TIDMFUJ
RNS Number : 5608D
Fujitsu Ld
30 April 2013
Fujitsu Limited
Consolidated Financial Results for the Full-Year Ended March 31,
2013
April 30, 2013
Fujitsu Limited
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Stock exchange listings: Tokyo, Osaka, Nagoya
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Code number: 6702
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URL: http://jp.fujitsu.com/
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Representative: Masami Yamamoto, President and Representative Director
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Contact person: Isamu Yamamori,
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Vice President, Public and Investor Relations Office
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Tel. +81 3 6252 2175
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Scheduled annual shareholders' meeting date: June 24, 2013
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Scheduled dividend payment date: -
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Supplementary material: No
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Financial results meeting: Yes (targeted at media and analysts)
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1. Consolidated Results for the Full-Year Ended March 31,
2013
(Monetary amounts are rounded to the nearest million yen.)
(1) Consolidated Financial Results
(The percentage figures represent the percentage of increase or
decrease against the same period of the previous year.)
Yen (Millions)
Net Sales Change Operating Change Net Income Change
(%) Income (%) (Loss) (%)
------------------- ---------- ------- ---------- ------- ----------- -------
FY 2012 4,381,728 -1.9 95,278 -9.5 -72,913 -
(4/1/12-3/31/13)
------------------- ---------- ------- ---------- ------- ----------- -------
FY 2011 4,467,574 -1.3 105,304 -20.6 42,707 -22.5
(4/1/11-3/31/12)
------------------- ---------- ------- ---------- ------- ----------- -------
Reference Comprehensive income : FY2012; -32,959 million yen [ - %]
FY2011; 34,310 million yen [-11.5 %]
Yen
Net Income (Loss) per Rate of Return Operating Income
Common Share on Equity (%) Margin (%)
------------------- ------------------------ --------------- -----------------
Basic Diluted
------------------- ----------- ----------- --------------- -----------------
FY 2012 -35.24 - -9.0 2.2
(4/1/12-3/31/13)
------------------- ----------- ----------- --------------- -----------------
FY 2011 20.64 20.55 5.1 2.4
(4/1/11-3/31/12)
------------------- ----------- ----------- --------------- -----------------
(2) Consolidated Financial Position Yen (Millions, except per
share data)
Total Assets Net Assets Owners' Equity Net Assets
Ratio (%) per Share
---------------- ------------- ----------- --------------- -----------
March 31, 2013 3,049,054 909,809 25.6 377.62
---------------- ------------- ----------- --------------- -----------
March 31, 2012 2,945,507 966,598 28.6 406.42
---------------- ------------- ----------- --------------- -----------
Reference Owners' Equity: March 31, 2013; 781,416 million yen
March 31, 2012; 841,039 million yen
(3) Consolidated Cash Flows Yen (Millions)
Cash Flows Cash Flows Cash Flows Cash and
from from from Cash Equivalents
Operating Activities Investing Activities Financing Activities
------------------- ---------------------- ---------------------- ---------------------- ------------------
FY 2012 71,010 -161,481 100,384 284,548
(4/1/12-3/31/13)
------------------- ---------------------- ---------------------- ---------------------- ------------------
FY 2011 240,010 -190,830 -138,966 266,698
(4/1/11-3/31/12)
------------------- ---------------------- ---------------------- ---------------------- ------------------
2. Dividends per Share of Common Stock
Dividends per Share (Yen) Total Dividend Ratio
Amount Payout of Dividends
of Dividends Ratio to Net
(Million (%) Assets
Yen) (%)
-------------------- ---------------------------------- -------------- --------- --------------
Year- Full
1Q 2Q 3Q End Year
-------------------- ---- ------ ---- ------ ------ -------------- --------- --------------
FY 2011 - 5.00 - 5.00 10.00 20,694 48.4 2.5
-------------------- ---- ------ ---- ------ ------ -------------- --------- --------------
FY 2012 - 5.00 - 0.00 5.00 10,346 - 1.3
-------------------- ---- ------ ---- ------ ------ -------------- --------- --------------
FY 2013 (Forecast) - 0.00 - - - -
-------------------- ---- ------ ---- ------ ------ -------------- --------- --------------
Note; Year-end dividend amounts for fiscal 2013 (fiscal year
ending March 31, 2014) has yet to be determined.
3. Consolidated Earnings Forecast for FY2013
(The percentage figures represent the percentage of increase or
decrease against the same period of the previous year.)
Yen (Millions, except per share data)
Net Sales Change Operating Change Net Income Change Net Income
(%) Income (%) (%) per Common
Share
---------- --------- ------ --------- ------ ---------- ------ -----------
1H FY2013 2,050,000 -1.1 -10,000 - -30,000 - -14.50
---------- --------- ------ --------- ------ ---------- ------ -----------
FY 2013 4,550,000 3.8 140,000 46.9 45,000 - 21.75
---------- --------- ------ --------- ------ ---------- ------ -----------
4. Other Information
(1) Significant Changes to Subsidiaries in the Current Reporting Period
(Changes to specified subsidiaries resulting from changes in
scope of consolidation): None
(2) Changes in accounting policies and accounting estimates, and restatements
1. Changes in accounting policies arising from revision of
accounting standards: None
2. Changes arising from factors stated in 1: None
3. Changes in accounting estimates: None
4. Restatements: None
(3) Number of Issued Shares (Common shares)
1. Number of issued As of March 31, 2,070,018,213 shares
shares at end of period 2013
------------------------- ------------------ -------------- -------
As of March 31, 2,070,018,213 shares
2012
------------------------- ------------------ -------------- -------
2. Treasury stock held As of March 31, 723,691 shares
at end of period 2013
------------------------- ------------------ -------------- -------
As of March 31, 652,484 shares
2012
------------------------- ------------------ -------------- -------
3. Average number of Full Year FY 2012 2,069,330,470 shares
issued and outstanding
shares during period
------------------------- ------------------ -------------- -------
Full Year FY 2011 2,069,526,185 shares
------------------------- ------------------ -------------- -------
(Reference Information) Summary of FY2012 Full-Year
Non-consolidated Results
(Monetary amounts less than one million yen are rounded
down.)
Non-consolidated Results for the Full-Year Ended March 31,
2013
(1) Non-consolidated Financial Results
(The percentage figures represent the percentage of increase or
decrease against the same period of the previous year.)
Yen (Millions)
Net Sales Change Operating Change Net Income Change
(%) Income (%) (Loss) (%)
------------------- ---------- ------- ---------- ------- ----------- -------
FY 2012 2,087,898 -1.7 27,850 -1.6 -338,025 -
(4/1/12-3/31/13)
------------------- ---------- ------- ---------- ------- ----------- -------
FY 2011 2,124,276 1.5 28,313 -19.8 54,808 22.4
(4/1/11-3/31/12)
------------------- ---------- ------- ---------- ------- ----------- -------
Yen
Net Income (Loss) per Common Share
-------------------- -------------------------------------
Basic Diluted
-------------------- ------------------ -----------------
FY 2012 -163.35 -
(4/1/12-3/31/13)
-------------------- ------------------ -----------------
FY 2011 26.48 26.36
(4/1/11-3/31/12)
-------------------- ------------------ -----------------
(2) Non-consolidated Financial Position Yen (Millions, except
per share data)
Total Assets Net Assets Owners' Equity Net Assets
Ratio (%) per Share
---------------- ------------- ----------- --------------- -----------
March 31, 2013 1,664,396 410,369 24.7 198.31
---------------- ------------- ----------- --------------- -----------
March 31, 2012 2,021,325 758,703 37.5 366.64
---------------- ------------- ----------- --------------- -----------
Reference Owners' Equity: March 31, 2013; 410,369 million yen
March 31, 2012; 758,703 million yen
Notes;
1. Compliance with Audit Procedures
These materials fall outside the jurisdiction of the audit
procedures of the Financial Instruments and
Exchange Act. Therefore, at the time of disclosure, a portion of
the audit has not yet been completed.
Upon completion of the audit, a statutory audit report will be
submitted on June 24, 2013.
2. Precautions on Usage of Earnings Projections
These materials may contain forward-looking statements that are
based on management's current information,
views and assumptions and involve known and unknown risks and
uncertainties that could cause actual results,
performance or events to differ materially from those expressed
or implied in such statements. Actual results
may differ materially from those projected or implied in the
forward-looking statements due to, without
limitation, the following factors listed below.
For information regarding the assumptions used to prepare these
projections, please refer to "3. FY2013
Earnings Projections".
- General economic and market 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
- Changes in market positioning due to competition in
R&D
- Changes in the environment for the procurement of parts and
components
- Changes in competitive relationships relating to
collaborations, alliances and technical provisions
- Risks related to public regulations, public policy and tax
matters
- Risks related to product or services defects
- Potential emergence of unprofitable projects
- Risks related to R&D investments, capital expenditures,
business acquisitions, business restructuring, etc.
- Risks related to natural disasters and unforeseen events
- Changes in accounting policies
Part I: Financial Results
1. Explanation of Financial Results
<Business Environment>
During fiscal 2012 (April 1, 2012 - March 31, 2013), the global
economy continued to experience a weak recovery. In Europe, the
development of a framework to economically assist countries in
southern Europe has caused sovereign debt yields to decline, while
economic conditions continued to deteriorate as a result of fiscal
austerity measures and rising unemployment. In the US, the
employment situation appeared to be improving, but concerns over
fiscal policy resulted in continued uncertainty. The rate of
economic growth in emerging market countries moderated on account
of depressed consumer spending, although there were signs of
improvement in investing as a result of expanded public sector
spending and monetary easing.
In Japan, the economy remained weak as a result of the
expiration of subsidies for hybrid car purchases and an anemic
recovery in the global economy. However, despite rising
expectations for an economic rebound due to a stock market rally
and yen depreciation spurred on by the government's economic policy
and monetary easing by the Bank of Japan, the impact on the real
economy has been limited.
With respect to investments in information and communication
technology (ICT) in Japan, spending on services has been recovering
as plans to invest that had been delayed were put back into motion.
Spending on services hardware has remained at low level. Outside of
Japan, primarily in Europe, economic conditions continued to
deteriorate, and companies have been putting firmer constraints on
investment spending.
FY2012 Full-Year Financial Results (Billion Yen)
FY2011 FY2012 Change vs. FY Change
2011 vs.
4/1/11- 4/1/12- Feb. Forecast
3/31/12 3/31/13
----------------------- --------- --------- ---------------
Change
(%)
----------------------- --------- --------- -------- ------ ---------------
Net Sales 4,467.5 4,381.7 -85.8 -1.9 11.7
Cost of Sales 3,232.1 3,177.9 -54.1 -1.7
----------------------- --------- --------- -------- ------ ---------------
Gross Profit 1,235.4 1,203.7 -31.6 -2.6
[Gross Profit Margin] [ 27.7%] [ 27.5%] [ -0.2%]
Selling, General
and Administrative
Expenses 1,130.1 1,108.4 -21.6 -1.9
----------------------- --------- --------- -------- ------ ---------------
Operating Income
(Loss) 105.3 95.2 -10.0 -9.5 -4.7
[Operating Income [ 2.4%] [ 2.2%] [ -0.2%]
Margin]
----------------------- --------- --------- -------- ------ ---------------
Other Income and
Expenses -38.5 -140.3 -101.8 - 34.6
Income (Loss) Before
Income Taxes and
Minority Interests 66.7 -45.1 -111.8 -
----------------------- --------- --------- -------- ------ ---------------
Income Taxes 29.9 24.2 -5.7 -19.1
----------------------- --------- --------- -------- ------ ---------------
Income (Loss) Before
Minority Interests 36.7 -69.3 -106.0 -
----------------------- --------- --------- -------- ------ ---------------
Minority Interests
(Loss) -5.9 3.5 9.5 -
----------------------- --------- --------- -------- ------ ---------------
Net Income (Loss) 42.7 -72.9 -115.6 - 22.0
----------------------- --------- --------- -------- ------ ---------------
* Change (%) Constant Currency
Quarterly Breakdown of Results (Billion Yen)
Change
FY2012 vs. Feb.
1Q 2Q 3Q 4Q Full-Year Forecast
-------------- ------ -------- -------- -------- ----------- ----------
Consolidated Sales 957.3 1,114.4 1,048.2 1,261.6 4,381.7 11.7
-------------- ------ -------- -------- -------- ----------- ----------
Change from
FY2011 -28.7 8.1 -31.4 -33.8 -85.8
---------------------------- ------ -------- -------- -------- ----------- ----------
Operating
Income -25.0 32.7 -4.1 91.7 95.2 -4.7
------ -------- -------- -------- ----------- ----------
Change from
FY2011 -7.9 8.5 -7.3 -3.3 -10.0
---------------------------- ------ -------- -------- -------- ----------- ----------
[Results by Business Segment]
Technology
Solutions Sales 627.1 713.3 700.6 901.3 2,942.3 -22.6
============ ------ ------ ------ ------ -------- ------
Change from
FY2011 -32.0 -12.9 14.4 37.9 7.4
-------------------------- ------ ------ ------ ------ -------- ------
Operating
Income 0.8 46.2 23.5 110.2 180.9 0.9
------ ------ ------ ------ -------- ------
Change from
FY2011 -1.6 3.0 -2.3 10.6 9.6
========================== ====== ====== ====== ====== ======== ======
Ubiquitous
Solutions Sales 234.6 314.7 266.5 274.3 1,090.2 10.2
============ ------ ------ ------ ------ -------- ------
Change from
FY2011 -0.8 34.4 -34.6 -62.9 -64.0
-------------------------- ------ ------ ------ ------ -------- ------
Operating
Income -2.0 12.4 -2.0 1.2 9.6 -10.3
------ ------ ------ ------ -------- ------
Change from
FY2011 -2.0 8.0 -4.1 -12.2 -10.3
========================== ====== ====== ====== ====== ======== ======
Device
Solutions Sales 130.3 138.3 129.5 142.1 540.3 0.3
------------ ------ ------ ------ ------ -------- ------
Change from
FY2011 -10.5 -9.2 -8.6 -15.8 -44.3
-------------------------- ------ ------ ------ ------ -------- ------
Operating
Income -3.6 -3.3 -9.3 2.1 -14.2 -2.2
------ ------ ------ ------ -------- ------
Change from
FY2011 -2.6 0.4 -0.9 -0.9 -4.0
-------------------------- ------ ------ ------ ------ -------- ------
FY2012 Full-Year Major Items in Other Income and Expense
(Billion Yen)
Change
Full vs. Feb.
Item 3Q 4Q Year Description Forecast
----------------- ------ ------ ------- ----------------------------------- ----------
Other Income
and Expenses
(Special
Items) -87.1 -63.5 -150.5 19.4
---------------- ------ ------ ------- ----------------------------------- ----------
Restructuring
Charges -59.1 -57.0 -116.2 25.7
------ ------ ------- ----------------------------------- ----------
-Losses relating to transfer
of production facilities.
[-33.1]
-Impairment losses of
standard logic LSI devices
production line. [-28.6]
LSI Devices -Personnel-related expenses
Business -57.0 -33.2 -90.3 [-28.4] 21.6
--------------- ------ ------ ------- ----------------------------------- ----------
Personnel-related expenses
related to structural
Global reforms mainly in Fujitsu
Business -0.9 -19.1 -20.0 Technology Solutions(Holding)B.V. -0
--------------- ------ ------ ------- ----------------------------------- ----------
Early retirement incentive
Others -1.0 -4.7 -5.8 plan for managerial levels 4.1
--------------- ------ ------ ------- ----------------------------------- ----------
Impairment loss on goodwill
in European subsidiary
Impairment and fixed assets of subsidiaries
Loss -28.0 -6.2 -34.2 in Japan. -6.2
---------------- ------ ------ ------- ----------------------------------- ----------
Issues and Initiatives in FY 2012
In fiscal 2012, moving beyond the adverse effects from the Great
East Japan Earthquake and the flooding in Thailand, Fujitsu
anticipated that ICT spending in Japan would undergo a full-fledged
recovery in the second half of the fiscal year. For fiscal 2012,
the company initially projected consolidated net sales of 4,550.0
billion yen (an increase of 1.8% from fiscal 2011), consolidated
operating income of 135.0 billion yen (an increase of 29.6 billion
yen), and consolidated net income of 60.0 billion yen (an increase
of 17.2 billion yen).
Actual results for fiscal 2012 were consolidated net sales of
4,381.7 billion yen (168.2 billion yen below initial projections)
and consolidated operating income of 95.2 billion yen (39.7 billion
yen below initial projections). The Technology Solutions segment
achieved higher year-on-year operating income, and it essentially
met initial projections. However, with intensification of
competition in the market for hardware products beyond anticipated
levels, and the protracted recession in European markets,
performance in the Device Solutions and Ubiquitous Solutions fell
below initial projections. In response, Fujitsu decided to
undertake structural reforms, primarily in its LSI device business
and operations outside Japan, resulting in the recording of 150.7
billion yen in other income and expenses, including a goodwill
impairment loss and restructuring charges (90.3 billion yen of
which is attributable to the LSI device business, and 49.8 billion
yen of which is attributable to business operations outside
Japan).
As a result, Fujitsu recorded a consolidated net loss of 72.9
billion yen (US$776 million), the Company's first net loss since
fiscal 2008 in the wake of the global financial crisis.
Since being reorganized as a wholly owned subsidiary of Fujitsu
in March 2008, the LSI device business has continually been
optimizing its manufacturing resources. In response to a sudden
deterioration in the market, however, there was a heightened need
to accelerate structural reforms in order to strengthen the
fundamentals of the business. Accordingly, in October 2012 the
Iwate Plant was transferred to Denso Corporation, and in December
2012 the assembly line facilities were transferred to J-Devices
Corporation. The Fujitsu Group has reached a basic agreement with
Panasonic Corporation to integrate their system LSI (SoC)
businesses, and the transfer of the 300 mm line of the Mie Plant to
a new foundry company, including Taiwan Semiconductor Manufacturing
Company, Ltd., is under consideration. In April 2013 a definitive
agreement was reached to transfer the microcontroller and analog
device business to US-based Spansion Inc. In addition, to
rationalize the size of the workforce, an early retirement
incentive plan was implemented for approximately 2,400 employees
(of whom approximately 2,000 are in Japan).
With respect to business operations outside Japan, to strengthen
the management fundamentals of Fujitsu Technology Solutions
(Holding) B.V., which has been adversely impacted by deteriorating
market conditions, particularly for its hardware business in
continental Europe, the decision was made to implement workforce
rationalization measures involving approximately 1,500 employees.
Fujitsu plans to stabilize the business by transforming it from a
hardware-oriented business to one that focuses on services.
In March 2013, a special contribution of 114.3 billion yen (800
million British pounds) was made to Fujitsu's UK pension fund,
while the composition of the pension portfolio has been revised to
reduce the future risk of an increase in pension obligations.
In addition to these measures, as part of the structural reforms
designed to strengthen Fujitsu's management fundamentals, an early
retirement incentive plan for management level personnel at Fujitsu
Group companies in Japan was implemented.
As a result of the net loss recorded in fiscal 2012 incurred due
to the structural reforms implemented, Fujitsu's consolidated
owners' equity ratio has declined to 25.6%. Unrecognized obligation
for retirement benefits, which are mandated to be reflected on the
balance sheet in fiscal 2013, are 465.8 billion yen (an increase of
64.9 billion yen from the previous fiscal year), despite the
allocation of amortization expenses and an improvement in the
investment performance of benefit plans. This is primarily due to
lower discount rates as a result of the decline in interest rates
in and outside Japan.
Because of the valuation loss on the shares of subsidiaries
involved in the LSI device business and business outside of Japan,
on an unconsolidated basis Fujitsu has negative retained earnings
of 104.3 billion yen. For this reason, the Company regrettably will
not pay a fiscal 2012 year-end dividend.
To quickly restore its consolidated owners' equity and resume
dividend payments, Fujitsu is moving forward on implementing
structural reforms to shift to a stable earnings structure. In
addition, the Company is also thoroughly reforming its cost
structure and shifting resources into growth fields. In fiscal
2015, Fujitsu aims to generate operating income of at least 200.0
billion yen, net income of at least 100.0 billion yen, and free
cash flow of at least 100.0 billion yen.
<Profit and Loss>
Note: In these explanatory materials, the yen figures for net
sales, operating income, and other figures are converted into US$
amounts, for reference purposes, at a rate of $1=94 yen, the
approximate Tokyo foreign exchange market rate on March 31, 2013.
Figures for and comparisons to prior reporting periods are provided
only for reference. The impact of foreign exchange fluctuations has
been calculated by using the average US dollar, euro, and British
pound foreign exchange rates for fiscal 2011 to translate the
current period's net sales outside Japan into yen.
Consolidated net sales for fiscal 2012 were 4,381.7 billion yen
(US$46,614 million), a decline of 1.9% from fiscal 2011. Excluding
the impact of foreign exchange fluctuations, sales were down by
3%.
Net sales in Japan fell by 2.6%. A drop in hardware sales of
PCs, mobile phones, LSI devices and electronic components were the
primary source of the decrease. Sales revenues stemming from the
next-generation supercomputer systems, for which deliveries peaked
in fiscal 2011, also declined. Outside of Japan, sales were
essentially unchanged from the previous fiscal year, and on a
constant currency basis, sales decreased by 3%. Sales of
infrastructure services, particularly in Europe, were buffeted by
deteriorating economic conditions, and sales of PCs in Europe and
optical transmission systems in North America were lower.
Yen appreciation in the first half of the fiscal year turned
into yen depreciation in the second half. For fiscal 2012, the
average yen exchange rates against major currencies were 83 yen to
the US dollar (representing a yen depreciation of 4 yen), 107 yen
to the euro (an appreciation of 2 yen), and 131 yen to the British
pound (a depreciation of 5 yen). As a result, the impact of foreign
exchange fluctuations for the period was to increase net sales by
approximately 30 billion yen compared to fiscal 2011. Sales
generated outside Japan as a percentage of total sales were 34.2%,
an increase of 0.5 of a percentage point compared to the previous
fiscal year.
Gross profit was 1,203.7 billion yen, down 31.6 billion yen from
fiscal 2011. The decline was attributable to lower sales of PCs,
mobile phones and LSI devices. The gross profit margin was 27.5%, a
decline of 0.2 of a percentage point compared to the prior fiscal
year.
Selling, general and administrative expenses were 1,108.4
billion yen, a decline of 21.6 billion yen from fiscal 2011,
primarily as a result of efforts across the Group to generate cost
efficiencies. There was also upfront development spending in
network-related technologies and cloud services.
As a result of the above factors, Fujitsu recorded operating
income of 95.2 billion yen (US$1,013 million), a decline of 10.0
billion yen from the previous fiscal year.
In other income and expenses, Fujitsu recorded a loss of 140.3
billion yen, representing a deterioration of 101.8 billion yen from
the previous fiscal year. As an extraordinary loss, Fujitsu posted
restructuring charges of 116.2 billion yen, and an impairment loss
of 34.2 billion yen.
The restructuring charges stem from 90.3 billion yen for the LSI
device business, 20.0 billion yen for business outside Japan, and
5.8 billion yen for others. Restructuring charges for the LSI
devices business consist of losses relating to transfer of
production facilities and an impairment loss on the standard logic
LSI devices production line, for which capacity utilization rates
have been declining. The losses relating to transfer of production
facilities consist of two items. One is guarantees, for a set
period of time, on a portion of the operational costs of the Iwate
Plant and test facilities that were transferred. The other is
personnel-related expenses in accordance with the transfer of the
LSI assembly and testing facilities. In addition,
personnel-rationalization expenses were included in restructuring
charges for the LSI devices business. The restructuring charges for
business outside Japan consist of personnel-related expenses,
primarily for the European subsidiary Fujitsu Technology Solutions
(Holding) B.V. Other restructuring charges include the losses
mainly related to the personnel-related expenses associated with
rationalizations at managerial levels in Japan.
The impairment loss stems mainly from the European subsidiary
Fujitsu Technology Solutions (Holding) B.V. In light of continued
deterioration of economic conditions in Europe, the business plan
of Fujitsu Technology Solutions has been revised as investments
planned at the time of acquisition are less likely to be
collectible, and an impairment loss was recorded on the unamortized
balance of goodwill and intangible assets.
Income (loss) before income taxes and minority interests
amounted to a 45.1 billion yen loss, a year-on-year deterioration
of 111.8 billion yen. Fujitsu posted income of 3.5 billion yen from
minority interests, representing an improvement of 9.5 billion yen
from the previous fiscal year, as a result of the recovering
financial performance of the car audio and navigation equipment
joint venture.
Fujitsu reported a consolidated net loss of 72.9 billion yen
(US$776 million), representing a deterioration of 115.6 billion yen
from fiscal 2011. Tax burden was relatively high due to the
expanded the net loss recorded by underperforming subsidiaries that
have limits on recognition of deferred tax assets.
Comprehensive income was a 32.9 billion yen loss (US$350 million
loss), with a 36.4 billion yen recorded in other comprehensive
income, primarily as a result of a 22.8 billion yen foreign
currency translation adjustments stemming from the ongoing
depreciation of the yen.
Statement of Comprehensive Income (Billion Yen)
------------------------------------------------------
FY2011 FY2012
------------------------------------ ------ --------
Income(loss) before Minority
Interests 36.7 -69.3
------ --------
Other Comprehensive Income -2.4 36.4
------ --------
Unrealized Gain and
Loss on Securities,
Net of Taxes 0 11.5
----------------------------------- ------ --------
Foreign Currency Translation
Adjustments -3.0 22.8
----------------------------------- ------ --------
Share of Other Comprehensive
Income of Associates
Accounted for Using
the Equity Method 0.5 1.9
----------------------------------- ------ --------
Comprehensive Income 34.3 -32.9
------------------------------------ ------ --------
Comparison to Consolidated Earnings Projections Announced in
February 2013
For fiscal 2012, net sales exceeded the consolidated earnings
projections announced in February 2013 by 11.7 billion yen in
accordance with yen depreciation, while operating income fell below
those projections by 4.7 billion yen mainly because of intensifying
competition at Ubiquitous Solutions segment. Net income was
improved from the previous projections by 22.0 billion yen. A part
of restructuring initiatives related to LSI devices have postponed
to FY2013, although personnel-related expenses increased.
<Results by Business Segment>
Information on fiscal 2012 consolidated net sales (including
intersegment sales) and operating income broken out by business
segment is presented as follows.
Technology Solutions
(Billion Yen)
------------ ------------------------------------------
FY2012 Change
vs.
FY2011
------------ -------------------- --------------------
Net Sales 2,942.3 0.3 %
-------------------- --------------------
Japan 1,936.4 1.2 %
Outside
Japan 1,005.9 -1.6 %
----------- -------------------- --------------------
Operating
Income 180.9 9.6
------------ -------------------- --------------------
Consolidated net sales in the Technology Solutions segment
amounted to 2,942.3 billion yen (US$31,301 million), essentially
unchanged from fiscal 2011.
Sales in Japan increased 1.2%. Server-related sales declined due
to the high-volume production of dedicated servers for use in the K
computer, a next-generation supercomputer, during the first half of
fiscal 2011. A decline in large-scale system deals also had an
adverse impact. Sales of network products increased, mainly in
routers, due to higher spending by telecommunications carriers to
handle larger volumes of communications traffic and to expand LTE
coverage. In system integration services, despite the impact of
fewer large-scale system deals and a shift toward spending on
hardware by telecommunications carriers, sales as a whole increased
due to a recovery in spending, primarily in the manufacturing and
public sectors. Sales of infrastructure services also rose on
steady growth of outsourcing services, in addition to higher demand
related to network services, as telecommunications carriers tried
to keep up with higher volumes of communications traffic. Sales
outside Japan declined 1.6%. On a constant currency basis, sales
fell by 4%. Infrastructure services sales declined on account of
the economic downturn in Europe. Meanwhile, sales of optical
transmission systems in the first half of this fiscal year declined
due to a shift toward spending on wireless networks by North
American telecommunications carriers. In addition, sales of UNIX
servers decreased in anticipation of the introduction of new
models.
The segment posted operating income of 180.9 billion yen
(US$1,924 million), up 9.6 billion yen compared to fiscal 2011. In
Japan, despite the impact of lower sales of large-scale system
integration and server-related system deals, in addition to higher
upfront R&D spending for network products, income rose overall
on the back of higher network-related sales and the impact of cost
reduction mainly for x86 servers. Outside Japan, operating income
declined as a result of the impact of lower sales in the European
business, reduced sales of optical transmission systems and UNIX
servers in North America, as well as increased expenses related to
retirement benefit obligations in the UK.
(a) Services
(Billion Yen)
------------ ------------------
FY2012 Change
vs.
FY2011
------------ -------- --------
Net Sales 2,387.2 0.7 %
-------- --------
Japan 1,516.4 1.5 %
Outside
Japan 870.7 -0.7 %
----------- -------- --------
Operating
Income 131.6 7.6
------------ -------- --------
Net sales in the Services sub-segment amounted to 2,387.2
billion yen (US$25,396 million), essentially unchanged from fiscal
2011. In Japan, sales rose 1.5% from the previous fiscal year. For
system integration services, despite the impact of fewer
large-scale system deals, primarily in the financial services
sector, in addition to a shift toward spending on hardware by
telecommunications carriers to handle higher communications
traffic, sales increased due to a recovery in spending in the
manufacturing and public sectors. In Infrastructure services,
overall sales rose on steady growth of outsourcing services and
higher demand related to network services, as telecommunications
carriers tried to keep up with higher volumes of communications
traffic. This was despite negative factors in the ISP business,
which included a drop in subscribers and a shift from packaged
products that include connection fees to stand-alone products.
Sales outside Japan were on par with fiscal 2011. On a constant
currency basis, sales declined 3%. While the datacenter businesses
in Australia and North America grew steadily, sales were adversely
affected by lower corporate spending stemming from the economic
downturn in Europe as well as the impact of fiscal austerity
policies put in place by the UK government.
Operating income for the Services sub-segment was 131.6 billion
yen (US$1,400 million), an increase of 7.6 billion yen compared to
the previous fiscal year. In Japan, operating income increased due
to higher sales of network services, despite the impact of fewer
large-scale system deals. Outside Japan, operating income was
adversely impacted by a decline in sales in Europe and an increase
in expenses related to retirement benefit obligations in the UK,
despite the positive impact of higher sales and cost efficiencies
in Australia and North America.
In light of continued deterioration of economic conditions in
Europe and intensified competition, Fujitsu has revised the
business plan for Fujitsu Technology Solutions (Holding) B.V.
(FTS), the wholly owned European subsidiary acquired in April 2009.
This revision is due to the likelihood that the investment at
acquisition will not be recoverable within 10 years as initially
planned. As a result, Fujitsu recorded an impairment loss of 28.0
billion yen, during the third quarter, on the unamortized balance
of goodwill recognized in accordance with the acquisition in April
2009. With the business environment deteriorating, Fujitsu decided
to implement workforce rationalization as a part of structural
reforms to improve FTS's profitability, and recorded an
extraordinary loss of 18.4 billion yen on restructuring costs
including for personnel-related expenses in the fourth quarter.
(b) System Platforms
(Billion Yen)
------------ ----------------
FY2012 Change
vs.
FY2011
------------ ------ --------
Net Sales 555.1 -1.5 %
------ --------
Japan 419.9 0.5 %
Outside
Japan 135.1 -7.3 %
----------- ------ --------
Operating
Income 49.3 2.0
------------ ------ --------
Net sales in the System Platforms sub-segment were 555.1 billion
yen (US$5,905 million), a decline of 1.5% from the year earlier.
Sales in Japan were essentially unchanged. Sales of server-related
products declined due to the high-volume production of dedicated
servers for use in the K computer, a next-generation supercomputer,
during the first half of fiscal 2011. In addition, there was the
adverse impact of fewer large-scale system deals. Sales of network
products rose, mainly in routers, on account of higher investments
by telecommunications carriers to handle higher network traffic and
to expand LTE coverage. Sales outside Japan declined 7.3%. On a
constant currency basis, sales decreased 10%. Sales of UNIX servers
declined in anticipation of the introduction of new models. Sales
of optical transmission systems in the first half of the fiscal
year decreased due to a shift toward spending on wireless networks
by North American telecommunications carriers.
The System Platforms sub-segment posted operating income of 49.3
billion yen (US$524 million), up 2.0 billion yen compared to fiscal
2011. In Japan, although income from server-related products
declined and upfront R&D spending in network products rose,
operating income increased due to the effect of higher sales of
network products and cost reductions mainly for x86 servers.
Outside Japan, income was adversely impacted by lower sales of
optical transmission systems in North America and for UNIX
servers.
Ubiquitous Solution
(Billion Yen)
------------ ----------------------------------------
FY2012 Change
vs.
FY2011
------------ ------------------- -------------------
Net Sales 1,090.2 -5.5 %
------------------- -------------------
Japan 823.0 -7.0 %
Outside
Japan 267.1 -0.8 %
----------- ------------------- -------------------
Operating
Income 9.6 -10.3
------------ ------------------- -------------------
Net sales in the Ubiquitous Solutions segment were 1,090.2
billion yen (US$11,598 million), a decline of 5.5% from fiscal
2011. Sales in Japan were down by 7.0%. In spite of large-volume
orders received from corporations, sales of PCs declined on
sluggish sales of consumer PCs and lower sales prices. In mobile
phones, sales of smart phones stagnated as a result of the
intensifying competition, while the market for feature phones
contracted. Sales of the Mobilewear sub-segment's car audio and
navigation systems decreased due to lower sales of consumer-market
car navigation products and the impact of lower vehicle sales on
account of the government's subsidy program for eco-friendly
vehicles having ended in September 2012. This decline came despite
the impact of disruptions during the previous fiscal year, when
vehicle production was temporarily suspended in the wake of the
Great East Japan Earthquake. Sales outside Japan were essentially
unchanged from fiscal 2011. Unit sales of PCs fell, however, sales
of Mobilewear rose compared to fiscal 2011, when there was a
temporary suspension of automobile production outside Japan because
of the flooding in Thailand.
The Ubiquitous Solutions segment posted operating income of 9.6
billion yen (US$102 million), down 10.3 billion yen from the
previous fiscal year. Despite the effect of restructuring
initiatives in Mobilewear, operating income in Japan declined on
account of increased procurement costs caused by yen depreciation,
as well as lower sales prices for PCs. In fiscal 2012, operating
income rose temporary on account of the revised provision to
recycling expenses prior to the start of the small electric
appliance recycling scheme. Outside Japan, operating income was
adversely affected by lower PC sales and higher procurement costs
in Europe for components and materials denominated in US dollars
because of the depreciation of the euro against the dollar, mainly
in the first half of the fiscal year.
Device Solutions
(Billion Yen)
------------ ----------------
FY2012 Change
vs.
FY2011
------------ ------ --------
Net Sales 540.3 -7.6 %
------ --------
-13.7
Japan 295.9 %
Outside
Japan 244.4 1.1 %
----------- ------ --------
Operating
Income -14.2 -4.0
------------ ------ --------
Net sales in Device Solutions amounted to 540.3 billion yen
(US$5,748million), a decline of 7.6% compared to fiscal 2011. Sales
in Japan fell 13.7%. LSI device sales decreased due to delayed
market recovery, particularly for digital audio-visual equipment
and sluggish sales of LSI devices for use in Fujitsu's own servers.
In addition, shipments of CPUs for the next-generation
supercomputer system were completed during the first half of fiscal
2011. Sales of electronic components, particularly of batteries and
semiconductor packages, also fell. Sales outside Japan increased
1.1%. On a constant currency basis, sales decreased 3%. LSI device
sales declined, mainly to Asia. For electronic components, sales of
batteries, particularly to the US, declined, but sales of
semiconductor packages to Asia increased, primarily in the first
half.
The Device Solutions segment recorded an operating loss of 14.2
billion yen (US$151 million), representing a deterioration of 4.0
billion yen from fiscal 2011. In Japan, earnings were adversely
affected by lower sales of LSI devices and a decline in production
line capacity utilization rates. Production lines for 300 mm wafers
maintained high utilization rates, but capacity utilization rates
on the production lines for products of standard logic devices
continued to decline. Operating income for electronic components
deteriorated because of the impact of lower sales and the burden of
development expenditures incurred by an affiliate developing
semiconductors for communications equipment. Outside Japan, there
was a positive impact of yen depreciation for both LSI devices and
electronic components.
The Fujitsu Group continually optimizes its manufacturing
organization in accordance with changes in the economic and
business environment. As part of these efforts, since being
reorganized as a wholly owned subsidiary of Fujitsu in March 2008,
the LSI device business has continually been optimizing its
manufacturing resources. In response to a sudden deterioration in
the market, however, there was a heightened need to accelerate
structural reforms in order to strengthen the fundamentals of the
business. Accordingly, in October 2012 the Iwate Plant was
transferred to Denso Corporation, and in December 2012 the assembly
line facilities were transferred to J-Devices Corporation. The
Fujitsu Group has reached a basic agreement with Panasonic
Corporation to integrate their system LSI (SoC) businesses, and the
transfer of the 300 mm line of the Mie Plant to a new foundry
company, including Taiwan Semiconductor Manufacturing Company,
Ltd., is under consideration. In April 2013 a definitive agreement
was reached to transfer the microcontroller and analog device
business to US-based Spansion Inc. In addition, to rationalize the
size of the workforce, an early retirement incentive plan was
implemented for approximately 2,400 employees (of whom
approximately 2,000 are in Japan).
Fujitsu recorded 90.3 billion yen in restructuring expenses
(33.1 billion yen losses relating to transfer of production
facilities, 28.6 billion yen impairment losses of standard logic
LSI devices production line and 28.4 billion yen relating to
personnel-related expenses). Losses relating to transfer of
production facilities include guarantees, for a set period of time,
on a portion of the operational costs of the Iwate Plant and the
LSI assembly and test facilities that were transferred, and
personnel-related expenses and impairment losses and others in
accordance with the transfer of the LSI assembly and testing
facilities. Impairment losses and others of standard logic LSI
devices production line are relating to 200mm lines and others of
Mie and Aizu-wakamatsu regions, for which capacity utilization
rates have been declining.
Other/Elimination and Corporate
This segment recorded an operating loss of 81.0 billion yen
(US$862 million), a deterioration of 5.3 billion yen from fiscal
2011. This was on account of up-front investments associated with
the development of new businesses and other factors.
<Results by Geographic Segments>
Sales and operating income for Fujitsu and its consolidated
subsidiaries according to country and region are as follows.
Net Sales (Billion Yen)
FY 2012
---------------- ------------------
Japan 3,306.4 <-2.6%>
---------------- -------- --------
Outside Japan 1,527.6 <0.7%>
-------- --------
EMEA 785.2 <-4.0%>
-------------- -------- --------
The Americas 273.7 <-1.4%>
-------------- -------- --------
APAC &China 468.7 <11.1%>
-------------- -------- --------
< > Indicates % change over previous year
Operating Income (Billion Yen)
FY2011 FY2012 Change
vs.
FY2011
-------------- -------- -------- ---------
Japan 177.8 178.4 0.6
[5.2%] [5.4%] [0.2%]
-------------- -------- -------- ---------
Outside 8.0 -4.1 -12.2
Japan [0.5%] [-0.3%] [ -0.8%]
-------- -------- ---------
EMEA -0 -12.4 -12.4
[-0.0%] [-1.6%] [-1.6%]
------------ -------- -------- ---------
The Americas 0.4 -2.2 -2.7
[0.2%] [-0.8%] [-1.0%]
------------ -------- -------- ---------
APAC & 7.6 10.4 2.8
China [1.8%] [2.2%] [0.4%]
------------ -------- -------- ---------
Note: Numbers inside brackets indicate operating income
margin.
In Japan, net sales amounted to 3,306.4 billion yen (US$35,174
million), a decrease of 2.6% compared to fiscal 2011. Sales of PCs
and mobile phones decreased due to intensifying competition and LSI
devices were impacted by lower demand, although sales of network
products and infrastructure services, primarily in network-related
sales, increased. Operating income in Japan was 178.4 billion yen
(US$1,898 million), a year-on-year increase of 0.6 billion yen. The
positive impact of higher sales of network-related business, yen
depreciation for electronic components and the effect of
restructuring initiatives in car audio and navigation systems were
offset by lower revenue from PCs, mobile phones and LSI
devices.
Net sales outside Japan were 1,527.6 billion yen (US$16,251
million), a roughly on par with fiscal 2011. Operating loss outside
Japan was 4.1 billion yen (US$44 million) a year-on-year
deterioration of 12.2 billion yen, mainly in EMEA.
Net sales in EMEA amounted to 785.2 billion yen (US$8,353
million), a decrease of 4.0% from fiscal 2011. Sales of PCs
decreased primarily in continental Europe and sales of
infrastructure services were adversely affected by constrained
corporate spending stemming from the economic downturn, mainly in
the first half of the fiscal year as well as the impact of public
sector fiscal austerity policies. Operating loss was 12.4 billion
yen (US$132 million), representing a deterioration of 12.4 billion
yen from fiscal 2011. Infrastructure services were adversely
impacted by low revenue and an increase in expenses related to
retirement benefit obligations in the UK. In addition to the
decrease of PCs sales, there was an adverse impact from higher
procurement costs in Europe for components and materials
denominated in US dollars due to depreciation of the euro against
the dollar mainly in the first half of the fiscal year.
Net sales in the Americas were 273.7 billion yen (US$2,912
million), a decline of 1.4% from fiscal 2011. On a constant
currency basis, sales declined 5.0%. Sales of optical transmission
systems decreased due to constrained investment by North American
telecommunications carriers, mainly in the first half of the fiscal
year. Sales of UNIX servers declined in anticipation of the
introduction of new models. Operating loss for the region amounted
to 2.2 billion yen, (US$23 million), a deterioration of 2.7 billion
yen from fiscal 2011. Income declined as a result of lower revenue
from optical transmission systems.
In APAC and China, net sales were 468.7 billion yen (US$4,986
million), a year-on-year increase of 11.1%. Sales of car audio and
navigation systems increased due to recovery following the Thai
flooding in the previous fiscal year. Sales of Infrastructure
services also increased. Operating income was 10.4 billion yen
(US$111 million), an increase of 2.8 billion yen from fiscal
2011.
(1) Assets, Liabilities and Net Assets
Consolidated total assets at the end of fiscal 2012 amounted to
3,049.0 billion yen (US$32,436 million), an increase of 103.5
billion yen from the end of fiscal 2011. This represented an
increase of approximately 110.0 billion yen as a result of yen
depreciation. Current assets increased by 20.5 billion yen compared
with the end of fiscal 2011, to 1,722.2 billion yen. Notes and
accounts receivable decreased by 5.3 billion yen as sales in the
fourth quarter of fiscal 2012 were lower than in the same period of
fiscal 2011. As shipments of CPUs for the next-generation
supercomputer system were completed, inventories at the end of
fiscal 2012 decreased to 323.0 billion yen, down 11.0 billion yen
from the ending balance of fiscal 2011. The monthly inventory
turnover ratio, which is an indication of asset utilization
efficiency, was 1.00 times, essentially unchanged from the end of
fiscal 2011.
Non-current assets increased by 83.0 billion yen from the end of
fiscal 2011, to 1,326.7 billion yen. Tangible fixed assets
decreased by 22.4 billion yen compared with the end of fiscal 2011,
primarily as a result of the impairment of fixed assets in the LSI
device business. Intangible assets decreased by 42.9 billion yen
from the end of fiscal 2011, primarily as a result of the
impairment of goodwill of a European subsidiary. Other non-current
assets increased 148.4 billion yen, mainly due to an increase in
prepaid pension expense associated with a special contribution into
benefit pension schemes for the Company's UK-based subsidiary.
Consolidated total liabilities amounted to 2,139.2 billion yen
(US$22,757 billion), an increase of 160.3 billion yen compared to
the end of fiscal 2011. The balance of interest-bearing loans was
534.9 billion yen, an increase of 153.8 billion yen from the end of
fiscal 2011. Short-term borrowings increased to finance a portion
of working capital and a special contribution into UK pension
schemes. As a result, the D/E ratio was 0.68 times, an increase of
0.23 of a percentage point compared to the end of fiscal 2011, and
the net D/E ratio was 0.32 times, an increase of 0.18 of a
percentage point compared to the end of fiscal 2011. In addition,
the provision for business structure improvement increased 66.8
billion yen due to structural reform in the LSI device business and
businesses outside Japan.
Net assets were 909.8 billion yen (US$9,679 million), a decrease
of 56.7 billion yen from the end of fiscal 2011. The decline in net
assets reflects a decrease in shareholders' equity of 93.4 billion
yen resulting mainly from the net loss recorded and the payment of
dividends during fiscal 2012. Accumulated other comprehensive
income increased by 33.8 billion yen, primarily as a result of yen
depreciation and rising share prices. The decline in owners' equity
lowered the owners' equity ratio by 3 percentage points compared to
the end of fiscal 2011, to 25.6%.
(Billion Yen)
FY2011 FY2012 Change
(March 31, (March 31,
2012) 2013)
---------------------------- ------------- ------------ -------
Cash and Cash Equivalents
at End of Period * 266.6 286.6 19.9
Interest-bearing Loans 381.1 534.9 153.8
Net Interest-bearing Loans 114.4 248.3 133.9
Owners' Equity 841.0 781.4 -59.6
---------------------------- ------------- ------------ -------
Note (*); The difference of cash and cash equivalents at end of
period between balance sheet and cash flow statement is
overdraft.
It is included in interest-bearing loans as short-term
borrowings.
(2) Cash Flows
Net cash provided by operating activities during fiscal 2012
amounted to 71.0 billion yen (US$755 million), a year-on-year
decrease of 169.0 billion yen. There was an outflow of 114.3
billion for a special payment to the pension scheme of Fujitsu's UK
subsidiary. Working capital increased due to sluggish sales of PCs
and mobile phones. Regarding restructuring charges relating to the
LSI device business and business outside Japan, outflow is expected
in fiscal 2013.
Net cash used in investing activities was 161.4 billion yen
(US$1,717 million). Outflows mainly consisted of the acquisition of
property, plant and equipment amounting to 111.5 billion yen,
primarily related to datacenters, and the acquisition of intangible
assets amounting to 64.4 billion yen, primarily software. A cash
inflow of 10.9 billion yen primarily represents the sales proceeds
for fixed and other assets stemming from the transfer of the Iwate
Plant and the LSI assembly and test facilities of the LSI device
business. Compared to fiscal 2011, net outflows decreased by 29.3
billion yen, reflecting lower capital expenditures on property,
plant and equipment.
Free cash flow, the sum of cash flows from operating and
investing activities, was negative 90.4 billion yen (US$962
million), representing a decrease in net cash inflows of 139.6
billion yen compared with the same period in the previous fiscal
year. Excluding one-time items such as the contribution to the
pension fund held by a UK subsidiary company, cash inflows amounted
to 8.4 billion yen, which was 35.0 billion yen less than the
previous fiscal year.
Net cash provided by financing activities was 100.3 billion yen
(US1,067 million). Short-term borrowings financed capital
associated with a contribution made to the pension scheme of a UK
subsidiary. This represents an increase in net cash inflows of
239.3 billion yen compared to the previous fiscal year.
As a result of the above factors, cash and cash equivalents at
the end of fiscal 2012 were 284.5 billion yen (US$3,027 million),
an increase of 17.8 billion yen compared to the end of fiscal
2011.
(3) Status of Retirement Benefit Plans
The balance of unrecognized obligation for retirement benefits
is 465.8 billion yen. For retirement benefit plans in Japan, the
amount of unrecognized obligation for retirement benefits is 308.7
billion yen. Although plan assets increased as a result of good
investment performance, the amount of unrecognized obligation for
retirement benefits increased by 16.7 billion yen since the end of
the prior fiscal year because a decline in the discount rate raised
the amount of projected benefit obligation. Similarly, for
retirement benefit plans outside of Japan, even though plan assets
increased as a result of good investment performance, the amount of
unrecognized obligation for retirement benefits increased by 48.2
billion yen since the end of the prior fiscal year, to 157.1
billion yen, because of lower discount rates and a weaker yen.
(Billion Yen)
FY2011 FY2012 Change
(March 31, (March 31,
2012) 2013)
--------------------------------- ------------- ------------ -------
a. Projected Benefit Obligation -1,868.4 -2,151.1 -282.7
b. Plan Assets 1,352.0 1,686.9 334.9
--------------------------------- ------------- ------------ -------
c. Projected Benefit Obligation
in Excess of Plan Assets (a)
+ (b) -516.3 -464.2 52.1
--------------------------------- ------------- ------------ -------
Net of Prepaid Pension Cost
and Allowance for Retirement
Benefits -115.4 1.6 117.1
------------------------------- ------- ---- ------
Unrecognized Obligation for
Retirement Benefits -400.9 -465.8 -64.9
---------- ---------- ----------
In Japan -292.0 -308.7 -16.7
Outside Japan -108.9 -157.1 -48.2
------------------------------- ---------- ---------- ----------
(Assumptions used in accounting for the plans
Discount
Rates In Japan 2.5% 1.7% -0.8%
---------- ----------------------- ------------ ------------ ------
Outside Japan (Mainly
in UK) Mainly 5.0% Mainly 4.4% -0.6%
---------------------------------- ------------ ------------ ------
3. FY2013 Earnings Projections
With respect to the operating environment Fujitsu faces in
fiscal 2013, in Japan ICT spending is recovering, primarily in the
manufacturing and retailing/distribution sectors, as a result of an
improved export environment because of the recent weakening of the
yen, higher public sector investment, and a recovery in consumer
spending. Outside of Japan, a mild recovery is underway, as the
credit market uncertainties in Europe have started to recede, and
there are signs that the economy has bottomed out in the US.
Against this backdrop, in its consolidated earnings projections for
fiscal 2013, Fujitsu is anticipating growth in its services
business and servers and network-related products in Japan. Outside
Japan, in its car audio and navigation equipment business and
electronic component business are expected to grow.
At the same time, Fujitsu has factored into its projections the
positive impact of a variety of structural reforms implemented in
fiscal 2012 to strengthen its fundamentals, including approximately
25 billion yen of impact stemming from structural reforms in its
underperforming businesses, such as its LSI device business and
parts of its operations outside Japan and approximately 20 billion
yen of impact stemming from workforce related measures and
rationalization of corporate function, as it aims to achieve its
medium-term performance targets based on the management direction
the company announced on February 7, 2013. Regarding the LSI device
business, Fujitsu has factored into its projections the impact of
restructuring charges carried over from fiscal 2012, while transfer
of the microcontroller and analog device business have both been
included in net sales and operating income.
The earnings projections for fiscal 2013 also assume yen
exchange rates of 93 yen for the US dollar, 120 yen for the euro,
and 140 yen for the British pound. For the full year, the impact of
these exchange rates alone is expected to boost net sales by
approximately 140.0 billion yen and operating income by
approximately 10.0 billion yen.
For the first half of fiscal 2013, Fujitsu is projecting
consolidated net sales of 2,050.0 billion yen. Despite the
favorable impact on sales anticipated from exchange rates and a
strong services business in Japan, sales are projected to decline
by 20.0 billion yen compared to the first half of fiscal 2012 due
to the continuation of a severe competitive environment in mobile
phones, as the cycle of demand for smartphones turns down, and
because a recovery in Fujitsu's services businesses outside Japan
is not expected until the second half of the fiscal year.
Fujitsu is projecting an operating loss of 10.0 billion yen for
the first half, representing deterioration of approximately 20.0
billion yen from the first half of fiscal 2012. Despite the fact
that lower overhead costs resulting from structural reforms in the
LSI device business and parts of its operations outside Japan
implemented in fiscal 2012 is expected to begin having a positive
impact from the second quarter of fiscal 2013, operating income is
projected to decline. This is due to higher retirement benefit
expenses in pension plans outside of Japan as a result of lower
discount rates, in addition to the impact of lower sales.
For the first half of fiscal 2013, Fujitsu is projecting a net
loss of 30.0 billion yen, representing a year-on-year deterioration
of approximately 20.0 billion yen, due to the impact of lower
operating income.
For the full 2013 fiscal year, Fujitsu is projecting net sales
of 4,550.0 billion yen, an increase of 170.0 billion yen compared
to the previous fiscal year. Despite a drastic decline in sales of
mobile phones and other products in the Ubiquitous Solutions
segment, sales are projected to rise primarily in the second half
of the fiscal year, due to higher sales of services and servers
both in and outside Japan, and because of a projected rebound in
demand for LSI devices and electronic components, in addition to
the favorable impact of exchange rates.
Full-year operating income for fiscal 2013 is projected to be
140.0 billion yen, an improvement of 45.0 billion yen compared to
fiscal 2012. Operating income in the Technology Solutions segment
is projected to increase by approximately 10.0 billion yen.
Operating income in Japan is projected to increase because of the
impact of higher sales in the services business and the impact of
workforce rationalization measures. Operating income outside Japan
is projected to decrease. Outside of Japan, although there should
be a positive impact of structural reforms and lower goodwill
amortization expenses, retirement benefit expenses are projected to
rise in accordance with revisions to accounting standards.
Operating income in the Ubiquitous Solutions segment is projected
to be essentially unchanged from fiscal 2012. Lower sales of mobile
phones and increasing procurement costs on the depreciating yen, is
expected to be offset by a sales strategy focusing on profitability
in PCs and lower development expenses. The Device Solutions segment
is projected to return to profitability with operating income of
25.0 billion yen. In addition to the impact of higher sales of LSI
devices and electronic components, as well as the favorable impact
of exchange rates, the segment will also benefit from the impact of
the structural reforms in the LSI device business implemented in
fiscal 2012, resulting in a projected 40.0 billion yen improvement
in operating income compared to fiscal 2012.
Fujitsu is projecting full-year net income of 45.0 billion yen.
Restructuring expenses of structural reform of the LSI device
business carried over from 2012 is factored. Over 30 billion yen of
amortization of actuarial loss stemming from both Japan and outside
Japan is factored in net income.
FY2013 Full-Year Consolidated Forecast (Billion Yen)
First-Half Full-Year
------------------------------------------ --------------------------------------
FY2012 FY2013 Change FY2012 FY2013 Change
vs. First-Half vs. FY2012
FY2012
(Actual) (Forecast) (Actual) (Forecast)
------------------- ---------- ------------ ---------------- ---------- ------------ ------------
Net Sales 2,071,8 2,050.0 -21.8 4,381.7 4,550.0 168.2
------------------- ---------- ------------ ---------------- ---------- ------------ ------------
Operating Income 7.6 -10.0 -17.6 95.2 140.0 44.7
[Operating Income [ 0.4%] [ -0.5%] [ -0.9%] [ 2.2%] [ 3.1%] [ 0.9%]
Margin]
------------------- ---------- ------------ ---------------- ---------- ------------ ------------
Other Income
and Expenses -4.5 - 4.5 -140.3 -35.0 105.3
------------------- ---------- ------------ ---------------- ---------- ------------ ------------
Net Income -11.0 -30.0 -18.9 -72.9 45.0 117.9
------------------- ---------- ------------ ---------------- ---------- ------------ ------------
4. Policy on Dividends and Dividends Forecast
Article 40 of Fujitsu Limited's Articles of Incorporation grants
the Board of Directors the authority to distribute retained
earnings. As part of Fujitsu's basic policy on the exercise of this
authority, a portion of retained earnings is paid to shareholders
to provide a stable return, and a portion is retained by the
Company to strengthen its financial base and support new business
development opportunities that will result in improved long-term
performance. In addition, while taking into consideration its level
of profit, when a sufficient volume of internal reserves is
secured, including through the acquisition of its own shares,
Fujitsu aims to more proactively distribute profits to
shareholders.
In its non-consolidated financial results for fiscal 2012,
Fujitsu posted a loss on valuation of shares in affiliates of
approximately 380 billion yen, primarily on non-recoverable losses
in the Company's semiconductor, European and UK subsidiaries.
Specifically, factors included the impact of deteriorated business
conditions on its subsidiary responsible for LSI devices, Fujitsu
Semiconductor Limited, and the subsidiary conducting operations in
continental Europe, Fujitsu Technology Solutions, as well as an as
an extraordinary loss posted due to the implementation of
structural reforms. In addition, Fujitsu will recognize
unrecognized obligation for retirement benefits for its subsidiary
in the UK, Fujitsu Services Holdings PLC. The posting of these
valuation losses caused negative retained earnings, on a
non-consolidated basis, as of the end of fiscal 2012. As such, the
company will not pay a fiscal 2012 year-end dividend.
Annual dividends amounted to 5 yen per share, representing only
the interim dividend.
With respect to the payment of dividends from retained earnings
in FY2013, the Company decided to cut the interim dividends and
leave the dividends at the end of fiscal year hanging.
To view the full announcement of the FY 2013 Full-Year Financial
Results, please paste the following link into your web browser;
http://www.fujitsu.com/global/about/ir/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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