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FUJITSU LIMITED
FUJITSU LIMITED
Annual Report

Table of contents

  • Page 1
    FUJITSU LIM ITED Annual Report

  • Page 2
    ... and Analysis of Operations Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flow s Notes to Consolidated Financial Statements Independent Auditors' Report Fujitsu Group Companies Shareholders' Data

  • Page 3
    ... Financial Highlights 1 Fujitsu Limited and Consolidated Subsidiaries Years ended M arch 31 Yen (millions) (except per share data) 1998 U.S. Dollars (millions) (except per share data) 1999 1999 For the year: Net sales...Â¥4,985,382 Operating income ...177,353 Income before income taxes...

  • Page 4
    ... optimal solutions to customers on a global basis. Based on our " Global Solution Link" concept, From lef t : Tadashi Sekizaw a, Chairman Naoyuki Akikusa, President Fujitsu Group companies like Amdahl Corporation and DM R Consulting Group, Inc. in North America, ICL PLC in Europe, Fujitsu Asia Pte...

  • Page 5

  • Page 6
    ... to help companies create new w ays of doing business. Leveraging Our Core Technological Strengths 0 The Fujitsu Group continues to make strides and gain recognition as a total solutions provider. The solutions that our customers rate most highly for their quality are those that are supported by...

  • Page 7
    ... and profit potential, promote management efficiency and strengthen our financial position. At the same time, w e w ill continue to devote special attention to dealing w ith global environmental problems on a groupw ide basis, such as by creating environmentfriendly products and expanding recycling...

  • Page 8
    .... The follow ing profiles illustrate how the Fujitsu Group's global pool of IT professionals has taken " customer focus" to heart in providing creative, tailor-made solutions that have brought tangible benefits to our customers' businesses. To satisfy the exacting requirements of w orldclass clients...

  • Page 9
    ... elements of our customers' business performance is w hat w e mean by " customer focus." 0 Total Solutions-from Hardw are to Softw are, Services and Consulting Backed by a full range of w orld-class technologies in information processing, telecommunications and electronic devices, w e are able to...

  • Page 10
    ... at DoCoM o's nationwide sales outlets, thoroughly revamp backoffice operations, and facilitate real-time administrative management. Working closely w ith the customer, some 1,300 Fujitsu software and systems a Tokyo Stock Exchange New St ock Trading Syst em t o Reduce Cost s and Improve Funct...

  • Page 11
    c a b

  • Page 12
    ... a Fujitsu Group company, to help develop the vision and guiding principles for the call handling groups supporting the launch. After first helping define user requirements and select the right telecommunications system for PCS support, DM R assisted in selecting the technology and managing systems...

  • Page 13
    f d e

  • Page 14
    ... of our suppliers and business partners. We requested and, by the end of M arch 1999, received compliance reports from our principal partners, and w e are now follow ing up on them. Products 0 Although customers must judge for themselves w hether their computer systems are Y2K compliant, w e have...

  • Page 15
    ... customers ...Intersegment ...Total sales... Services and Softw are Information Processing Telecommunications Electronic Devices Other Operations Intersegment Elimination ...Â¥ (558.5) Consolidated Net Sales...Â¥4,503.4 Operating Income Years ended M arch 31 1997 1998 (Â¥ Billion) 1999 Services...

  • Page 16
    ...business leaders, w e are supporting education, academic research and international exchange programs. In addition, w e are actively carrying out an extensive range of environmental protection activities. By quant if ying cost s and benef it s, t he Fujit su Environment al Account ing Syst em helps...

  • Page 17
    ... and utilization of management systems Environmental Education Activities: Cost benefits resulting from in-house education of environmental ISO system construction consultants and inspectors Fujit su: 9.7 M ajor Subsidiaries: 8.4 Tot al: 18.1 Fujit su is t he f irst Japanese company t o receive...

  • Page 18
    ... environment . Continued Progress in ISO Certification 0 By December 1997, all 11 of our domestic production bases had been aw arded ISO 14001 certification, an international standard for environmental management systems. In February 1998, tw o of our development facilities w ere also so designated...

  • Page 19
    ...their country at the IM O. Supporting Education, Academic Research and International Exchange 0 A longstanding example of our efforts to help cultivate tomorrow 's business leaders is our continuing support of the Japan-America Institute of M anagement Science (JAIM S), w hich w e founded in Haw aii...

  • Page 20
    ... Naruto AUDITORS Yasuyuki Wakahara Takeo Kato PRESIDENT Naoyuki Akikusa SENIOR EXECUTIVE VICE PRESIDENTS Takesi M aruyama M asuo Tanaka Keizo Fukagaw a M EM BERS OF THE BOARD Kunihiko Saw a Tatsuzumi Furukaw a Ryusuke Hoshikaw a Junji M aeyama Hiroya M adarame M asaru Takei Tatsushi M iyazaw...

  • Page 21
    ......Number of employees...Net sales by business segment (excluding intersegment sales): Services and softw are...Information processing ...Telecommunications ...Electronic devices...Other operations...Total ...Net sales by customers' geographic location: Japan ...Europe ...The Americas ...Asia...

  • Page 22
    ... the full period, expansion of our services and softw are business, increased netw ork demand in the U.S. and Europe, buoyant sales of PCs in the European consumer market, and higher global demand for small form factor hard disk drives. The average yen exchange rate during the year fell from ¥123...

  • Page 23
    ... at 34 affiliated companies accounted for by the equity method. Other, net includes ¥41.0 billion ($338 million) in gains on the listings of three domestic subsidiaries-Fujitsu Support and Service Inc., Fujitsu Systems Construction Ltd. and Fujitsu Devices Inc.-on the Tokyo Stock Exchange and ¥19...

  • Page 24
    ...; • Telecommunications-facilities and equipment related to the development and manufacture of sw itching equipment and transmission systems; • Electronic devices-equipment for the development of system LSIs, equipment to support increased integration of logic lCs, and flash memory manufacturing...

  • Page 25
    ... (decrease) rate (% ) Years ended M arch 31 1998 1999 Services and softw are ...Information processing ...Telecommunications...Electronic devices...[Semiconductor production]...Other operations ...Corporate* ...Capital expenditure ...Domestic ...Overseas... ¥ 65 89 46 205 [175] 10 18 ¥435...

  • Page 26
    ...1999 1999 Assets Current assets: Cash and cash equivalents ...Short-term investments (Note 4) ...Receivables, trade... 387,909 10,407,264 (150,008) 7,487,537 1,650,802 23,498,463 Investments and long-term loans: Affiliates (Note 6)...Other (Notes 4, ...Financial Statements are an integral part of these...

  • Page 27
    ... (thousands) (Note 3) 1999 1999 Liabilities and shareholders' equity Current liabilities: Short-term borrow ings (Note 9) ...Current portion of long-term debt (Note 9)...Payables, trade (Note 16) ...Accrued expenses ...Customers' advances ...Accrued income taxes ...Other current liabilities (Note...

  • Page 28
    26 Consolidated Statements of Operations Yen (millions) Years ended M arch 31 1997 1998 U.S. Dollars (thousands) (Note 3) 1999 1999 Net sales ...Operating costs and expenses: Cost of sales ...Selling, general and administrative expenses (Note 18)... ¥4,503,474 ¥4,985,382 ¥5,242,986 $43,...

  • Page 29
    Consolidated Statements of Shareholders' Equity 27 Yen (millions) Years ended M arch 31 1997 1998 U.S. Dollars (thousands) (Note 3) 1999 1999 Common stock: Balance at beginning of year...Exercise of w arrants...Conversion of bonds...Increase by merger ...Balance at end of year ... ¥237,626 - ...

  • Page 30
    ... at beginning of year ... Cash and cash equivalents at end of year ...¥413,900 Noncash financing activities: Conversion of bonds into common stock and capital surplus ...¥ 127 ¥ 4,252 ¥ 361 $ 2,983 The accompanying Notes to Consolidated Financial Statements are an integral part of these...

  • Page 31
    ...in Japan. (e) Revenue recognition Revenues from sales of communications products and computer systems are generally recognized upon acceptance by the customers, w hile revenues from sales of personal computers, peripherals, other equipment and electronic devices are recognized w hen the products are...

  • Page 32
    ... computers Certain computers manufactured by the Group are sold to Japan Electronic Computer Company Limited (" JECC" ) and other leasing companies and financial institutions for leasing to the ultimate users under contracts w hich require that the Group repurchase the computers if they are returned...

  • Page 33
    ... to IAS No. 27, Fujitsu Leasing Co., Ltd., an affiliate of the Group, should be included in consolidation. The Company excludes this enterprise from consolidation in accordance w ith the regulations under the Securities and Exchange Law of Japan. Retirement and severance benefits (Note 10) IAS No...

  • Page 34
    ... Japan maintain their books of account in yen. The U.S. dollar amounts included in the accompanying consolidated financial statements and the notes thereto represent the arithmetic results of translating yen into dollars at ¥121= US$1, the approximate rate of exchange prevailing on M arch 31, 1999...

  • Page 35
    ...to the amendment to the scope of consolidation based on controlling pow ers in regulations under the Securities and Exchange Law of Japan, Fujitsu Leasing Co., Ltd., w hich w as an affiliate of the Group as of M arch 31, 1999, w ill become a consolidated subsidiary effective the year beginning April...

  • Page 36
    34 Notes to Consolidated Financial Statements 7. Property, Plant and Equipment Changes in property, plant and equipment have resulted from the follow ing: Yen (millions) Years ended M arch 31 1998 U.S. Dollars (thousands) 1999 1999 Land Balance at beginning of year, net ...Additions ......

  • Page 37
    ...) ¥ 867 573,716 114,000 $ 7,165 4,741,455 942,149 ¥688,583 $5,690,769 1999 1999 Loans, principally from banks and insurance companies, due from 1999 to 2025 at interest rates ranging from 0.47% to 11.70% at M arch 31, 1998 and 1999: Secured ...Unsecured ...Bonds and notes issued by the...

  • Page 38
    ... all employees of the Company and most subsidiaries in Japan are covered by contributory defined benefit plans, w hich include a substitutional portion of the benefits under the National Welfare Pension Plan of Japan (" the NWP Plan" ). The plans require that the liability reserve and the annual...

  • Page 39
    ... amortized over 10 years. M ost subsidiaries outside Japan have defined benefit pension plans and/or defined contribution pension plans covering substantially all employees. The major plan is the ICL Group Pension Plan, w hich is a defined benefit plan. The pension cost of this plan is calculated by...

  • Page 40
    ... plan. Under the plan, the cost of providing retirement benefits is determined using the accrued benefit valuation method. 11. Income Taxes The Group is subject to a number of different income taxes. The statutory tax rates in Japan for the years ended M arch 31, 1997, 1998, and 1999 w ere, in the...

  • Page 41
    ... given for employees' housing loans w ere ¥33,230 million ($274,628 thousand) in the aggregate and guarantees given as buyers' credit related to exports to China w ere ¥10,033 million ($82,917 thousand). 14. Derivative Financial Instruments Purpose of Derivative Trading The Group enters into...

  • Page 42
    ... five years, and ¥4,335 million ($35,826 thousand) due over five years. Total lease payments under finance leases of the Company and its consolidated subsidiaries in Japan for the years ended M arch 31,1997, 1998 and 1999 amounted to ¥21,993 million, ¥23,118 million and ¥24,695 million ($204...

  • Page 43
    Notes to Consolidated Financial Statements 41 The equivalent amount of depreciation under finance leases of the Company and its consolidated subsidiaries in Japan for the year ended M arch 31,1999 w as ¥24,695 million ($204,091 thousand). Presentation of the 1997 and 1998 information is not ...

  • Page 44
    ...similarity of products and services, and selling methods, etc. Business Segment Information Yen (millions) Years ended M arch 31 Services & Softw are Information Processing Telecommunications Electronic Devices Other Elimination & Operations Corporate Consolidated 1997 Sales Unaffiliated customers...

  • Page 45
    ... system, Wireless system, Satellite telecommunication system, Corporate information netw ork system, M obile telecommunication system, Cellular phone (4) Electronic Devices ...M emory IC (DRAM , Flash memory), Logic IC (ASIC, M icrocontroller, System LSI), M edia device (PC card, SAW device...

  • Page 46
    ... except Japan: (1) Europe...U.K., Spain, Sw eden, Germany, Finland, the Netherlands (2) The Americas...U.S.A., Canada (3) Others ...China, Thailand, Vietnam, M alaysia, the Philippines, Singapore, Taiw an, Australia 3. Unallocated operating costs and expenses reported in " Elimination & Corporate...

  • Page 47
    Independent Auditors' Report 45 The Board of Directors FUJITSU LIM ITED We have examined the consolidated balance sheets of Fujitsu Limited and consolidated subsidiaries (the " Group" ) as of M arch 31, 1998 and 1999, and the related consolidated statements of operations, shareholders' equity and ...

  • Page 48
    ... Corporation [Tokyo] 70% Fujitsu Kanto Systems Ltd. [Saitama] 100% Shin-etsu Fujitsu Ltd. [Nagano] 88% Fujitsu Financial Solutions and Outsourcing Ltd. [Osaka] 100% Fujitsu LSI Technology Ltd. [Kaw asaki] 100% Fujitsu Kansai System Engineering Ltd. [Osaka] 100% Fujitsu Research Institute [Tokyo] 100...

  • Page 49
    ...(CA)] U.S.A. 100% Amdahl Corporation [Sunnyvale (CA)] U.S.A. 100% DM R Consulting Group, Inc. (Amdahl Group Company) [Edison (NJ)] U.S.A. 100% Fujitsu M icroelectronics, Inc. [San Jose (CA)] U.S.A. 100% Fujitsu Systems Business of America, Inc. [Santa Clara (CA)] U.S.A. 100% Fujitsu Personal Systems...

  • Page 50
    ... 40% Glovia International, LLC [El Segundo (CA)] U.S.A. 31% FKL Dongnhw a Ltd. [South Chungchong] KOREA 50% Fujitsu Philippines, Inc. [M anila] PHILIPPINES 40% Fujitsu Development Corporation of the Philippines [Laguna] PHILIPPINES 40% Fujitsu Systems Business (Thailand) Ltd. [Bangkok] THAILAND 49...

  • Page 51
    ...1.6% 1.4% Corporate Headquarters 6-1, M arunouchi 1-chome, Chiyoda-ku, Tokyo 100-8211, Japan Telephone: +81-3-3216-3211 Transfer Agent The Toyo Trust and Banking Company, Limited 4-3, M arunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan Stock Exchange Listings Japan: Tokyo, Osaka, Nagoya Overseas...

  • Page 52
    © 1999 6-1, M arunouchi 1-chome, Chiyoda-ku, Tokyo 100-8211, Japan Telephone: +81-3-3213-4160 Facsimile: +81-3-3216-9365 Homepage URL: http://w w w .fujitsu.co.jp/index-e.html Printed in Japan BA0013-1M This annual report is printed on recycled paper.