Summary:

1. Significant accounting policies

2. U.S. dollar amounts

3. Marketable securities

4. Inventories

5. Investments in affiliates

6. Other assets

7. Short-term borrowings and long-term debt

8. Retirement and severance benefits

9. Income taxes

10. Shareholders' equity

11. Supplementary information to the consolidated balance sheets

12. Supplementary information to the consolidated statements of operations

13. Commitments and contingent liabilities

14. Segment information

15. Subsequent events

1. Significant accounting policies

The accompanying consolidated financial statements of Fujitsu Limited (the"Company") and its consolidated subsidiaries (together, the "Group") have beenprepared in accordance with accounting principles and practices generallyaccepted in Japan, and the regulations under the Securities and Exchange Law ofJapan. The accounting principles and practices adopted by the foreignconsolidated subsidiaries in their respective countries basically conform tothose adopted by the Company. For the purpose of presenting the accompanyingconsolidated financial statements, certain items have been reclassified for theconvenience of readers outside Japan.
The accounting principles and practices adopted by the Group are in conformitywith International Accounting Standards ("IAS") except for certain differenceswhich are set forth in the relevant notes on accounting policies.

(b) Principles of consolidation

The consolidated financial statements include the accounts of the Company and,with minor exceptions, those of its majority-owned subsidiaries, whether directlyor indirectly controlled. All intercompany accounts and transactions have beeneliminated in consolidation.
Investments in affiliates owned 20% to 50%, with minor exceptions, have beenstated at cost plus the equity in their respective undistributed earnings(losses) and reserves since acquisition. Net income or loss includes the equityin the current net earnings (losses) of such companies, after the elimination ofunrealized intercompany profit.
The difference between the cost and the underlying equity in the net assets ofsubsidiaries and affiliates accounted for on an equity basis is allocated toidentifiable assets based on their fair value at the dates of acquisition. Theunassigned residual value is recognized as goodwill, and is being amortized on astraight-line basis over periods not exceeding 20 years.

(c) Cash equivalents

For the purpose of the statement of cash flows, the Company considers allshort-term, highly liquid instruments with a maturity of three months or less tobe cash equivalents.

(d) Translation of foreign currency accounts

Current receivables and payables denominated in foreign currencies are translatedinto Japanese yen at the exchange rates in effect at the respective balance sheetdates. Noncurrent monetary items denominated in foreign currencies are translatedinto Japanese yen at historical exchange rates. Had noncurrent receivables andpayables been translated at the exchange rates in effect at the balance sheetdates pursuant to IAS No. 21, the differences would not have beensignificant.
Asset and liability accounts of foreign consolidated subsidiaries are translatedinto Japanese yen at the applicable fiscal year-end rates. Income and expenseaccounts are translated at the average rate during the year.

(e) Revenue recognition

Revenues from sales of communications products and computer systems are generallyrecognized upon acceptance by customers, while revenues from sales of personalcomputers and other equipment and electronic devices are recognized when theproducts are shipped.

(f) Marketable securities

Marketable securities included in short-term investments, and investments andlong-term loans are stated at the lower of cost or market, cost being determinedby the moving average method.

(g) Allowance for doubtful accounts

The allowance for doubtful accounts is provided at an amount that is deemedsufficient to cover estimated future losses.

(h) Inventories

Finished goods are stated at cost not in excess of their market value. Cost isdetermined by the actual cost method, the moving average method and the first-in,first-out method ("FIFO").
Work in process is stated at actual cost and cost determined by FIFO.
Raw materials are stated at cost not in excess of their market value. Cost isdetermined by the moving average method, the most recent purchase price methodand FIFO.
IAS No. 2 requires that inventories be valued at the lower of historical cost or net realizable value. Had IAS No. 2 been applied, thedifference in the aggregate value of the inventories would not have beensignificant.

(i) Property, plant and equipment and depreciation

Property, plant and equipment, including renewals and additions, are carried atcost.
Depreciation is computed by the declining-balance method at ratesbased on the estimated useful lives of the respective assets, which varyaccording to their general classification, type of construction andfunction.
Maintenance and repairs, including minor renewals and improvements, are chargedto income as incurred.

(j) Retirement and severance benefits

Employees who terminate their service with the Group are generally entitled toannuities or lump-sum severance payments based on their current basic rates ofpay and length of service.
The Company and its domestic consolidated subsidiaries have contributory definedbenefit plans with insurance companies, trust banks and investment managementcompanies to supplement the public welfare pension plan. The plans entitleemployees upon retirement to receive either a lump-sum payment or annuity payments for life, or a combination of both.
Most foreign consolidated subsidiaries have defined benefit plans and/or definedcontribution plans covering substantially all employees.
The cost of benefits for the annuities and lump-sum severance payments iscurrently funded or accrued.

(k) Provision for loss on repurchase of computers

Certain computers manufactured by the Group are sold to Japan Electronic ComputerCompany Limited ("JECC") and other leasing companies and financial institutionsfor leasing to the ultimate users under contracts which require that the Grouprepurchase the computers if they are returned by the users after a certainperiod. Based on past experience, an estimated amount for the losses arising fromsuch repurchases is provided at the point of sale and is charged to income.

(l) Income taxes

The Company adopts the liability method of tax effect accounting to recognizethe effect of all temporary differences in the recognition of tax basis assetsand liabilities and their financial reporting amounts.

(m) Net income or loss per share

Net income or loss per share is computed based on the weighted average number ofshares of common stock outstanding during the respective years.

2. U.S. dollar amounts

3. Marketable securities

4. Inventories

5. Investments in affiliates

		Yen (millions)		U.S. dollars (thousands)
		1995	1996	1996
Current assets		702,828	762,594	7,194,283
Other assets, including property, plant and equipment, net		508,703	525,917	4,961,481
		1,211,531	1,288,511	12,155,764
Current liabilities		382,744	429,476	4,051,660
Long-term liabilities		126,916	124,373	1,173,330
Net assets		701,871	734,662	6,930,774
	Yen (millions)			U.S. dollars (thousands)
	1994	1995	1996	1996
Net sales	695,666	796,423	859,826	8,111,566
Net income (loss)	(52,241)	32,827	41,436	390,906
Of the affiliates which are accounted for on an equity basis, the carrying and market values of the shares of the publicly listed companies at March 31, 1995 and 1996 were as follows:
		Yen (millions)		U.S. dollars (thousands)
		1995	1996	1996
Carrying value		279,620	285,536	2,693,736
Market value		481,578	587,235	5,539,953

At March 31, 1995 and 1996, the amount of 19,373 million yen ($182,764 thousand)representing the Company's 29.49% investment in JECC was included in investmentsand long-term loans - other. The Company does not regard JECC as an affiliate asit is unable to exercise significant influence over JECC's affairs. JECC'sprincipal business is the leasing of computers and peripheral computer equipmentwhich it purchases from its seven shareholders. At March 31, 1996, JECC's issuedshare capital was 65,700 million yen ($619,811 thousand) and its net sales for theyear then ended amounted to 315,536 million yen ($2,976,755 thousand).

6. Other assets

7. Short-term borrowings and long-term debt

	Yen (millions)		U.S. dollars (thousands)
	1995	1996	1996
Loans, principally from banks, at interest rates ranging from 2.20% to 9.90% at March 31, 1995, and from 0.75% to 10.41% at March 31, 1996:
Secured	2,675	917	8,651
Unsecured	405,981	462,267	4,361,010
Commercial paper at interest rates ranging from 2.22% to 6.37%
at March 31, 1995, and from 0.65% to 6.25% at March 31, 1996	42,020	178,279	1,681,877
	450,676	641,463	6,051,538
Long-term debt at March 31, 1995 and 1996 consisted of:
	Yen (millions)		U.S. dollars (thousands)
	1995	1996	1996
Loans, principally from banks and insurance companies, due from 1995 to 2025 at interest rates ranging from 0.76% to 7.61% at March 31, 1995 and 1996:
Secured	19,140	24,704	233,057
Unsecured	253,026	224,851	2,121,236
Bonds and notes issued by the Company:
5 1/2 % U.S. dollar convertible bonds due 1996	48	45	424
3.0 % U.S. dollar convertible bonds due 1999	737	344	3,245
1.3 % Unsecured convertible bonds due 1998	39,782	39,782	375,302
1.4 % Unsecured convertible bonds due 2004	39,649	39,649	374,047
4.3 % Unsecured convertible bonds due 1995	34,998	-	-
1.9 % Unsecured convertible bonds due 2002	39,881	39,877	376,198
1.95 % Unsecured convertible bonds due 2003	40,000	39,969	377,066
2.0 % Unsecured convertible bonds due 2004	19,998	19,950	188,207
3.0 % Swiss franc notes 1998 with warrants	29,579	29,579	279,047
3 1/8 % U.S. dollar bonds 2000 with warrants	-	50,341	474,915
4.1 % Bonds 1999 with warrants	35,000	35,000	330,189
7 3/8 % Bonds 1997	30,000	30,000	283,019
7.0 % Bonds 1998	30,000	30,000	283,019
6.3 % Bonds 1997	50,000	50,000	471,698
3 1/4 % Bonds 1997	30,000	30,000	283,019
3 3/4 % Bonds 1999	30,000	30,000	283,019
3.95 % Bonds 1997	30,000	30,000	283,019
3.15 % Bonds 1997	20,000	20,000	188,679
3.6 % Bonds 1998	20,000	20,000	188,679
2.3 % Bonds 2001	-	30,000	283,019
2.6 % Bonds 2002	-	30,000	283,019
Bonds and notes issued by consolidated subsidiaries:
Unsecured (0.8% - 9.25%, due 1996 - 2002)	42,506	46,888	442,340
Less amounts due within one year	120,678	116,128	1,095,547
	713,666	774,851	7,309,915
Assets pledged as collateral for bank loans and long-term debt at March 31, 1995 and 1996 are summarized as follows:
	Yen (millions)		U.S. dollars (thousands)
	1995	1996	1996
Investments - noncurrent	990	98	925
Property, plant and equipment, net	34,729	35,835	338,066
	35,719	35,933	338,991

As is customary in Japan, substantially all loans from banks (includingshort-term loans) are made under general agreements which provide that, at therequest of the banks, the borrower is required to provide collateral orguarantors (or additional collateral or guarantors, as appropriate) with respectto such loans, and that all assets pledged as collateral under such agreementswill be applicable to all present and future indebtedness to the banks concerned.These general agreements further provide that the banks have the right, as theindebtedness matures or becomes due prematurely by default, to offset thedeposits at the banks against the indebtedness due to the banks.
The current conversion prices of the 51/2%, 3%, 1.3%, 1.4%, 1.9%, 1.95% and 2.0%convertible bonds issued by the Company are 499.70 yen, 1,093.90 yen, 1,751.50 yen,1,751.50 yen, 998.00 yen, 998.00 yen and 998.00 yen per share, respectively, and the currentexercise prices of the warrants issued with the 3.0% notes and the 31/8% and 4.1%bonds are 1,144.90 yen, 1,220.00 yen and 1,144.90 yen per share, respectively. Theconversion and exercise prices referred to above are subject to adjustment incertain circumstances including stock splits or free share distributions ofcommon stock. At March 31, 1996, approximately 252 million shares of common stockwere reserved for the conversion or exercise of all outstanding convertible bondsand warrants.
Certain outstanding convertible bonds and notes can be repurchased at any timeand may be redeemed at the option of the Company, in whole or in part, at pricesranging from 102% to 100% of their principal amounts.
The aggregate annual maturities of long-term debt subsequent to March 31, 1996are summarized as follows:

8. Retirement and severance benefits

9. Income taxes

10. Shareholders' equity

The issuance of shares upon conversion of convertible debt and the exercise ofstock purchase warrants are accounted for by crediting an amount equal to atleast 50% of the amount of the issue to the common stock account and the balanceto the capital surplus account in accordance with certain provisions of theCommercial Code of Japan which became effective October 1, 1982.
Regarding the issuance of shares upon conversion of convertible debt beforeOctober 1, 1982, in accordance with the provisions of the Commercial Code at thattime, an amount equal to the par value of the shares was credited to the commonstock account and the balance of the amount issued to the capital surplusaccount.
The Commercial Code of Japan provides that an amount equal to at least 10% ofcash dividends and bonuses to directors and statutory auditors paid by a companyand its domestic subsidiaries from retained earnings be appropriated to the legalreserve until the reserve equals 25% of common stock.
The appropriations of retained earnings for the year ended March 31, 1996, whichinclude year-end dividends of 9,206 million yen ($86,849 thousand) were recorded onthe Company's statutory books of account after approval at the generalshareholders' meeting held on June 27, 1996, and will be included in theconsolidated balance sheet in the following year.

11. Supplementary information to the consolidated balance sheets

12. Supplementary information to the consolidated statements of operations

Restructuring charges related mainly to the reorganization of manufacturing andoffice facilities and the disposal of assets throughout the Group in order tostreamline its business structure. The amount of 31,618 million yen ($298,283thousand) for the year ended March 31, 1996 also included an exceptional chargeincurred to facilitate the re-engineering of ICL.
Losses relating to the recovery and repair of damages from the earthquake whichdevastated Kobe in January 1995 amounted to 4,501 million yen , and were included inother, net for the year ended March 31, 1995.

13. Commitments and contingent liabilities

14. Segment information

15. Subsequent events