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  7. Notice Regarding Signing of Exchange Offer Agreement

Notice Regarding Signing of Exchange Offer Agreement

Fujitsu Limited,Fujitsu I-Network Systems Limited

Tokyo, May 26, 2005

Fujitsu Limited ("Fujitsu") and Fujitsu I-Network Systems Limited ("FI-NET") today announced that, in accordance with decisions taken by their respective boards of directors, they have signed an agreement for an exchange of shares, to be executed on August 1, 2005, whereby FI-NET will become a wholly owned subsidiary of Fujitsu.

The exchange offer is expected to be ratified at FI-NET's annual shareholders' meeting scheduled to be held on June 24, 2005. In accordance Section 358 (simple share exchange) of the Commercial Code of Japan, there are no plans to submit the agreement for approval at Fujitsu's annual shareholders' meeting.

1. Objectives of Making FI-NET a Wholly Owned Subsidiary via Exchange of Shares

Network systems are essential infrastructure for both corporate activities and society as a whole, and with the expansion of application areas accompanying the emergence of the ubiquitous networking era they are becoming increasingly important for customers' business management and society. At the same time, the fusion of IT and network systems is increasing the sophistication and complexity of such systems, and these trends are creating greater demand from customers for solutions that cover the entire lifecycle of their systems, particularly those with network systems at the core.

To strengthen its network solutions business, Fujitsu has already instituted some organizational changes, but to promote further reforms – encompassing its group companies as well – aimed at creating a truly customer-focused organization, it will implement the following measures:

  1. Simplify its organization so it is easier for customers to understand,
  2. Create a single point of contact for customers,
  3. Clarify functions and responsibilities within the group.

As part of these reforms, to create an unified organizational structure for Fujitsu's network solutions business, expand its service-oriented business, and strengthen new product development efforts, Fujitsu has sought to make FI-NET a wholly owned subsidiary, and the boards of both companies have agreed to this measure.

This move will enable Fujitsu to improve its level of customer service and respond more quickly and appropriately to customer needs in the area of network systems as their businesses undergo rapid change. It also deepens Fujitsu's commitment to a business model based on the convergence of IT and networking, which leverages Fujitsu's strengths and will help raise corporate value.

2. Details Regarding Exchange of Shares

* Planned
1) Calendar
May 26, 2005: Ratification of exchange offer agreement by boards of directors Signing of exchange offer agreement
May 27, 2005*: Exchange offer notification (Fujitsu)
June 24, 2005*: Ratification of exchange offer agreement at FI-NET's annual shareholders' meeting
August 1, 2005*: Date of share transfer
2) Share Exchange Ratio
. Fujitsu Limited
(Parent Company)
FI-NET
(Wholly Owned Subsidiary)
Stock Swap Ratio 1 0.082
3) Notes
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  1. Share Allocation Ratio
    An allocation of 0.082 shares of Fujitsu Limited common stock will be issued for 1 share of FI-NET common stock. However, Fujitsu's shareholding of FI-Net common stock (34,307,000 shares) will not be exchanged.
  2. Basis for Determining Share Exchange Ratio
    Mizuho Securities Co., Ltd. was retained to determine the appropriate share exchange ratio, and the companies made an agreement based on that determination.
  3. Third Party's Determination Regarding Share Exchange Ratio and the Basis for and Methods of Calculation
    In determining the share exchange ratio, Mizuho Securities used a market value method in calculating the value of Fujitsu's shares and a discounted cash flow method in calculating the value of FI-NET's shares.
  4. Number of Shares to Be Allocated by Fujitsu in Conjunction with Exchange of Shares
    Fujitsu will allocate 335,626 shares of its common stock. However, Fujitsu plans to make the appropriation from shares of its own stock that it currently holds as treasury stock.
  5. Dividend Calculation Date
    The dividends payable on the shares allocated by Fujitsu in conjunction with the exchange of shares will be calculated as of April 1, 2005.

3. Situation Following Share Exchange

Because the shares allocated by Fujitsu in conjunction with the exchange of shares will be apportioned from its own treasury stock holdings, neither capitalization nor capital reserves will increase. The disposal value of treasury stock will be recognized as treasury stock or other capital surplus.

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Company:Fujitsu I-Network Systems Limited

Date: 26 May, 2005
City: Tokyo
Company: Fujitsu Limited, Fujitsu I-Network Systems Limited, , , ,