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Fujitsu Ld. (FUJ)

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Thursday 07 February, 2013

Fujitsu Ld.

3rd Quarter Results

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

FY2012

10/1/12-

12/31/12

3Q

FY2011

10/1/11-

12/31/11

Change vs.
3Q FY 2011


 

 

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 Margin]

[ -0.4%] 

[ 0.3%]

[ -0.7%]



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

FY2012

4/1/12-

12/31/12

Nine Months   FY2011

4/1/11-

12/31/11

Change vs.

Nine Months FY2011

 

Change (%)

Constant

Currency


Change

(%)

Net Sales

3,120.0

3,172.0

-51.9

-1.6

-1

Operating Income

[Operating Income Margin]

3.5

    [ 0.1%]

10.2

[ 0.3%]

-6.6

[ -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

Expenses

Business Structure

Improvement Expenses

  59.1

Restructuring expenses related 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

FY2012

Change 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

FY2012

Change 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

FY2012

Change 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

FY2012

Change vs. 3Q

FY2011

Net Sales

266.5

-11.5 %


Japan

200.3

-14.3 %


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

FY2012

Change vs. 3Q

FY2011

Net Sales

129.5

-6.3 %


Japan

73.0

-11.1 %


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

FY2012

Change vs.

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

FY2012

Change vs.

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

FY2012

Change vs.

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

FY2012

Change 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

FY2012

Change 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 Quarter

FY2012

Change vs. 3Q
FY2011


9 Months
FY2012

Change vs. 9 Months
FY2011

Japan

13.9

[1.8%]

-5.5

[-0.6%]


76.2

[3.2%]

8.3

[0.4%]

Outside

Japan

2.4

[0.7%]

0.1

[0.1%]


-12.9

  [-1.2%]

-11.9

[ -1.1%]


EMEA

0.9

[0.5%]

-1.3 

[-0.6%]


-15.1

[-2.7%]

-10.3

[-1.9%]


The Americas

-1.2

[-2.0%]

-0.3

[-0.6%]


-3.8

[-2.0%]

-3.9

[-2.1%]


APAC &

China

2.7

[2.5%]

1.8

[1.5%]


6.0

[1.8%]

2.3

[0.6%]

Note: Numbers inside brackets indicate operating income margin.

 

  

5. Financial Condition

 

[Assets, Liabilities and Net Assets]                                       (Billion Yen)


Third Quarter

FY 2012              (at Dec. 31, 2012)

Year end

FY 2011

 (at March 31, 2012)

Change

Third Quarter

FY 2011

 (at Dec. 31, 2011)


Assets

1,700.6

1,701.7

-1.1

1,701.9


  Current assets


(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

and Current portion of bonds payable)

545.8

289.4

 

617.7

128.9

 

-71.9

160.5

 

558.7

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)

    (Accrued retirement benefits)

257.2

185.3

252.2

180.4

5.0

4.8

252.5

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

FY 2012

(4/1/12~12/31/12)

Nine Months

FY 2011

(4/1/11~12/31/11)

 

Change

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

    Income tax paid

-83.2

-18.1

-24.1

-31.1

-59.1

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

(December 31, 2012)

FY2011

  (March 31, 2012)

Change


3Q FY2011

(December 31, 2011)

Cash and cash equivalents at end of period

Interest-bearing loans

Net interest-bearing loans

Owners' equity

292.9

 

546.7

253.8

739.3

266.6

 

381.1

114.4

841.0

26.2

 

165.5

139.3

-101.6


319.9

 

584.7

264.8

779.7

 

D/E ratio (times)

Net D/E ratio (times)

Shareholders' equity ratio Owners' equity ratio

0.74

0.34

28.2 %

25.6 %

0.45

0.14

31.4 %

28.6 %

0.29

0.20

-3.2 %

 -3.0 %


0.75

0.34

30.3 %

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

Full-Year

Results


October

 Forecast

FY2012

Full-Year

Forecast

Change vs. October

Forecast


Change vs.

FY2011





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 Margin]

[2.4%]


[2.3%]

[2.3%]

[-%]



[-0.1%]


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

and

Expense

Business Structure

Improvement Expenses

  -142.0

- Restructuring expenses related to structural reforms in the LSI 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 Half

End of Fiscal Year

Annual Basis

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 Solutions

Ubiquitous
Solutions

Device
Solutions

Sub-Total

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

 

62,690

 

-5,111

 

-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 Solutions

Ubiquitous
Solutions

Device
Solutions

Sub-Total

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 Solutions

Ubiquitous
Solutions

Device
Solutions

Sub-Total

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 Solutions

Ubiquitous
Solutions

Device
Solutions

Sub-Total

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 31, 2012)                        

(Million Yen)

Japan

Outside Japan

Total

EMEA

The Americas

APAC/China

Sub-total

2,059,869

(     66.0%)

538,696

(     17.3%)

201,009

(      6.4%)

320,490

(     10.3%)

1,060,195

(     34.0%)

3,120,064

(    100.0%)

 

Nine Months of Fiscal 2011 (April 1, 2011 to December 31, 2011)                        

(Million Yen)

Japan

Outside Japan

Total

EMEA

The Americas

APAC/China

Sub-total

2,066,855

(     65.2%)

594,213

(     18.7%)

213,082

(     6.7%)

297,907

(     9.4%)

1,105,202

(     34.8%)

3,172,057

(     100.0%)


Third Quarter of Fiscal 2012 (October 1, 2012 to December 31, 2012)                        

(Million Yen)

Japan

Outside Japan

Total

EMEA

The Americas

APAC/China

Sub-total

681,329

(     65.0%)

199,137

(     19.0%)

65,422

(      6.2%)

102,363

(     9.8%)

366,922

(     35.0%)

1,048,251

(    100.0%)


Third Quarter of Fiscal 2011 (October 1, 2011 to December 31, 2011)                        

(Million Yen)

Japan

Outside Japan

Total

EMEA

The Americas

APAC/China

Sub-total

720,049

(     66.7%)

201,370

(     18.6%)

63,379

(     5.9%)

94,942

(     8.8%)

359,691

(     33.3%)

1,079,740

(     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
FY2012
4/1/12-12/31/12

Nine Months
FY2011
4/1/11-12/31/11


 

Earnings (net loss) per share

yen

-43.55

0.70


 

{Calculation basis}




 

   Net income (net loss)

million yen

-90,127

1,440

 

   Deduction from net income

million yen

-

-

 

   Net income for common share (net loss)

million yen

-90,127

1,440

 

Average number of common shares outstanding

thousand shares

2,069,339

2,069,574

 

2. Diluted earnings per share

yen

-

0.69

 

 {Calculation basis}




 

   Adjustment for net income (net loss)

million yen

-

-13

 

   [Adjustment related to dilutive securities issued by subsidiaries and affiliates]

million yen

[-]

[-13]

 

  [Bonds payable and other costs]

million yen

[-]

[-]

 

   Increase in number of common shares

thousand 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
10/1/12-12/31/12

3Q FY2011
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 income

million yen

-

-

  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

FY2012

4/1/12 - 12/31/12

Nine Months

FY2011

4/1/11 - 12/31/11

1.Business Structure Improvement Expenses

Restructuring 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

FY2012

4/1/12 - 12/31/12

Nine Months

FY2011

4/1/11 - 12/31/11

1. Proceeds from Transfer of Business

This cash inflow 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.

                     

 

(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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