Fujitsu Reports FY 2003 Financial Results Operating Profit Up Nearly 50% on Higher Sales, Continued Efficiency Gains

Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales of 4.77 trillion yen (approximately US$45.0 billion*) for fiscal year 2003 (April 1, 2003 - March 31, 2004), an increase of 3.2% over the previous fiscal year. The higher sales, together with company-wide cost-cutting efforts, efficiency gains and significantly improved profitability in its Electronic Devices and Platforms business segments, contributed to a jump in consolidated operating income to 150.3 billion yen (US$1.4 billion), up 49.7% over the previous year.

Consolidated net income was 49.7 billion yen (US$469 million), a major turnaround from the 122.1 billion yen net loss recorded in FY 2002. A number of extraordinary items affected these earnings. With the aim of building a firm foundation for future growth and profitability, Fujitsu carried out further restructuring of its overseas operations, particularly in North America, as well as measures to improve its domestic Software & Services business management. The company recorded extraordinary gains in conjunction with the transfer of the substitutional portion of its employees' pension plan to the Japanese government and by selling off marketable securities and other fixed assets, more than offsetting the extraordinary charges.

"Despite a tough IT business environment, we were able to meet our aggressive profit targets and solidify our recovery in fiscal 2003, with all three of our main business segments firmly in the black," said Fujitsu Limited president Hiroaki Kurokawa. "We intend to build on this momentum by intensifying our focus on customer needs, quality, timeliness, and management speed. I'm confident that these efforts, together with further strengthening our global organization to provide customers around the world with top-quality one-stop solutions, will put us in an excellent position to achieve further gains in growth and profitability."

Business Segment Results

Buoyant global demand for digital electronics products helped drive an 18.7% increase in consolidated sales in Fujitsu's Electronic Devices segment, to 734.3 billion yen (US$6.9 billion). This included a 15.6% rise in semiconductor sales, with particularly strong sales of leading-edge logic devices for digital AV and automotive applications, and a 22.7% jump in sales of other products such as plasma display panels. Operating income in this segment rebounded from a loss of 31.6 billion yen last fiscal year to a profit of 27.5 billion yen (US$260 million).

In Software & Services, sales rose 3.4% to 2.09 trillion yen (US$19.8 billion), led by strong demand for outsourcing and other IT services and solutions from the manufacturing, public and healthcare sectors in Japan. Overseas, too, Fujitsu Services was awarded a series of large government outsourcing contracts in Europe. However, operating income in the segment declined by 21.4% to 138.8 billion yen (US$1.3 billion), due to intensified price competition and deterioration in the profitability of certain domestic projects.

Sales in the Platforms segment were roughly flat at 1.61 trillion yen (US$15.2 billion). In Japan, higher sales of 3G mobile phones and systems were offset by declines in major server contracts and transmission systems sales. Overseas, sales of UNIX servers and transmission systems increased, particularly in the second half. Hard disk drive sales were also robust. Despite intensifying pricing pressures and flat sales for the segment overall, continued cost cutting efforts, efficiency gains, and strong sales of mobile hard disk drives and other products resulted in a sharp increase in operating income, from roughly break-even last year to a profit of 29.2 billion yen (US$276 million).

FY 2004 Projections

Looking forward, Fujitsu anticipates that robust demand for digital electronics products will continue, and that the nascent pick-up in corporate IT spending toward the end of fiscal 2003 will steadily gain momentum. In addition to further strengthening its business structure to capitalize on opportunities for future growth, the company will continue to pursue reforms to increase operational efficiency, reduce costs and improve its financial condition. In light of these and other factors, the company projects the following consolidated financial results for fiscal 2004:

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