Total assets at the end of the first quarter were 4,056.2 billion yen, a decrease of 169.1 billion yen compared to the end of the previous fiscal year. A reorganization of the company's flash memory operations and lower trade receivables were the two main factors behind the decrease.

Total current assets were 1,973.8 billion yen, down 97.8 billion yen from the end of the last fiscal year. Inventories increased by 50.6 billion yen, to 646.5 billion yen, partly as a result of the delay in shipping a new mobile phone model until the second quarter, and partly in anticipation of higher sales starting in the second quarter. Trade receivables declined by 166.1 billion yen, to 674.2 billion yen, reflecting the seasonal effect of a concentration of sales in the fourth quarter, generating higher trade receivables, with collection of these receivables during the first quarter.

Total fixed assets were 2,082.4 billion yen, a reduction of 71.2 billion yen compared to the end of prior fiscal year. Property, plant and equipment declined by 106.5 billion yen, to 884.0 billion yen, and investments and long-term loans increased by 40.2 billion yen, to 941.7 billion yen. These changes primarily reflect the shift in the accounting treatment of the company's flash memory operations to the equity method, in accordance with the new joint venture status.

Total liabilities were 3,201.6 billion yen, a reduction of 106.7 billion yen compared to the end of the previous fiscal year. The reduction is primarily attributed to a 128.4 billion yen reduction in trade payables.

Total shareholders' equity declined by 22.9 billion yen, to 679.4 billion yen. Higher equity prices resulted in an increase in unrealized gains on securities, but this was offset by the company's net loss. Because, proportionally, assets contracted by more than shareholders' equity, the shareholders' equity ratio increased by 0.2%, to 16.8%.

Total interest-bearing liabilities increased by 64.3 billion yen, to 1,828.1 billion yen, primarily as a result of posting a net loss and a temporary increase in inventories.

Net cash generated by operating activities in the first quarter was negative 85.9 billion yen. There was a narrowing of the loss before income taxes and minority interests compared to the first quarter of the previous year, and a decline in trade receivables through collections. But these factors were offset by the temporary increase in inventories in anticipation of higher sales starting in the second quarter and a decrease in trade payables.

Net cash generated from investing activities was 5.5 billion yen, a 58.9 billion yen improvement compared to the first quarter of the previous year. This improvement resulted from keeping capital expenditures within amount of the depreciation charges taken and the sale of marketable securities.

Therefore, free cash flow was negative 80.3 billion yen, an improvement of 67.3 billion yen compared to the prior year. The negative free cash flow was funded through increased borrowing, primarily through the commercial paper market, and net cash generated from financing activities was 69.7 billion yen. The net decrease in cash and cash equivalents was 9.7 billion yen.

Fujitsu is undertaking a number of initiatives to wring operating efficiencies out of its core businesses while raising their capacity to generate strong earnings. For example, particularly in its domestic operations, Fujitsu is redoubling its focus on quality manufacturing. It is also organizing its global supply chain management activities for servers, PCs and other hardware around four operation centers in Japan, Singapore, Germany, and the U.S. In addition, it is making organizational changes to enhance its ability to provide services and support to global customers in Japan, North America, Europe, and other Asian markets.

Starting in the second quarter, the company is implementing plans to reduce inventory levels and take other actions designed to enhance the efficiency of asset utilization. Through these measures, by the end of this fiscal year Fujitsu plans to reduce interest-bearing liabilities to a level no greater than 1,500.0 billion yen.

The company intends to quickly restore the strength of its balance sheet by utilizing its existing assets in the most effective manner possible, while restoring the profitability of its businesses.

Although the disruption in production at one of the company's semiconductor production facilities resulting from the earthquake caused a temporary setback, at present the company's sales orders match the levels anticipated in its original plan. With respect to the company's projections for its mid-term financial results (from April 1 to September 30, 2003), taking into account the extraordinary charge and other effects on earnings resulting from the earthquake, the company is revising its net income projection for the first half only from a net loss of 40 billion yen to a net loss of 50 billion yen. The company's projections for the full 2003 fiscal year remain unchanged from the levels announced in April, with the expectation that this impact on earnings will be offset by recovery in the second half of the fiscal year.

Note:

*

All yen figures have been converted to US dollars for convenience only at a uniform rate of $1=120 yen.

*

FY2003 from April 1, 2003 - March 31, 2004; FY2002 from April 1, 2002 - March 31, 2003

*

Due to uncertainties relating to changes in demand for products and components in key markets (Japan, U.S., Europe, etc.), currency exchange rate fluctuations, Japan and U.S. stock market conditions, and other factors, actual results may vary substantially from projections above.

About Fujitsu
Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting technologies, highly reliable computing and telecommunications platforms, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.6 trillion yen (US$38 billion) for the fiscal year ended March 31, 2003. For more information, please see: www.fujitsu.com
For details and supplemental information regarding Fujitsu's FY2002 financial results, please see http://pr.fujitsu.com/en/ir/
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