euro adhoc: Fujitsu Limited / Quarterly or Semiannual Financial Statements / Fujitsu Reports FY2003 First-Half Financial Results for first-half fiscal period, ended September 30, 2003 - Part 2 (E)

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Part 2

Consolidated Business Segment Information (Three months
ended September 30)

a. Net Sales Yen U.S. (millions) Dollars (millions) 2nd 2nd 2nd Quarter Quarter Quarter 2003 2002 Change 2003 (%) Software Unaffiliated Y 525,979 Y 537,102 -2.1 $ 4,738 & Customers Services Interseg- ment 19,942 19,771 +0.9 180 Total Y 545,921 Y 556,873 -2.0 $ 4,918 Platforms Unaffiliated 411,572 390,622 +5.4 3,708 Customers Interseg- 62,467 61,203 +2.1 563 ment Total 474,039 451,825 +4.9 4,271 Electronic Unaffiliated 172,100 147,047 +17.0 1,551 Devices Customers Interseg- 16,272 18,633 -12.7 146 ment Total 188,372 165,680 +13.7 1,697 Financing Unaffiliated 29,596 30,306 -2.3 267 Customers Interseg- 2,715 2,446 +11.0 24 ment Total 32,311 32,752 -1.3 291 Other Unaffiliated 63,949 62,315 +2.6 576 Operations Customers Interseg- 35,210 36,755 -4.2 317 ment Total 99,159 99,070 +0.1 893 Eliminations (136,606) (138,808) - (1,230) Total Y 1,203,196 Y 1,167,392 +3.1 $10,840

b. Operating Income (Loss)

Yen U.S. Dollars (millions) (millions) 2nd 2nd Change 2nd Quarter Quarter (Million Quarter 2003 2002 Yen) 2003 Software & Y 32,525 Y 50,635 -18,110 $293 Services (Operating (6.0%) (9.1%) (-3.1%) Margin) Platforms (1,286) (17,829) +16,543 (12) ((0.3%)) ((3.9%)) (+3.6%) Electronic 4,972 (15,668) +20,640 45 Devices (2.6%) ((9.5%)) (+12.1%) Financing 1,033 1,043 -10 9 (3.2%) (3.2%) (-%) Other 3,011 4,383 -1,372 27 Operations (3.0%) (4.4%) (-1.4%) Eliminations (20,359) (16,772) -3,587 (183) Total Y 19,896 Y 5,792 +14,104 $179 (1.7%) (0.5%) (+1.2%)

c. Sales to Unaffiliated Customers

Yen U.S. Dollars (billions) (millions) 2nd 2nd 2nd Quarter Quarter Quarter 2003 2002 Change 2003 (%) Software Japan Y 405.3 Y 411.0 -1.4 $3,652 & Services Overseas 120.5 126.0 -4.4 1,086 Total Y 525.9 Y 537.1 -2.1 $4,738 Platforms Japan 288.9 273.9 +5.5 2,603 Overseas 122.6 116.6 +5.1 1,105 Total 411.5 390.6 +5.4 3,708 Electronic Japan 89.0 77.4 +15.0 802 Devices Overseas 83.0 69.6 +19.3 749 Total 172.1 147.0 +17.0 1,551 Financing Japan 29.5 30.3 -2.3 267 Overseas - - - - Total 29.5 30.3 -2.3 267 Other Japan 51.9 49.4 +4.9 468 Operations Overseas 12.0 12.8 -6.3 108 Total 63.9 62.3 +2.6 576 Total Japan Y 864.8 Y 842.1 +2.7 $7,792 Overseas 338.3 325.2 +4.0 3,048 Total Y 1,203.1 Y 1,167.3 +3.1 $10,840

d. Sales to Unaffiliated Customers by Products and Services

Yen U.S. Dollars (billions) (millions) 2nd 2nd Quarter Quarter 2003 2002 Change 2003 (%) Software Solutions/SI Y 258.9 Y 257.3 +0.6 $2,333 & Infrastructure 267.0 279.8 -4.6 2,405 Services Services Total Y 525.9 Y 537.1 -2.1 $4,738 Platforms Servers Y 88.8 Y 98.0 -9.4 $800 Mobile Infrastructure/ IP Network 43.5 42.1 +3.3 392 Transmission 44.2 52.1 -15.2 398 Equipment PCs & Mobile 182.0 157.2 +15.8 1,640 Telephones HDDs 53.0 41.2 +28.6 478 Total Y 411.5 Y 390.6 +5.4 $3,708 Electronic Semiconductors Y 92.0 Y 86.3 +6.6 $829 Devices Others 80.1 60.7 +32.0 722 Total Y 172.1 Y 147.0 +17.0 $1,551

Consolidated Statements of Operations (Six months ended September 30)

Yen U.S. Dollars (millions) (millions) 1st Half 1st Half 1st Half 2003 2002 Change 2003 (%) Net sales Y 2,141,934 Y 2,150,386 -0.4 $19,297 Operating costs and expenses: Cost of goods 1,576,454 1,571,934 +0.3 14,202 sold Selling, general and administrative 583,470 601,730 -3.0 5,257 expenses 2,159,924 2,173,664 19,459 Operating income (17,990) (23,278) - (162) (loss) Other income (expenses): Net interest* (7,755) (11,327) (70) Equity in earnings of affiliated 418 (2,090) 4 companies, net Amortization of unrecognized obligation for retirement (28,938) (21,938) (261) benefits Casualty loss** (4,700) - (42) Restructuring (4,674) (150,000) (42) charges Cost of - (25,000) - corrective measures for products*** Valuation loss - (7,637) - on marketable securities Gain on sales of 34,470 27,980 311 marketable securities**** Other, net (21,913) (6,811) (198) (33,092) (196,823) - (298) Income (Loss) before income taxes and minority (51,082) (220,101) - (460) interests Income taxes 3,787 (70,141) 34 Minority (3,693) 2,522 (34) interests Net income Y (58,562) Y (147,438) - $ (528) (loss) Note: All yen figures throughout these statements have been converted to U.S. dollars for convenience only at a uniform rate of $1=111 yen. *Net interest consists of interest income, dividend income and interest charges. **Casualty loss refers to repair expenses incurred to cover damages to property as a result of the earthquake that occurred off the coast of Miyagi prefecture, Japan, on May 26th, 2003. ***Cost of corrective measures for products refers to certain small form factor hard disk drives. ****Gain on sales of marketable securities in first half of FY2003 refers to 27,632 million yen of gain on sales of affiliates' stock and 6,838 million yen on sales of available-for-sale securities. Consolidated Business Segment Information (Six months ended September 30)

a. Net Sales

Yen U.S. Dollars (millions) (millions) 1st 1st 1st Half Half Half 2003 2002 Change 2003 (%) Software Unaffiliated Y 909,325 Y 918,089 -1.0 $8,192 & customers Services Intersegment 31,867 31,688 +0.6 287 Total Y 941,192 Y 949,777 -0.9 $8,479 Platforms Unaffiliated 723,821 769,713 -6.0 6,521 customers Intersegment 104,178 103,752 +0.4 939 Total 827,999 873,465 -5.2 7,460 Electronic Unaffiliated 334,746 289,037 +15.8 3,016 Devices customers Intersegment 33,000 38,089 -13.4 297 Total 367,746 327,126 +12.4 3,313 Financing Unaffiliated 50,391 55,074 -8.5 454 customers Intersegment 4,027 5,607 -28.2 36 Total 54,418 60,681 -10.3 490 Other Unaffiliated 123,651 118,473 +4.4 1,114 Operations customers Intersegment 66,346 68,133 -2.6 598 Total 189,997 186,606 +1.8 1,712 Eliminations (239,418) (247,269) - (2,157) Total Y 2,141,934 Y 2,150,386 -0.4 $19,297

b. Operating Income (Loss)

Yen U.S. Dollars (millions) (millions) 1st Half 1st Half Change 1st Half 2003 2002 (Million 2003 Yen) Software & Y 28,890 Y 51,501 -22,611 $ 260 Services (Operating (3.1%) (5.4%) (-2.3%) Margin) Platforms (20,715) (30,805) +10,090 (186) ((2.5%)) ((3.5%)) (+1.0%) Electronic (1,218) (23,102) +21,884 (11) Devices ((0.3%)) ((7.1%)) (+6.8%) Financing 2,007 2,591 -584 18 (3.7%) (4.3%) (-0.6%) Other 5,031 4,312 +719 45 Operations (2.6%) (2.3%) (+0.3%) Eliminations (31,985) (27,775) -4,210 (288) Total Y (17,990) Y (23,278) +5,288 $(162) ((0.8%)) ((1.1%)) (+0.3%)

c. Sales to Unaffiliated Customers

Yen U.S. Dollars (billions) (millions) 1st 1st 1st Half Half Half 2003 2002 Change 2003 (%) Software Japan Y 671.4 Y 666.2 +0.8 $6,049 & Services Overseas 237.8 251.8 -5.5 2,143 Total Y 909.3 Y 918.0 -1.0 $8,192 Platforms Japan 505.0 539.0 -6.3 4,550 Overseas 218.8 230.6 -5.2 1,971 Total 723.8 769.7 -6.0 6,521 Electronic Japan 164.6 145.9 +12.8 1,483 Devices Overseas 170.0 143.1 +18.8 1,533 Total 334.7 289.0 +15.8 3,016 Financing Japan 50.3 55.0 -8.5 454 Overseas - - - - Total 50.3 55.0 -8.5 454 Other Japan 100.9 93.8 +7.5 910 Operations Overseas 22.6 24.5 -7.8 204 Total 123.6 118.4 +4.4 1,114 Total Japan Y1,492.5 Y1,500.1 -0.5 $13,446 Overseas 649.4 650.2 -0.1 5,851 Total Y2,141.9 Y2,150.3 -0.4 $19,297 d. Sales to Unaffiliated Customers by Products and Services Yen U.S. Dollars (billions) (millions) 1st 1st 1st Half Half Half 2003 2002 Change 2003 (%) Software Solutions/SI Y413.7 Y403.2 +2.6 $3,727 & Infrastructure 495.6 514.8 -3.7 4,465 Services Services Total Y909.3 Y918.0 -1.0 $8,192 Platforms Servers Y154.0 Y191.7 -19.7 $1,387 Mobile Infrastructure/ IP Network 80.9 85.7 -5.6 729 Transmission 80.6 99.7 -19.2 726 Equipment PCs & Mobile 322.0 307.7 +4.6 2,901 Telephones HDDs 86.3 84.9 +1.6 778 Total Y 723.8 Y 769.7 -6.0 $6,521 Electronic Semiconductors Y 182.3 Y 165.3 +10.3 $1,643 Devices Others 152.4 123.7 +23.2 1,373 Total Y 334.7 Y 289.0 +15.8 $3,016 Consolidated Geographic Segment Information (Six months ended September 30) a. Net Sales Yen U.S. Dollars (millions) (millions) 1st 1st 1st Half Half Half 2003 2002 Change 2003 (%) Japan Unaffiliated Y 1,616,284 Y 1,630,631 -0.9 $14,561 customers Intersegment 201,698 155,557 +29.7 1,817 Total Y1,817,982 Y1,786,188 +1.8 $16,378 Europe Unaffiliated 244,339 255,866 -4.5 2,201 customers Intersegment 10,668 7,968 +33.9 96 Total 255,007 263,834 -3.3 2,297 The Unaffiliated 117,186 134,333 -12.8 1,056 Americas customers Intersegment 9,068 9,964 -9.0 82 Total 126,254 144,297 -12.5 1,138 Others Unaffiliated 164,125 129,556 +26.7 1,479 customers Intersegment 92,396 90,069 +2.6 832 Total 256,521 219,625 +16.8 2,311 Eliminations (313,830) (263,558) - (2,827) Total Y 2,141,934 Y2,150,386 -0.4 $19,297

b. Operating Income (Loss)

Yen U.S. Dollars (millions) (millions) 1st Half 1st Half Change 1st Half 2003 2002 (Million 2003 Yen) Japan Y 16,195 Y 23,393 -7,198 $146 (Operating (0.9%) (1.3%) (-0.4%) Margin) Europe (2,042) (7,642) +5,600 (18) ((0.8%)) ((2.9%)) (+2.1%) The (7,803) (19,678) +11,875 (70) Amaricas ((6.2%)) ((13.6%)) (+7.4%) Others 5,154 2,713 +2,441 46 (2.0%) (1.2%) (+0.8%) Eliminations (29,494) (22,064) -7,430 (266) Total Y(17,990) Y(23,278) +5,288 $(162) ((0.8%)) ((1.1%)) (+0.3%) Net Overseas Sales by Customer's Geographic Location (Six months ended September 30) Yen U.S. Dollars (millions) (millions) 1st Half 1st Half 1st Half 2003 2002 Change 2003 (%) Europe Y 268,964 Y 278,327 -3.4 $2,423 The 168,650 191,454 -11.9 1,520 Americas Others 211,814 180,438 +17.4 1,908 Outside Japan Total Y 649,428 Y 650,219 -0.1 $5,851

Consolidated Balance Sheets

Yen U.S. Dollars (millions) (millions) September 30 March 31 September 30 2003 2003 2003 Assets Current assets: Cash and cash equivalents and Y 239,458 Y 283,985 $2,157 short-term investments Receivables, 669,432 840,408 6,031 trade Inventories 619,349 595,984 5,580 Other 271,703 351,263 2,448 current assets Total 1,799,942 2,071,640 16,216 current assets Investments 836,196 901,587 7,533 and long-term loans Property, plant and equipment less 855,895 990,552 7,711 accumulated depreciation Intangible 248,436 261,582 2,238 assets Total Y 3,740,469 Y 4,225,361 $33,698 assets

Liabilities, minority interests and shareholders' equity

Current liabilities: Short-term borrowings and current Y 543,024 Y 506,091 $4,892 portion of long-term debt Payables, 666,846 716,842 6,008 trade Other 465,302 542,291 4,192 current liabilities Total 1,675,172 1,765,224 15,092 current liabilities Long-term liabilities: Long-term 933,644 1,257,678 8,411 debt Other 313,228 285,513 2,822 long-term liabilities Total 1,246,872 1,543,191 11,233 long-term liabilities Minority 168,559 214,556 1,518 interests Shareholders' equity: Common stock 324,624 324,624 2,925 Capital surplus 519,723 519,720 4,682 Retained earnings (119,409) (60,718) (1,076) (deficit) Unrealized gains on securities and revaluation surplus on 18,177 6,090 164 land Foreign currency (92,441) (86,517) (833) translation adjustments Treasury stock (808) (809) (7) Total shareholders' 649,866 702,390 5,855 equity Total liabilities, minority interests and shareholders' Y3,740,469 Y4,225,361 $33,698 equity Ending balance of Y1,476,668 Y1,763,769 $13,303 interest bearing loans Supplementary Information Yen (billions) 1st Half FY2003 FY2002 FY2003 (Forecast) Capital Expenditure Y 66.7 Y 205.0 Y 147.6 Depreciation 97.3 205.0 264.6 Consolidated Statements of Cash Flows (Six months ended September 30) Yen U.S. Dollars (millions) (millions) 1st Half 1st Half Change 1st Half FY2003 FY2002 (Million FY2003 Yen) 1. Cash flows from operating activities: Income (Loss) before income taxes and Y (51,082) Y (220,101) +169,019 $ (460) minority interests Depreciation 137,316 172,981 -35,665 1,237 and amortization Accrual 2,319 (5,935) +8,254 21 (Reversal) of provisions Equity in (418) 2,090 -2,508 (4) earnings of affiliates, net Disposal of property, plant and 9,531 31,460 -21,929 86 equipment (Increase) 79,147 177,298 -98,151 713 Decrease in receivables, trade (Increase) (60,294) (9,714) -50,580 (543) Decrease in inventories Increase (11,307) (172,303) +160,996 (102) (Decrease) in payables, trade Other, net (67,788) (56,772) -11,016 (611) Net cash provided by (used in) operating 37,424 (80,996) +118,420 337 activities 2. Cash flows from investing activities: Purchase of property, plant and equipment (68,766) (95,505) +26,739 (619) (Purchases of) Proceeds from Sales of 59,252 79,901 -20,649 534 Investment Securities Other, net (20,838) 5,053 -25,891 (188) Net cash provided by (used in) investing (30,352) (10,551) -19,801 (273) activities 1+2 ( Free 7,072 (91,547) +98,619 64 Cash Flow ) 3. Cash flows from financing activities: Increase (Decrease) in bonds, notes, short-term (39,434) 201,551 -240,985 (355) borrowings and long-term debt Dividends - (5,005) +5,005 - paid Other, net (11,203) (84,964) +73,761 (101) Net cash provided by (used in) financing (50,637) 111,582 -162,219 (456) activities 4. Effect of exchange rate changes on cash and (2,110) (3,083) +973 (19) cash equivalents 5. Net increase (decrease) in cash and cash (45,675) 16,952 -62,627 (411) equivalents 6. Cash and cash equivalents at 282,333 299,418 -17,085 2,543 beginning of period 7. Cash and cash equivalents at end of Y 236,658 Y 316,370 -79,712 $2,132 period

Marketable Securities (Six months ended September 30)

1. Net Unrealized Gain on Marketable Securities

Yen Yen (millions) (millions) September 30, 2003 March 31, 2003 Carry Fair Net Carry Fair Net -ing Value Unreal -ing Value Unreal Value -ized Value -zed Gains Gains (Losses) (Losses) Held-to-mat- Y3,068 Y3,062 Y (6) Y1,509 Y 1,506 Y (3)


Investment 158,736 449,224 290,488 202,621 391,237 188,616


Total Y161,804 Y452,286 Y290,482 Y204,130 Y392,743 Y188,613

2. Summary of Marketable Securities at Fair Value

Yen Yen (millions) (millions) September 30, 2003 March 31, 2003 Cost Carry Net Cost Carry Net -ing Unrea -ing Unrea Value -lized Value -lized (Fair Gains (Fair Gains Value) (Losses) Value) (Losses)


Equity securities Y 60,024 Y 85,770 Y 25,746 Y 75,425 Y 79,372 Y 3,947 Debt 4,535 4,421 (114) 3,789 3,609 (180)

securities and

Total Y64,559 Y90,191 Y25,632 Y79,214 Y82,981 Y3,767

Fujitsu Reports FY2003 First-Half Financial Results

Net Loss Posted on Flat Sales, But Second Quarter Sales
and Operating Income Rebound

Tokyo, October 29, 2003 - Fujitsu Limited, a leader in customer-focused IT and communications solutions for the
global marketplace, today reported consolidated net sales
of 2,141.9 billion yen (approximately US$19.3 billion) for
the first half of fiscal year 2003 (April 1 - September 30,
2003), a 0.4% decrease from the first half of fiscal 2002.
Net sales in the second quarter increased 3.1%, to 1,203.1
billion yen, led by strong sales of PCs, mobile telephones,
logic chips, and plasma display panels. It was the first
time since the first quarter of FY2001 that Fujitsu posted year-on-year quarterly sales growth. Higher sales and lower operating expenses contributed to a rebound in second
quarter operating income to 19.8 billion yen (US$179
million). For the company as a whole, however, a large
operating loss in the first quarter resulted in an
operating loss for the first six months of 17.9 billion yen
(US$162 million), compared to an operating loss of 23.2
billion yen for the first half of FY2002.

During the first half, higher pension obligation expenses,
a casualty loss stemming from an earthquake in May, and
foreign exchange losses resulting from the rapid
appreciation of the yen in late September were partially
offset by gains from the sale of a portion of the company's
shares in Fanuc Ltd. The net loss for the first six months
was 58.5 billion yen (US$528 million), compared to a net
loss of 147.4 billion yen in the first half of 2002. The
net loss for the second quarter was 18.7 billion yen
(US$169 million), compared to a net loss of 91.0 billion
yen in the same period last year.

Second Quarter Financial Results

Second Quarter Change from % Change Previous Year Net Sales 1,203.1 billion yen +35.8 billion yen +3.1% Operating Income 19.8 billion yen +14.1 billion yen Net Income -18.7 billion yen +72.2 billion yen

Net sales in the second quarter were 1,203.1 billion yen,
an increase of 3.1% over the same period in the previous
year. It was the first time since the first quarter of
FY2001 that Fujitsu posted year-on-year quarterly sales
growth. Sales in software and services were maintained at
roughly the same level as the prior year, while sales of
servers and other systems hardware recovered, particularly
in overseas markets. In addition, sales expanded in a wide
variety of product areas, including notebook PCs, hard disk
drives for notebook PCs, semiconductors used in digital
audio-visual equipment, and plasma display panels. Although
price competition in software and services as well as
hardware is becoming more severe, the IT market overall is
finally bottoming out.

Operating income was 19.8 billion yen, a 14.1 billion yen improvement over the previous year. Operating income was 2
billion yen higher than the company's public projections,
indicating that results are broadly in line with company expectations. These results reflect the savings achieved
from last year's restructuring initiative and continued
efforts to cut costs and improve efficiencies in response
to ongoing pricing pressures.

Although there was an improvement in operating profit and interest expenses were lower, pension obligation expenses
increased, and there was a foreign exchange loss associated
with the rapid appreciation of the yen in late September.
As a result, Fujitsu posted a net loss of 18.7 billion yen
for the second quarter. This represents an improvement of
72.2 billion yen compared to the second quarter of last
year, when there were large extraordinary losses associated
with the company's restructuring.

Second Quarter Operating Income by Business Segment

Second Change First Quarter from Quarter Previous Year Software 32.5 -18.1 -3.6 and billion billion billion Services yen yen yen Platforms -1.2 +16.5 -19.4 billion billion billion yen yen yen Electronic 4.9 +20.6 -6.1 Devices billion billion billion yen yen yen

For the company as a whole, operating income moved from a
37.8 billion yen loss in the first quarter to a 19.8
billion yen profit in the second quarter. In the first
quarter, the three main segments-software and services,
platforms, and electronic devices-all posted operating
losses. In the second quarter, however, software and
services posted operating income of 32.5 billion yen and
electronic devices posted operating income of 4.9 billion
yen, while the platforms segment moved close to break even,
posting an operating loss of only 1.2 billion yen,
supported by stronger sales and the cost efficiencies
generated by previous restructuring initiatives.

Compared with the second quarter of the previous year,
Fujitsu posted a 14.1 billion yen improvement in operating
income. Large improvements were achieved in both platforms
and electronic devices, while software and services posted
an 18.1 billion yen reduction in operating income resulting
from the deterioration in profitability of particular

In the platforms segment, the hard disk drive business
returned to profitability. In electronic devices, there was
a large increase in the profitability of the plasma display
panel business and success in minimizing the financial
impact on the logic IC business of the earthquake at the
Iwate production facility. All of these factors contributed
to the improvement in profitability compared to the
previous quarter as well as the prior year.

First Half Financial Results

First Half Change from % Change Previous Year Net Sales 2,141.9 -8.4 -0.4% billion yen billion yen Operating -17.9 +5.2 Income billion yen billion yen Net Income -58.5 +88.8 billion yen billion yen

Net sales for the first half were 2,141.9 billion yen,
roughly the same level as the first half of last year.
Compared with the same period last year, sales of software
and services were roughly flat, sales of platforms declined
6%, as strong second quarter results could not make up for
the large drop-off in the first quarter, and sales of
electronic devices increased 15.8% on strong sales of LSIs (System-on-Chips) and displays.

Fujitsu posted an operating loss for the first half of 17.9 billion yen. It appears that sales of new product offerings
in the platforms segment will be concentrated in the second
half of the fiscal year, and major software and services
sales associated with those products will also therefore be
shifted to the second half, curtailing growth of these
sales in the first half. In addition, the large operating
loss in the first quarter exceeded the operating profit
posted in the second quarter. On the other hand, even in an environment of severe price competition, because of the
effects of last year's restructuring and additional cost efficiencies, the company achieved a 5.2 billion yen
improvement over the previous year.

Fujitsu incurred higher expenses stemming from the
amortization of unrecognized pension benefit obligations.
The company also posted a 34.4 billion yen gain on the
sales of marketable securities, including a portion of
Fujitsu's holdings of Fanuc, Ltd. stock, a 4.7 billion yen
casualty loss for damages incurred in the earthquake off
the coast of Miyagi Prefecture in May, and a 4.6 billion
yen restructuring charge associated with several domestic
and overseas subsidiaries.

The net loss was 58.5 billion yen, an 88.8 billion yen improvement compared to the first half of last year, when
the company posted large restructuring charges.

Results by Business Segment in the First Half

* Net sales represents net sales to third parties
Segment information for the first half is as follows.

1. Software & Services

First Half Change from Same Period Last Year Net Sales 909.3 billion yen -1.0% Japan 671.4 billion yen +0.8% Overseas 237.8 billion yen -5.5% Operating Income 28.8 billion yen -22.6 billion yen

Net sales in the software and services segment were 909.3
billion yen, roughly even with results for the same period
last year. Sales within Japan increased, but overseas
sales, which represent about one-fourth of the total,
declined. The decline is partly attributable to the sale
last year of some European business units as well as the
currency conversion impact of the strong yen.

Operating income declined significantly compared to the
prior year. The impact of new platforms product offerings
being concentrated in the second half, the deterioration in profitability of particular projects, and aggressive
up-front investments in middleware and Linux offerings all
hurt profitability in Japan, while overseas profitability
was affected by a deterioration in North American results.

Net Sales Change from Same Period Last Year Solutions / S I 413.7 billion yen + 2.6% Infrastructure 495.6 billion yen -3.7% Services

Sales increased of solutions/system integration services,
whereby Fujitsu provides services to individual customer
projects. Higher sales were posted to the public sector,
through such high-profile projects as the e-Japan
initiative, as well as the healthcare sector.
In infrastructure services, whereby Fujitsu provides
services for business infrastructure, sales within Japan of corporate outsourcing services continued to be strong.
Overseas, however, sales in Europe declined.

In order to support the global expansion of its customers, Fujitsu is enhancing its organizational structure in
Europe, the U.S., and Asia. During the current period, in
addition to supporting the global expansion of Japanese corporations, the company received a series of major government-related outsourcing deals in the U.K. and
succeeded in winning other major global deals in Europe and
North America.

Fujitsu is clearly establishing a strong business platform
in Europe, and is coordinating its effort to strengthen its
position in the U.S. market.

2. Platforms

First Half Change from Same Period Last Year Net Sales 723.8 billion yen - 6.0% Japan 505.0 billion yen - 6.3% Overseas 218.8 billion yen - 5.2% Operating Income -20.7 billion yen + 10.0 billion yen

Net sales of platforms products declined by 6% compared to
the previous year. In Japan, the company posted strong
sales throughout the period of consumer-oriented PCs with
enhanced audio-visual and LAN functions as well as
newly-launched mobile phone handsets. There was, however,
only a moderate recovery in capital expenditures by telecom
carriers and other corporations. Overseas, a strong market
for notebook PC hard disk drives boosted sales of those
products, and in the latter half of the period there were
signs of a recovery in the markets for transmission
systems, primarily in North America, and UNIX servers,
primarily in Europe. On the other hand, for the first half
overall, sales of transmission systems and server-related
equipment were both down by nearly 20% compared with the
same period last year, reflecting the lingering
after-effects of the telecom bubble in North America and
the inclusion in last year's first-half results of some
major sales of server-related equipment in Japan.

The operating loss for the platforms segment was 20.7
billion yen, representing an improvement of 10.0 billion
yen compared to the first half of the previous year.
Improvements in PCs, hard disk drives and other business
areas resulting from last year's restructuring and other cost-cutting measures were not enough to offset the impact
of lower sales of servers and networking equipment.

Net Sales Change from Same Period Last Year Servers 154.0 billion -19.7% yen Mobile / IP Networks 80.9 billion - 5.6% yen Transmission Systems 80.6 billion - 19.2% yen PCs / Mobile Phones 322.0 billion + 4.6% yen Hard Disk Drives 86.3 billion + 1.6% yen

In servers and PCs, Fujitsu has integrated its development operations and is selling in the four major markets of
Japan, the U.S., Europe, and Asia. In UNIX servers, the
company's high-end systems have achieved top scores in a
number of performance benchmarks, and sales in Europe and
other areas are expanding.

Fujitsu is further enhancing its ability to provide
products for the global markets, differentiating itself on
the basis of its superior technology. It is also
strengthening its server business by deepening the linkage
with its software and services business through its TRIOLE infrastructure concept. Fujitsu is also widening the scope
of its global alliances with other companies and pursuing
an all-out marketing effort in Japan.

In design and manufacturing, the company is also making
every effort to strengthen its manufacturing prowess
through the introduction of some of Toyota's techniques. By
further enhancing its ability to cut costs, the company is
laying a foundation for stable profitability.

*TRIOLE is Fujitsu's IT infrastructure initiative that
addresses the most pressing needs of corporate and
institutional customers: scalability to expand with their requirements; quick and easy integration with partners;
lower cost of ownership; and operational reliability.

3. Electronic Devices

First Half Change from Same Period Last Year Net Sales 334.7 billion yen + 15.8% Japan 164.6 billion yen + 12.8% Overseas 170.0 billion yen + 18.8% Operating Income -1.2 billion yen + 21.8 billion yen

Net sales of electronic devices increased 15.8% over the
previous year. Sales of semiconductor products for digital audio-visual equipment, mobile phones, and automobiles were
strong in Japan, Asia, and Europe. In addition, market
demand for flat screen TVs has taken off, sparking very
strong sales growth in plasma display panels and other

The electronic devices segment moved very close to
break-even, posting an operating loss of 1.2 billion yen.
Aided by a market recovery and the effects of the
restructuring initiatives undertaken last fiscal year, the
segment achieved profitability in the second quarter.
Although first quarter results were adversely affected by
the disruption of the Iwate production facility caused by
the earthquake off the coast of Miyagi Prefecture in May,
the impact was largely offset by higher sales in the second

In addition to good results in the plasma displays
business, which benefited from a strong market, improved
yield rate and other cost efficiencies, the components
business, which had perennially lost money, is now
profitable as a result of cost reductions achieved through productivity reforms.

To achieve greater efficiencies and competitiveness,
Fujitsu and U.S.-based Advanced Micro Devices, Inc. (AMD)
have expanded their joint venture in flash memory
production to integrate their respective marketing and
product development operations. Accordingly, on June 30 the
two companies transferred their flash memory operations
into a newly-established joint venture company, FASL LLC,
which is 40% owned by Fujitsu and 60% owned by AMD. Fujitsu
will continue to handle sales as a distributor for the
joint venture. The new venture's profitability relating to development and manufacturing will be reflected in
Fujitsu's financial results according to equity-method
accounting treatment.

Demand for flash memory during the period was
extraordinarily strong, particularly for the mobile phone
market. But it was only at the end of the period that
prices finally stopped falling, however, so the
profitability of the business continued to face very severe conditions.

First Half Change from the same period last year Semiconductors 182.3 billion yen + 10.3% Other 152.4 billion yen + 23.2%

Balance Sheet Summary

As of September Change from 30, 2003 March 31, 2003 Total Assets 3,740.4 billion - 484.8 yen billion yen Interest Bearing 1,476.6 billion - 287.1 Liabilities yen billion yen Shareholders' Equity 649.8 billion - 52.5 yen billion yen

Total assets at the end of the first half were 3,740.4
billion yen, a reduction of 484.8 billion yen from the end
of the previous fiscal year. The reduction in assets is a
result of the switch to equity-method accounting for the
company's flash memory operations and leasing affiliate as
well as further progress in promoting balance sheet
efficiencies through such measures as the sale of
marketable securities.

Total current assets were reduced by 271.6 billion yen from
the end of the last fiscal year, to 1,799.9 billion yen.
While trade receivables declined by 170.9 billion yen as a
result of collections from sales concentrated at the end of
the previous fiscal year, inventories increased by 23.3
billion yen in anticipation of increased sales in the
second half. Other current assets decreased by 79.5 billion
yen from the end of the previous fiscal year as a result of
the reduction of lease receivables in accordance with the
switch to equity-method accounting for the leasing company.

Total fixed assets decreased by 213.1 billion yen from the
end of the last fiscal year, to 1,940.5 billion yen.
Property, plant and equipment decreased by 134.6 billion
yen as a result of the reorganization of flash memory
operations. In addition, investments and other assets
decreased by 65.3 billion yen in accordance with the
decrease in lease receivables and the sale of marketable

Total liabilities declined by 386.3 billion yen from the
end of the previous fiscal year, to 2,922.0 billion yen. In
addition to a 220 billion yen reduction in interest-bearing liabilities from the change in the accounting treatment of
the leasing company to the equity method, progress was also
achieved in the redemption of corporate bonds and the
repayment of bank loans, resulting in a total reduction of interest-bearing liabilities of 287.1 billion yen from the
end of the previous fiscal year. Interest-bearing
liabilities at the end of the current period were 1,476.6
billion yen, so at present the company has already achieved
its objective of reducing interest-bearing liabilities to
1,500.0 billion yen by the end of the fiscal year. Fujitsu
has also reduced its ratio of interest-bearing liabilities
by 2.2%, to 39.5%. Through the effective use of its asset
holdings, the company will continue its effort to reduce interest-bearing liabilities to the extent possible.

Total shareholders' equity declined by 52.5 billion yen as
a result of the net loss for the period, to 649.8 billion
yen. Because, proportionally, assets contracted by more
than shareholders' equity, the shareholders' equity ratio
increased by 0.8%, to 17.4%.

Summary of Cash Flows

First Half Change from Previous Year Cash Flow from 37.4 billion 118.4 billion Operations yen yen Cash Flow from - 30.3 billion -19.8 billion Investing yen yen Free Cash Flow 7.0 billion 98.6 billion yen yen

Net cash flow generated by operating activities in the
first half was 37.4 billion yen (compared to negative 80.9
billion yen in the same period last year), resulting in
part from the significant collection of trade receivables
at the end of the last fiscal year. This improvement of
118.4 billion yen was also attributable to a substantial
reduction in the loss before income taxes compared to the
same period of the previous year.

Net cash flow from investing activities was negative 30.3
billion yen, achieved by concentrating capital expenditures
in high growth segments and through sales of marketable

By holding investment spending within the amount of net
cash generated by operating activities, free cash flow
improved by 98.6 billion yen compared to the same period
last year, to positive 7.0 billion yen.

Net cash flow generated from financing activities was
negative 50.6 billion yen. Cash generated from operations
and existing cash balances were used towards the redemption
of bonds and the repayment of outstanding debt.

As a result, total cash and cash equivalents fell by 45.6
billion yen, to 236.6 billion yen.

Dividend Policy

With respect to the disposition of profits, Fujitsu
believes that a portion should be paid to shareholders to
offer a stable return, and that a portion should be
retained by the company to strengthen its financial base
and support new business development opportunities that
will result in improved long-term performance.

Although, on an unconsolidated basis, Fujitsu posted net
income of 18.7 billion yen for the current period, the
company is still in the midst of its plans to restore the profitability of its core business as reflected in
operating income, and the company reported operating losses
for the current period on both a consolidated and
unconsolidated basis. Accordingly, the company has
reluctantly decided to forgo dividend payments for the
first half of fiscal 2003. With respect to the dividend for
the next payout period, following the end of this fiscal
year, the company would like to base its decision on a
review of the full-year's results, and therefore no
decision has been reached at the present time.

Strategic Management Direction

Management Stance

As the scope of the networked society continues to expand,
IT is permeating every aspect of our daily lives, moving us
ever closer to a ubiquitous networked world, where
information sharing through the network is available
anytime, anyplace and with anyone. Moreover, IT is playing
an increasingly important role in the ability of customers
to manage their businesses. Nowadays, IT vendors must
recognize that customers do not simply look for suppliers
of products and services when selecting partners for
building and operating their IT systems. Rather, IT vendors
are expected to be true partners who, based on long-term relationships of mutual trust, can make appropriate
proposals and implement them through the entire IT

The customer is the starting point for everything we do and
think about at Fujitsu. By understanding in detail the
environment in which our customers operate and their
overall businesses, we are able to provide them with
effective proposals that are both concrete and timely.
Moreover, we will continue to strive to keep pace with the fast-changing markets and needs of our customers.

As a leader of the IT industry, we are firmly committed to continuously providing total solutions that utilize
high-quality products and services based on advanced
technology that offers superior performance and
reliability. In this way, we will further strengthen our
overall capabilities -- which range from cutting-edge
technology that incorporates the latest advances and
applications to a full complement of services -- and at the
same time contribute to our customers' businesses. We aim
by so doing to become management partners to our customers
and grow together with them.

Business Strategy and Priority Issues

We believe that, in today's uncertain economic and market conditions, our customers are giving priority to reducing
the cost of operating their IT systems and bolstering their competitiveness in order to promote further growth.

Today's IT systems are comprised of an increasingly wide
variety of hardware and software products, and along with
higher performance levels comes greater complexity.
Consequently, the task of operating them has become a
greater burden for customers. While, on the one hand,
systems are often separated along divisional lines, it is
becoming increasingly important to link them with external
systems, and the issue of interconnectivity among systems
is becoming increasingly crucial. In addition, there is
growing demand for the ability to integrate the overall
structure and management of corporate IT systems.

Fujitsu is uniquely positioned to offer our customer comprehensive solutions to their business problems through
the strategic utilization of information technology. We are
actively using this expertise to contribute to our
customers' business growth and expansion.

Below are some of the specific initiatives we are currently emphasizing.

Continually Providing Comprehensive Solutions

While increasing the level of interconnectivity among our customers' various divisional systems, we aim to achieve an integrated perspective on the overall chain of processes
relating to our customers' systems - from consulting and
planning through development, operation and maintenance -
and thereby help them to reduce their overall IT costs and strengthen the competitiveness of their operations. We are
not simply offering suggestions at the various stages in
these processes but rather continuously providing
comprehensive service proposals based on in-depth
understanding of the customers' management policies and

Strengthening the Infrastructure of Next-Generation IT

Today's IT systems are becoming increasingly sophisticated
and complex. In response, Fujitsu is intensifying its
commitment to develop and deploy TRIOLE, its
next-generation IT infrastructure initiative. TRIOLE
utilizes middleware to integrate open standard servers,
storage and network resources, bringing harmony to the
disparate parts of an IT system, including those
manufactured by other companies. Specifically, while
enhancing the technology we have accumulated in the
mainframe field in high-reliability design and superior
operational stability, we are utilizing our rich experience
and know-how in systems integration and producing templates
for highly-reliable systems integration. These advantages
enable us to offer our customers operational system
stability, faster system deployments, and scalability to
keep pace with the growth of their business.

Business Segment Initiatives

In our services and software business, we are continuing to strive to improve profitability by bolstering the
efficiency of application development and strengthening
project management. We are also rapidly shifting our
emphasis to growth markets such as services for top-tier manufacturers and retailers, healthcare, and local
government consolidation, in addition to growth fields as outsourcing, CRM, ERP, e-learning and mobile solutions.
Moreover, we are strengthening sales of our competitive
middleware products and aim to increase our share of that

In our platforms business, we are further strengthening our manufacturing prowess by taking various measures to boost productivity, such as initiating major productivity reforms
in our manufacturing facilities. Our efforts are not
limited to the manufacturing process. At every stage of our operations, including development, design and procurement,
we are working hard to improve product and service quality,
reduce development time and cut costs. Moreover, based upon
our TRIOLE next-generation IT infrastructure initiative, we
are promoting coordination with our software and services
unit to expand business, and we are laying the
organizational foundation to expand our business globally.

In our electronic devices business, as part of the
initiatives to improve our profitability, we are moving
quickly to focus our resources on markets in which we
expect high growth, such as logic ICs for home information appliances, mobile devices and networks. At the same time,
we are moving ahead with the development of advanced CMOS technology, which will further enhance the competitiveness
of our products. To launch, in a timely manner, the
products that meet our customers' needs, we are working to
speed up every process throughout our organization.

We have made cash flow management a major priority and are
taking various steps to improve our financial structure. In
the first half, we succeeded in reducing interest-bearing
debt through such means as the sales of equity holdings and
changing the status of our leasing affiliate into a company warranting equity-method accounting treatment. By
continuing to focus on improving the profitability of our
core operations as a top priority, while at the same time
promoting a more efficient use of our assets, we will make
further progress towards improving the company's financial

By continuously applying our efforts to the accomplishment
of these tasks, we are striving to become a global company
that is trusted by our customers and society, and that can
make a significant contribution to building a prosperous
and dynamic networked society.

Policy Regarding Minimum Lot Size for Trading Shares

Participation of individual investors in the equity markets
is increasing, and we recognize the importance of this
trend from the viewpoint of the revitalization of the
capital markets and the promotion of long-term, stable
holdings of the company's shares. Moreover, as a basic
principle, as part of our ongoing investor relations
activities, we inform investors about the company's
financial condition through active and appropriate
disclosure of company information.

With respect to lowering the minimum lot size for trading
the company's shares, we realize that such a move could
promote the participation of individual investors in the
equity market and, therefore, could be an effective means
of boosting the liquidity of the stock. Nevertheless, after considering the current stock price level, the number of shareholders, the current distribution of individual
shareholders and the market liquidity of Fujitsu's stock,
we have come to the conclusion that it would be premature
to reduce the minimum lot size at the present time.

Taking into account overall trends in individual stock
ownership and Fujitsu's stock price, we will carefully
consider what action might be appropriate in the future.

Earnings Projections for FY2003

After having undergone two painful years of restructuring,
there are signs that Fujitsu's financial results are
beginning to improve, with the company posting in the
second quarter its first year-on-year quarterly sales
growth in two years. With respect to the market environment
facing the IT industry, technological advances have made
digital cameras, DVDs, camera phones, and other digital
audio-visual equipment cheaper, lighter, and more
sophisticated, spurring an increase in demand, and the
company expects these trends to continue. In conjunction
with these trends, Fujitsu fully expects demand for
advanced broadband network infrastructure, particularly
servers and storage systems, to also increase.

At the present time there are some causes for concern about instability relating to the situation in Iraq and the
equity market, but the company feels that conditions are
ripe for an economic upturn in the second half. On the
other hand, globalization and technological progress are
combining to significantly accelerate the downward pricing
pressure on computer hardware in addition to software and
services. Fujitsu itself must therefore intensify the
globalization of its own operations, maintain its
technological superiority, strengthen its manufacturing
prowess, and implement operational reforms to generate
greater efficiencies, including additional cost savings.
Amid the major changes affecting the IT industry, Fujitsu
will continue to emphasize, above all, the company's customer-oriented perspective and fast responsiveness.

With respect to Fujitsu's projections for the full fiscal
year, the shift to the equity-method of accounting for the
company's leasing affiliate has resulted in a downward
revision of 50 billion yen in our net sales forecast. For
operating income, because of a profit deterioration in
software and services, the company expects not to be able
to meet its original profit targets in that business
segment. Fujitsu now expects, however, to offset that
amount through improved results in platforms and electronic
devices, so it is not changing its original projections for
the full year. The company's projections for net income
also remain unchanged.

Earnings projections for the third quarter are shown below.
In Fujitsu's business, sales tend to be concentrated at the
end of the fiscal year. Even though sales in the third
quarter are projected to be 100 billion yen lower than in
the second quarter, the company still expects to post an
operating profit and lay the foundation for stable

Fujitsu Limited Consolidated Earnings Forecast for Fiscal 2003

FY 2003 Change FY2002 (forecast) Since (reported) July Net Sales 4,750 billion -50 4,617.5 yen billion billion yen yen Operating 150 billion 100.4 billion Income yen yen Net Income 30 billion yen -122.0 billion yen

Earnings Forecast for Fiscal 2003, by Quarter

Q1 Q2 Q3 Q4 (reported) (reported) (forecast) (forecast) Net 938.7 1,203.1 1,100.0 1,508.0 Sales billion billion billion billion yen yen yen yen Operating -37.8 19.8 5.0 162.9 Income billion billion billion billion yen yen yen yen


* All yen figures have been converted to US dollars for convenience only at a uniform rate of $1=111 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
For details and supplemental information regarding
Fujitsu's FY2002 financial results, please see

All company/product names mentioned may be trademarks or registered trademarks of their respective holders and are
used for identification purposes only

This information is provided by RNS The company news service from the London Stock Exchange

Further inquiry note:
Yuri Momomoto or Scott Ikeda
Fujitsu Limited, Public and Investor Relations
TEL:+81 (0) 3-6252-2176
FAX:+81 (0) 3-6252-2783
Tel: +81(0) 3-6252-2176
FAX: +81(0) 3-6252-2783

Emittent: Fujitsu Limited 1-5-2 Higashi Shimbashi, Minato-Ku UK-1057123 Tokyo Tel: +81(0) 3-6252-2176 FAX: +81(0) 3-6252-2783 Email: WWW: ISIN: JP3818000006 WKN: 0354912 Indizes: Börsen: official dealing Frankfurter Wertpapierbörse, SWX Swiss

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Branche: Hardware
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