TIDMFUJ
RNS Number : 3652X
Fujitsu Ld
07 February 2013
Fujitsu Limited
Explanation of Financial Results
1. Overview of FY2012 Third-Quarter Consolidated Financial
Results
Business Environment
During the first nine months of fiscal 2012 (April 1, 2012 -
December 31, 2012), the global economy continued to experience a
weak recovery. In Europe, the development of a framework to
economically assist for 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. The US economy is experiencing a mild
recovery, but concerns over fiscal policy have resulted in
continued uncertainty. Economic growth in emerging market countries
moderated as exports declined due to the European recession, but
recently signs of improvement could be seen as a result of an
expansion of public investment and monetary easing.
Economic conditions in Japan continued to be bolstered by an
uptick in demand on the back of reconstruction efforts following
the Great East Japan Earthquake, although the economy remained
weak, with GDP shifting downward as a result of the expiration of
subsidies for hybrid car purchases and the slowdown in global
economic growth.
With respect to investments on information and communication
technology (ICT) in Japan, spending on services has been solid as
investments that were previously put off were made. Spending on
hardware however, stagnated on account of deteriorating market
conditions. Outside of Japan, primarily in Europe, where economic
conditions continue to deteriorate, companies are taking firmer of
control of investment spending.
FY2012 Third-Quarter Financial Results (Billion Yen)
3Q 3Q Change vs.
FY2012 FY2011 3Q FY 2011
10/1/12- 10/1/11-
12/31/12 12/31/11
----------------------- ---------- ---------- ----------
Change Change
(%) (%)
Constant
Currency
----------------------- ---------- ---------- -------- ------
Net Sales 1,048.2 1,079.7 -31.4 -2.9 -4
Cost of Sales 776.5 797.9 -21.3 -2.7
----------------------- ---------- ---------- -------- ------
Gross Profit 271.7 281.8 -10.1 -3.6
[Gross Profit Margin] [ 25.9%] [ 26.1%] [ -0.2%]
Selling, General
and Administrative
Expenses 275.8 278.6 -2.8 -1.0
----------------------- ---------- ---------- -------- ------
Operating Income
(Loss) -4.1 3.1 -7.3 -
[Operating Income [ -0.4%] [ 0.3%] [ -0.7%]
Margin]
----------------------- ---------- ---------- -------- ------
Other Income and
Expense -80.4 -1.5 -78.8 -
Income (Loss) Before
Income Taxes and
Minority Interests -84.6 1.6 -86.2 -
----------------------- ---------- ---------- -------- ------
Income Taxes -5.8 6.9 -12.7 -
----------------------- ---------- ---------- -------- ------
Income (Loss) Before
Minority Interests -78.7 -5.2 -73.4 -
----------------------- ---------- ---------- -------- ------
Minority Interests
(Loss) 0.2 -0.9 1.2 -
----------------------- ---------- ---------- -------- ------
Net Income (Loss) -79.0 -4.3 -74.7 -
----------------------- ---------- ---------- -------- ------ ----------
FY2012 Nine-Months Financial Results (Billion Yen)
Nine Months Nine Months Change vs.
FY2011
FY2012 4/1/11- Nine Months FY2011
4/1/12- 12/31/11
12/31/12
-------------------- ------------ ------------
Change Change
(%) (%)
Constant
Currency
-------------------- ------------ ------------ ------------ -------
Net Sales 3,120.0 3,172.0 -51.9 -1.6 -1
-------------------- ------------ ------------ ------------ -------
Operating Income
[Operating Income 3.5 10.2 -6.6
Margin] [ 0.1%] [ 0.3%] [ -0.2%] -65.2
-------------------- ------------ ------------ ------------ -------
Net Income -90.1 1.4 -91.5 -
-------------------- ------------ ------------ ------------ ------- ---------
FY2012 Third-Quarter Major Items in Other Income and Expense (Billion Yen)
Item Amount Description
------------------------------------ ------- -------------------------------------------------------------
87.1
----------------------------------- ------- -------------------------------------------------------------
Other Business Structure 59.1 Restructuring expenses related
Expenses Improvement Expenses to structural reforms in the LSI
device business. [57.0]
* Losses relating to transfer of production facilities.
[33.1]
* Impairment losses of standard logic LSI devices
production line. [23.9]
----------- ----------------------- ------- -------------------------------------------------------------
Impairment Loss 28.0 Impairment loss on the unamortized
balance of goodwill recognized
in accordance with the acquisition
of European subsidiary, Fujitsu
Technology Solutions (Holding)
B.V., in April 2009.
----------------------------------- ------- -------------------------------------------------------------
Structural Reforms in the LSI Device Business
<Present> <Following Restructuring and Direction Change>
System LSI (SoC) -> -Establishment of new fabless system LSI
company
-Consolidation of Fujitsu Semiconductor and Panasonic system
LSI
businesses in new company
-Capital contribution by DBJ in new company (expected)
300mm Wafer Line (Mie Plant) -> -Deliberation on transfer to
a new foundry company including TSMC
Iwate Plant -> -Completed transfer to DENSO Corporation on
October 1, 2012
Assembly Lines (FIM's Aizu/Miyagi/Kyushu) -> -Completed
transfer to J-Devices Corporation on December 21, 2012
Microcontrollers & Analog Devices -> -Pursuit of stable
supply to customers and business growth
-Consideration of new possibilities
Plant Facilities
(Mie 200mm/Aizu-Wakamatsu/FSET) -> -Impairments due to
restructuring and direction change, with
150mm/200mm production lines consolidated in Aizu-Wakamatsu
-A more compact and efficient organization in order to
stabilize
business operations
DBJ: Development Bank of Japan; TSMC: Taiwan Semiconductor
Manufacturing Company Limited
FIM: Fujitsu Integrated Microtechnology, FSET: Fujitsu
Semiconductor Technology
FIM and FSET are wholly owned subsidiaries of Fujitsu
Semiconductor.
Note The above restructuring initiatives are expected to impact
about 2,000 personnel in total.
Other FSL group companies in Japan not listed above may continue
operations within the Fujitsu Group
2. Profit and Loss for FY2012 Third-Quarter
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=87 yen, the
approximate Tokyo foreign exchange market rate on December 31,
2012. 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 the third
quarter of fiscal 2011 to translate the current period's net sales
outside Japan into yen.
<Profit and Loss>
Consolidated net sales for the third quarter of fiscal 2012 were
1,048.2 billion yen (US$12,048 million), a decline of 2.9% from the
third quarter of fiscal 2011.
Net sales in Japan fell by 5.4%. Sales of infrastructure
services and system integration services increased, but sales of
PCs, mobile phones, car audio and navigation systems, and LSI
devices declined, compared to the same period last year when there
was the impact of the Thai floods.
Sales outside of Japan rose by 2%. Excluding the impact of
foreign exchange movements, however, sales declined by 1%,
primarily as a result of lower sales of PCs in Europe.
For the third quarter of fiscal 2012, the average yen exchange
rates against major currencies were 81 yen for the US dollar
(representing yen depreciation of 4 yen), 105 yen for the euro
(depreciation of 1 yen), and 130 yen for the British pound
(depreciation of 8 yen) compared with the same period of the
previous fiscal year. As a result, the impact of foreign exchange
fluctuations for the period was to increase net sales by
approximately 10 billion yen compared to the third quarter of
fiscal 2011. Sales generated outside Japan as a percentage of total
sales were 35%, an increase of 1.7 percentage points compared to
the third quarter of the previous fiscal year.
Gross profit was 271.7 billion yen, down 10.1 billion yen from
the third quarter of fiscal 2011. The gross profit margin was
25.9%, a decline of 0.2 of a percentage point from the third
quarter of the prior fiscal year, primarily as a result of
intensified price competition in PCs and other volume-driven
products.
Selling, general and administrative expenses were 275.8 billion
yen, a decline of 2.8 billion yen from the third quarter of fiscal
2011 resulting from efforts across the group to generate cost
efficiencies.
As a result of the above factors, Fujitsu recorded an operating
loss of 4.1 billion yen (US$47 million), a deterioration of 7.3
billion yen from the previous fiscal year's third quarter.
In other income and expenses, Fujitsu recorded a loss of 80.4
billion yen, representing a deterioration of 79.0 billion yen from
the previous fiscal year's third quarter. Other expenses of 59.1
billion yen in restructuring expenses and 28.0 billion yen in
impairment losses were recorded in the quarter. The restructuring
expenses primarily stem from the LSI device business. These consist
of losses relating to transfer of production facilities and
impairment losses of 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 and
others in accordance with the transfer of the LSI assembly and
testing facilities.
Fujitsu impaired unamortized balance of the goodwill relating to
Fujitsu Technology Solutions (Holding) B.V. recorded at the time of
acquisition as the initial business plan is recognized
impracticable in light of the deteriorating business environment in
Europe. On the other hand, gain on foreign exchange, net were
improved from the same period in previous fiscal year.
Fujitsu reported a consolidated net loss of 79.0 billion yen
(US$908 million), a deterioration of 74.7 billion yen from the
third quarter of fiscal 2011.
3. Results by Business Segment
Information on fiscal 2012 third-quarter consolidated net sales
(including intersegment sales) and operating income broken out by
business segment is presented as follows.
Technology Solutions
(Billion Yen)
------------ -----------------------
Third Quarter Change
FY2012 vs. 3Q
FY2011
------------ ------------- --------
Net Sales 700.6 2.1 %
------------- --------
Japan 451.2 1.8 %
Outside
Japan 249.3 2.7 %
----------- ------------- --------
Operating
Income 23.5 -2.3
------------ ------------- --------
Consolidated net sales in the Technology Solutions segment
amounted to 700.6 billion yen (US$8,053 million), up 2.1% from the
third quarter of fiscal 2011. Sales in Japan increased 1.8%. In
system integration services, despite the impact of the shift toward
spending on hardware by telecommunications carriers, sales as a
whole increased due to a spending recovery, primarily in the
manufacturing sector and public sector. Infrastructure services
sales also rose as a result of steady growth in outsourcing
services, in addition to higher demand for network services, as
telecommunications carriers tried to keep up with higher volumes of
communications traffic. Server-related sales were in line with the
same period of the prior year. Sales of network products, including
mobile phone base stations, remained at a high level due to
increased spending by telecommunications carriers to deal with
larger volumes of communications traffic and to expand the LTE
coverage area, but sales as a whole were lower compared to the
third quarter of fiscal 2011, when there was a surge in router
sales.
Sales outside Japan increased 2.7%. On a constant currency
basis, sales fell by 1%. Sales of infrastructure services fell due
to the impact of cutbacks in corporate spending and fiscal
austerity measures stemming from the economic downturn in Europe.
Sales of UNIX servers declined in advance of the introduction of
new models. Sales of optical transmission systems in North America
were essentially unchanged from the same period of the prior year
due to a shift toward spending on wireless equipment by
telecommunications carriers although overall spending by
telecommunications carriers continued to recover.
The segment posted operating income of 23.5 billion yen (US$270
million), down 2.3 billion yen compared to the third quarter of
fiscal 2011. In Japan, despite higher sales of system integration
and network services, operating income was essentially unchanged
due to lower sales of network products and upfront R&D spending
for network products, in addition to deterioration in the
profitability of some system integration projects. Outside Japan,
although progress was made in reducing costs and implementing
efficiencies, primarily for x86 servers and network products,
operating income as a whole declined due to the impact of lower
sales in Europe and higher expenses related to retirement benefit
obligations in the UK.
(a) Services
(Billion Yen)
------------ -----------------------
Third Quarter Change
FY2012 vs. 3Q
FY2011
------------ ------------- --------
Net Sales 576.5 3.1 %
------------- --------
Japan 357.4 3.4 %
Outside
Japan 219.0 2.7 %
----------- ------------- --------
Operating
Income 21.7 -0.3
------------ ------------- --------
Net sales in the Services sub-segment were 576.5 billion yen
(US$6,626 million), up 3.1% from the same period a year earlier. In
Japan, sales increased 3.4%. For system integration services,
despite a shift toward spending on hardware by telecommunications
carriers to deal with higher communications traffic, sales as a
whole were higher due mainly 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 against the backdrop of
telecommunications carriers undertaking measures to keep up with
higher volumes of communications traffic, although there were
negative impacts in ISP business, which were a drop in subscribers
and a shift from packaged products that include connection fees to
stand-alone products. Sales outside Japan increased 2.7%. On a
constant currency basis, sales decreased by 1%. The datacenter
business in Australia and North America grew steadily, but overall
sales were weak on account of the softening economic recovery.
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 21.7 billion
yen (US$249 million), down 0.3 billion yen compared to the same
period of fiscal 2011. In Japan, although the profitability of some
system integration projects deteriorated, operating income
increased overall as a result of higher sales of system integration
and network services. Outside Japan, progress was made in
implementing cost efficiencies in Australia and North America, but
operating income was adversely impacted by the impact of lower
sales in Europe and higher expenses related to retirement benefit
obligations in the UK.
In light of continued deterioration of economic conditions in
Europe and intensified competition,
Fujitsu recognized the impairment loss of Fujitsu Technology
Solutions (Holding) B.V. in relation to goodwill and intangible
assets due to impossibility to collect investment in 10 years from
the time of acquisition. Impairment losses were recorded on the
unamortized balance of goodwill and intangible assets that was
recognized in accordance with the acquisition in April 2009.
Going forward, structural reforms will be implemented to improve
the company's profitability in response to the downturn in the
business environment.
(b) System Platforms
(Billion Yen)
------------ -----------------------
Third Quarter Change
FY2012 vs. 3Q
FY2011
------------ ------------- --------
Net Sales 124.1 -2.3 %
------------- --------
Japan 93.8 -3.9 %
Outside
Japan 30.2 3.2 %
----------- ------------- --------
Operating
Income 1.8 -1.9
------------ ------------- --------
Net sales in the System Platforms sub-segment were 124.1 billion
yen (US$1,426 million), a decrease of 2.3% from the third quarter
of fiscal 2011. Sales in Japan declined 3.9%. Server-related sales
were essentially unchanged from the same quarter of the prior year.
Sales of network products, including mobile phone base stations,
remained at a high level due to greater spending by
telecommunications carriers to deal with larger volumes of
communications traffic and to expand the LTE coverage area, but
sales as a whole were lower compared to the third quarter of fiscal
2011, when there was a surge in router sales. Sales outside Japan
rose 3.2%. On a constant currency basis, sales were essentially
unchanged. Sales of UNIX servers stagnated in advance of the
introduction of new models. Sales of optical transmission systems
in North America were essentially unchanged from the same period of
the prior year due to a shift toward spending on wireless equipment
by telecommunications carriers although overall spending by
telecommunications carriers continued to recover.
The System Platforms sub-segment posted operating income of 1.8
billion yen (US$21 million); representing a decrease of 1.9 billion
yen from the same period of the previous year. In Japan,
contributing factors included lower network product sales and
increased in upfront R&D spending. Outside Japan, progress was
made in reducing costs and implementing efficiencies, primarily for
x86 servers and network products.
Ubiquitous Solutions
(Billion Yen)
------------ -----------------------
Third Quarter Change
FY2012 vs. 3Q
FY2011
------------ ------------- --------
-11.5
Net Sales 266.5 %
------------- --------
-14.3
Japan 200.3 %
Outside
Japan 66.1 -1.8 %
----------- ------------- --------
Operating
Income -2.0 -4.1
------------ ------------- --------
Net sales in the Ubiquitous Solutions segment were 266.5 billion
yen (US$3,063 million), a decline of 11.5% from the third quarter
of fiscal 2011. Sales in Japan fell by 14.3%. Overall unit
shipments of PCs were essentially unchanged due to large-volume
orders received from corporations, but sales declined on sluggish
sales of consumer PCs and lower sales prices. For mobile phones,
smartphone sales weakened due to competition with manufacturers
based outside Japan, while the market for feature phones
contracted, resulting in lower overall sales. Sales of the
Mobilewear sub-segment's car audio and navigation systems declined
as automobile production fell following the conclusion of the
government's subsidy program for eco-friendly vehicles. Sales
outside Japan declined by 1.8%. On a constant currency basis, sales
declined by 3%. Mobilewear device sales were strong in Asia, and
the sub-segment recovered from the impact of the flooding in
Thailand in the third quarter of last fiscal year, which caused a
temporary suspension of vehicle production outside Japan, On the
other hand, PC sales were slow, particularly in Europe.
The Ubiquitous Solutions segment posted an operating loss of 2.0
billion yen (US$23 million), a deterioration of 4.1 billion yen
from the third quarter of fiscal 2011. Operating income in Japan
was adversely impacted by a decline in the sales prices of PCs and
lower sales of mobile phones. In addition, the impact of lower
sales of mobilewear devices was offset by cost efficiencies and
improvements from structural reforms, and operating income remained
essentially unchanged as a result. Outside of Japan, progress was
made in shifting toward a sales strategy for PCs focused on
profitability and implementing cost reductions. Operating income
from mobilewear devices was essentially unchanged.
Device Solutions
Note: LSI Devices sales include intrasegment sales to the
electronic components business.
(Billion Yen)
------------ -----------------------
Third Quarter Change
FY2012 vs. 3Q
FY2011
------------ ------------- --------
Net Sales 129.5 -6.3 %
------------- --------
-11.1
Japan 73.0 %
Outside
Japan 56.4 0.7 %
----------- ------------- --------
Operating
Income -9.3 -0.9
------------ ------------- --------
Net sales in Device Solutions amounted to 129.5 billion yen
(US$1,489 million), a decline of 6.3% compared to the third quarter
of fiscal 2011. Sales in Japan fell 11.1%. Demand for LSI devices
fell below that of the third quarter of fiscal 2011 when there was
the impact of the Thai floods, especially on digital audio-visual
equipment and industrial equipment. Sales of electronic components,
semiconductor packages and batteries also fell. Sales outside Japan
were essentially unchanged, but were down 3% on a constant currency
basis. For electronic components, sales of semiconductor packages,
primarily to the US, decreased.
The Device Solutions segment recorded an operating loss of 9.3
billion yen (US$107 million), representing a deterioration of 0.9
billion yen from the third quarter of fiscal 2011. Operating income
for LSI devices was essentially unchanged on account of a decline
in expenses even though there was an adverse impact caused by lower
sales. Operating income for electronic components deteriorated on
the impact of lower sales and the burden of development
expenditures incurred by an affiliate developing semiconductors for
communications equipment.
The Fujitsu Group continually optimizes its manufacturing
organization in accordance with changes in the economic and
business environment. As part of these efforts, on October 1, 2012,
it transferred its Iwate Plant to DENSO Corporation, and on
December 21, 2012, it transferred its LSI device assembly and
testing facility to J-Devices Corporation. The Fujitsu Group and
Panasonic Corporation have signed a memorandum of understanding
(MOU) to transfer their system LSI (SoC) businesses to a new
company they will establish that will focus on SoC design and
development using a fabless business model. They seek to conclude a
final agreement as soon as possible. With respect to its
manufacturing facilities, Fujitsu intends to transfer the 300mm
line of Mie Plant to a new company including Taiwan Semiconductor
Manufacturing Company Limited, and the 200mm line of the Mie Plant
will be consolidated in the Aizu-Wakamatsu region with the aim of
strengthening the operation's cost competitiveness by raising
capacity utilization. Fujitsu recorded 57.0 billion yen in
restructuring expenses (33.1 billion yen losses relating to
transfer of production facilities and 23.9 billion yen impairment
losses of standard logic LSI devices production line). 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
in accordance with the transfer of the LSI assembly and testing
facilities. Impairment losses 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.
4. Overview of FY2012 Nine-Months Consolidated Results
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=87 yen, the
approximate Tokyo foreign exchange market rate on December 31,
2012. 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 the nine months
of fiscal 2011 to translate the current period's net sales outside
Japan into yen.
<Profit and Loss>
Consolidated net sales for the first nine months of fiscal 2012
were 3,120.0 billion yen (US$35,862 million), a decline of 1.6%
from the first nine months of fiscal 2011.
Net sales in Japan were essentially unchanged. Sales of LSI
devices, electronic components, and PCs declined as a result of
either weak demand or price competition, and sales revenues
stemming from the next-generation supercomputer system, for which
deliveries peaked in fiscal 2011, also declined, but sales of
mobile phones rose, primarily in the first half, and sales of
network products also increased. Sales outside of Japan fell by
4.1%. Sales of infrastructure services, particularly in Europe,
were hurt by deteriorating economic conditions, and there were also
lower sales of optical transmission systems in North America and
PCs in Europe.
For the first nine months of fiscal 2012, the average yen
exchange rates against major currencies were 80 yen for the US
dollar (representing yen depreciation of 1 yen), 102 yen for the
euro (appreciation of 9 yen), and 127 yen for the British pound
(essentially unchanged) compared with the same period of the
previous fiscal year. As a result, the impact of foreign exchange
fluctuations for the period was to decrease net sales by
approximately 20 billion yen compared to the first nine months of
fiscal 2011. Sales generated outside Japan as a percentage of total
sales were 34%, a decrease of 0.8 of a percentage points compared
to the first nine months of the previous fiscal year.
Gross profit was 831.8 billion yen, down 23.8 billion yen from
the same period in fiscal 2011. In addition to the impact of lower
sales of LSI devices and PCs, the decline was attributable to
higher procurement costs in Europe for components and materials
denominated in US dollars because of the depreciation of the euro
against the dollar, mainly during the first half of the fiscal
year. The gross profit margin was 26.7%, a decline of 0.3 of a
percentage point from the first nine months of the prior fiscal
year.
Selling, general and administrative expenses were 828.3 billion
yen, a decline of 17.1 billion yen from the third quarter of fiscal
2011, primarily as a result of efforts across the group to generate
cost efficiencies and the impact of foreign exchange fluctuations.
There was, however, continued upfront development spending in new
business areas.
As a result of the above factors, Fujitsu recorded operating
income of 3.5 billion yen (US$40 million), a decline of 6.6 billion
yen from the same period in the previous fiscal year.
In other income and expenses, Fujitsu recorded a loss of 85.0
billion yen, representing a deterioration of 66.1 billion yen from
the same period in the previous fiscal year. Other expenses of 59.1
billion yen in restructuring expenses and 28.0 billion yen in
impairment losses were recorded in the third quarter.
The restructuring expenses primarily stem from the LSI device
business. These consist of losses relating to transfer of
production facilities and impairment losses of 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 and others in accordance with the
transfer of the LSI assembly and testing facilities.
Fujitsu impaired unamortized balance of the goodwill relating to
Fujitsu Technology Solutions (Holding) B.V. recorded at the time of
acquisition as the initial business plan is recognized
impracticable in light of the deteriorating business environment in
Europe. On the other hand, gain on foreign exchange, net were
improved from the same period in previous fiscal year.
Fujitsu reported a consolidated net loss of 90.1 billion yen
(US$1,036 million), a deterioration of 91.5 billion yen from the
first nine months of fiscal 2011.
Results by Business Segment
Information on fiscal 2012 nine months consolidated net sales
(including intersegment sales) and operating income broken out by
business segment is presented as follows.
Technology Solutions
(Billion Yen)
------------ --------------------
9 Months Change
vs.
FY2012 9 Months
FY2011
------------ -------- ----------
Net Sales 2,041.0 -1.5 %
-------- ----------
Japan 1,331.7 1.0 %
Outside
Japan 709.3 -5.9 %
----------- -------- ----------
Operating
Income 70.6 -0.9
------------ -------- ----------
Consolidated net sales in the Technology Solutions segment
amounted to 2,041.0 billion yen (US$23,460 million), down 1.5% from
the first nine months of fiscal 2011. In Japan, sales rose 1%.
Server-related sales declined compared to the same period in fiscal
2011, when there was high-volume production of dedicated servers
for use in the K computer, a next-generation supercomputer. In
addition, sales were adversely impacted by a decline in large-scale
system deals. Sales of network products, including mobile phone
base stations, increased due to higher spending by
telecommunications carriers to deal with 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 as a result of
strong sales 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 5.9%. On a constant currency basis, sales
fell by 4%. Contributing factors included lower sales of optical
transmission systems in the first half of the fiscal year due to a
shift toward spending on wireless networks by North American
telecommunications carriers, as well as a decline in sales of UNIX
servers in anticipation of the introduction of new models.
Infrastructure services sales declined on account of the economic
downturn in Europe and the US.
The segment posted operating income of 70.6 billion yen (US$811
million), down 0.9 billion yen compared to the first nine months of
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.
Outside Japan, operating income declined as a result of the impact
of lower sales of optical transmission systems and UNIX servers in
North America and lower sales in the European business, as well as
increased expenses related to retirement benefit obligations in the
UK.
(a) Services
(Billion Yen)
------------ ------------------------------------
9 Months Change
vs.
FY2012 9 Months
FY2011
------------ ---------------- ------------------
Net Sales 1,665.8 -0.7%
---------------- ------------------
Japan 1,049.3 1.5%
Outside
Japan 616.4 -4.3%
----------- ---------------- ------------------
Operating
Income 59.1 6.9
------------ ---------------- ------------------
Net sales in the Services sub-segment amounted to 1,665.8
billion yen (US$19,147 million), down 0.7% from the same period a
year earlier. In Japan, sales rose 1.5% from the first nine months
of fiscal 2011. 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 deal with 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 declined 4.3%. On a constant currency basis,
sales declined 3%. While the datacenter business 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 59.1 billion
yen (US$679 million), an increase of 6.9 billion yen compared to
the same period of fiscal 2011. In Japan, operating income
increased due to such factors as 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.
(b) System Platforms
(Billion Yen)
------------ --------------------
9 Months Change
vs.
FY2012 9 Months
FY2011
------------ -------- ----------
Net Sales 375.2 -4.7%
-------- ----------
Japan 282.4 -0.7%
Outside
Japan 92.8 -15.0%
----------- -------- ----------
Operating
Income 11.5 -7.9
------------ -------- ----------
Net sales in the System Platforms sub-segment were 375.2 billion
yen (US$4,313 million), a decline of 4.7% from the first nine
months of fiscal 2011. Sales in Japan were essentially unchanged.
Sales of server-related products declined compared to the first
nine months of fiscal 2011, when there was high-volume production
of dedicated servers for use in the K computer, a next-generation
supercomputer. In addition, there was the adverse impact of fewer
large-scale system deals. Sales of network products, including
mobile phone base stations, rose on account of higher investments
by telecommunications carriers to deal with higher network traffic
and to expand LTE coverage. Sales outside Japan declined 15%. On a
constant currency basis, sales decreased 13%. Contributing factors
included lower sales of optical transmission systems in the first
half of the fiscal year due to a shift toward spending on wireless
networks by North American telecommunications carriers, as well as
a decline in sales of UNIX servers in anticipation of the
introduction of new models.
The System Platforms sub-segment posted operating income of 11.5
billion yen (US$132 million), down 7.9 billion yen compared to the
first nine months of fiscal 2011. In Japan, although operating
income was boosted by higher sales of network products, overall
operating income declined due to the impact of lower sales of
server-related products and higher upfront R&D spending for
network products. Outside Japan, operating income was adversely
impacted by lower sales of optical transmission systems and UNIX
servers to North America.
Ubiquitous Solutions
(Billion Yen)
------------ ------------------
9 Months Change
FY2012 vs. 9
Months
FY2011
------------ -------- --------
Net Sales 815.8 -0.1%
-------- --------
Japan 626.4 0.8%
Outside
Japan 189.4 -3.1%
----------- -------- --------
Operating
Income 8.3 1.9
------------ -------- --------
Net sales in the Ubiquitous Solutions segment were 815.8 billion
yen (US$9,377 million), on par with the first nine months of fiscal
2011. Sales in Japan were essentially unchanged. Overall unit
shipments of PCs increased because of large-volume orders received
from corporations, but sales declined on sluggish sales of consumer
PCs and lower sales prices. Sales of mobile phones increased as a
result of the expansion in the market for smartphones and tablet
devices. Sales of the Mobilewear sub-segment's car audio and
navigation systems remained essentially unchanged, as the impact of
lower vehicle sales this period, following the conclusion of the
government's subsidy program for eco-friendly vehicles ended in
September 2012, was offset by production disruptions during the
same period last fiscal year, when vehicle production was
temporarily suspended in the wake of the Great East Japan
Earthquake. Sales outside Japan declined 3.1%. On a constant
currency basis, sales rose by 1%. Unit sales of PCs weakened, and
sales prices also declined. Sales of mobilewear rose compared to
the first nine months of 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 8.3
billion yen (US$95 million), an increase of 1.9 billion yen from
the same period of the previous fiscal year. Operating income in
Japan benefited from the impact of higher sales of mobile phones
and restructuring initiatives in mobilewear, even though there was
a decline in PC sales prices. Outside Japan, operating income was
adversely affected by lower PC sales prices 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)
------------ ------------------
9 Months Change
FY2012 vs. 9
Months
FY2011
------------ -------- --------
Net Sales 398.1 -6.7%
-------- --------
Japan 223.2 -11.3%
Outside
Japan 174.9 0.1%
----------- -------- --------
Operating
Income -16.3 -3.1
------------ -------- --------
Net sales in Device Solutions amounted to 398.1 billion yen
(US$4,576 million), a decline of 6.7% compared to the first nine
months of fiscal 2011. Sales in Japan declined 11.3%. LSI device
sales decreased mainly as a result of a delay in the recovery of
the market LSI devices used in digital audio-visual equipment and
because shipments of CPUs for the next-generation supercomputer
system were completed during the same period in the previous fiscal
year. Sales of electronic components, particularly of batteries,
also fell. Sales outside Japan were essentially unchanged from the
first nine months of fiscal 2011. LSI device sales declined, mainly
to Europe. 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 16.3
billion yen (US$187 million), representing a deterioration of 3.1
billion yen compared to the first nine months of 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 300mm 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, operating income for
electronic components rose as a result of higher sales of
semiconductor packages.
Other/Elimination and Corporate
This segment recorded an operating loss of 59.1 billion yen
(US$679 million), a deterioration of 4.5 billion yen from the first
nine months of fiscal 2011. This was on account of up-front
investments associated with the development of new businesses and
other factors.
<Geographic Information>
Sales and operating income for Fujitsu and its consolidated
subsidiaries according to country and region are as follows.
Net Sales (Billion Yen)
9 - Months
FY 2012
---------------- ----------- --------
Japan 2,361.7 <-1.0%>
---------------- ----------- --------
Outside Japan 1,078.5 <-3.1%>
----------- --------
EMEA 552.0 <-7.8%>
-------------- ----------- --------
The Americas 189.0 <-8.7%>
-------------- ----------- --------
APAC &China 337.4 <10.0%>
-------------- ----------- --------
< > Indicates % Change Over Same Period in Previous
Year
Operating Income (Billion Yen)
Third Change 9 Months Change
Quarter vs. 3Q FY2012 vs. 9
FY2012 FY2011 Months
FY2011
-------------- -------- -------- -------- ---------
Japan 13.9 -5.5 76.2 8.3
[1.8%] [-0.6%] [3.2%] [0.4%]
-------------- -------- -------- -------- ---------
Outside 2.4 0.1 -12.9 -11.9
Japan [0.7%] [0.1%] [-1.2%] [ -1.1%]
-------- -------- -------- ---------
EMEA 0.9 -1.3 -15.1 -10.3
[0.5%] [-0.6%] [-2.7%] [-1.9%]
------------ -------- -------- -------- ---------
The Americas -1.2 -0.3 -3.8 -3.9
[-2.0%] [-0.6%] [-2.0%] [-2.1%]
------------ -------- -------- -------- ---------
APAC 2.7 1.8 6.0 2.3
& [2.5%] [1.5%] [1.8%] [0.6%]
China
------------ -------- -------- -------- ---------
Note: Numbers inside brackets indicate operating income
margin.
5. Financial Condition
[Assets, Liabilities and Net Assets] (Billion Yen)
Third Quarter Year end Change Third Quarter
FY 2012 FY 2011 FY 2011
(at Dec.
31, 2012)
(at March (at Dec.
31, 2012) 31, 2011)
------------------------------------------ -------------- ---------------------- ------- --------------
Assets
-------------- ---------------------- ------- --------------
Current assets 1,700.6 1,701.7 -1.1 1,701.9
-------------- ---------------------- ------- --------------
(Cash and time deposits and
Marketable securities) 319.1 273.9 45.2 327.0
(Notes and accounts receivable,
trade) 778.6 901.3 -122.6 780.3
(Inventories) 399.7 334.1 65.6 394.7
Non-current assets 1,185.7 1,243.7 -57.9 1,215.5
-------------- ---------------------- ------- --------------
(Property, plant and equipment) 608.2 640.9 -32.6 630.1
(Intangible assets) 189.8 230.2 -40.4 231.6
(Investment securities and
other non-current assets) 387.6 372.4 15.1 353.6
----------------------------------------- -------------- ---------------------- ------- --------------
Total Assets 2,886.4 2,945.5 -59.0 2,917.4
========================================== ============== ====================== ======= ==============
Liabilities
Current liabilities 1,438.6 1,417.4 21.2 1,477.7
-------------- ---------------------- ------- --------------
(Notes and accounts payable,
trade)
(Short-term borrowings 545.8 617.7 -71.9 558.7
and Current portion of bonds
payable) 289.4 128.9 160.5 332.1
(Accrued expenses) 292.8 342.5 -49.7 284.1
Long-term liabilities 583.8 561.4 22.3 533.9
-------------- ---------------------- ------- --------------
(Long-term debt) 257.2 252.2 5.0 252.5
(Accrued retirement benefits) 185.3 180.4 4.8 173.0
------------------------------------- -------------- ---------------------- ------- --------------
Total Liabilities 2,022.5 1,978.9 43.6 2,011.6
----------------------------------------- -------------- ---------------------- ------- --------------
Net Assets
Shareholders' equity 815.3 926.0 -110.6 884.7
Accumulated other comprehensive
income -75.9 -85.0 9.0 -105.0
Minority interests in consolidated
subsidiaries 124.4 125.4 -1.0 125.9
----------------------------------------- -------------- ---------------------- ------- --------------
Total Net Assets 863.9 966.5 -102.6 905.7
------------------------------------------ -------------- ---------------------- ------- --------------
Total Liabilities and Net
Assets 2,886.4 2,945.5 -59.0 2,917.4
------------------------------------------ -------------- ---------------------- ------- --------------
[Cash Flows]
(Billion Yen)
Nine Months Nine Months
FY 2012 FY 2011 Change
(4/1/1212/31/12) (4/1/1112/31/11)
---------------------------------------- ------------------- ------------------- --------
I. Cash flows from operating
activities:
Income (loss) before income
taxes
and minority interests -81.4 -8.6 -72.8
Depreciation and amortization,
including goodwill amortization 143.5 152.9 -9.4
Impairment loss 28.0 - 28.0
Increase (decrease) in provisions 8.4 -18.9 27.3
(Increase) decrease in receivables,
trade 136.3 66.0 70.3
(Increase) decrease in inventories -64.3 -62.8 -1.4
Increase (decrease) in payables,
trade -83.2 -24.1 -59.1
Income tax paid -18.1 -31.1 13.0
------------------- ------------------- --------
Net cash used in operating
activities 20.6 25.2 -4.6
---------------------------------------- ------------------- ------------------- --------
II. Cash flows from investing
activities:
Purchases of property, plant
and equipment -80.0 -96.7 16.6
Purchases of intangible assets -43.7 -38.4 -5.2
------------------- ------------------- --------
Proceeds from sales of investment
securities 1.1 4.7 -3.5
---------------------------------------- ------------------- ------------------- --------
Proceeds from transfer of
business 10.2 - 10.2
---------------------------------------- ------------------- ------------------- --------
Net cash used in investing
activities -122.8 -132.8 10.0
---------------------------------------- ------------------- ------------------- --------
I + II Free Cash Flow -102.2 -107.5 5.3
III. Cash flows from financing
activities:
Net increase (decrease) in
borrowings 155.6 161.9 -6.2
Bond issue and redemption 5.1 -42.7 47.8
Dividends paid -23.0 -22.6 -0.3
------------------- ------------------- --------
Net cash provided by financing
activities 124.3 75.8 48.5
---------------------------------------- ------------------- ------------------- --------
Cash and cash equivalents
at end of period 292.9 319.9 -26.9
---------------------------------------- ------------------- ------------------- --------
Explanation of Assets, Liabilities and Net Assets
Consolidated total assets at the end of the third quarter
amounted to 2,886.4 billion yen (US$33,177 million), a decrease of
59.0 billion yen from the end of fiscal 2011. Current assets
decreased by 1.1 billion yen compared with the end of fiscal 2011,
to 1,700.6 billion yen. Reflecting the collection of notes and
accounts receivable associated with the large concentration of
sales at the end of previous fiscal year, notes and accounts
receivable decreased by 122.6 billion yen from the end of fiscal
2011. In preparation for anticipated sales, particularly in the
services business and mobile phone business, inventories at the end
of the quarter increased to 399.7 billion yen, an increase of 65.6
billion yen from the ending balance of fiscal 2011. The monthly
inventory turnover ratio, which is an indication of asset
utilization efficiency, was 0.91 times, essentially unchanged from
the end of the third quarter of fiscal 2011.
Non-current assets declined by 57.9 billion yen from the end of
fiscal 2011, to 1,185.7 billion yen. Tangible fixed assets
decreased by 32.6 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 40.4 billion yen
from the end of fiscal 2011, primarily as a result of the
impairment of goodwill of a European subsidiary.
Consolidated total liabilities amounted to 2,022.5 billion yen
(US$23,247 billion), an increase of 43.6 billion yen compared to
the end of fiscal 2011. Trade notes and accounts payable decreased
by 71.9 billion yen, reflecting the paying down of balances
accumulated in relation to the concentration of sales at the end of
the prior fiscal year. The balance of interest-bearing loans was
546.7 billion yen, an increase of 165.5 billion yen from the end of
fiscal 2011. Short-term borrowings increased to finance a portion
of working capital. As a result, the D/E ratio was 0.74 times, an
increase of 0.29 of a percentage point compared to the end of
fiscal 2011, and the net D/E ratio was 0.34 times, an increase of
0.2 of a percentage point compared to the end of fiscal 2011,
essentially unchanged from the end of the third quarter of fiscal
2011.
Net assets were 863.9 billion yen (US$9,930 million), a decrease
of 102.6 billion yen from the end of fiscal 2011. The decline in
net assets reflects a decrease in shareholders' equity of 110.6
billion yen resulting mainly from the net loss recorded in the nine
months and the payment of dividends. Accumulated other
comprehensive income increased by 9.0 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)
3Q FY2012 FY2011 Change 3Q FY2011
(December (March 31, (December
31, 2012) 2012) 31, 2011)
---------------------- ------------ ------------- -------- ------------
Cash and cash 292.9 266.6 26.2 319.9
equivalents at
end of period
Interest-bearing
loans
Net interest-bearing 546.7 381.1 165.5 584.7
loans
Owners' equity 253.8 114.4 139.3 264.8
739.3 841.0 -101.6 779.7
---------------------- ------------ ------------- -------- ------------
D/E ratio (times) 0.74 0.45 0.29 0.75
Net D/E ratio 0.34 0.14 0.20 0.34
(times)
Shareholders' 28.2 % 31.4 % -3.2 % 30.3 %
equity ratio Owners'
equity ratio
25.6 % 28.6 % -3.0 % 26.7 %
----------------------- -------- -------- --------- --------
1. D/E ratio: Interest-bearing loans/Owners' equity.
2. Net D/E ratio: (Interest-bearing loans - Cash and cash
equivalents at end of period)/Owners' equity.
Summary of Cash Flows
Net cash provided by operating activities in the first nine
months amounted to 20.6 billion yen (US$237 million). This
represents a decrease in cash inflows of 4.6 billion yen compared
to the first three quarters of fiscal 2011. Although the
restructuring expenses primarily for the LSI caused a significant
deterioration in income before income taxes and minority interests,
there were also increases in impairment losses and reserve
provisions. There was also a reduction in the amount of corporate
taxes paid due to the liquidation of a European subsidiary, which
reduced the previous fiscal year's corporate tax liability.
Net cash used in investing activities was 122.8 billion yen
(US$1,411 million). Outflows mainly consisted of the acquisition of
property, plant and equipment amounting to 80.0 billion yen,
primarily related to datacenters, and the acquisition of intangible
assets amounting to 43.7 billion yen, primarily software. A cash
inflow of 10.2 billion 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 the same period in fiscal 2011, net outflows
decreased by 10.0 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 102.2 billion yen (US$1,175
million), representing a decrease in net cash outflows of 5.3
billion yen compared with the same period in the previous fiscal
year.
Net cash provided by financing activities was 124.3 billion yen
(US$1,429 million). Short-term borrowings were increased to finance
a portion of working capital. This represents an increase in net
cash inflows of 48.5 billion yen compared to the first nine months
of fiscal 2011.
As a result of the above factors, cash and cash equivalents at
the end of the third quarter of fiscal 2012 were 292.9 billion yen
(US$3,367 million), an increase of 26.2 billion yen compared to the
end of fiscal 2011.
6. FY2012 Consolidated Earnings Projections
Although the performance of some business units fell below the
projections announced in October 2012, overall net sales and
operating income were in line with projections, helped in part by
the recent depreciation of the yen and the impact of cost reduction
efforts.
Net sales were 1,048.2 billion yen, down 31.4 billion yen year
on year, and there was an operating loss of 4.1 billion yen,
representing a deterioration of 7.3 billion yen compared to the
same period last fiscal year. Sales of PCs and electronic
components were adversely impacted by weak market conditions caused
by structural changes in the demand for PCs worldwide, and severe
competition with manufacturers based outside of Japan continued in
mobile phones.
Fujitsu recorded a net loss for the quarter of 79.0 billion yen,
representing a significant deterioration from the previous fiscal
year as a result of recording restructuring charges, primarily
stemming from the LSI device business, and goodwill impairment
losses from a subsidiary in Europe.
In light of these conditions, Fujitsu has revised its full-year
projections for fiscal 2012 as outlined below. Exchange rate
projections are also revised, to 90 yen for the US dollar, 120 yen
for the euro, and 140 yen to the British pound.
Net sales projections for the full fiscal year have been revised
downward by 50.0 billion yen from projections announced in October,
to 4,370.0 billion yen. Although projected sales for Technology
Solutions have been revised upward by 40.0 billion yen because of
exchange rate adjustments, projected sales for Ubiquitous Solutions
and Device Solutions have both been revised downward, by 65.0
billion yen and 25.0 billion yen, respectively. Despite the
positive impact of exchange rate adjustments, the downward revision
for Ubiquitous Solutions reflects the impact of deteriorating
market conditions and lower sales prices on the PC and mobile phone
businesses as well as the impact of a decline in automobile
production on the mobilewear business. The downward revision for
Device Solutions reflects a deceleration in demand for LSI devices
used in smartphones and lower demand for electronic components,
primarily for those used in PCs.
Fujitsu has left its full-year projection for operating income
unchanged at 100.0 billion yen. The adverse impact of lower sales
in Ubiquitous Solutions is expected to be offset in part by the
impact of exchange rate adjustments, and the remaining impact is
expected to be absorbed by progress on cost reduction and expense
efficiency efforts.
Fujitsu has revised its full-year projection for net income
downward by 120.0 billion yen, to a net loss of 95.0 billion yen.
The downward revision reflects the 87.1 billion yen in loss
recorded in the third quarter for restructuring the LSI device
business and other factors as well as additional restructuring
expenses that are expected to be recorded in the fourth quarter,
primarily associated with the LSI device business and business
outside Japan.
FY2012 Full-Year Consolidated Forecast (Billion Yen)
FY2011 October FY2012 Change vs. Change vs.
Full-Year Forecast Full-Year October FY2011
Results Forecast Forecast
----------- ---------- -------------
Change Change
(%) (%)
-------------- ------ ----------- ---------- --- -------- ------- ------- -------- -----------
Net Sales 4,467.5 4,420.0 4,370.0 -50.0 -1.1 -97.5 *-2.2
---------------------- ----------- ---------- ------------- ------- ------- -------- -----------
Operating Income 105.3 100.0 100.0 - - -5.3 -5.0
[Operating Income [2.4%] [2.3%] [2.3%] [-%] [-0.1%]
Margin]
---------------------- ----------- ---------- ------------- ------- ------- -------- -----------
Other Income
and Expense -38.5 -25.0 -175.0 -150.0 - -136.5 -
---------- ------------- ------- ------- -------- -----------
Net Income 42.7 25.0 -95.0 -120.0 - -137.7 -
---------- ------------- ------- ------- -------- -----------
* Change (%) Constant Currency;
-3
FY2012 Major Items in Other Income and Expense (Billion Yen)
Item Amount Description
--------------------------------------- -------- ----------------------------------------
-170.0
-------------------------------------- -------- ----------------------------------------
Other Income Business Structure -142.0 - Restructuring expenses related
and Improvement Expenses to structural reforms in the LSI
Expense device business. [-112.0]
-Restructuring expenses for businesses
outside of Japan [-20.0], others
[-10.0].
-------------- ----------------------- -------- ----------------------------------------
Impairment Loss -28.0 Impairment loss on the unamortized
balance of goodwill recognized
in accordance with the acquisition
of European subsidiary, Fujitsu
Technology Solutions (Holding)
B.V., in April 2009.
-------------------------------------- -------- ----------------------------------------
[Reference]
Breakdown of annual dividend payments
Dividend Per Share
------------------- -----------------------------------------------
Record Date End of First End of Fiscal Annual Basis
Half Year
------------------- ------------- -------------- ----------------
Payment for FY2011 5 yen 5 yen 10 yen
------------------- ------------- -------------- ----------------
Payment for FY2012 5 yen yen (planned) 5 yen (planned)
------------------- ------------- -------------- ----------------
7. Segment Information
I. Segment Overview
Fujitsu's reportable business segments consist of components of
the Fujitsu group for which discrete financial information is
available and whose operating results are regularly reviewed by the
group's executive decision-making body to make decisions about
resource allocation to the segments and assess their
performance.
In the field of information and communication technology (ICT),
while delivering wide varieties of services, the group offers
comprehensive solutions, from the development, manufacturing, and
sales, to the maintenance and operations of cutting-edge,
high-performance and high-quality products, and electronic devices
that support services. The group's business is organized into three
reportable segments-Technology Solutions, Ubiquitous Solutions, and
Device Solutions-based on the group's managerial structure,
characteristics of the products and services, and the similarities
of the sales market within each operating segment. Managerial
structure and product and service classification in each reportable
segment are as follows.
(1) Technology Solutions
To optimally deliver to customers services that integrate
products, software, and services, the segment is organized in a
matrix management structure comprised of business departments that
are organized by product and service type, in order to manage costs
and devise global business strategies, and sales departments that
are organized along industry and geographic lines.
This reportable segment consists of Solutions/Systems
Integration, which are services for the construction of information
and communication systems, Infrastructure Services, which are
primarily outsourcing and maintenance services, System Products,
which covers mainly the servers and storage systems that comprise
ICT platforms, and Network Products, which are used to build
communications infrastructure, such as mobile phone base stations
and optical transmission systems.
(2) Ubiquitous Solutions
The segment is organized into independent business 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 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" (a society that enjoys the benefits of the
value generated by ICT without requiring anyone to be conscious of
the technological complexities involved).
(3) Device Solutions
The segment is organized by product in independent business
management units which include the respective sales departments and
contains cutting-edge technologies, including LSI devices used in
digital home appliances, automobiles, mobile phones and servers, as
well as electronic components, such as semiconductor packages and
batteries.
II. Nine Months of Fiscal 2012 (April 1, 2012 to December 31,
2012)
1.Amounts of Net Sales, Profit or Loss by Reportable
Segments
(Million Yen)
---------------------------------------------------------------------------------------------
Reportable Segments Other Total
*
--------------------- ------------------------------------------------- ------- ----------
Technology Ubiquitous Device Sub-Total
Solutions Solutions Solutions
-------------------- ----------- ----------- ----------- ---------- ------- ----------
Net Sales
External customers 2,001,657 733,140 357,945 3,092,742 15,500 3,108,242
Inter-segment 39,420 82,756 40,250 162,426 34,578 197,004
-------------------- ----------- ----------- ----------- ---------- ------- ----------
Total net sales 2,041,077 815,896 398,195 3,255,168 50,078 3,305,246
--------------------- ----------- ----------- ----------- ---------- ------- ----------
Operating Income
(Loss) 70,685 8,367 -16,362 62,690 -5,111 57,579
--------------------- ----------- ----------- ----------- ---------- ------- ----------
* The "Other" segment consists of operations not included in
reportable segments, such as Japan's Next-Generation Supercomputer
project, facility services and development of information systems
for group companies, and welfare benefits for group employees.
2.Reconciliation of Net Sales and Operating Income or Loss of
Reportable Segments with
those of the Consolidated Income Statements
(Million Yen)
-------------------------------------------------------------
Reconciliation of Net Sales Amount
------------------------------------------- ----------------
Total of Reportable Segments 3,255,168
Net Sales of "Other" Category 50,078
Elimination of Intersegment Transactions -185,182
------------------------------------------- ----------------
Net Sales in Consolidated Income
Statements 3,120,064
------------------------------------------- ----------------
(Million Yen)
-------------------------------------------------------------
Reconciliation of Operating Income (Loss) Amount
--------------------------------------------------- --------
Total of Reportable Segments 62,690
Operating Income of "Other" Category -5,111
Corporate Expenses * -54,903
Elimination of Intersegment Transactions 891
--------------------------------------------------- --------
Operating Income in Consolidated Income
Statements 3,567
--------------------------------------------------- --------
* Corporate Expenses mainly consist of strategic expenses such
as basic research and development expenses
which are not attributable to the reportable segments and group
management shared expenses incurred by Fujitsu.
III. Nine Months of Fiscal 2011 (April 1, 2011 to December 31,
2011)
1.Amounts of Net Sales, Profit or Loss by Reportable
Segments
(Million Yen)
-------------------------------------------------------------------------------------------------
Reportable Segments Other Total
*
------------------------- ------------------------------------------------- ------- ----------
Technology Ubiquitous Device Sub-Total
Solutions Solutions Solutions
------------------------ ----------- ----------- ----------- ---------- ------- ----------
Net Sales
External customers 2,017,907 734,865 378,461 3,131,233 31,832 3,163,065
Inter-segment 53,671 82,142 48,171 183,984 34,989 218,973
------------------------ ----------- ----------- ----------- ---------- ------- ----------
Total net sales 2,071,578 817,007 426,632 3,315,217 66,821 3,382,038
------------------------- ----------- ----------- ----------- ---------- ------- ----------
Operating Income
(Loss) 71,673 6,418 -13,240 64,851 -244 64,607
------------------------- ----------- ----------- ----------- ---------- ------- ----------
* The "Other" segment consists of operations not included in
reportable segments, such as Japan's Next-Generation Supercomputer
project, facility services and development of information systems
for group companies, and welfare benefits for group employees.
2.Reconciliation of Net Sales and Operating Income or Loss of
Reportable Segments with
those of the Consolidated Income Statements
(Million Yen)
----------------------------------------------------------
Reconciliation of Net Sales Amount
---------------------------------------------- ----------
Total of Reportable Segments 3,315,217
Net Sales of "Other" Category 66,821
Elimination of Intersegment Transactions -209,981
---------------------------------------------- ----------
Net Sales in Consolidated Income Statements 3,172,057
---------------------------------------------- ----------
(Million Yen)
----------------------------------------------------------
Reconciliation of Operating Income (Loss) Amount
---------------------------------------------- ----------
Total of Reportable Segments 64,851
Operating Income of "Other" Category -244
Corporate Expenses * -54,654
Elimination of Intersegment Transactions 296
---------------------------------------------- ----------
Operating Income in Consolidated Income
Statements 10,249
---------------------------------------------- ----------
* Corporate Expenses mainly consist of strategic expenses such
as basic research and development expenses
which are not attributable to the reportable segments and group
management shared expenses incurred by Fujitsu.
IV.Third Quarter of Fiscal 2012 (October 1, 2012 to December 31,
2012)
1.Amounts of Net Sales, Profit or Loss by Reportable
Segments
(Million Yen)
----------------------------------------------------------------------------------------------------
Reportable Segments Other Total
*
---------------------------- ------------------------------------------------- ------- ----------
Technology Ubiquitous Device Sub-Total
Solutions Solutions Solutions
--------------------------- ----------- ----------- ----------- ---------- ------- ----------
Net Sales
External customers 687,464 238,152 115,958 1,041,574 2,759 1,044,333
Inter-segment 13,171 28,356 13,546 55,073 11,612 66,685
--------------------------- ----------- ----------- ----------- ---------- ------- ----------
Total net sales 700,635 266,508 129,504 1,096,647 14,371 1,111,018
---------------------------- ----------- ----------- ----------- ---------- ------- ----------
Operating Income
(Loss) 23,591 -2,061 -9,323 12,207 -1,959 10,248
---------------------------- ----------- ----------- ----------- ---------- ------- ----------
* The "Other" segment consists of operations not included in
reportable segments, such as Japan's Next-Generation Supercomputer
project, facility services and development of information systems
for group companies, and welfare benefits for group employees.
2.Reconciliation of Net Sales and Operating Income or Loss of
Reportable Segments with
those of the Consolidated Income Statements
(Million Yen)
--------------------------------------------------------------------
Reconciliation of Net Sales Amount
---------------------------------------------- --------------------
Total of Reportable Segments 1,096,647
Net Sales of "Other" Category 14,371
Elimination of Intersegment Transactions -62,767
---------------------------------------------- --------------------
Net Sales in Consolidated Income Statements 1,048,251
----------------------------------------------
(Million Yen)
--------------------------------------------------------------------
Reconciliation of Operating Income (Loss) Amount
---------------------------------------------- --------------------
Total of Reportable Segments 12,207
Operating Income of "Other" Category -1,959
Corporate Expenses * -17,818
Elimination of Intersegment Transactions 3,447
---------------------------------------------- --------------------
Operating Income in Consolidated Income
Statements -4,123
---------------------------------------------- --------------------
* Corporate Expenses mainly consist of strategic expenses such
as basic research and development expenses
which are not attributable to the reportable segments and group
management shared expenses incurred by Fujitsu.
3.Impairment losses on fixed assets and information regarding
goodwill for each reporting segment
Impairment losses relating to the LSI device business and others
of 26,538 million yen were recorded in
business structure improvement expenses.
In addition, goodwill impairment losses of 24,895 million yen
and impairment losses on other intangible
assets of 3,154 million yen for the European subsidiary Fujitsu
Technology Solutions (Holding) B.V.
(hereafter FTS). These losses are not allocated to the business
segments because income figures
for the Fujitsu Group's business segments represent operating
income.
Goodwill amortization costs and the unamortized balance of
goodwill for FTS are included in figures for
income and assets of the Technology Solutions reporting
segment.
V. Third Quarter of Fiscal 2011 (October 1, 2011 to December 31,
2011)
1.Amounts of Net Sales, Profit or Loss by Reportable
Segments
(Million Yen)
-----------------------------------------------------------------------------------------------
Reportable Segments Other Total
*
----------------------- ------------------------------------------------- ------- ----------
Technology Ubiquitous Device Sub-Total
Solutions Solutions Solutions
---------------------- ----------- ----------- ----------- ---------- ------- ----------
Net Sales
External customers 672,961 274,200 123,587 1,070,748 5,947 1,076,695
Inter-segment 13,202 26,998 14,599 54,799 11,861 66,660
---------------------- ----------- ----------- ----------- ---------- ------- ----------
Total net sales 686,163 301,198 138,186 1,125,547 17,808 1,143,355
----------------------- ----------- ----------- ----------- ---------- ------- ----------
Operating Income
(Loss) 25,951 2,083 -8,402 19,632 855 20,487
----------------------- ----------- ----------- ----------- ---------- ------- ----------
* The "Other" segment consists of operations not included in
reportable segments, such as Japan's Next-Generation Supercomputer
project, facility services and development of information systems
for group companies, and welfare benefits for group employees.
2.Reconciliation of Net Sales and Operating Income or Loss of
Reportable Segments with
those of the Consolidated Income Statements
(Million Yen)
-------------------------------------------------------------
Reconciliation of Net Sales Amount
------------------------------------------- ----------------
Total of Reportable Segments 1,125,547
Net Sales of "Other" Category 17,808
Elimination of Intersegment Transactions -63,615
------------------------------------------- ----------------
Net Sales in Consolidated Income
Statements 1,079,740
------------------------------------------- ----------------
(Million Yen)
-------------------------------------------------------------
Reconciliation of Operating Income (Loss) Amount
------------------------------------------------ -----------
Total of Reportable Segments 19,632
Operating Income of "Other" Category 855
Corporate Expenses * -18,120
Elimination of Intersegment Transactions 831
------------------------------------------------ -----------
Operating Income in Consolidated Income
Statements 3,198
------------------------------------------------ -----------
* Corporate Expenses mainly consist of strategic expenses such
as basic research and development expenses
which are not attributable to the reportable segments and group
management shared expenses incurred by Fujitsu.
[Related Information]
Geographical Information
Net Sales
Nine Months of Fiscal 2012 (April 1, 2012 to December (Million
31, 2012) Yen)
--------------------------------------------------------------------- ---------
Japan Outside Japan Total
---------- ---------------------------------------------------- --------------
EMEA The Americas APAC/China Sub-total
---------- ---------- ------------- ----------- ------------ --- ---------
2,059,869 538,696 201,009 320,490 1,060,195 3,120,064
( 66.0%) ( 17.3%) ( 6.4%) ( 10.3%) ( 34.0%) ( 100.0%)
---------- ---------- ------------- ----------- ------------ --------------
Nine Months of Fiscal 2011 (April 1, 2011 (Million Yen)
to December 31, 2011)
------------------------------------------------------ ------------------------------
Japan Outside Japan Total
---------- ---------------------------------------------------------- --------------
EMEA The Americas APAC/China Sub-total
---------- ---------- ------------- --------------- -------------- --------------
2,066,855 594,213 213,082 297,907 1,105,202 3,172,057
( 65.2%) ( 18.7%) ( 6.7%) ( 9.4%) ( 34.8%) ( 100.0%)
---------- ---------- ------------- --------------- -------------- --------------
Third Quarter of Fiscal 2012 (October 1, 2012 to (Million Yen)
December 31, 2012)
----------------------------------------------------------------- -------------------
Japan Outside Japan Total
---------- ---------------------------------------------------------- --------------
EMEA The Americas APAC/China Sub-total
---------- ---------- ------------- --------------- -------------- --------------
681,329 199,137 65,422 102,363 366,922 1,048,251
( 65.0%) ( 19.0%) ( 6.2%) ( 9.8%) ( 35.0%) ( 100.0%)
---------- ---------- ------------- --------------- -------------- --------------
Third Quarter of Fiscal 2011 (October 1, 2011 to (Million Yen)
December 31, 2011)
-------------------------------------------------------------------- ----------------
Japan Outside Japan Total
---------- ---------------------------------------------------------- --------------
EMEA The Americas APAC/China Sub-total
---------- ---------- ------------- --------------- -------------- --------------
720,049 201,370 63,379 94,942 359,691 1,079,740
( 66.7%) ( 18.6%) ( 5.9%) ( 8.8%) ( 33.3%) ( 100.0%)
---------- ---------- ------------- --------------- -------------- --------------
Notes
1.Geographical segments are defined based on customer location.
2.Principal countries and regions comprising the segments other
than Japan:
(1) EMEA (Europe, Middle East, Africa): UK, Germany, Spain, Finland, Sweden
(2) The Americas: US, Canada
(3) APAC (Asia-Pacific) & China: Australia, Singapore, Korea, Taiwan, China
3.Figures in parentheses represent percentage of segment sales
to consolidated net sales.
8. Consolidated Per Share Data
The calculations basis for earnings and net loss per share
in the nine months and third quarter, as well as diluted earnings
per share is as follows:
Unit Nine Months Nine Months
FY2012 FY2011
4/1/12-12/31/12 4/1/11-12/31/11
--------------------------------------- ---------- ------------------- -------------------
Earnings (net loss) per share yen -43.55 0.70
--------------------------------------- -------------- ------------------- -------------------
{Calculation basis}
--------------------------------------- ---------- ------------------- -------------------
million
Net income (net loss) yen -90,127 1,440
--------------------------------------- -------------- ------------------- -------------------
Deduction from net income million - -
yen
--------------------------------------- ---------- ------------------- -------------------
Net income for common share million
(net loss) yen -90,127 1,440
--------------------------------------- -------------- ------------------- -------------------
Average number of common shares thousand
outstanding shares 2,069,339 2,069,574
--------------------------------------- -------------- ------------------- -------------------
2. Diluted earnings per share yen - 0.69
--------------------------------------- -------------- ------------------- -------------------
{Calculation basis}
--------------------------------------- ---------- ------------------- -------------------
Adjustment for net income million
(net loss) yen - -13
--------------------------------------- -------------- ------------------- -------------------
[Adjustment related to dilutive million [-] [-13]
securities issued by subsidiaries yen
and affiliates]
--------------------------------------- ---------- ------------------- -------------------
[Bonds payable and other million [-] [-]
costs] yen
--------------------------------------- ---------- ------------------- -------------------
Increase in number of common thousand - -
shares shares
--------------------------------------- ---------- ------------------- -------------------
Diluted earnings per share for the nine months of FY2012 are not
calculated due to loss per share,
although the company has potential ordinary share.
Unit 3Q FY2012 3Q FY2011
10/1/12-12/31/12 10/1/11-12/31/11
---------------------------- --------------------- ------------------- -------------------
Earnings (net loss)
per share yen -38.21 -2.09
---------------------------- --------------------- ------------------- -------------------
{Calculation basis}
---------------------------- --------------------- ------------------- -------------------
Net income million yen -79,068 -4,334
---------------------------- --------------------- ------------------- -------------------
Deduction from net million yen - -
income
---------------------------- --------------------- ------------------- -------------------
Net income for common
share million yen -79,068 -4,334
---------------------------- --------------------- ------------------- -------------------
Average number of common
shares outstanding thousand shares 2,069,327 2,069,494
---------------------------- --------------------- ------------------- -------------------
Diluted earnings per share for the third quarter of FY2012 are
not calculated due to loss per share, although the company has
potential ordinary share.
9. Major Subsequent Events
At an extraordinary Board of Directors meeting held on February
7, 2013, the initiatives to assess the structural reform in the LSI
device business and to improve management efficiency were
decided.
Regarding the LSI, Fujitsu decided on a policy to combine SoC
business with Panasonic Corporation at new established company of a
fabless business model after accepting investment from outside
investors. In addition, Fujitsu decides on a policy to transfer the
300mm line of Mie Plant to a new company including Taiwan
Semiconductor Manufacturing Company Limited and begins a detailed
study of that.
To improve management efficiency, Fujitsu decided to take
emergency measures including support for outplacement and reduce
the workforce outside group (approximately 5,000 employees) around
the world, transfer its employees related to the LSI business
reform (approximately 4,500 employees) and reform personnel-system
and its operation. Fujitsu will consult with labor union when
necessary.
The impact of these policies on consolidated financial
performance is still under assessment.
10. Notes to Consolidated Financial Statements
(1) Significant Changes to Subsidiaries in the Current Reporting
Period (changes to specified subsidiaries resulting from changes in
scope of consolidation)
There are none.
(2) Application of accounting procedures specific to preparation
of quarterly consolidated financial statements
There are none.
(3) 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 other factors: None
3. Changes in accounting estimates: None
4. Restatements: None
(4) Cautionary Note Regarding Assumptions of a Going Concern
There are none.
(5) Cautionary issues regarding the basis for preparation of
quarterly consolidated financial reports
(Quarterly consolidated profit and loss)
Nine Months Nine Months
FY2012 FY2011
4/1/12 - 12/31/12 4/1/11 - 12/31/11
---------------------- ----------------------------------- -------------------
1.Business Structure Restructuring expenses
Improvement Expenses of 57,089 million yen
were recorded relating
to structural reforms
in the LSI device business.
These include 33,146
million yen in losses
relating to transfer
of production facilities
and 23,943 million yen
in impairment losses
of standard logic LSI
devices production line.
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 the LSI assembly
and test facilities that
were transferred. (20,895
million yen) The other
is personnel-related
expenses and impairment
losses in accordance
with the transfer of
the LSI assembly and
testing facilities.(12,251million
yen)
Impairment losses 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. In addition,
restructuring expenses
for 2,049 million yen
were recorded for businesses
outside of Japan and
others.
The business structure
improvement expenses
include impairment losses
of 26,538 million yen
from the LSI device business
and other businesses.
---------------------- ----------------------------------- -------------------
2. Impairment Loss The impairment loss stems
from the European subsidiary
Fujitsu Technology Solutions
(Holding) B.V. and represents
goodwill impairment losses.
In light of continued
deterioration of economic
conditions in Europe
and intensified competition,
the business plan of
Fujitsu Technology Solutions
has been revised as investment
planned at acquisition
are less likely to be
collectible within 10
years, and impairment
losses were recorded
on the unamortized balance
of goodwill that was
recognized in accordance
with the acquisition
in April 2009.
The impairment losses
of 26,538 million yen
recorded in the LSI device
business and other businesses
are included in the business
structure improvement
expenses.
---------------------- ----------------------------------- -------------------
(Quarterly consolidated cash flow)
Nine Months Nine Months
FY2012 FY2011
4/1/12 - 12/31/12 4/1/11 - 12/31/11
---------------------- --------------------------- -------------------
1. Proceeds from This cash inflow primarily
Transfer of Business 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.
---------------------- --------------------------- -------------------
(6) Compliance with Quarterly Review Procedures
These materials fall outside the jurisdiction of the quarterly
review procedures of the Financial Instruments and Exchange Act.
Therefore, at the time of disclosure, a portion of the review has
not yet been completed. Upon completion of the review, a statutory
quarterly report will be submitted on February 14, 2013.
(7) Significant Changes in Shareholders' Equity
There are none.
(8) 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 "FY2012 Consolidated 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
To view the full announcement of the FY 2012 Third-Quarter
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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