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Fujitsu Announces Revised Financial Results Forecast for Fiscal 2004

Fujitsu Limited

Tokyo, April 20, 2005

Fujitsu Limited today announced that it has revised its forecast consolidated and unconsolidated financial results for the fiscal year ended March 31, 2005 (FY 2004) from the previous forecast made on January 28, 2005 at the time of its third-quarter financial results announcement.

FY 2004 Consolidated Financial Results Forecast

(For fiscal year from April 1, 2004 to March 31, 2005)

(billion yen)
Net Sales Operating Income Net Income
Previous Forecast (A) 4,800.0 170.0 55.0
Revised Forecast (B) 4,763.0 160.0 32.0
Increase or Decrease (B-A) -37.0 -10.0 -23.0
Percentage of Increase or Decrease -0.8% -5.9% -41.8%
FY 2003 results 4,766.8 150.3 49.7

FY 2004 Unconsolidated Financial Results Forecast

(For fiscal year from April 1, 2004 to March 31, 2005)

(billion yen)
Net Sales Operating Income Net Income (Loss)
Previous Forecast (A) 2,830.0 45.0 28.0
Revised Forecast (B) 2,846.0 30.0 (40.0)
Increase or Decrease (B-A) 16.0 -15.0 -68.0
Percentage of Increase or Decrease 0.6% -33.3% ---
FY 2003 results 2,788.5 32.9 17.0

Although Fujitsu recorded a full-year unconsolidated net loss, the loss was taken for the purpose of reducing future financial risk and was unrelated to cash flow. The company is currently on track for improvement in earnings and anticipates continuing stable earnings going forward. The projection of a fiscal year-end dividend of 3 yen per share remains unchanged. (This is to be formally decided at a scheduled meeting of Fujitsu's Board of Directors on April 27, 2005 and ratified at the Annual Shareholders' Meeting.)

Explanation of Revisions to FY 2004 Financial Results Forecast

Although net sales were roughly in line with previous projections, due to deterioration in Software & Services earnings, the company fell short of its previous forecast for operating income. Regarding net income, as detailed below, the results were significantly under forecast as a result of extraordinary gains and losses and a valuation allowance taken for deferred tax assets. The company has revised its forecast results at this time because the degree of change in projected net income over the previous forecast exceeded 30%.

Extraordinary Gains

1) Gains from Sales of Marketable Securities

Consolidated Unconsolidated
133.2 billion yen 141.4 billion yen

On February 22 and 23 of 2005, Fujitsu sold portions of its shareholdings in FANUC Ltd. and Advantest Corporation. Income from the sales of these marketable securities (consolidated: 129.2 billion yen; unconsolidated: 137.9 billion yen) was recorded as an extraordinary gain.

2) Gains on Transfer of Operations

Consolidated Unconsolidated
36.5 billion yen 12.9 billion yen

On March 25, 2005 Fujitsu signed a formal agreement with joint venture partner Hitachi, Ltd. regarding the transfer of plasma display panel operations. Together with gains from the transfer of other business operations, gains from this transfer were recorded as an extraordinary gain.

Extraordinary Losses

3) Real Estate Valuation Losses

Consolidated Unconsolidated
15.2 billion yen 15.2 billion yen

Real estate valuation losses on idle property holdings were reported as extraordinary losses.

4) Restructuring Charges

Consolidated
20.0 billion yen*1

Restructuring charges were recorded as extraordinary losses, as Fujitsu carried out personnel reductions or realignment and disposed of assets, primarily at domestic manufacturing subsidiaries.

*1: Includes 6.8 billion in losses recorded through the third quarter of the fiscal year.

5) Valuation Losses on Shareholdings in Affiliated Companies

Unconsolidated
60.7 billion yen*2

Valuation losses on shareholdings in affiliated companies, primarily domestic manufacturing subsidiaries, were recorded as extraordinary losses on an unconsolidated basis.

*2: Includes 3.0 billion in losses recorded through the third quarter of the fiscal year.

Corporate Tax Adjustments

6) Recording of Valuation Allowance for Deferred Tax Assets

Consolidated Unconsolidated
93.5 billion yen 86.3 billion yen

Having significant tax loss carryforwards from the restructuring of its operations in fiscal 2001 and fiscal 2002, Fujitsu calculated deferred tax assets at year-end based on future taxable income. At this time, in light of delays in the recovery of taxable income from business operations primarily relating to unconsolidated accounts, the company decided to record a valuation allowance to cover the amount in excess of what it was likely to recover based on estimates of the next fiscal year's taxable income.

Net Value and Increase/Decrease in Deferred Tax Assets
(billion yen)
Consolidated Unconsolidated
Balance at Beginning of FY 2004
Tax loss carryforwards
Valuation allowance
Temporary difference (net)
About 180.0
400.0
-220.0
----
About 110.0
240.0*3
-120.0
-10.0
Increase/Decrease During FY 2004
Sales of shareholdings, etc.
Valuation allowance
Other*4

Balance at End of FY 2004
-120.0
-104.0
-93.0
77.0

60.0
-120.0
-104.0
-86.0
70.0

-10.0

*3: Includes shareholding valuation loss in subsidiaries recorded in previous fiscal year for Fujitsu IT Holdings, which is in the process of being liquidated.
*4: Includes decrease in deferred tax liabilities (relating to gains from establishment of stock holding trust for retirement benefit plan and unrealized gains on securities) due to sales of shareholdings.

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 communications 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 4.7 trillion yen (US$45 billion) for the fiscal year ended March 31, 2004.
For more information, please see: http://www.fujitsu.com/

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Company:Fujitsu Limited

Date: 20 April, 2005
City: Tokyo
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