Fujitsu 2011 Annual Report Download - page 102

Net cash used in financing activities was ¥166.9 billion ($2,011
million). Although the company issued ¥50.0 billion in straight
bonds in October 2010 to cover the redemption of ¥50.0 billion in
straight bonds maturing in November 2010, the company also
redeemed ¥100.0 billion in convertible bonds maturing in fiscal
2010, primarily in cash on hand. Moreover, in addition to year-end
and interim dividend payments of ¥23.1 billion in line with the
increase in dividends from the prior fiscal year, there was also a
payment of ¥9.4 billion for the acquisition of shares from minority
shareholders in conjunction with the conversion of PFU Limited into
a wholly owned subsidiary. Compared to fiscal 2009, when ¥300.0
billion in corporate bonds was redeemed, there was a decrease in
outflows of ¥238.3 billion.
As a result of the above factors, cash and cash equivalents at the
end of fiscal 2010 totaled ¥358.5 billion ($4,320 million), down
¥61.5 billion from a year earlier.
To ensure efficient fund procurement when the need for funds
arises, the Company views the maintenance of an appropriate level
of liquidity as an important policy with respect to its financing activi-
ties. “Liquidity” refers to cash and cash equivalents and the total
unused balance of financing frameworks based on commitment
lines established with multiple financial institutions. As of March 31,
2011, the Group had liquidity of ¥561.3 billion ($6,763 million), of
which ¥358.5 billion ($4,320 million) was cash and cash equiva-
lents and ¥202.7 billion ($2,443 million) was the yen value of
unused commitment lines.
To raise funds from global capital markets, the Company has
acquired bond ratings from Moody’s Investors Service (Moody’s),
Standard & Poor’s (S&P), and Rating and Investment Information,
Inc. (R&I). As of March 31, 2011, the Company had bond ratings
(long-term/short-term) of A3 (long-term) from Moody’s, A– (long-
term) from S&P, and A+ (long-term) and a-1 (short-term) from R&I.
Condensed Consolidated Statements of Cash Flows
(Units: billion yen)
Fiscal year ended March 31 2010 2011
YoY
Change
I Cash flows from operating activities . . . 295.3 255.5 (39.8)
II Cash flows from investing activities . . . 1.0 (142.1) (143.1)
I+II Free cash flow . . . . . . . . . . . . . . . . . . 296.4 113.4 (182.9)
[Excluding one-time items] . . . . . . . . . . [111.6] [73.3] [(38.2)]
III Cash flows from financing activities . . (405.3) (166.9) 238.3
IV Cash and cash equivalents at end of
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420.1 358.5 (61.5)
Note: “Free cash flow excluding one-time items” refers to free cash flow exclud-
ing proceeds from sales of investment securities, transfer of businesses
and purchase of shares in subsidiaries.
4. Capital Expenditure
In fiscal 2010, capital expenditure totaled ¥130.2 billion ($1,569
million), an increase of 3.0% from ¥126.4 billion spent in the previous
fiscal year. In the Technology Solutions segment, capital expenditures
totaled ¥67.2 billion ($810 million) for expansion of datacenters in
Japan, including the opening of the Yokohama datacenter, along with
datacenters in Australia and other regions outside Japan. In the
Ubiquitous Solutions segment, the Group spent ¥15.5 billion ($188
million), mainly for new 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.
5. Consolidated Subsidiaries
As of the end of fiscal 2010, the number of consolidated subsidiaries in
Japan totaled 198, and the number outside Japan totaled 337, for a
total of 535 subsidiaries, down five from 540 subsidiaries in fiscal 2009.
The number of affiliated companies accounted for by the equity
method as of the fiscal year-end totaled 15, five less than a year earlier.
6. Critical Accounting Policies and Estimates
The accompanying consolidated financial statements of the Group have
been prepared in accordance with accounting principles and practices
generally accepted in Japan and the regulations under the Financial
Instruments and Exchange Law of Japan. The preparation of the con-
solidated financial statements requires management to make assump-
tions and estimates that affect the amount of the assets, liabilities,
contingent assets and contingent liabilities reported at the end of the
fiscal year, as well as the amount of revenue and expenses recognized
during that term. Actual results may differ from these estimates. The
following assumptions and estimates based on the application of
accounting principles are those that the management believes may
have a material impact on the consolidated financial statements.
Revenue Recognition
Revenue from sales of ICT systems and products, excluding custom-
ized software under development contracts, is recognized upon
acceptance by the customers, whereas revenue from sales of per-
sonal computers, other peripheral equipment and electronic devices
is recognized when the products are delivered to the customers.
Revenue from customized software under development contracts is
recognized on a percentage-of-completion basis.
The Group stringently assesses the potential revenue recoverable
on projects for which estimated costs have exceeded estimated
revenue, and recognizes the amounts assessed as non-recoverable
as losses. If the estimated costs relating to such contracts increase
further in the future, additional losses may be recognized.
Inventories
Inventories are carried at the acquisition cost. However, should the
net realizable value (“NRV”) at the fiscal year-end fall below that of
the acquisition cost, inventories are subsequently listed based on the
NRV, with the difference in value between the acquisition cost and
the NRV, in principle, booked as cost of sales. Inventories outside the
normal operating cycle are calculated at an NRV that reflects future
demand and market trends. The Group may experience substantial
losses in cases where the NRV drops dramatically as a result of dete-
rioration in the market environment compared to forecasts.
100 FUJITSU LIMITED ANNUAL REPORT 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS