Consolidated Financial Highlights

Five-Year Summary
Financial Review:: Results of operation; Financial Position; Financial Overview of the ICL Group
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report

Five-Year Summary

	Yen
	(millions)					U.S. dollars
	(except per share data and number of employees)					(thousands)

Years ended March 31	1992	1993	1994	1995	1996	1996

Net sales	3,441,947	3,461,928	3,139,330	3,257,706	3,761,966	35,490,245
Operating income	136,849	64,169	103,357	165,875	205,882	1,942,283
Income (loss) before income taxes	41,541	(9,758)	26,227	85,371	127,686	1,204,585
Net income (loss)	12,210	(32,602)	(37,672)	45,020	63,113	595,406

Total assets	3,991,543	3,775,831	3,594,743	3,713,816	4,324,490	40,797,075
Shareholders' equity	1,165,053	1,101,209	1,057,907	1,100,315	1,149,399	10,843,387

Amounts per share of common stock:
Net income (loss)	6.7	(18.0)	(20.8)	24.8	34.5	0.325
Cash dividends	10.0	8.0	8.0	10.0	10.0	0.094
Shareholders' equity	642.7	607.2	582.4	605.6	624.2	5.889

R&D expenditure	391,885	386,890	329,916	323,900	346,389	3,267,821
Capital expenditure	350,692	184,639	184,634	234,841	403,839	3,809,802

Number of employees	155,779	161,974	163,990	164,364	165,056

Net sales by main product:
Computers & information
processing systems	2,510,731	2,506,193	2,140,548	2,169,753	2,456,939	23,178,670
Communications systems	444,901	473,428	487,942	500,664	624,705	5,893,443
Electronic devices	348,519	350,971	394,552	460,340	538,814	5,083,151
Other operations	137,796	131,336	116,288	126,949	141,508	1,334,981

Total	3,441,947	3,461,928	3,139,330	3,257,706	3,761,966	*35,490,245*

Net sales by customers' geographic location:
Japan	2,415,151	2,312,524	2,213,694	2,283,353	2,645,077	24,953,556
Asia & Oceania	129,799	169,140	184,766	201,295	218,002	2,056,623
The Americas	333,226	353,753	261,273	280,114	310,416	2,928,453
Europe	543,653	604,603	459,170	470,985	564,537	5,325,821
Africa & the Middle East	20,118	21,908	20,427	21,959	23,934	225,792

Total	3,441,947	3,461,928	3,139,330	3,257,706	3,761,966	*35,490,245*

Notes:
1. See Note 1 of Notes to Consolidated Financial Statements with respect to the calculation of net income (loss) per share.
2. The U.S. dollar amounts above have been translated from yen, for convenience only, at the rate of 106 Yen = US$1.

Financial Review

Results of operation

Net sales for the fiscal year ended March 31, 1996 grew 15% over the previous year to 3,761 billion yen ($ 35,490 million). Each of the Group's major product areas showed double-digit sales increases, due to the strong demand for multimedia network systems and personal computers, as well as for related memory and logic semiconductor products. Domestic sales for fiscal 1995 were up 16% to 2,645 billion yen ($ 24,953 million) and overseas sales increased 15% to 1,116 billion yen ($ 10,536 million).
Sales of computers and information processing systems increased by 13% to 2,456 billion yen ($ 23,178 million). Sales of personal computers increased primarily as a result of the strong demand for the FMV Series in Japan. Sales of the DS/90 7000 Series of business servers and S-Family of workstations also contributed to the increased sales as a result of the expansion of the network computing and client-server systems. The services and software business, which includes outsourcing and middleware products, also expanded. Overseas, OEM sales showed steady growth, especially for small magnetic disk drives to overseas customers.
Sales of communications systems increased by 25% to 624 billion yen ($ 5,893 million). In Japan, proliferation of cellular phones together with increased use of high-speed lines helped boost sales of digital switching and transmission systems. Cellular phone shipments recorded particularly strong growth. Overseas, Fujitsu enjoyed strong growth in sales of SONET optical transmission systems and ATM switching systems to support growing multimedia networks in the U.S.
Sales of electronic devices increased by 17% to 538 billion yen ($ 5,083 million). Rising demand for personal computers and cellular phones helped spur growth in the Group's memory ICs, 4-Mbit and 16-Mbit DRAMs and flash memory products. The year also saw growth in the sales of logic ICs, particularly microcontrollers for high-performance information equipment and home electronic appliances, and ASICs for multimedia applications.

Gross margin rose 11% to 1,266 billion yen ($ 11,952 million). Gross margin percentage to net sales decreased 1% to 34% primarily as a result of the competitive pricing pressure on computers and peripherals, particularly personal computers. Recognizing these competitive conditions and the need to lower manufacturing costs, the Group continued to streamline its management overall, including reorganization of its production systems and expansion of its overseas parts procurement.

Selling, general and administrative expenses increased 9% to 1,061 billion yen ($ 10,010 million). The percentage to sales decreased 2% to 28%. Research and development expenditure increased 7% to 346 billion yen ($ 3,267 million). The Group believes that research and development activities are critical to its medium-term and long-term growth in the IT industry.

Interest and dividend income decreased by 2.8 billion yen ($ 27 million) and interest charges decreased by 6.8 billion yen ($ 64 million), primarily due to lower interest rates in Japan. The balance of interest and dividend income less interest expenses resulted in net interest payments of 37.6 billion yen ($ 354 million), an improvement of 4.0 billion yen ($ 37 million) over the previous year. Other net expenses were up by 4% to 40.5 billion yen ($ 382 million), primarily as a result of the restructuring charge taken by ICL. For further information on ICL, please see "Financial Overview of the ICL Group" below.

As a result of the aforementioned factors, income before income taxes increased 50% to 127 billion yen ($ 1,204 million), giving an increase in net income of 40% to 63 billion yen ($ 595 million). Net income per share increased by 39% to 34.5 yen ($ 0.325).

Financial position

Total assets at March 31, 1996 were up 16% to 4,324 billion yen ($ 40,797 million). The increase in receivables, trade and inventories due to the increase in sales is the principal factor in the growth. Cash and cash equivalents increased 12% to 433 billion yen ($ 4,093 million). Current liabilities increased 31% to 1,955 billion yen ($ 18,452 million), and long term liabilities increased 9% to 1,061 billion yen ($ 10,012 million). The Company issued 60 billion yen ($ 56,603 million) bonds and 600 million U.S. dollar bonds with warrants in fiscal 1995. Shareholders' equity at March 31, 1996 was up 4% to 1,149 billion yen ($ 10,843 million). Shareholders' equity per share increased by 3% to 624.2 yen ($ 5.889).

Capital expenditure during the year increased 72% to 403 billion yen ($ 3,809 million) which included 234 billion yen ($ 2,208 million) for expanding electronic devices facilities and 120 billion yen ($ 1,136 million) for computers and information processing systems facilities. In the fiscal year ending March 31, 1997, the Group intends to maintain a steady capital expenditure that includes investment in memory IC products facilities in Japan, in other Asian countries and in the U.S., and small magnetic disk drive facilities in Asian countries.

Financial Overview of the ICL Group

ICL's sales in the fiscal year ended December 31, 1995 were 3,114 million pounds, a 17% increase over the previous year. 2.6 billion pounds sales came from the systems and services business. These comprise specialist businesses in retail, financial services and systems integration, together with further businesses with strong positions in the multivendor service, U.K. outsourcing and multivendor product supply sectors. ICL's volume products business also grew. Its unit shipments increased 50% for the year.
Despite the increased sales, the decline in gross margins experienced in recent years continued in 1995. Gross margin fell by 50 million pounds to 632 million pounds. In 1995, ICL has taken a series of measures designed to accelerate its profit recovery and to concentrate on its systems and services businesses. An exceptional charge of 152 million pounds in respect of rationalization, vacant space and spare obsolescence was taken to cover the restructuring. The decline in gross margins and the restructuring charge resulted in a loss before tax of 188 million pounds.
ICL has continued to invest in R&D, particularly in the high skill areas of software, systems engineering and multimedia. ICL and Fujitsu continue to seek opportunities to expand their businesses such as TeamWARE productivity tools.

ICL Group (Summary of Performance)
	Stg. Pounds (millions)

Years ended December 31	1994	1995

Net sales	2,655	3,114
Income (loss) before income taxes	28	(188)
Net income (loss) for the year	17	(194)

R&D expenditure	173	142

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