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  7. Fujitsu Reports Fiscal 2012 Third-Quarter Financial Results

February 7, 2013
Fujitsu Limited

Fujitsu Reports Fiscal 2012 Third-Quarter Financial Results

Restructuring Plans for Semiconductor Businesses and Operations in Europe

Tokyo, February 7, 2013 — Fujitsu today reported a consolidated net loss of 79.0 billion yen (US$908 million) for the third quarter of fiscal 2012, a year-on-year decline of 74.7 billion yen, primarily as a result of restructuring expenses stemming from the LSI device business.

Third-quarter consolidated net sales totaled 1,048.2 billion yen (US$12,048 million), a decline of 2.9% from the same period of fiscal 2011. Sales in Japan fell by 5.4%. Sales of infrastructure services and system integration services increased, but sales of PCs, mobile phones, car audio and navigation systems, and LSI devices declined. Sales outside Japan rose by 2%. Excluding the impact of foreign exchange movements, however, sales declined by 1%, primarily as a result of lower PC sales in Europe.

Gross profit was 271.7 billion yen, a decline of 10.1 billion yen from the third quarter of fiscal 2011, primarily as a result of intensified price competition in PCs and other volume-driven products. Selling, general and administrative expenses were 275.8 billion yen, a decline of 2.8 billion yen from the third quarter of fiscal 2011 resulting from efforts across the group to generate cost efficiencies. As a result, the operating loss was 4.1 billion yen (US$47 million), a deterioration of 7.3 billion yen from the previous fiscal year's third quarter.

In other income and expenses, Fujitsu recorded a loss of 80.4 billion yen. Other expenses of 59.1 billion yen in restructuring expenses, primarily stemming from the LSI device business, were also recorded. These consist of losses relating to the sales of facilities and impairment losses on fixed assets, namely facilities producing standard logic devices. In addition, Fujitsu recorded an impairment loss of 28.0 billion yen on the unamortized balance of the goodwill relating to Fujitsu Technology Solutions (Holding) B.V. recorded at the time of acquisition, as the initial business plan was recognized as impracticable in light of the deteriorating business environment in Europe.

In the fourth quarter, Fujitsu plans to incur additional restructuring expenses associated with structural business reforms, specifically with its semiconductor business and other businesses outside of Japan. As a result, Fujitsu has revised its full-year business projections for fiscal 2012 (please refer to Fiscal 2012 Consolidated Projections at the end of this release). In the company's unconsolidated business results for fiscal 2012, Fujitsu expects to post valuation losses on stocks related to subsidiaries, which will cause negative retained earnings as of the end of fiscal 2012. As such, the company regrets that it does not plan to pay a fiscal 2012 year-end dividend.

“Fujitsu's Technology Solutions business in Japan remains robust. However, Fujitsu's device business, its business outside Japan and PC business have deteriorated significantly from projections announced at the beginning of the fiscal year," commented Masami Yamamoto, President of Fujitsu Limited. “The full-fledged structural reform measures that we have announced today are intended to address the issues these businesses present, and will strive to bolster our ability to achieve profitable growth the next fiscal year and going forward."

For more information:
- FY 2012 Third-Quarter Financial Results
- Management Direction Presentation

Business Segment Results

Consolidated net sales in the Technology Solutions segment amounted to 700.6 billion yen (US$8,053 million), up 2.1% from the third quarter of fiscal 2011. Sales in Japan increased 1.8%. In system integration services, despite the impact of the shift toward spending on hardware by telecommunications carriers, sales as a whole increased due to a spending recovery, primarily in the manufacturing sector and public sector. Infrastructure services also rose as a result of steady growth of outsourcing services, in addition to higher demand for network services, as telecommunications carriers tried to keep up with higher volumes of communications traffic. Sales outside Japan increased 2.7%. On a constant currency basis, sales fell by 1%. Sales of infrastructure services fell due to the impact of cutbacks in corporate spending and fiscal austerity measures stemming from the economic downturn in Europe. The segment posted operating income of 23.5 billion yen (US$270 million), down 2.3 billion yen compared to the third quarter of fiscal 2011. In Japan, despite higher sales of system integration and network services, operating income was essentially unchanged due to lower sales of network products and upfront R&D spending for network products, in addition to deterioration in the profitability of some system integration projects. Outside Japan, operating income declined due to the impact of lower sales in Europe and higher expenses related to retirement benefit obligations in the UK.

Net sales in the Ubiquitous Solutions segment were 266.5 billion yen (US$3,063 million), a decline of 11.5% from the third quarter of fiscal 2011. Sales in Japan fell by 14.3%. Sales of PCs declined on sluggish sales of consumer PCs and lower sales prices. For mobile phones, smartphone sales weakened due to competition with manufacturers outside Japan, and the market for feature phones shrunk, resulting in lower overall sales. Sales outside Japan declined by 1.8%. PC sales were low, particularly in EMEA. The Ubiquitous Solutions segment posted an operating loss of 2.0 billion yen (US$23 million), a deterioration of 4.1 billion yen from the third quarter of fiscal 2011.

Net sales in Device Solutions amounted to 129.5 billion yen (US$1,489 million), a decline of 6.3% compared to the third quarter of fiscal 2011. Sales in Japan fell 11.1%. LSI devices sales decreased compared to the third quarter of fiscal 2011 when there was an adverse impact caused by the Thai flood, on lower demand primarily for LSI devices used in digital audio-visual equipment and industrial equipment. Sales of electronic components, particularly of semiconductor packages, also fell. The Device Solutions segment recorded an operating loss of 9.3 billion yen (US$107 million), representing a deterioration of 0.9 billion yen from the third quarter of fiscal 2011.

Fiscal 2012 Consolidated Projections

In light of the conditions explained above, Fujitsu has made downward adjustments to its full-year financial projections for fiscal 2012, as presented below. Exchange rate projections were revised, to 90 yen for the US dollar, 120 yen for the euro, and 140 yen to the British Pound.

Full-year financial projections for fiscal 2012
(Billion Yen)
  FY 2012 Projections
(Full-Year)
Change from Projections
Announced in October
Net Sales 4,370.0 -50.0
Operating Income 100.0 -
Other Income
and Expense
-175.0 -150.0
Net Income -95.0 -120.0

* Major items in other income and expense include business structure improvement expenses of 142.0 billion yen and an impairment loss of 28.0 billion yen.

** The impact of exchange rate fluctuation has been calculated by using the average U.S. dollar, euro and British pound exchange rates for fiscal 2011 to translate the current period's net sales outside Japan into yen.

About Fujitsu

Fujitsu is the leading Japanese information and communication technology (ICT) company offering a full range of technology products, solutions and services. Over 170,000 Fujitsu people support customers in more than 100 countries. We use our experience and the power of ICT to shape the future of society with our customers. Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.5 trillion yen (US$54 billion) for the fiscal year ended March 31, 2012. For more information, please see:http://www.fujitsu.com.

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