to school, shopping or even relaxing at home-Fujitsu products and services are a part of your life in ways you never imagined. In today's world, IT is an indispensible part of every level of society. Untold volumes of data are processed through net- "So convenient!" works by Fujitsu systems to add...

  • Page 4
    ...- and Internet-based overseas communications. Fujitsu creates optical transmission systems installed at base stations and cable relay stations to control and enable efficient data transmission and reception. Round-the-clock protectio of the year On-site system maintena support for customers...

  • Page 5
    ... the world in a number of applications to replace conventional ID and passwords, including PC login, room access control, and work attendance management. The new wing of the Fujitsu Tatebayashi System Center (scheduled to open in November 2009) s ered data to be wirelessly read from or written...

  • Page 6
    Technology Solutions/Services Technology Solutions/System Platforms Ubiquitous Product Solutions "So convenient!" even faster and more convenient making shopping easier Mobile phone handsets and base stations Mobile phones use wireless signals to handle voice calls and data. Fujitsu produces not...

  • Page 7
    .... "Spectacular!" Fujitsu technology is helping out in all kinds of places around the world. operations. safer, more efficient operations Keeping watch over the earth from space Satellite-based disaster management system for the Asia-Pacific region Fujitsu provides support for systems that assist...

  • Page 8
    ... ended March 31) Operating income (left scale) Operating income margin (right scale) (As of March 31) Total assets (left scale) Monthly inventory turnover rate (right scale) (As of March 31) Owners' equity (left scale) Owners' equity ratio (right scale) 006 Fujitsu Limited ANNUAL REPORT 2009

  • Page 9
    ... 2008 2009 0 0 2004 2005 2006 2007 2008 2009 0 2004 2005 2006 2007 2008 2009 0 2004 2005 2006 2007 2008 2009 (As of March 31) Interest-bearing loans (left scale) D/E ratio (right scale) (Years ended March 31) (Years ended March 31) (Years ended March 31) Fujitsu Limited ANNUAL REPORT 2009...

  • Page 10
    ... conditions in key markets (particularly in Japan, North America, Europe and Asia, including China); rapid changes in the high-technology market (particularly semiconductors, PCs, etc.); fluctuations in exchange rates or interest rates; fluctuations in capital markets; intensifying price competition...

  • Page 11
    ... A report on Fujitsu's operations in fiscal 2008, including a look at the staff who support operations and case studies of customers around the world MANAgEMENT REPORT We Drive Fujitsu Business Overview Operational Review and Outlook Technology Solutions / Services Technology Solutions / System...

  • Page 12
    A Message From Management Michiyoshi Mazuka Chairman Kuniaki Nozoe President 010 Fujitsu Limited ANNUAL REPORT 2009

  • Page 13
    ... help realize a prosperous, low-carbon society. Through this approach, we aim to achieve healthy profit growth and a steady increase in corporate value to meet the expectations of our shareholders and investors. Michiyoshi Mazuka Chairman Kuniaki Nozoe President Fujitsu Limited ANNUAL REPORT 2009...

  • Page 14
    ... and products from a customer-centric perspective and delivering them globally. We are tackling a range of reforms in order to continue being a company that inspires pride in customers, shareholders, business partners and employees. Kuniaki Nozoe, President 012 Fujitsu Limited ANNUAL REPORT 2009

  • Page 15
    ... this as the company's senior manager. Technology Solutions, the mainstay business of Fujitsu, saw sales decline by 6% year on year due to exchange rate effects-sales increased by 1% when discounting this factor. But, despite the extremely challenging economic environment, operating income grew by...

  • Page 16
    ... providing IT solutions to customers. We aim to utilize IT to contribute to the success of our customers' entire businesses. Fujitsu aims to help customers succeed in their businesses, not simply supply IT to them. This is what we mean by the perspective of our customers' customers. In order to...

  • Page 17
    ... products. This integration has been positioned as a pivotal reform for the entire Fujitsu Group, and we are currently working diligently to reform the server business, reorganize domestic distribution systems, revamp sites outside Japan and strengthen relationships with global partners. In order...

  • Page 18
    ... business (operated by Fujitsu Media Devices) Sold Fujitsu Automation Sold stake in Eudyna Devices Sold HDD business to create a stronger corporate structure. My mission is to execute these initiatives with all due speed. For example, as of April 1, 2009 we have concentrated solutions products...

  • Page 19
    ... the business outside of Japan, it will be extremely important to translate the structural reforms promoted by Richard Christou, our corporate senior executive vice president, into tangible financial results. Expand global business (Think global, Act Local) Fujitsu Limited ANNUAL REPORT 2009 017

  • Page 20
    ... be necessary to reorganize related research and developOver % x86 Server Business Plan Fujitsu group Target Market Share 500,000 units in FY2010 (7% worldwide share) 10 ment functions, materials procurement, marketing, groups outside of Japan and sales systems inside Japan. In addition, we must...

  • Page 21
    ...in semiconductor technologies throughout the Fujitsu group, which means thinking about how to tie these strengths to Fujitsu's end-services and end-products. Despite the challenging market conditions, we have fully reviewed our semiconductor business in order to build a profitable business structure...

  • Page 22
    ...the CFO Kazuhiko Kato Corporate First Senior Vice President and Chief Financial Officer Performance in Fiscal 2008 The business environment in which the Fujitsu Group operated in the fiscal year under review was marked by an increasingly severe global recession. Credit markets tightened around the...

  • Page 23
    ... principle. We are planning to pay an annual dividend in fiscal 2009 of ¥6 per share, which includes a ¥3 per share interim dividend, given that the current harsh economic environment is expected to continue for the foreseeable future. Dividend Policy Under the Fujitsu Group's basic policy on the...

  • Page 24
    .... Fujitsu's globalization history to date has been to first build a presence in the Japanese market, and then export overseas through local subsidiaries to expand business. The success of this approach can be largely attributed to Fujitsu's outstanding product quality and superior technology. Today...

  • Page 25
    ... and Siemens AG, a wholly owned Fujitsu subsidiary on April 1, 2009. Subsequently, the company's name was changed to Fujitsu Technology Solutions. At Fujitsu Siemens Computers, business centered on the manufacture, sale and maintenance of servers, storage systems, PCs and other hardware products in...

  • Page 26
    ...Desktop Services and Help Desks] Virtualization Autonomy Optimization Environment SaaS Technology Billing Cloud computing Advanced technology Process and delivery standards Security On-demand Services Electric Current Monitoring Shared Resource Management 024 Fujitsu Limited ANNUAL REPORT 2009

  • Page 27
    ... Truly Global Company chased KAZ Group Pty Ltd of Australia, an IT services company with an extensive track record in government-related businesses. With this move, Fujitsu is now ranked third in the Australian IT services market in sales. Also in Australia, Fujitsu purchased Supply Chain Consulting...

  • Page 28
    "I am proud to be involved in providing Fujitsu's high quality products and services." We Drive Fujitsu "All organizations and project teams within the Company work together leveraging the latest technologies to drive innovation." 026 Fujitsu Limited ANNUAL REPORT 2009

  • Page 29
    ...000 employees are united by the common philosophy and policies of the Fujitsu Way* in their efforts to raise Fujitsu's corporate value. * See page 54 for details. "I aim to perform high added-value work that contributes to raising Fujitsu's competitiveness." Fujitsu Limited ANNUAL REPORT 2009 027

  • Page 30
    ... Services Holdings PLC • Fujitsu Australia Limited • Fujitsu Asia Pte. Ltd. • Fujitsu North America Holdings, Inc. • Fujitsu Taiwan Limited, others Technology Solutions 3,077.0 60.8% (Billions of Yen/%) Ubiquitous Product Solutions 949.1 18.8% Fujitsu offers the PCs, mobile phones...

  • Page 31
    ... types of software (operating system, middleware), network products, network management systems, optical transmission systems, and mobile phone base stations PeRFoRmANCe Business Overview Fujitsu London North Data Centre equipped with cutting-edge technology PRIMERGY BX900 blade server PCs...

  • Page 32
    ... three solutions companies based in North America- Fujitsu Consulting, Fujitsu Transaction Solutions, and Fujitsu Computer Systems. We also took steps to reinforce Fujitsu Australia's business structure by acquiring the local IT services firm KAZ Group Pty Ltd. Infrastructure Services: Sales...

  • Page 33
    ...markets outside Japan, UK-based Fujitsu Services will lead the push to realize the benefits of synergies from recent M&As as we accelerate business expansion in Europe, centered on outsourcing. PeRFoRmANCe Operational Review and Outlook Technology Solutions/Services Market Data global IT Services...

  • Page 34
    ...) Operating income margin (right scale) 2008 2009 0 (Years ended March 31) Capital expenditure (left scale) Ratio of R&D expenditure to net sales (right scale) * For entire Technology Solutions segment Fiscal 2008 Business Results Market Trends System Products: In 2008, the server market in Japan...

  • Page 35
    ... structure. PeRFoRmANCe Operational Review and Outlook Technology Solutions/System Platforms Market Data global Server Market Forecast (Billions of dollars) 80 57.1 49.4 48.7 50.7 53.1 global Server Share in 2008 (Revenue Basis) Others Fujitsu 4.8% Company D Company A Server Share in Japan 2008...

  • Page 36
    ... losses expanded as intense global competition brought dramatic price drops in HDDs for notebook PCs and servers, and HDD head production declined. In April 2009, Fujitsu signed agreements finalizing the transfer of the hard disk drive and HDD media businesses to Toshiba Corporation and Showa Denko...

  • Page 37
    ...-spec models aimed at sophisticated customers. PeRFoRmANCe Operational Review and Outlook Ubiquitous Product Solutions Market Data global PC Market Forecast (Millions of units) 500 390.6 global PC Market Share in 2008 (Unit Basis) Others Fujitsu/ Fujitsu Siemens Computers 2.7% Company G Company...

  • Page 38
    ... to adverse market conditions from the second quarter. Sales of Flash memory for mobile phones and electronic components also were lower because of poor market conditions. Outside Japan, sales declined 21.7%, or 13% excluding currency exchange rate effects. 036 Fujitsu Limited ANNUAL REPORT 2009

  • Page 39
    ...specific applications such as power supplies and image processing, for use in PCs, mobile phone handsets, and other devices. These LSIs can be sold to multiple users. PeRFoRmANCe Operational Review and Outlook Device Solutions Market Data global Semiconductor Market Forecasts (Billions of dollars...

  • Page 40
    ... Markets SEPTEMBER 24, 2008 Fujitsu Launches Global Infrastructure Services SEPTEMBER 26, 2008 Fujitsu Selected as NTT DOCOMO's Core Network System Supplier for "Super 3G" Ubiquitous Product Solutions APRIL 11, 2008 Fujitsu Releases Raku-Raku Phone Premium APRIL 17, 2008 Fujitsu Releases Raku-Raku...

  • Page 41
    ... Solutions in Japan APRIL 27, 2009 Fujitsu to Extend SAP Services with Acquisition of Supply Chain Consulting JUNE 26, 2009 Fujitsu Inks Long-Term IT Infrastructure Services Agreement With Alliance Data PeRFoRmANCe JANUARY 21, 2009 Marks & Spencer Selects Fujitsu for In-Store IT Support Major...

  • Page 42
    ... scale) * Including intersegment sales (Source: IDC The Worldwide Black Book Q1 2009) Company A 10.5% Company B 9.9% Company C 9.4% Company D 8.1% Others 48.6% (Source: Gartner "IT Services Market Metrics Worldwide Market Share: Database" 14 May 2009) 040 Fujitsu Limited ANNUAL REPORT 2009

  • Page 43
    ... supply/demand and production planning, production management, cost calculation, and quality control. This has yielded greater operational efficiency and optimal management operations. Going forward, Fujitsu is committed to enhancing and ensuring the smooth operation of the IT systems that support...

  • Page 44
    ...-added IT solutions. In October 2008, we established Fujitsu North America Holdings to serve as a holding company for the three main solutions subsidiaries in North America-Fujitsu Consulting, Fujitsu Computer Systems and Fujitsu Transaction Solutions. Through Fujitsu Consulting, we offered services...

  • Page 45
    ... extensive portfolio of products and services in a drive to further expand the solutions business. Moreover, in our plan to mirror our success in Japan and Europe and develop our North American outsourcing business, we intend to enhance cost competitiveness by utilizing offshore resources for system...

  • Page 46
    ... Company B 6.8% Company C 5.3% Company D 4.8% Company E 3.5% Others 68.8% (Source: IDC The Worldwide Black Book Q1 2009) (EMEA: Europe, the Middle East, and Africa) (Source: Gartner "IT Services Market Metrics Worldwide Market Share: Database" 14 May 2009) 044 Fujitsu Limited ANNUAL REPORT 2009

  • Page 47
    ...equipment in our stores from multiple vendors, but also identify potential cost savings." In addition to Marks & Spencer, Fujitsu works with a number of Europe's largest retailers, helping these organizations to achieve greater efficiency and improved customer service. Fujitsu Limited ANNUAL REPORT...

  • Page 48
    ... sales (left scale) Operating income margin (right scale) * Including intersegment sales (Source: IDC The Worldwide Black Book Q1 2009) (APAC: Excludes Japan, China, and Hong Kong) (Source: IDC The Worldwide Black Book Q1 2009) (China: Including Hong Kong) 046 Fujitsu Limited ANNUAL REPORT 2009

  • Page 49
    ... resources, we intend to make Fujitsu Technology Solutions the main promoter of IT infrastructure business in India. This step will improve business in terms of both scale and management quality as we aggressively develop the system products business, including expanding our sales of x86 servers...

  • Page 50
    ... carry customer data back to one's own company to manage and utilize the data. * File direct technology: This technology can prevent data from being copied from the selferasing USB memory device to specific folders on a PC, or it can give the appearance of data being written to the PC's hard disk...

  • Page 51
    ...and commercialization of ultra-low power full HD H.264 CODEC LSIs Fujitsu has developed H.264 CODEC LSI devices capable of encoding and decoding Full HD (1,920 dots x 1,080 lines) video in the H.264 format*9. Shipments of two H.264 CODEC LSI products commenced from April 2009. The first, the MB86H55...

  • Page 52
    ... The company will focus on the following research domains to enhance the Fujitsu Group's global core businesses. (4) Platform technologies Fujitsu will focus on the development and enhance the competitiveness of distinctive device technologies for the hardware used in IT systems. (1) x86 servers...

  • Page 53
    ... more intuitive key layout, and voice input email functions. Fujitsu's customer surveys indicate a high degree of satisfaction with the Raku-Raku Phone among customers. Fujitsu, in cooperation with NTT DOCOMO, will continue to maximize ease of use and provide prod- Product managers exchange opinucts...

  • Page 54
    ...key corporate asset supporting business activities. Moreover, Fujitsu employees are acutely aware of the role that technologies backed by intellectual property play in enabling customers to rely with confidence on the products and services we deliver. Intellectual Property Strategy We are promoting...

  • Page 55
    ... technologies, including an atmospheric sensor and environmental evaluation system, can be found on Fujitsu's website. (http://jp.fujitsu.com/about/ip/) [Acquisition of an Influential Patent] Example of US Patent Relating to a Card Type Wireless Device (Wireless LAN) 1. Reissued US patent number...

  • Page 56
    ... we adhere to in all business dealings and actions in accordance with Corporate Values. Code oF CoNduCt The rules and guidelines followed by everyone in the Fujitsu Group. BusiNess PoLiCY Our current strategies pursued in accordance with the Fujitsu Way. 054 Fujitsu Limited ANNUAL REPORT 2009

  • Page 57
    ... ourselves, while delivering added value to our customers. n We provide global environmental solutions in all our business areas. n Fujitsu Group companies work together to accelerate our global business expansion. shARehoLdeRs ANd iNVestoRs We seek to continuously increase our corporate value. We...

  • Page 58
    ...(LCA), others green Policy Management Reinforcing environmental management support systems • Environmental management system • Environmental education, awareness • Environmental management information system • Environmental management, others 056 Fujitsu Limited ANNUAL REPORT 2009

  • Page 59
    ... later calculated as 0.407 tons CO2 per MWh. (projected coefficient of 0.34 CO2 per MWh in fiscal 2010) ** Real sales: Adjusted net sales using the Bank of Japan's corporate goods price index (electrical equipment). (Per unit value= CO2 emissions/real sales) Fujitsu Limited ANNUAL REPORT 2009 057

  • Page 60
    ... and Social Activities Doing Our Part as a global IT Company to Realize a Low-Carbon Society Envisioning a New Era -Fujitsu Group Vision and Strategy n Approaching the Environment from a Management Perspective 2008 was a year of lively discussion on environmental protection for the international...

  • Page 61
    ...Planetarium Operations Fujitsu America (previously called Fujitsu Computer Systems Corporation) provided funding to help establish a classroom IT environment and assist in planetarium operations at De Anza College in Cupertino, California. The "Fujitsu Planetarium" is the largest college planetarium...

  • Page 62
    ... Ishihara Corporate Adviser, Seiwa Sogo Tatemono Co., Ltd. Megumi Yamamuro Hiroshi Mitani Professor, University of Tokyo Graduate Schools for Law and Politics Special Counsel, TMI Associates Kazuhiko Kato Junichi Murashima Kazuo Ishida Makoto Matsubara 060 Fujitsu Limited ANNUAL REPORT 2009

  • Page 63
    ...Executive Advisor Advantest Corporation Ikujiro Nonaka Professor Emeritus Hitotsubashi University ResPoNsiBiLitY Management Haruo Ito President and Representative Director Fuji Electric Holdings... Urakawa Takashi Yagi Takanori Katayama Noriyuki Toyoki Fujitsu Limited ANNUAL REPORT 2009 061

  • Page 64
    ... and equity method affiliates, the following companies are publicly listed on Japanese stock exhanges as of June 30, 2009: Fujitsu Frontech Limited, Fujitsu Broad Solution & Consulting Inc., Fujitsu Business Systems Ltd., NIFTY Corporation, Shinko Electric Industries...

  • Page 65
    ... holding company of the Fuji Electric Group, which holds 5.47% of Fujitsu's shares as well as an additional 5.94% of Fujitsu's shares as trust account assets for employee retirement benefits. In addition, Fujitsu holds 9.96% of the shares of Fuji Electric, and a senior executive advisor to Fujitsu...

  • Page 66
    ... Status of Incentive Policies for Members of the Board: Introduced bonus system linked to the performance of the company, and introduced stock option plan. Supplemental Explanation To achieve clear management accountability, with respect to compensation paid to members of the board, we utilize...

  • Page 67
    ... the Company (usually once a month for Board meetings). Corporate Governance 2. Issues Relating to Functions for Business Execution, Auditing, Oversight, Nominating, and Compensation Decisions The Board of Directors is responsible for management oversight, supervising the business execution...

  • Page 68
    ... presentations. Explanation by Company Representatives No Regular Presentations to Analysts and Institutional Investors Yes Regular Presentations to Foreign Investors Yes Posting of IR Materials to Website Yes Unit Dedicated to IR Activities Other 066 Fujitsu Limited ANNUAL REPORT 2009

  • Page 69
    ... division Audit Audit Fujitsu Way • FUJITSU Way Promotion Council • Risk Management Committee • Compliance Committee • Environmental Committee Instruction/direction Audit Supervision Corporate executive officers Business Group/Group Companies Fujitsu Limited ANNUAL REPORT 2009 067

  • Page 70
    ... operation reports, the Board of Directors observes and oversees the status of achievement of management goals. (2) System to ensure that business execution of directors and employees complies with laws and articles of incorporation a. Senior management adheres to the Fujitsu Way as a basic vision...

  • Page 71
    ... revising its regulations and business operations. In addition, Fujitsu has established the Fujitsu Way, consisting of a Corporate Vision, Corporate Values, Principles, and Code of Conduct, which guides the Group and its employees in their daily activities. Fujitsu Limited ANNUAL REPORT 2009 069

  • Page 72
    ... priority on corporate value and shareholder profits, we will pay careful attention to social trends and changes in the environment and continuously consider the possible need for protective measures. 2. Other Provisions Relating to Corporate governance - 070 Fujitsu Limited ANNUAL REPORT 2009

  • Page 73
    ... of PCs, digital home electronics, mobile phones, automobiles and other products in which these parts are used. Accordingly, soft demand and falling prices for customers' products, or a decline in customers' market share, could negatively impact Group sales and earnings. Alongside corporate clients...

  • Page 74
    ...highly competitive technologies, a loss in competitiveness versus other companies in the race to develop innovative technologies could lead to a decline in the Group's market share and profitability, which would negatively impact sales and earnings. Further, sales and profitability could be affected...

  • Page 75
    ..., engage in system recovery work, pay damages to customers or suffer opportunity losses, all of which would negatively impact Group sales and profitability. 4) Intellectual Property Rights The Fujitsu Group has accumulated technologies and expertise that help distinguish its products from those of...

  • Page 76
    ... from impeding network operations. 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 technical experts, system engineers, managers and other key personnel; the...

  • Page 77
    ... Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent auditors' report 076 077 086 088 089 090 091 124 Fujitsu Limited ANNUAL REPORT 2009 075

  • Page 78
    Five-Year Summary Fujitsu Limited and Consolidated Subsidiaries Yen U.S. Dollars (millions) (thousands) (excluding per share data, D/E ratio, net D/E ratio, average exchange rate and number of employees) 2005 2006 2007 2008 2009 2009 Years ended March 31 Net sales Operating income Income (loss) ...

  • Page 79
    ... March 2009). The deterioration in the economy hit the country's corporate sector particularly hard. Consumer demand also took a negative turn, tracking the rapid deterioration in Japan's personal income and employment conditions. logic LSI devices, electronic components, PCs and other products, as...

  • Page 80
    ... devices, electronic components, PCs and other products, triggered by the rapid decline in market conditions and yen appreciation emerging in the second half of the fiscal year. Although profit margins worsened for logic LSI devices, mobile phones and HDDs, the lower sales in components businesses...

  • Page 81
    ... to provide services on a global scale. In fiscal 2008, we reviewed our structure in North America, integrating three companies-Fujitsu Consulting, Fujitsu Computer Systems, and Fujitsu Transaction Solutions-as subsidiaries under newly established Fujitsu North America Holdings (in April 2009, the...

  • Page 82
    ...value of Fujitsu as FDK's largest shareholder, creditor and business partner. FDK's consolidation means that structural reforms will take place smoothly as we work to raise the corporate value of both companies. Device Solutions This segment reported a 26.2% year-on-year decrease in sales, to ¥587...

  • Page 83
    ... mobile phone functions. Sales in the Americas fell 22.3% (or 15% excluding currency exchange rate effects), to ¥365.2 billion ($3,727 million). Despite higher sales of optical transmission systems, sales of UNIX servers, HDDs, and automotive electronic equipment declined. The Services business...

  • Page 84
    ... prices of our holdings of listed shares. Property, plant and equipment declined ¥166.7 billion on a decrease in capital expenditures mainly in the LSI business, coupled with impairment losses posted in relation to advanced logic LSI facilities (buildings and 300mm wafer production facilities...

  • Page 85
    ... in capital expenditure in the LSI business. Capital expenditure was ¥87.7 billion ($896 million) in Technology Solutions. This figure mainly reflected the purchase of ownership rights to land and buildings belonging to a key business site in Japan, Fujitsu Solution Square, as well as capital...

  • Page 86
    ... unit sales fall short of the original sales plan. Computer software for internal use is amortized by the straight-line method over its estimated useful life. Losses may occur if the actual useful life falls short of the initially estimated useful life. 084 Fujitsu Limited ANNUAL REPORT 2009

  • Page 87
    ... repair or exchange them free of charge during a set period of time. Based on past experience, we record a provision for estimated repair and exchange expenses at the time of sale. The Group is taking steps to strengthen quality management during the product Fujitsu Limited ANNUAL REPORT 2009 085

  • Page 88
    ... Balance Sheets Fujitsu Limited and Consolidated Subsidiaries U.S. Dollars (thousands) (Note 2) 2009 Yen (millions) At March 31 2008 2009 Assets Current assets: Cash and cash equivalents Short-term investments (Note 3) Receivables, trade (Note 14) Allowance for doubtful accounts Inventories (Note...

  • Page 89
    ...March 31 2008 2009 U.S. Dollars (thousands) (Note 2) 2009 Liabilities and net assets Liabilities Current liabilities: Short-term borrowings and current portion of long-term debt (Note 8) Lease obligation (Note 6) Payables, trade (Note 14) Accrued expenses Accrued income taxes Provision for product...

  • Page 90
    ... Statements of Operations Fujitsu Limited and Consolidated Subsidiaries U.S. Dollars (thousands) (Note 2) 2009 Yen (millions) Years ended March 31 2007 2008 2009 Net sales Operating costs and expenses: Cost of sales Selling, general and administrative expenses (Note 16) Operating income Other...

  • Page 91
    ...income Purchase of treasury stock Disposal of treasury stock Change in scope of consolidation Others Net increase (decrease) during the term, except for items under shareholders' equity Net increase (decrease) during the term Balance at March 31, 2008 Effect of changes in accounting policies applied...

  • Page 92
    ... wholly owned subsidiaries. The purchased treasury stock was exchanged for shares in these companies. Fujitsu Devices Inc. changed its corporate name to Fujitsu Electronics Inc. in October 2007. The details of the share exchange are set forth in Note 21. 090 Fujitsu Limited ANNUAL REPORT 2009

  • Page 93
    ..., 2009, was insignificant because the Group had already applied the percentage-of-completion method to revenue recognition for the customized software, a core business of the Group. The impact of this change to the segment information is set forth in Note 18. Fujitsu Limited ANNUAL REPORT 2009 091

  • Page 94
    ... year ended March 31, 2008> For the year ended March 31, 2008, the Group changed its accounting policy for the revenue recognition of personal computers, other equipment and electronic devices from recognition upon shipment to recognition upon delivery to customers. The amounts in the consolidated...

  • Page 95
    ...(m) Retirement benefits The Company and the majority of the consolidated subsidiaries have retirement benefit plans. Under the significant defined benefit plans, the actuarial valuation used to determine the pension costs is the projected unit credit method. Fujitsu Limited ANNUAL REPORT 2009 093

  • Page 96
    ... to the segment information is set forth in Note 18. (n) Provision for loss on repurchase of computers Certain computers manufactured by the Group are sold to Japan Electronic Computer Co., Ltd. ("JECC") and other leasing companies for leasing to ultimate users under contracts which require the...

  • Page 97
    ... 31 2008 2009 U.S. Dollars (thousands) FACts & FiGuRes 2009 Finished goods Work in process Raw materials and supplies Total inventories ¥169,662 137,215 76,229 ¥383,106 ¥140,356 95,159 70,941 ¥306,456 $1,432,204 971,010 723,888 $3,127,102 Fujitsu Limited ANNUAL REPORT 2009 095 Notes...

  • Page 98
    ...Property, Plant and Equipment Changes in property, plant and equipment, net of accumulated depreciation are as follows: Yen (millions) Years ended March 31 2008 2009 U.S. Dollars (thousands) 2009...,514 $ 240,673 1,268,327 22,612 (1,684) (1,326,398) $ 158,306 096 Fujitsu Limited ANNUAL REPORT 2009

  • Page 99
    ..., principally from banks, with weighted average interest rates of 2.91% at March 31, 2008 and of 1.28% at March 31, 2009: Secured Unsecured Total short-term borrowings (A) ¥ 200 49,386 ¥49,586 ¥ 200 115,550 ¥115,750 $ 2,041 1,179,081 $1,181,122 Fujitsu Limited ANNUAL REPORT 2009 097

  • Page 100
    ... average interest rate of 1.51% at March 31, 2009: Secured Unsecured Total long-term borrowings b) Bonds and notes Bonds and notes issued by the Company: Secured Unsecured zero coupon unsecured convertible bonds due 2009 *2 unsecured convertible bonds due 2010 *1,2 unsecured convertible bonds due...

  • Page 101
    ... date (May 27, 2009) by cash financed from the Bonds. The corresponding interest rates are as follows. Before May 27, 2009 Unsecured convertible bonds due 2010 1.60% On and after May 28, 2009 0.00% [3.00%] [ ] represents interest rates if the weighted average share price of 10 consecutive days...

  • Page 102
    ...(739,847) $ (929,092) As a result of pension system revisions, Fujitsu Corporate Pension Fund in which the Company and certain consolidated subsidiaries in Japan participate, reported unrecognized prior service cost (reduced obligation) at September 1, 2005. 100 Fujitsu Limited ANNUAL REPORT 2009

  • Page 103
    ... Company placed its holding of marketable securities in a trust which was solely established for the retirement benefit plan. Notes to Consolidated Financial Statements FS adopted International Financial Reporting Standards ("IFRS") for the year ended March 31, 2006, and accounts...

  • Page 104
    ... used in accounting for the plans At March 31 2008 2009 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Mainly 6.9% Mainly 7.0% Straight-line method over the employees' average remaining service period Mainly 6.9% Mainly 8.0% Straight-line method over...

  • Page 105
    ... Equity The number of authorized and issued shares of common stock at March 31, 2008 and 2009 is stated as follows: At March 31 2008 2009 The number of authorized shares The number of issued shares 5,000,000,000 2,070,018,213 5,000,000,000 2,070,018,213 Fujitsu Limited ANNUAL REPORT 2009 103

  • Page 106
    ... market and credit risks. Control of Derivative Trading The Group enters into derivative transactions based on regulations established by the Company, and controls the risk of the transaction by assessing the effectiveness of its hedging. Based on policies approved by both corporate executive...

  • Page 107
    .../pay Pound Sterling Total ¥35,662 8,398 15,175 2,591 ¥21,454 3,422 3,797 - ¥5,180 5,062 9,534 2,939 ¥ 1,645 1,002 (2,235) (349) 286 286 5,295 6,956 19,686 2,957 3,235 2 (1) 13 (102) 9 451 (199) 79 ¥ (10) (102) 9 451 (199) 79 290 Fujitsu Limited ANNUAL REPORT 2009...

  • Page 108
    ... Receivables, trade from and payables, trade to affiliates at March 31, 2008 and 2009 are as follows: Yen (millions) At March 31 2008 2009 U.S. Dollars (thousands) 2009 Receivables, trade Payables, trade ¥33,791 47,184 ¥25,949 14,854 $264,786 151,571 106 Fujitsu Limited ANNUAL REPORT 2009

  • Page 109
    ...(71,571) (49,418) (98,531) $(1,529,377) gain on sales of investment securities Gain on sales of investment securities for the year ended March 31, 2007 referred mainly to the sales of shares in Fanuc Ltd. in connection with the issuer's own stock repurchase. Fujitsu Limited ANNUAL REPORT 2009 107

  • Page 110
    ...for the year ended March 31, 2008 referred mainly to the sales of shares in affiliates such as Japan Cablenet Holdings Limited. Gain on sales of investment securities for the year ended March 31, 2009 referred mainly to the sales of shares such as Yokohama TV Corporation. gain on change in interest...

  • Page 111
    ..., trade Other, net Net cash used in operating activities (A) Purchases of property, plant and equipment Net cash used in investing activities (B) Net cash flows from the impact (A)+(B) ¥ 18,049 (74,168) (19,081) (75,200) (34,398) (34,398) ¥(109,598) Fujitsu Limited ANNUAL REPORT 2009...

  • Page 112
    ...Business Segment Information Yen (millions) Technology Solutions Ubiquitous Product Solutions Device Solutions Other Operations Elimination & Corporate Years ended March 31 Consolidated 2007 Sales Unaffiliated customers Intersegment Total sales Operating... 110 Fujitsu Limited ANNUAL REPORT 2009

  • Page 113
    ..., Mission-critical IA servers, PC servers) Storage systems Software (OS, Middleware) Network management systems Optical transmission systems Mobile phone base stations (2) Ubiquitous Product Solutions ...Personal computers Mobile phones Optical transceiver modules HDD (hard disk drives) (3) Device...

  • Page 114
    ... location and interconnectedness of its business activity. 2. The principal countries and regions belonging to geographic segments other than Japan are as follows: (1) EMEA (Europe, Middle East and Africa) ...U.K., Spain, Germany, Finland, the Netherlands (2) The Americas ...U.S.A., Canada...

  • Page 115
    ... the year ended March 31, 2008 (Related-party transactions) Related party: Fujitsu Leasing Co., Ltd.: Common stock-Â¥1,000 million Its business: leasing and sales of IT equipment and other assets Breakdown of the Company's voting rights ownership: At March 31 2008 Directly held Indirectly held 22...

  • Page 116
    ... the Company converted Fujitsu Siemens Computers (Holding) B.V. into a consolidated subsidiary and changed its name to Fujitsu Technology Solutions (Holding) B.V. 20. Share-based Payment Plans 1. Account and amount of stock options charged as expenses for the year ended March 31, 2009 Cost of sales...

  • Page 117
    ... (1) the Company (i) Resolution at shareholders' meeting on June 29, 2000 Position and number of people entitled to stock options Number of shares for stock options Date granted Conditions to be vested Corresponding service period Exercisable period Years ended March 31 32 members of the Board of...

  • Page 118
    ...and number of people entitled to stock options 4 members of the Board of Directors (excluding external board members) 8 corporate vice presidents (excluding persons holding concurrent post of board members) Number of shares for stock options Date granted Conditions to be vested Corresponding service...

  • Page 119
    ...In order to enable the Company to better respond to the services needs of our customers and strengthen our customer-focused operating structure, on August 1, 2007, the shareholders of Fujitsu Access Limited, Fujitsu Devices Inc. and Fujitsu Wireless Systems Limited transferred their common shares to...

  • Page 120
    ...(i) Types of shares and the exchange ratios For each common share of the companies, the number of the Company shares allocated and distributed is as follows: Fujitsu Access Limited Fujitsu Devices Inc. Fujitsu Wireless Systems Limited 0.86 share 2.70 shares 13.36 shares (ii) Approach to calculating...

  • Page 121
    ... biggest IT markets in Europe, will help the Company promote the globalization of its products business. In addition, the Company will offer high value-added services to customers by strengthening the relationship between Fujitsu Siemens Computers and Fujitsu Services Holdings PLC, a UK subsidiary...

  • Page 122
    ... shares Fujitsu Technology Solutions (Holding) B.V. 2) Acquisition Cost of the Acquired Business Cash 3) Source of the Funds to be Paid Own funds and borrowings (Conversion of FDK Corporation into a Consolidated Subsidiary) The Board of Directors of the Company, at a meeting held on March 27, 2009...

  • Page 123
    ... to compete in the current severe business environment and thus support and grow these operations. (iv) Date of the Business Separations HDD drive business HDD media business August 1, 2009 (tentative) July 1, 2009 (tentative) Fujitsu Limited ANNUAL REPORT 2009 121 Notes to Consolidated Financial...

  • Page 124
    ...type Split) on August 1, 2009 (tentative). Upon completion of the transfer, the new company established out of the HDD-related business of Yamagata Fujitsu Limited, along with the Company's HDD manufacturing subsidiaries, Fujitsu Computer Products Corporation of the Philippines and Fujitsu (Thailand...

  • Page 125
    ... Dates for treasury stock purchase From open market Common stock, 43,683,000 shares ¥21,763 million ($222,071 thousand) June 1 and 5, 2009 The purchase of own shares, approved by the Board of Directors on May 21, 2009, was completed with the shares purchased on June 5, 2009. Fujitsu Limited ANNUAL...

  • Page 126
    Independent Auditors' Report 124 Fujitsu Limited ANNUAL REPORT 2009

  • Page 127
    Fujitsu Limited ANNUAL REPORT 2009 125 FACts & FiGuRes Independent Auditors' Report

  • Page 128
    ..., financial position and profit or loss of Fujitsu Limited and the undertakings included in the consolidation taken as a whole; and (ii) the management report includes a fair review of the development and performance of the business and the position of Fujitsu Limited and the undertakings included...

  • Page 129
    ...locations that accounted for approximately two-thirds of the aggregated sales for this fiscal year (before elimination of inter-company transactions) of the consolidated companies as "significant business locations/units" which should be subject to the assessment. Fujitsu Limited ANNUAL REPORT 2009...

  • Page 130
    ...April 1, 2009, Fujitsu Consulting Holdings Inc., Fujitsu Computer Systems Corporation, and Fujitsu Transaction Solutions Inc. were brought together under one unified corporate structure. The name of the integrated company was changed to Fujitsu America, Inc. on the same day. • On...

  • Page 131
    .... Fujitsu (Thailand) Co., Ltd.*3 Equity-method Affiliates (20 companies) japan Listed Fujitsu General Limited FDK Corporation*4 unlisted Fujitsu Leasing Co., Ltd. emeA unlisted Fujitsu Siemens Computers (Holding) B.V.*5 *1 Fujitsu will conduct an exchange of shares with Fujitsu Business Systems Ltd...

  • Page 132
    ... * The 123,042 thousand shares of Fujitsu Limited stock held by Fuji Electric Holdings Co., Ltd. and its consolidated subsidiaries as retirement benefit trust assets are categorized under the shareholdings of "Other Japanese Corporations." Number of Percentage of shares held shares held (thousands...

  • Page 133
    ...of Citigroup Global Markets Limited as of the fiscal year-end, the company has not been included in the above list of principal shareholders. The details of the amended report are as follows: Number of shares held (thousands) Percentage of total shares outstanding (%) stock exchange Listings: Japan...

  • Page 134
    ... in order to help preserve forestry resources. • It uses vegetable oil inks that do not include volatile organic compounds. FUJITSU LIMITED Shiodome City Center, 1-5-2 Higashi-Shimbashi Minato-ku, Tokyo 105-7123, JAPAN Tel. +81-3-6252-2220 www.fujitsu.com ©2009 Fujitsu Limited Printed in Japan...