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The accompanying
consolidated financial statements of Fujitsu Limited (the "Company") and its
consolidated subsidiaries (together, the "Group") have been prepared in
accordance with accounting principles and practices generally accepted in Japan,
and the regulations under the Securities and Exchange Law of Japan. The
accounting principles and practices adopted by the foreign consolidated
subsidiaries in their respective countries basically conform to those adopted by
the Company. In presenting the accompanying consolidated financial statements,
certain items have been reclassified for the convenience of readers outside
Japan.
The accounting principles and practices adopted by the Group are in conformity
with International Accounting Standards ("IAS") except for certain differences
which 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 directly or indirectly controlled. All
intercompany accounts and transactions have been eliminated in consolidation.
Investments in affiliates owned 20% to 50%, with minor exceptions, have been
stated at cost plus the equity in their respective undistributed earnings
(losses) and reserves since acquisition. Net income or loss includes the equity
in the current net earnings (losses) of such companies, after the elimination of
unrealized intercompany profit.
The difference between the cost and the underlying equity in the net assets of
subsidiaries and affiliates accounted for on an equity basis is allocated to
identifiable assets based on their fair value at the dates of acquisition. The
unassigned residual value is recognized as goodwill, and is being amortized on a
straight-line basis over periods not exceeding 20 years.
(c) Cash equivalents
For the purpose of the statement of cash flows, the
Company considers all short-term, highly liquid instruments with a maturity of
three months or less to be cash equivalents.
(d) Translation of foreign currency accounts
Current receivables and payables
denominated in foreign currencies are translated into Japanese yen at the
exchange rates in effect at the respective balance sheet dates. Noncurrent
monetary items denominated in foreign currencies are translated into Japanese yen
at historical exchange rates. Had noncurrent receivables and payables been
translated at the exchange rates in effect at the balance sheet dates pursuant to
IAS No. 21, the differences would not have been significant.
Asset and liability accounts of the foreign consolidated subsidiaries are
translated into Japanese yen at the applicable fiscal year-end rates. Income and
expense accounts are translated at the average rate during the year. The
resulting translation adjustments are reflected in assets in conformity with
accounting principles generally accepted in Japan.
(e) Revenue recognition
Revenues from sales of communications products and computer systems are generally
recognized upon acceptance by the customers, while revenues from sales of personal
computers and other equipment and electronic devices are recognized when the
products are shipped.
(f) Marketable securities
Marketable securities included in short-term investments, and investments and
long-term loans are stated at the lower of cost or market, cost being determined
by the moving average method.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount that is deemed
sufficient to cover estimated future losses.
(h) Inventories
Finished goods are stated at cost not in excess of their market value. Cost is
determined 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 is
determined by the moving average method, the most recent purchase price method
and 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, the
difference in the aggregate value of the inventories would not have been
significant.
(i) Property, plant and equipment and depreciation
Property, plant and equipment, including renewals and additions, are carried at
cost.
Depreciation is computed by the declining-balance method at rates
based on the estimated useful lives of the respective assets, which vary
according to their general classification, type of construction and
function.
Maintenance and repairs, including minor renewals and improvements, are charged
to income as incurred.
(j) Retirement and severance benefits
Employees who terminate their service with the Group are generally entitled to
annuities or lump-sum severance payments based on their current basic rates of
pay and length of service.
The Company and its domestic consolidated subsidiaries have contributory defined
benefit plans with insurance companies, trust banks and investment management
companies to supplement the public welfare pension plan. The plans entitle
employees 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 defined
contribution plans covering substantially all employees.
The cost of benefits for the annuities and lump-sum severance payments are
currently funded or accrued.
(k) Provision for loss on repurchase of computers
Certain computers manufactured by the Group are sold to Japan Electronic Computer
Company Limited ("JECC") and other leasing companies and financial institutions
for leasing to the ultimate users under contracts which require that the Group
repurchase the computers if they are returned by the users after a certain
period. Based on past experience, an estimated amount for the loss arising from
such 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 recognize
the effect of all temporary differences in the recognition of tax basis assets
and liabilities and their financial reporting amounts.
(m) Earnings or loss per share
Basic earnings or loss per share is computed
based on the weighted average number of shares of common stock outstanding during
the respective years.
Diluted earnings per share is computed based on the
weighted average number of shares after consideration of the dilutive effect of
potential ordinary shares including warrants and convertible bonds.
|
(millions) |
U.S. dollars (thousands) |
||
| 1996 | 1997 | 1997 | |
| Current: | |||
| 14,170 |
31,788 |
256,355 |
|
| 14,412 |
31,376 |
253,032 |
|
| 242 |
(412) |
(3,323) |
|
| Noncurrent: | |||
| 103,538 |
106,138 |
855,952 |
|
| 238,140 |
202,747 |
1,635,057 |
|
| 134,602 |
96,609 |
779,105 |
|
|
(millions) |
U.S. dollars (thousands) | ||
| 1996 | 1997 | 1997 | |
| Finished goods | 372,545 | 403,277 | 3,252,234 |
| Work in process | 329,485 | 333,312 | 2,688,000 |
| Raw materials | 120,705 | 143,993 | 1,161,234 |
| 822,735 | 880,582 | 7,101,468 | |
|---|---|---|---|
|
(millions) |
U.S. dollars (thousands) | |||
| 1996 | 1997 | 1997 | ||
|---|---|---|---|---|
| Current assets | 762,594 | 799,324 | 6,446,161 | |
| Other assets, including property, plant and equipment, net | 525,917 | 569,122 | 4,589,694 | |
| 1,288,511 | 1,368,446 | 11,035,855 | ||
| Current liabilities | 429,476 | 486,136 | 3,920,452 | |
| Long-term liabilities | 124,373 | 124,823 | 1,006,637 | |
| 734,662 |
757,487 |
6,108,766 |
| |
|
(millions) |
U.S. dollars (thousands) | |||
| 1995 | 1996 | 1997 | 1997 | |
| Net sales | 796,423 | 859,826 | 937,439 | 7,559,992 |
| Net income | 32,827 | 41,436 | 16,182 | 130,500 |
| 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, 1996 and 1997 were as follows: | ||||
|
(millions) |
U.S. dollars (thousands) | |||
| 1996 | 1997 | 1997 | ||
| Carrying value | 285,536 | 284,177 | 2,291,750 | |
| Market value | 587,235 | 572,075 | 4,613,508 | |
At March 31, 1996 and 1997, the amount of 19,373 million yen ($156,234 thousand)
representing the Company's 29.49% investment in JECC was included in investments
and long-term loans - other. The Company does not regard JECC as an affiliate as
it is unable to exercise significant influence over JECC's affairs. JECC's
principal business is the leasing of computers and peripheral computer equipment
which it purchases from its seven shareholders. At March 31, 1997, JECC's issued
share capital was 65,700 million yen ($529,839 thousand) and its net sales for the
year then ended amounted to 305,221 million yen ($2,461,460 thousand).
|
(millions) |
U.S. dollars (thousands) | ||
| 1996 | 1997 | 1997 | |
|---|---|---|---|
| Loans, principally from banks, at interest rates ranging from 0.75% to 10.41% at March 31, 1996, and from 0.58% to 7.75% at March 31, 1997: | |||
| 917
| 3,425
| 27,621
| |
| 462,267
| 573,306
| 4,623,435
| |
| Commercial paper at interest rates ranging from 0.65% to 6.25% | |||
| at March 31, 1996, and from 0.56% to 6.30% at March 31, 1997 | 178,279 | 88,656 | 714,968 |
| 641,463 | 665,387 | 7,366,024 | |
| Long-term debt at March 31, 1996 and 1997 consisted of: | |||
|
(millions) |
U.S. dollars (thousands) | ||
| 1996 | 1997 | 1997 | |
| Loans, principally from banks and insurance companies, due from 1996 to 2013 at interest rates ranging from 0.52% to 7.90% at March 31, 1996 and 1997: | |||
| 24,704
| 17,620
| 142,097
| |
| 224,851
| 211,354
| 1,704,468
| |
| Bonds and notes issued by the Company: | |||
| 45
| -
| -
| |
| 344
| 289
| 2,331
| |
| 39,782
| 39,782
| 320,823
| |
| 39,649
| 39,649
| 319,750
| |
| 39,877
| 39,876
| 321,581
| |
| 39,969
| 39,968
| 322,323
| |
| 19,950
| 19,919
| 160,637
| |
| 29,579
| 29,578
| 238,532
| |
| 50,341
| 50,341
| 405,976
| |
| 35,000
| 35,000
| 282,258
| |
| 30,000
| 30,000
| 241,935
| |
| 30,000
| 30,000
| 241,935
| |
| 50,000
| -
| -
| |
| 30,000
| 30,000
| 241,935
| |
| 30,000
| 30,000
| 241,935
| |
| 30,000
| 28,500
| 229,839
| |
| 20,000
| 20,000
| 161,291
| |
| 20,000
| 20,000
| 161,291
| |
| 30,000
| 30,000
| 241,935
| |
| 30,000
| 30,000
| 241,935
| |
| -
| 60,000
| 483,871
| |
| -
| 30,000
| 241,935
| |
| -
| 30,000
| 241,935
| |
| -
| 50,000
| 403,226
| |
| -
| 50,000
| 403,226
| |
| Bonds and notes issued by consolidated subsidiaries: | |||
| 46,888
| 54,647
| 440,702
| |
| Less amounts due within one year | 116,128 | 202,692 | 1,634,613 |
| 774,851 | 843,831 | 6,805,089 | |
| Assets pledged as collateral for bank loans and long-term debt at March 31, 1996 and 1997 were summarized as follows: | |||
|
(millions) |
U.S. dollars (thousands) | ||
| 1996 | 1997 | 1997 | |
| Investments - noncurrent | 98 | 352 | 2,839 |
| Property, plant and equipment, net | 35,835 | 30,467 | 245,701 |
| 35,933 | 30,819 | 248,540 | |
As is customary in Japan, substantially all loans from banks (including
short-term loans) are made under general agreements which provide that, at the
request of the banks, the borrower is required to provide collateral or
guarantors (or additional collateral or guarantors, as appropriate) with respect
to such loans, and that all assets pledged as collateral under such agreements
will be applicable to all present and future indebtedness to the banks concerned.
These general agreements further provide that the banks have the right, as the
indebtedness matures or becomes due prematurely by default, to offset the
deposits at the banks against the indebtedness due to the banks.
The current conversion prices of the 3%, 1.3%, 1.4%, 1.9%, 1.95% and 2.0%
convertible bonds issued by the Company are 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 current
exercise 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. The
conversion and exercise prices referred to above are subject to adjustment in
certain circumstances including stock splits or free share distributions of
common stock. At March 31, 1997, approximately 252 million shares of common stock
were reserved for the conversion or exercise of all outstanding convertible bonds
and warrants. Conversion options of convertible bonds and warrants are recorded
in the liabilities.
Certain outstanding convertible bonds and notes can be repurchased at any time
and may be redeemed at the option of the Company, in whole or in part, at prices
ranging from 101% to 100% of their principal amounts.
The aggregate annual maturities of long-term debt subsequent to March 31, 1997
are summarized as follows:
|
March 31 |
(millions) |
(thousands) |
| 1998 | 202,692 | 1,634,613 |
| 1999 | 159,464 | 1,286,000 |
| 2000 | 89,717 | 723,524 |
| 2001 | 77,525 | 625,202 |
| 2002 and thereafter | 517,125 | 4,170,363 |
Previous | Table of Contents | Next
|
(millions) |
U.S. dollars (thousands) |
||
| 1996 | 1997 | 1997 | |
|---|---|---|---|
| Other current assets | 16,757 | 15,371 | 123,960 |
| Other long-term liabilities | 22,924 | 19,888 | 160,387 |
| Number of shares | |||
| 1995 | 1996 | 1997 | |
|---|---|---|---|
| Balance at beginning of year | 1,816,535,718 | 1,816,848,438 | 1,841,272,768 |
| Conversion of bonds | 312,720 | 24,424,330 | 163,015 |
| Balance at end of year | 1,816,848,438 | 1,841,272,768 | 1,841,435,783 |
The issuance of shares upon conversion of convertible debt and the exercise of
stock purchase warrants are accounted for by crediting an amount equal to at
least 50% of the amount of the issue to the common stock account and the balance
to the capital surplus account in accordance with certain provisions of the
Commercial Code of Japan which became effective October 1, 1982.
The Commercial Code provides that an amount equal to at least 10% of
cash dividends and bonuses to directors and statutory auditors paid by a company
and its domestic subsidiaries from retained earnings be appropriated to the legal
reserve until the reserve equals 25% of common stock.
The appropriations of retained earnings for the year ended March 31, 1997, which
included year-end cash dividends of 9,206 million yen ($74,242 thousand) were recorded on
the Company's statutory books of account after approval at the general
shareholders' meeting held on June 27, 1997, and will be included in the
consolidated balance sheet in the following year.
|
(millions) |
U.S. dollars (thousands) | ||
| 1996 | 1997 | 1997 | |
|---|---|---|---|
| Receivables, trade | 69,406 | 85,600 | 690,323 |
| Payables, trade | 35,172 | 30,735 | 247,863 |
|
(millions) |
(thousands) | |||
| 1995 | 1996 | 1997 | 1997 | |
|---|---|---|---|---|
| Foreign exchange gains (losses), net | (5,950) | 6,212 | 22,524 | 181,645 |
| Loss on disposal of property, plant and equipment | (6,333) | (9,824) | (11,656) | (94,000) |
| Expenses for issuance and offering of securities | (3,254) | (1,948) | (1,264) | (10,193) |
| Loss on devaluation of marketable securities | (2,577) | (1,290) | (5,283) | (42,605) |
| Amortization of goodwill | (12,933) | (11,010) | (10,896) | (87,871) |
| Restructuring charges | (6,183) | (31,618) | (4,964) | (40,032) |
| Other, net | (1,678) | 8,895 | (6,550) | (52,823) |
| (38,908) | (40,583) | (18,089) | (145,879) | |
Restructuring charges relate mainly to the reorganization of manufacturing and
office facilities and the disposal of assets throughout the Group in order to
streamline its business structure. The amount of 4,964 million yen ($40,032
thousand) for the year ended March 31, 1997 related to the restructuring of FDK Corporation.
The amount of 31,618 million yen for the year ended March 31, 1996 included an exceptional
charge incurred to facilitate the re-engineering of ICL.
Losses relating to the recovery from and repair of damages due to the earthquake which
devastated Kobe in January 1995 amounted to 4,501 million yen , and were included in
other, net for the year ended March 31, 1995.
| Years ended march 31 | |||||
| Yen | |||||
| (millions) | |||||
| Japan | Overseas | Eliminations | Consolidated | ||
| 1995 Net sales | |||||
| 2,439,652 |
818,054 |
- |
3,257,706 |
| |
| 226,086 |
63,689 |
(289,775) |
- |
| |
| 2,665,738 |
881,743 |
(289,775) |
3,257,706 |
| |
|---|---|---|---|---|---|
| 142,457 |
23,230 |
188 |
165,875 |
| |
| 1996 Net sales | |||||
| 2,829,526 |
932,440 |
- |
3,761,966 |
| |
| 292,405 |
170,255 |
(462,660) |
- |
| |
| 3,121,931 |
1,102,695 |
(462,660) |
3,761,966 |
| |
| 194,805 |
15,033 |
(3,956) |
205,882 |
| |
| 3,501,647 |
886,163 |
(63,320) |
4,324,490 |
| |
| 1997 Net sales | |||||
| 3,376,708 |
1,126,766 |
- |
4,503,474 |
| |
| 385,520 |
278,621 |
(664,141) |
- |
| |
| 3,762,228 |
1,405,387 |
(664,141) |
4,503,474 |
| |
| 218,644 |
(20,410) |
2,447 |
200,681 |
| |
| 3,789,830 |
1,099,054 |
(161,197) |
4,727,687 |
| |
| U.S. dollars | |||||
| (thousands) | |||||
| Japan | Overseas | Eliminations | Consolidated | ||
| 1997 Net sales | |||||
| 27,231,516 |
9,086,823 |
- |
36,318,339 |
| |
| 3,109,033 |
2,246,943 |
(5,355,976) |
- |
| |
| 30,340,549 |
11,333,766 |
(5,355,976) |
36,318,339 |
| |
| 1,763,258 |
(164,597) |
19,734 |
1,618,395 |
| |
| 30,563,145 |
8,863,339 |
(1,299,976) |
38,126,508 |
| |
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Copyright (c) 1996 Fujitsu Limited. All Rights Reserved.