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FUJITSU LIMITED ANNUAL REPORT 2011
EXPANDING WORLD,
NEW POSSIBILITIES

Table of contents

  • Page 1
    ExPANDINg woRLD, NEw PoSSIbILITIES Fujitsu Limited AnnuAL RepoRt 2011

  • Page 2
    ...with recovery of its own damaged production sites, the Group sought to assist in getting lives and businesses in the affected area back to normal as quickly as possible. The Group has therefore worked to restore customers' ICT systems, offered free of charge a special cloud computing support program...

  • Page 3
    ...MANAgEMENT'S REPoRT oN INTERNAL CoNTRoL ovER FINANCIAL REPoRTINg PRINCIPAL SUbSIDIARIES AND AFFILIATES SHAREHoLDERS' DATA Fujitsu Limited ANNUAL REPORT 2011 ResPonsIBILItY 064 066 070 072 oUR CoRPoRATE PHILoSoPHy -FUJITSU way ENvIRoNMENTAL AND SoCIAL ACTIvITIES MANAgEMENT oN STRENgTHENINg CoRPoRATE...

  • Page 4
    ... Fujitsu's advanced technologies and solutions are playing in realizing a "Human Centric Intelligent society", along with comments from Fujitsu employees who support these efforts. toshifumi obayashi Manager Technology Div. Telematics Services Business Unit 002 Fujitsu Limited ANNUAL REPORT 2011

  • Page 5
    ... Phone Product Marketing Dept. I Marketing Div. Mobile Phones Unit next-generation supercomputer system* shows promise in delivering synergies with the cloud computing business The range of fields for the application of ICT has broadened, ushering in a dramatic increase in unprecedented services...

  • Page 6
    .... By informing households of their power consumption, utility charges and other data in real time, the smart meters that electric power companies install should offer eco benefits by, for example, helping to curb consumer-side electricity consumption. 004 Fujitsu Limited ANNUAL REPORT 2011

  • Page 7
    ...part of Fujitsu's push to make the "Human Centric Intelligent Society" a reality, my research has sought to develop a cross-functional way to collect, compile and analyze data on individual lifestyles, corporate activities and social conditions using social media, sensors and other tools. The object...

  • Page 8
    ... having to think long and hard on data collection methods that allow the vision of "if only we could do this with ICT" to become a reality. Yoshinori Yaginuma Director Human Solutions Laboratory Human Centric Computing Laboratories Fujitsu Laboratories Ltd. 006 Fujitsu Limited ANNUAL REPORT 2011

  • Page 9
    ... at the touch of a finger. As change in the communications environment accelerates, tablet PCs are becoming increasingly widespread for use as ubiquitous terminals well-suited to the cloud computing era both at home and in business. STYLISTIC Q550 Series Fujitsu Limited ANNUAL REPORT 2011 007

  • Page 10
    THE woRLD oF NEw PoSSIbILITIES -HUMAN CENTRIC INTELLIgENT SoCIETy- 008 Fujitsu Limited ANNUAL REPORT 2011

  • Page 11
    ... lives. Cloud computing and other advanced ICT will enable once underutilized human knowledge and activity, as well as the opportunities for value that emerge from environmental change, to be leveraged in ways that support the transformation of our society and the world of business. Fujitsu Limited...

  • Page 12
    ... in consolidated subsidiaries)...Return on equity (%) ...Owners' equity ratio (%) ...Return on assets (%) ...Interest-bearing loans...D/E ratio (times) ...Net D/E ratio (times) ...R&D expenses ...Capital expenditure ...Depreciation ...Number of employees ...Amounts per share of common stock (Yen and...

  • Page 13
    ... Great East Japan Earthquake caused operating income to fall by roughly ¥13.0 billion due to temporary production stoppages, as well as shipment and delivery delays. Fujitsu also recorded an ¥11.6 billion loss in other income (expenses), covering the costs of restoring plant and equipment damaged...

  • Page 14
    ... a wide range of social problems and to support the creation of a more prosperous and secure "Human Centric Intelligent Society." In this way we will harness all the Group's resources and capabilities to maximize our contribution to the rebuilding efforts. 012 Fujitsu Limited ANNUAL REPORT 2011

  • Page 15
    ...for both growth and sound profitability. We will strive to continually enhance our corporate value to meet the expectations of shareholders and investors. We very much appreciate your unwavering support. Michiyoshi Mazuka Chairman Masami Yamamoto President Fujitsu Limited ANNUAL REPORT 2011 013

  • Page 16
    ... to carrying out fundamental reforms to achieve sustainable growth. We will continue to deliver maximum value to our customers by forging ahead with global integration, as a technology-based, globally integrated services company. Masami Yamamoto President 014 Fujitsu Limited ANNUAL REPORT 2011

  • Page 17
    ... sufficient internal reserves to support the active expansion of our business. In fiscal 2010, as a result of steady improvements in our financial condition, we paid an annual dividend of ¥10 per share as originally planned. Message to shareholders and investors Fujitsu continues to make strategic...

  • Page 18
    ... the area of strengthening the Group business structure, in October 2010 we completed the mobile phone business merger with Toshiba Corporation to establish Fujitsu Toshiba Mobile Communications Limited. Other key initiatives included the restructuring of our network products manufacturing divisions...

  • Page 19
    ... user's own PC or a server on a company's in-house network confirming the safety and whereabouts of family members and for managing the supply chain of relief materials. To help resolve these issues and support recovery efforts, Fujitsu donated a large number of PCs along with a cloud*2 environment...

  • Page 20
    ... improvements in profitability. Outside Japan, our previous system of assurance drew on the initiatives in Japan, but we came to realize that we needed to provide stronger support from headquarters. This is why we established the Assurance Group in May. 018 Fujitsu Limited ANNUAL REPORT 2011

  • Page 21
    ...we will leverage this difference in realizing a "Human Centric Intelligent Society" as a global ICT leader. *3 vertically integrated business model A business model in which Fujitsu serves as a one-stop provider of hardware, software, and services solutions Fujitsu Limited ANNUAL REPORT 2011 019

  • Page 22
    ...Focus Areas Decision Probe Data Customers Contents/ Services Provider ubiquitous Front-end interfaces Sensor Tablet Smartphone PoS gPS Car Navigation Mobilewear Digital Tachograph powerful Back-end systems (HpC*, Cloud) * HPC: High Performance Computing 020 Fujitsu Limited ANNUAL REPORT 2011

  • Page 23
    ... valued partner to our customers and support their success. Additionally, for all of our stakeholders, including our valued shareholders and investors, we will strive to be a corporate group they can trust as a partner that helps to create a better future. Fujitsu Limited ANNUAL REPORT 2011 021

  • Page 24
    ... fiscal year, there were higher sales of x86 servers in Europe, LSI devices and electronic components in Asia, and optical transmission systems in North America. The transfer of the HDD business in October 2009, however, resulted in overall sales outside Japan remaining essentially unchanged year on...

  • Page 25
    ... of over ¥150 billion annually by improving earnings and asset efficiency. Kazuhiko Kato Corporate executive Vice President and Director, Chief Financial officer owners' Equity and owners' Equity Ratio (¥ Billions) 1,200 EPS (Net Income (Loss) per Share), RoE (Return on Equity) (%) 60 (Yen...

  • Page 26
    ... shared functions which straddle all regions in order to uniformly integrate our business operations in and outside Japan. Furthermore, we will define the creation of new services businesses that ensure our growth and realize our vision of a "Human Centric Intelligent Society." ANNUAL REPORT 2011

  • Page 27
    ... areas 300 n Conversion of existing ICT domains to Cloud 200 global Services Line-up 100 Scope of Profit generation via the Cloud Large services planning plan Build operate services operation ubiquitous networking 0 BCp/security Applications 2010 2011 (Years ended March 31) 2013 Fujitsu...

  • Page 28
    ... test of remote metering system with Kit Carson electric in the Us Human-Centric intelligent society Mobility Community Manufacturing work Management Food & Agriculture Livestock Mating Solution Ranch support services Medicine & Health Energy & Environment Karada Life Diabetes Support Service...

  • Page 29
    ...resumed operations at Shimane Fujitsu Limited (SFJ) as of March 23, 2011. Operations partially restarted as of March 28, 2011. Printers Equipment relating to power supply Mobile system products, mobile phones, etc. Advanced optical transmission devices, optical component products, etc. FTN-Furudono...

  • Page 30
    ... of ICT. Experienced, savvy human resources drive every aspect of Fujitsu's cloud computing business, from the planning and proposal of cloud systems for customers to system development and operation. Along with system engineering and sales staff, Fujitsu is training technical experts capable of...

  • Page 31
    ..., is that by working to meet the varied and diverse needs of our customers I can contribute to broadening Fujitsu's cloud services menu and to the expansion of sales. takahiro Yamamoto Trading & Wholesale Sales Dept. 1, Distribution Industry Business Unit Fujitsu Limited ANNUAL REPORT 2011 029

  • Page 32
    ... business encompasses the development, manufacture, sales and maintenance of the cutting-edge, high-quality products and electronic devices that make these services possible. net sales/Breakdown of net sales* technology solutions PRIMERGY RX200 S6 energy-efficiency model is a 2-way rack server...

  • Page 33
    ... "Infrastructure Services" category. 2. Car Audio and Navigation Systems, Mobile Communications Equipment, and Automotive Electronics In the "Human Centric Intelligent Society" that the Fujitsu Group is seeking to bring about, car audio and navigation systems will, along with PCs and mobile phones...

  • Page 34
    ... via datacenters) and maintenance services. Fiscal 2010 Performance (Year-on-year Comparison) (Billions of Yen) * For entire Technology Solutions segment Net Sales Operating Income Capital Expenditure* 2,419.5 (-4.8%) 117.3 (-10.2) 67.2 (-6.8) 032 Fujitsu Limited ANNUAL REPORT 2011

  • Page 35
    ... RevieW And outLooK teCHnoLoGY soLutions/seRviCes Fujitsu Trusted Cloud Square supports business negotiations pertaining to the cloud computing business New annex at the Fujitsu Tatebayashi System Center TeamPoS 1100 is a compact, highperformance POS terminal ouR stRenGtH IT Services Market Share...

  • Page 36
    ... new IT systems such as cloud computing, and there is a growing need for outsourcing services that take into account business continuity and power supply strategies. Investment in IT is expected to pick up as recovery efforts continue and corporate earnings improve. The global IT services market is...

  • Page 37
    ... areas that utilizes a Fujitsu cloud service. We also developed a road traffic information service that gathers position data from moving taxis. For industry, we developed an engineering cloud service that delivers a CAD system over a network. In response to customers' heightened interest in system...

  • Page 38
    ... systems are built. Network products include the mobile phone base stations, optical transmission systems and other equipment used to build communications infrastructure. Fiscal 2010 Performance (Year-on-year Comparison) (Billions of Yen) * For entire Technology Solutions segment Net Sales...

  • Page 39
    ... Server Quarterly Model Analysis, 2011 Q1) optical Transmission Market Share in North America 2010 (Revenue basis) 1 2 3 4 5 6 7 n Fujitsu n Company A n Company B n Company C n Company D n Company E n Others In system products, Fujitsu has a broad lineup of offerings to meet the needs of customers...

  • Page 40
    ... in response to the March 2011 earthquake in Japan. In North America's optical transmission market, the development of LTE services, the adoption of IP technology, and the investments to enhance mobile backhaul and other backbone infrastructure to cope with increased data traffic are set to...

  • Page 41
    opeRAtionAL RevieW And outLooK teCHnoLoGY soLutions/sYstem pLAtFoRms the top server company for a fourth consecutive year thanks to the continued support of its many customers. Outside Japan, sales of x86 servers were strong in every major geographic region. Overall, however, system product sales ...

  • Page 42
    ...Solutions segment is comprised of PCs and mobile phones, as well as audio and navigation equipment and other types of mobilewear. Fujitsu offers a broad lineup of computer products, including conventional desktop and notebook PCs, as well as tablets and other new types of terminals. In mobile phones...

  • Page 43
    ... with in-vehicle technologies to provide car navigation systems and other types of automotive electronics that make automotive life safer and more comfortable. PeRFoRMAnCe 6 5 1 2 4 3 (Source: IDC Japan, Japan Quarterly Mobile Phone Tracker, 2011Q1) Fujitsu Limited ANNUAL REPORT 2011 041

  • Page 44
    ... the Great East Japan Earthquake. Outside Japan in Europe sales of desktop PCs were steady, but sales growth was slow in the U.S., Asia and other regions. Mobile phone shipments in Japan rose 29.4% year on year to 6.70 million (Source: Gartner, "Quarterly Statistics: Personal Computers by Major...

  • Page 45
    ... vein authentication system. In Europe, Fujitsu will continue to focus on high-quality, value-added products for the corporate market, and implement sales strategies emphasizing profitability. In North America, we anticipate growth in tablet PCs in such areas as the medical and educational fields...

  • Page 46
    ... found in products such as digital consumer electronics, automobiles, mobile phones, and servers. Meanwhile, publicly listed consolidated subsidiaries Shinko Electric Industries and Fujitsu Component, together with companies like FDK, provide semiconductor packages and other electronic components...

  • Page 47
    ..., from imaging to wireless communications and security, and are increasingly energy efficient as a result of the emphasis we place on the environment. Fujitsu Semiconductor conducts business globally through development and sales sites in Japan, the Americas, Europe, and Asia. The company...

  • Page 48
    ... Sales of Logic LSI Products by Application for the year Ended March 31, 2011 1 2 3 4 5 6 7 n AV/Consumer electronics n PCs and peripherals n Automobiles 6 7 5 n Mobile phones n Communications devices 4 n Industrial machinery n Others 3 2 market trends 2010 Global Market trends In 2010, the global...

  • Page 49
    ..., security, medical, and energy-related electronics. In this way, we are proactively responding to customer needs, particularly in markets outside Japan, and we plan to widen our lineup of energy-efficient products. Fujitsu will continue to offer a broad lineup of products to meet customers' diverse...

  • Page 50
    ...for Access Control System uBiQuitous soLutions April 13, 2010 Fujitsu Renews Lineup of ESPRIMO and LIFEBOOK PCs for Corporate Customers April 26, 2010 Fujitsu Develops Industry's First Real-time Simulator Capable of Checking Virtual Camera Images may 11, 2010 Fujitsu Introduces 3 ECLIPSE AV and Car...

  • Page 51
    ... 3, 2010 Fujitsu Develops Technology to Manufacture Power-Supply Transistors On Nearly Any Flatsurface Material december 16, 2010 Fujitsu Establishes Corporate Social Responsibility Policy march 10, 2011 Fujitsu Achieves 40-Gbps Optical-Fiber Transmission Using Directly-Modulated Laser Without Need...

  • Page 52
    ... disaster recovery. In light of this, the server market in Japan is expected to contract more than 10% compared with the previous year. In addition to concerns about companies postponing IT (Source: Gartner, "Market Share: IT Services, 2010" 31 March 2011) 050 Fujitsu Limited ANNUAL REPORT 2011

  • Page 53
    ... sales of its Cloud Ready Blocks, packaged hardware and software with everything a customer needs to get a private cloud up and running in minimum time. With a growing lineup of competitive products, we aim to maintain our top share of the Japanese server market. In the network products business...

  • Page 54
    ...in areas linked to cost-cutting initiatives, including procurement systems, shared services, off-shoring, infrastructure outsourcing, and business process outsourcing (BPO). 4.3% 3.6% 69.4% (Source: Gartner, "Market Share: IT Services, 2010" 31 March 2011) 052 Fujitsu Limited ANNUAL REPORT 2011

  • Page 55
    ...as customers shift to low-end servers. As a result of this shift, the markets for low-end x86 and mid-range servers, mainstay product areas for 400 200 0 2010 2011 2012 2013 2014 Fujitsu, are expected to grow to support demand for cloud and other advanced computing needs. The storage market...

  • Page 56
    ... LIFEBOOK® T Series Tablet PC based on size, weight, full-sized keyboard and overall performance; solid construction; modular bay for second battery; price; and the Fujitsu reputation for quality and service. "Because our students use their computers so extensively, we really needed reliable, state...

  • Page 57
    ...to support the business expansion of customers in Europe and Japan. In North America's optical transmission systems market, investments to enhance mobile backhaul and other backbone infrastructure to cope with LTE (Long Term Evolution) and the increase in data traffic are set to continue during 2011...

  • Page 58
    ... servers • Designed and managed disaster recovery facilities for all key applications hosted within Victoria Police's main data centre • Supplied Victoria Police with desktop PCs, laptops, servers, switches and SAN storage devices In April 2010, Victoria Police commissioned a new human resources...

  • Page 59
    ...will drive our cloud business at full speed to become a pillar of our growth strategy. In East Asia, our business up to now has focused on platform products such as servers and POS systems. Going forward, we plan to make a definitive shift to promote cloud services to companies in areas such as food...

  • Page 60
    ...services, computer servers and networks, as well as various electronic devices and advanced materials which serve as building blocks for our products. • Foster the creation of new businesses • Create and accumulate advanced technologies • extend our value chain globally • Fulfill our social...

  • Page 61
    .... The new technology is expected to open doors for new applications for cloud computing services, such as enabling shorter processing times for analysis of access log data. Elsewhere, as a security technology for utilizing confidential data in external clouds, Fujitsu has developed cloud information...

  • Page 62
    ...• Social intelligence supporting future business and society Combining cloud services Reliability and growth virtual systems Cloud services Cloud services Resource pool • Server architecture • Datacenter networks, etc. • Security • Front-end Media Processing • Green Technologies, etc...

  • Page 63
    ... system no. 1 on toP500 supercomputer List! Combining the best of Fujitsu Group technology, the "K computer"*1 will support the creation of a "Human Centric intelligent society" The K computer, being jointly developed by RIKEN and Fujitsu under the auspices of the Ministry of Education...

  • Page 64
    ...by Fujitsu and other companies in their respective fields. Based on this analysis, they formulate and implement intellectual property strategies. Linking business and R&D Divisions Initial planning Project planning Patent portfolio Design Prototyping Manufacture out-licensing sales Business and...

  • Page 65
    ...n North America n Europe n Asia/Oceania 45% 25% 18% 12% 4 3 Total 102,000 patents 2 1 20 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 1,355 Fujitsu survey based on Japan Patent Office data (Number of issued patents) The number of patents granted to Fujitsu Group companies other than Fujitsu Limited...

  • Page 66
    ... 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. 064 Fujitsu Limited ANNUAL REPORT 2011

  • Page 67
    ...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 68
    ... to work and live, as well as to boost energy efficiency. Multifaceted support from ICT solutions is an increasingly important part of these efforts. As a global ICT solutions corporation, the Fujitsu Group develops advanced environmental technologies, and makes products and services employing these...

  • Page 69
    ... Eco-First certification from Japan's Minister of the Environment 3Time data acquired Map view E-mail server 4E-mail sent biological data Db mobile phone photograph system on-demand virtual system ResPonsIBILIt Y Completed dandelion map of Japan Fujitsu Limited ANNUAL REPORT 2011 067

  • Page 70
    ... by drawing on our own experience to actively develop products and services that are energy efficient and reduce CO2 emissions. Atsuhisa takahashi Corporate Executive Advisor (Environment) minoru takeno Head of Unit, Corporate Environmental Strategy Unit 068 Fujitsu Limited ANNUAL REPORT 2011

  • Page 71
    ... of palm vein patterns to external manipulation. The same PalmSecureTM system is used for secure PC login, controlled entry, and in a growing array of other areas worldwide, supporting greater public safety and peace of mind. The Bradesco logo Bradesco ATM Fujitsu Limited ANNUAL REPORT 2011 069

  • Page 72
    .... 2006 Director-General, Commerce and Information Policy Bureau Jul. 2007 Commissioner, Japan Patent Office Aug. 2009 Advisor, Fujitsu Limited Apr. 2010 Corporate Executive Vice President, CSO*, *2 Jun. 2010 Corporate Executive Vice President and Director* 070 Fujitsu Limited ANNUAL REPORT 2011

  • Page 73
    ...Corporation Jun. 2011 Director, Fujitsu Limited* Jun. 2011 Chairman, Seiwa Sogo Tatemono Co., Ltd.* * to present *3 currently Fuji Electric Co., Ltd. *4 currently Keio Institute of East Asian Studies *5 currently Mizuho Corporate Bank, Ltd. and Mizuho Bank, Ltd. Fujitsu Limited ANNUAL REPORT 2011...

  • Page 74
    ... shareholder value by spurring even greater awareness of stock price and profits among directors. Q: As Chairman of the Board and a member of the executive nomination and Compensation Committee, what are your thoughts on corporate governance? A company such as ours with global business operations...

  • Page 75
    ...network of contacts to promote the development of an innovative social IT system utilizing the cloud computing in which Fujitsu excels. In tandem with this is the need to nurture and appoint personnel with an international outlook to support this system that performs as a global response to frequent...

  • Page 76
    ... companies are publicly listed on Japanese stock exchanges: Fujitsu Frontech Limited, Fujitsu Broad Solution & Consulting Inc., NIFTY Corporation, Shinko Electric Industries Co., Ltd., FDK Corporation, Fujitsu Component Limited. Fujitsu General...

  • Page 77
    ... holds 1.55% of Orient Corporation's outstanding stock. Orient Corporation and Fujitsu do have business dealings. Mr. Okamoto plans to retire from his position as Representative Director, Chairman and Corporate Office of Orient Corporation at the end of the company's general meeting of shareholders...

  • Page 78
    ..., the company has identified Mr. Mitani as an independent auditor in reports to stock exchanges in Japan. Mr. Amano has experience in corporate management at a global corporation. Moreover, Mr. Amano has never been an executive of a major shareholder or major business partner of Fujitsu, or...

  • Page 79
    CoRpoRAte GoveRnAnCe [Independent officers] Number of independent officers 5 other Issues Relating to Independent officers None [Incentives] Implementation Status of Incentive Policies for Directors: Introduced bonus system linked to the performance of the company, and introduced stock option plan...

  • Page 80
    ... Calculation and Determination of Compensation Amounts Executive Compensation Policy To secure exceptional human resources required to manage the Fujitsu Group as a global ICT company, and to further strengthen the link between its financial performance and shareholder value, while at the same time...

  • Page 81
    ... invitation and business report) and sends the notice to foreign investors in order to promote a wider understanding of the proposals presented at the shareholders' meeting. The notice is disclosed on the Company website the same day it is sent to shareholders as part of our policy to disclose...

  • Page 82
    ... Fujitsu Group Sustainability Report. Additionally, all materials accompanying the invitation notice to the Annual Shareholders' Meeting are posted on our website. The officer in charge of IR activities is the CFO; the division in charge of IR activities is the Public and Investor Relations Division...

  • Page 83
    ...are shared at regular meetings where Fujitsu Group executives are assembled. As a result, we have a heightened awareness of what our customers are saying and we can take positive action to make improvements. Activities Promoting Environmental Protection and Corporate Social Responsibility Policies...

  • Page 84
    ...Environmental Committee Report Corporate internal Audit division Internal audit Audit/ Internal control audit Fujitsu Way internal Control division Coordinate Supervision Report Corporate executive officers Business Group/Group Companies 1. Basic stance on Internal Control system and status...

  • Page 85
    ... business a. Using the Fujitsu Way as a foundation, in order to continuously increase the value of the Fujitsu Group, Fujitsu will provide direction and support to senior management of each Group company for setting up efficient, law-abiding and appropriate business execution systems as detailed...

  • Page 86
    ... Vision, Corporate Values, Principles, and Code of Conduct. [Status of Internal Control System] Fujitsu has established a department with executive responsibility for internal controls. The company is continuing its steps to implement an even more robust operational execution structure by reviewing...

  • Page 87
    ... committee is responsible for promoting the environmental protection activities of the Fujitsu Group, which are based on the Fujitsu Group Environmental Policy and the Fujitsu Group Environmental Protection Program. As a result of our Project EAGLE initiative to build an internal control system for...

  • Page 88
    ... Prior discussion Board of directors Deliberation management Council Deliberation Report Deliberation decisions Business Divisions Business Groups Business Divisions events Business Groups Financial results-related information Corporate Finance Unit 086 Fujitsu Limited ANNUAL REPORT 2011

  • Page 89
    ... in our key markets, namely Japan, North America, Europe, and Asia (including China), can significantly impact Fujitsu Group operations. 1) Changes in Customers' ICt Investment trends A growing proportion of our technology solutions and other businesses is with the public institutions such as the...

  • Page 90
    ... sales and earnings. Further, sales and profitability could be affected by the development of groundbreaking technologies and services by competitors that would severely compromise the value of the Group's services and products. 5. Public Regulations, Public Policy, and tax Matters The business...

  • Page 91
    .... While the Group is also setting rules on quality control throughout the company, promoting software modularization, standardization of development work, and enhanced security measures in order to improve the quality of system development and other services in the technology solutions business, the...

  • Page 92
    ... chains. Immediately following the Tohoku Earthquake on Friday, March 11, 2011, a disaster response headquarters was established, with the company president acting as chief, and information was collected about the status of all Fujitsu Group facilities in eastern Japan and the status of customers...

  • Page 93
    ... CONSOLIDATED INCOME STATEMENTS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT FACts & FIGURes 091 Fujitsu Limited ANNUAL REPORT 2011

  • Page 94
    ...of basic and diluted earnings (loss) per share. 3. Cash dividends per share of common stock for the year ended March 31, 2011 are the total of interim and year-end dividends approved by the Company's Board of Directors on October 27, 2010 and May 23, 2011, respectively. 4. Owners' equity: Net assets...

  • Page 95
    ...servers in Europe, LSI devices and electronic components in Asia, and optical transmission systems in North America. As a result of the transfer of the HDD business in October 2009, however, overall sales outside Japan remained essentially unchanged. net sales Consolidated net sales for fiscal 2010...

  • Page 96
    ... East Japan Earthquake) LSI Devices Fujitsu Semiconductor Limited Five plants including the Iwate Plant (Kanegasaki-cho, Isawa-gun, Iwate Prefecture, Japan) x86 Server/PC Fujitsu Isotec Limited Head Office Plant (Date-shi, Fukushima Prefecture, Japan) Network Product/Mobile Phone Fujitsu Limited...

  • Page 97
    ... systems for the Group companies, and welfare benefits for Fujitsu Group employees. The main changes in segmentation are described below. (Car audio and navigation systems, mobile communication equipment, and automotive electronic equipment) In the "Human Centric Intelligent Society" that the Group...

  • Page 98
    ... systems, mobile communication equipment, and automotive electronic equipment-that collect and utilize various information and knowledge generated from the behavioral patterns of people and organizations needed to achieve the Group's vision of a "Human Centric Intelligent Society." Net sales...

  • Page 99
    ...electronic components and the benefits of the Company and Toshiba Corporation mobile phone business merger, sales were impacted by the transfer of the HDD business in the previous fiscal year, as well as lower sales resulting from the Great East Japan Earthquake. Sales of system integration services...

  • Page 100
    ... 2009. Excluding the impact of foreign exchange rate fluctuations, sales increased 8%. In addition to the steady growth of sales of optical transmissions systems, sales of LSI devices, electronic components, and car audio and navigation systems also increased, mainly during the first half of the...

  • Page 101
    ... The Group expenses actuarial losses that arise over the average remaining service period of its employees. Shareholders' equity ratio: Shareholders' equity ÷ Total assets Owners' equity ratio: (Net assets - Subscription rights to shares - Minority interests in consolidated subsidiaries) ÷ Total...

  • Page 102
    ... models of PC and mobile phone, along with manufacturing facilities for car audio and navigation systems. In the Device Solutions segment, expenditures totaled ¥39.4 billion ($475 million), mainly for LSI device manufacturing facilities and facilities to increase production of electronic components...

  • Page 103
    ... utilization rate, associated with rapid changes in the operating environment or other factors, and business realignment. Provision for Product Warranties Some of the Group's products are covered by contracts that require the Group to repair or exchange them free of charge during a set period...

  • Page 104
    ... sHeets Fujitsu Limited and Consolidated Subsidiaries Yen (millions) At March 31 Notes 2010 2011 U.S. Dollars (thousands) (Note 2) 2011 Assets Current assets: Cash and cash equivalents Short-term investments Receivables, trade Allowance for doubtful accounts Inventories Others Total current...

  • Page 105
    ... retirement benefits Provision for loss on repurchase of computers Provision for product warranties Provision for recycling expenses Others Total long-term liabilities total liabilities net assets shareholders' equity: Common stock Capital surplus Retained earnings Treasury stock, at cost Total...

  • Page 106
    ConsoLIDAteD InCoMe stAteMents Fujitsu Limited and Consolidated Subsidiaries Yen (millions) Years ended March 31 Notes 2010 2011 U.S. Dollars (thousands) (Note 2) 2011 net sales operating costs and expenses: Cost of sales Selling, general and administrative expenses operating income other income ...

  • Page 107
    ... on loss on hedges and securities, others, net of taxes net of taxes Common stock Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Foreign currency translation adjustments Subscription rights to shares Minority interests in consolidated subsidiaries Total...

  • Page 108
    ..., plant and equipment Proceeds from sales of property, plant and equipment Purchases of intangible assets Purchases of investment securities Proceeds from sales of investment securities Proceeds from transfer of business Proceeds from acquisition of subsidiaries' stock resulting in change in scope...

  • Page 109
    ..., revenue from sales of personal computers, other equipment and electronic devices is recognized when the products are delivered to the customers. Revenue from sales of the customized software is recognized by reference to the percentage-of-completion method. Fujitsu Limited ANNUAL REPORT 2011 107

  • Page 110
    ... of future losses on customized software or construction contracts whose costs are probable to exceed total contract revenues. (m) Provision for bonuses to board members Provision for the bonuses to board members is recorded based on an estimated amount. 108 Fujitsu Limited ANNUAL REPORT 2011

  • Page 111
    ...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 Group to repurchase the computers if they are returned by the...

  • Page 112
    ...sales for the years ended March 31, 2010 and 2011 were ¥29,840 million and ¥22,545 million ($271,627 thousand) respectively. 4. Property, Plant and equipment Changes in property, plant and equipment... 264,145 730,602 - (6,880) (790,120) $ 197,747 $7,694,482 110 Fujitsu Limited ANNUAL REPORT 2011

  • Page 113
    ... Short-term borrowings, principally from banks, with a weighted average interest rate of 1.24% at March 31, 2010 and 2011: Secured Unsecured total short-term borrowings (A) ¥ - 49,885 ¥49,885 ¥ - 54,148 ¥54,148 $ - 652,386 $652,386 FACts & FIGURes 111 Fujitsu Limited ANNUAL REPORT 2011

  • Page 114
    ... price of the bonds (Yen) Total issue price (Millions of yen) Total issue price of stock issued by the exercise of subscription rights to shares (Millions of yen) Subscription rights to shares granted (%) Exercisable periods of subscription rights to shares 112 Fujitsu Limited ANNUAL REPORT 2011

  • Page 115
    ... defined benefit pension plans provided outside Japan are the plans that Fujitsu Services Holdings PLC (including its consolidated subsidiaries, "FS") and Fujitsu Technology Solutions B.V. (including its consolidated subsidiaries) provide. The plan provided by FS entitles employees payments based...

  • Page 116
    ... net obligation at transition as income. For additional plan assets to cover the unrecognized net obligation at transition, the Company placed its holding of marketable securities in a trust which was solely established for the retirement benefit plan. 114 Fujitsu Limited ANNUAL REPORT 2011

  • Page 117
    ...line with the fluctuation in prices may be exchanged for a one-off uplift in payments. *2 Contribution for defined contribution plans. Assumptions used in accounting for the plans At March 31 2010 2011 Discount rate Expected rate of return on plan assets Method of allocating actuarial loss Mainly...

  • Page 118
    ... of computers Intercompany profit on inventories and property, plant and equipment 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 Unrealized gains on securities...

  • Page 119
    ... of deposit are held for fund management and the shares are held for maintaining and strengthening business relationship with the customers. Shares are exposed to market price fluctuation risk and financial risk of the company invested. FACts & FIGURes 117 Fujitsu Limited ANNUAL REPORT 2011

  • Page 120
    ... of the financial assets that are exposed to credit risk. (ii) Management of Market Risk The Group utilizes mainly exchange forward contracts in respect to trade receivables and trade liabilities denominated in foreign currencies to mitigate exchange rate fluctuation risk monitored by each currency...

  • Page 121
    ... consolidated balance sheet as of March 31, 2010 and 2011, fair values, and the variances between the... trade (4) Accrued expenses Long-term liabilities (5) Long-term debt (6) Lease obligation Total ...108 [43,819] [43,928] 108 [43,819] - - - FACts & FIGURes 119 Fujitsu Limited ANNUAL REPORT 2011

  • Page 122
    ... of March 31, 2010 and 2011 are ¥50,781 million and ¥47,404 million ($571,133 thousand), consisting of Affiliate: ¥20,169 million and ¥18,799 million ($226,494 thousand) and Others: ¥30,612 million and ¥28,605 million ($344,639 thousand) respectively. 120 Fujitsu Limited ANNUAL REPORT 2011

  • Page 123
    ...31, 2011 Fair Value Gain/Loss Fair Value Gain/Loss Foreign Exchange Forward Contracts To buy foreign currencies U.S. Dollars Euro Other currencies To sell foreign currencies U.S. Dollars Euro Other currencies Foreign Exchange Swap Contracts Receive Pound Sterling Pay Pound Sterling Others Total...

  • Page 124
    ...937 ¥9 Yen (millions) $33,711 $23,337 $108 Type of derivative transaction Principal Item Hedged Contract Amount Contract Amounts over 1 Year Fair Value Interest rate swap transaction Pay fixed/Receive variable 122 Borrowings ¥3,625 ¥2,772 ¥10 Fujitsu Limited ANNUAL REPORT 2011

  • Page 125
    ... 31 2010 2011 U.S. Dollars (thousands) 2011 Gain on sales of investment securities Gain on change in interest Foreign exchange gains (losses), net Gain on negative goodwill Gain on transfer of business Loss on disaster Loss on disposal of property, plant and equipment and intangible assets Loss on...

  • Page 126
    ... mainly to an investment property determined to be sold. Loss on changes in retirement benefit plan Loss on changes in retirement benefit plan for the year ended March 31, 2011 referred to the costs related to the changes to a defined contribution pension plan by consolidated subsidiaries in Japan...

  • Page 127
    ... ended March 31, 2010 [Proceeds from acquisition of subsidiaries' stock resulting in change in scope of consolidation] Net proceeds consist of ¥42,912 million and ¥7,504 million from acquisitions of shares of Fujitsu Technology Solutions (Holding) B.V. (FTS) and FDK Corporation, respectively. The...

  • Page 128
    ...management units along product lines and includes the sales departments. This reportable segment contains ubiquitous terminals-including personal computers and mobile phones, as well as car audio and navigation systems, mobile communication equipment, and automotive electronic equipment-that collect...

  • Page 129
    ... by Reportable segments Yen (millions) Reportable segments Years ended March 31 Technology Solutions Ubiquitous Solutions Device Solutions Total Other Operations Elimination & Corporate Consolidated 2011 Net Sales External customers Inter-segment Total sales Operating income (loss) Total assets...

  • Page 130
    ... 31 2010 2011 U.S. Dollars (thousands) 2011 Technology Solutions Services System Platforms Ubiquitous Solutions Personal Computers and Mobile Phones Mobilewear Device Solutions LSI Electronic Components Other Operations Elimination & Corporate Total Note: The details of products and services are...

  • Page 131
    ... DATA CORPORATION are included in NTT Group. 20. Related-party transactions For the years ended March 31, 2010 and 2011 (Related-party transactions) No significant transactions. (Note to significant affiliate) Not applicable for the years. FACts & FIGURes 129 Fujitsu Limited ANNUAL REPORT 2011

  • Page 132
    ... Cost of sales Selling, general and administrative expenses ¥ 6 million 15 $ 72 thousand 181 The above charges were related to stock options granted by the Company's consolidated subsidiary, Fujitsu Frontech Limited. Since the year ended March 31, 2007, "Accounting Standard for Share-based Payment...

  • Page 133
    ... Fujitsu Frontech Limited (the Company's subsidiary) (i) Resolution at Board of Directors on July 23, 2008 Position 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...

  • Page 134
    ... at Board of Directors on July 28, 2010 Position and number of people entitled to stock options 5 members of the Board of Directors (excluding external board members) 12 corporate vice presidents (excluding persons holding concurrent post of board members) Number of shares for stock options...

  • Page 135
    ... sale and maintenance of information systems. Due to changes in the competitive environment in the ICT industry and new business opportunities, particularly in the infrastructure services market, the Company decided to convert Fujitsu Technology Solutions (name changed from Fujitsu Siemens Computers...

  • Page 136
    ...: Business description: FDK Corporation ("FDK") Manufacture and sale of electronic components, batteries and related products 2) Principal Reasons for Carrying Out the Business Combination To respond to the changes taking place in the marketplace, FDK (listed on second section, Tokyo Stock Exchange...

  • Page 137
    ... and the Name of the Business Subsequent to the Combination Legal form of the business combination: Name of the business subsequent to the combination: Share exchange No change in corporate name FACts & FIGURes ¥29,943 18,432 48,375 46,113 14,078 60,191 Fujitsu Limited ANNUAL REPORT 2011 135

  • Page 138
    ... its Objectives To meet customers' diversifying ICT needs in a timely fashion and strengthen the Technology Solutions business, including platforms and ICT solutions, for medium-size businesses in Japan, the Company allotted treasury stock to shareholders of FJB in exchange for common stock of...

  • Page 139
    ...related business of Yamagata Fujitsu Limited, along with the Company's HDD manufacturing subsidiaries, Fujitsu (Thailand) Co., Ltd., and Fujitsu Computer Products Corporation of the Philippines became subsidiaries of Toshiba Storage Device. The Company's HDD sales and marketing offices outside Japan...

  • Page 140
    InDePenDent AUDItoRs' RePoRt 138 Fujitsu Limited ANNUAL REPORT 2011

  • Page 141
    independent AuditoRs' RepoRt FACts & FIGURes 139 Fujitsu Limited ANNUAL REPORT 2011

  • Page 142
    ... of the development and performance of the business and the position of Fujitsu Limited and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. Masami Yamamoto 140 Fujitsu Limited ANNUAL REPORT 2011

  • Page 143
    ... Director of Fujitsu Limited (the "Company"), and Kazuhiko Kato, Corporate Executive Vice President and Director and Chief Financial Officer of the Company, are responsible for the design and operation of internal control over financial reporting for the Fujitsu Group's consolidated financial...

  • Page 144
    .... 3. Assessment Result As a result of performing the assessment in accordance with the above policy, the Company concluded that the design and operation of internal control over financial reporting for the Fujitsu Group were effective as of March 31, 2011. 142 Fujitsu Limited ANNUAL REPORT 2011

  • Page 145
    ... 31, 2011) Consolidated subsidiaries (535 companies) Japan Listed Shinko Electric Industries Co., LTD. NIFTY Corporation Fujitsu Component Limited Fujitsu Broad Solution & Consulting Inc. Fujitsu Frontech Limited FDK Corporation Unlisted Shimane Fujitsu Limited PFU Limited*1 Fujitsu Isotec Limited...

  • Page 146
    ... Corporation 4-5, Marunouchi 1-chome Chiyoda-ku, Tokyo 100-8212, Japan stock exchange Listings: Japan: Tokyo, Osaka, Nagoya Overseas: London Independent Auditors: Ernst & Young ShinNihon LLC shareholder Information: For further information, please contact: Fujitsu Limited Public & Investor Relations...

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    Fujitsu Limited Shiodome City Center, 1-5-2 Higashi-Shimbashi Minato-ku, Tokyo 105-7123, JAPAN Tel. +81-3-6252-2220 www.fujitsu.com Legibility Considerations We have reviewed this report using our ColorSelector tool to choose a highly accessible color combination so that the text and figures will ...