Fujitsu Reports FY2002 First Quarter Financial Results.Business Editors TOKYO--(BUSINESS WIRE)--July 26, 2002 Sales Impacted by Economic Uncertainty and Restrained IT Spending; Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Efforts Help Reduce Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. Fujitsu Limited today reported consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of 982.9 billion yen for the first quarter of fiscal year 2002 (April 1 - June 30, 2002), a 10% decrease from the first quarter of fiscal 2001. Converted into US dollars(1), this represents approximately $8.1 billion. Fujitsu faced a difficult business environment during the quarter. Although the impact of the bursting of the IT bubble A bit in bubble memory or a symbol in a bubble chart. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. spread throughout the globe, continuing to depress de·press v. 1. To lower in spirits; deject. 2. To cause to drop or sink; lower. 3. To press down. 4. To lessen the activity or force of something. markets, there were signs of recovery in the U.S., Asia and Japan, and there was an overall sense of bottoming out. However, with the worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the U.S. telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. sector, together with disruptions from the sharp fall in stock prices and the weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. value
of the dollar precipitated by accounting scandals Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. and other issues in
the U.S., future prospects have become extremely difficult to predict.
Amidst a·midst prep. Variant of amid. [Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.] this economic environment, during the quarter there was firm demand in Japan for software and services, and the supply/demand balance for logic ICs and other semiconductor devices improved, especially overseas. However, telecommunications carriers - especially in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. - further tightened restraints on investment, and recovery in corporate and individual demand for personal computers and other IT-related products was uneven. These and other factors adversely impacted Fujitsu's business. Fujitsu reported a first quarter consolidated operating loss of 29.0 billion yen (US$242 million), an improvement of 13.3 billion yen over the operating loss recorded during the corresponding quarter of the previous fiscal year. Due in part to costs associated with continuing restructuring efforts, the company posted a net loss for the period of 56.4 billion yen (US$470 million), compared with a net loss of 55.4 billion during the corresponding period last year. In order to cope with dramatic changes in the IT sector and create a structure better able to meet market and customer needs, Fujitsu has since last year aggressively pursued a large-scale corporate restructuring program. Now, the recent turmoil in the U.S. economy and other factors presage even more drastic changes to the business environment in which the Fujitsu Group operates. Recognizing the need to further increase operational efficiency, Fujitsu will not waver in its commitment to structural reform. Results in Principal Business Segments Services & Software Spurred by increased utilization of IT by public sector organizations and corporations in Japan, Fujitsu enjoyed increased domestic sales of various types of solutions centering on supply chain management, ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. and middleware Software that functions as a conversion or translation layer. It is also a consolidator and integrator. Custom-programmed middleware solutions have been developed for decades to enable one application to communicate with another that either runs on a different platform or comes from a , as well as higher sales of outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. services. Overseas, on the other hand, reductions in IT investment by U.S. and European telecommunications carriers and other corporations negatively impacted results. Overall, first quarter consolidated sales for the segment amounted to 380.9 billion yen (US$3,175 million), up 2% from the corresponding period last year. Increased operational efficiency and other measures contributed to an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of 866 million yen (US$7 million), compared with a loss of 1.2 billion yen in the comparable period last year. Platforms(2) In the Japanese market, sales of UNIX servers A medium to large-scale computer system in a network that runs under Unix. Unix servers are widely used as application servers and database servers and are available from a variety of vendors, including Sun, IBM, HP and others. and mobile phones increased, but there were fewer orders for large-scale systems and sales of large-scale enterprise servers and storage systems declined. In addition, sales of IMT-2000 (3G) mobile communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. decreased, stemming from lower capital investment by telecommunications carriers. As a result, domestic platforms business sales for the quarter fell considerably below the level of the corresponding period last year. Overseas, the continuation of severe limits on investment by U.S. and other telecommunications carriers led to a large decline in sales of optical transmission systems. The company's withdrawal from the small form factor hard disk drive market for desktop personal computers also affected overseas sales. Total consolidated sales in the platforms segment for the quarter were 379.0 billion yen (US$3,159 million), down 20% from the equivalent period last year. Thanks to major restructuring efforts undertaken last year, which included revamping its manufacturing structure and exiting certain businesses, Fujitsu was able to limit losses in this segment to 12.9 billion yen (US$108 million), significantly less than the loss of 23.8 billion yen in the equivalent period last year. Electronic Devices There was significant improvement in sales on a volume basis, owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de inventory adjustments of semiconductor components used primarily in mobile telephones, as well as major gains in sales of logic ICs compared to the preceding quarter. However, delayed recovery in the supply/demand balance for flash memory also slowed a revival in prices, and sales suffered. Moreover, continued restraints on investment in optical transmission systems delayed a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in demand for compound semiconductors and other products, leading to a deep drop in sales of these components. On the other hand, Fujitsu began to see considerable demand for its high-quality plasma display panels See plasma display. (PDPs). Overall, consolidated sales in the Electronic Devices segment totaled 141.9 billion yen (US$1,183 million), down 11% from the corresponding period last year. Notwithstanding efforts to cut costs through restructuring, declines in flash memory and compound semiconductor sales contributed to an operating loss of 7.4 billion yen (US$62 million) in this area, compared with a loss of 1.9 billion yen in the same period last year. Cash Flows Despite progress in collecting receivables, outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. for corporate restructuring costs and other payables resulted in negative cash flows from operating activities of 94.3 billion yen (US$786 million) during the first quarter, an improvement over the 140.7 billion yen negative cash flow recorded in the corresponding period last year. By more tightly focusing capital investment on growth areas and other measures, cash flows for investing activities were reduced by 43% to 53.3 billion yen (US$445 million). As a result, free cash flow during the quarter was minus 147.7 billion yen (US$1,231 million), an improvement of 86.1 billion yen over the minus 233.8 billion yen during the equivalent period of the previous year. In regard to cash flows from financing activities, the issuance in May of 250 billion yen in convertible bonds with stock acquisition rights and other measures yielded net cash of 192.1 billion yen (US$1,601 million), an increase of 24% over the equivalent period last year. Revised Projections for Fiscal Year 2002(3) Since the projections made in April - and amidst indications that the semiconductor inventory correction cycle has run its course - signs have begun to appear that the market has reached bottom. However, along with the outbreak of corporate accounting scandals in the U.S. and the heightened impact of the collapse of the IT bubble being felt by telecommunications and other industries, there has been a precipitous decline in stock prices and the value of the dollar, as well as a deterioration in American companies' willingness to invest. As a result, uncertainties regarding the future course of the global economy have increased. Moreover, with global telecommunications carriers unable to avoid further structural changes, it is expected that there will be even greater pressure to restrain IT-related investment. Accordingly, although Fujitsu anticipates growth in sales of electronic devices, particularly logic ICs, it now foresees lower than expected sales for platform products, particularly optical transmission and mobile systems, as well as for services and software, especially overseas. In regard to profits, despite the projected decline in total consolidated sales, thanks to improvements in operational efficiency, cost reductions and other measures, Fujitsu expects that operating and net income will be consistent with the projections it made in April.
Fujitsu Limited Consolidated Net Sales Projections
for Fiscal Year 2002
(Billion Yen)
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FY 2002 (April 1, 2002 - March 31, 2003)
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Original Forecast Revised Forecast Difference FY 2001 (Actual)
(April 25, 2002) (July 26, 2002)
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1st Full 1st Full 1st Full 1st Full
Half Year Half Year Half Year Half Year
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2,320.0 5,200.0 2,250.0 5,000.0 - 70.0 - 200.0 2,387.7 5,006.9
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Notes:
1: All yen figures have been converted to U.S. dollars for
convenience only at a uniform rate of US$1 = 120 yen, the closing
exchange rate on June 30, 2002.
2: Platforms business segment includes operations formerly
categorized under Information Processing and Telecommunications.
Comparison figures for first quarter FY2001 have been restated
accordingly.
3: 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. See also Cautionary Statement on earnings
statements posted on Fujitsu web site http://pr.fujitsu.com/en/ir/
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