April 1, March 31, Fujitsu Broad Solution & Consulting, Inc. URL: Securities code: 4793

Transcription

1 Apri 1, March 31, 2004 Fujitsu Broad Soution & Consuting, Inc. URL: Securities code: 4793

2 Highight of financia resuts for 41 st term Resuts of operations 32, st term (Units: Miions of yen) Y/Y comparison +3.9% Ordinary income % Net oss 1,392 Financia standing Sharehoders 12, st term (Net profit of 589 miion in the previous year) (Units: Miions of yen) Y/Y comparison -11.4% Tota assets 24, % Share of tota saes by type of business Hardware 1, % Software Services 10, % (Units: Miions of yen) Production and of Packaged Software % Custom Software Deveopment 21, % To our sharehoders TO OUR SHAREHOLDERS Takao Kaneko, President (CEO) We are peased to provide a business overview of the Company for 41 st term (Apri 1, March 31, 2004). We regret to report that we have registered a oss for the current term, primariy attributabe to a major project that proved unprofitabe. We discontinued this project during the term. Based on this experience, we wi endeavor to create a more sound corporate structure and to improve profitabiity by improving risk for projects on a company-wide basis. With respect to term-end dividends, we pan to continue our poicy of providing stabe dividends in response to the support we receive from our sharehoders. Consequenty, we wi pay a dividend of 6 per share. Business review During the term under review, athough business conditions were improving in the information service industry, the environment remained severe because of suggish information technoogy investment and fierce price competition. In response, we increasingy focused on independent business, pursuing a poicy which is moving us away from conventiona business centered on contract deveopment. In software deveopment, we used the technoogy and know-how that we have accumuated through deveopment for customers in the information and teecommunications sectors in areas in which we exce. In particuar, in the embedded system business, we have promoted the deveopment of a diverse range of embedded software, such as systems for 2.5G and 3G mobie phone services, systems for digita home appiances with communications capabiities in the ubiquitous society, and systems for vehice navigation. Meanwhie, in software services, we operated our soution business primariy through our proprietary package software, and focused on strengthening our marketing expertise and bostering our service menu. We aso provided services ranging from consuting to outsourcing, to further expand this business. As a resut, saes for the term reached 32,815 miion (up 3.9% year on year). In profit terms, however, we were registered an ordinary income of 183 miion in the term under review, ower than the figure recorded for the previous term (actuay an 83.4% decine). This was primariy attributabe to a decine in contract prices and an increase in costs caused by unprofitabe projects, which offset our efforts to significanty reduce costs. We aso registered extraordinary osses of 2,457 miion, which consisted of osses on the vauation of uncoectibe inventory, the destruction of goods in process, the costs of projects in which the deveopment of software was suspended under agreement with customers to avoid further osses arising from the continuation of deveopment, and osses on the vauation of securities. As a resut, we posted a net oss of 1,392 miion for the term (compared with a net income of 589 miion in the previous term). An overview by type of business foows: Custom Software Deveopment Looking at our activities in the information and teecommunications sectors, we restructured key systems of major teecommunications carriers and shipped interna systems to them on an ongoing basis. We aso deveoped systems for terrestria digita broadcasting which started this year, and shipped those systems to key TV broadcasting stations. In the deveopment of embedded systems, based on the further accumuation of technoogy invoving mobie phones, we were abe to increase saes by approaching a number of domestic and overseas manufacturers. In addition, in the digita consumer eectronics area, we shipped an array of systems for DVD recorders and digita teevision sets to major consumer eectronics firms. In the ITS* 1 market, we deveoped vehice information termina-reated systems, such as car navigation systems, for major automakers. In the pubic sector, we continued our invovement in the deveopment of the socia insurance system of the Ministry of Heath, Labour and Wefare, the posta savings system of Japan Post, and the base system and eectrica appication system of the Ministry of Finance. 1 2

3 To our sharehoders TO OUR SHAREHOLDERS In the financia services sector, we deveoped key systems at major financia institutions. And for the distribution industry, we shipped POS systems* 2 and product anaysis systems. In addition, we created customer systems and DWH* 3 for the eectric power sector. As a resut, saes reached 21,036 miion (up 3.2% year on year) Software services We provide our cients with a diverse array of software services, such as the provision of soutions and the creation of network systems. We aso provide operationa support, as we as a temporary staffing service. In our soution business, we enjoyed heathy saes of BI* 4 soutions, in which data is anayzed and used in the context of product and customer information by teecommunications carriers and in the financia services and distribution sectors. We aso registered stronger saes of security soutions using our security software as core programs. This performance refected the introduction of persona data protection egisation and heightened needs for security. With respect to the IP teephone soution, using IP networks* 5, we promoted saes to Japanese corporations operating in China. We successfuy received system orders that wi enabe us to further deveopment this business. We aso promoted saes of the ERP* 6 soution CAP 21, and received a soid voume of orders. For other services, we received orders for such services as the creation of network systems, system operation and maintenance, and monitoring of systems operation. We aso found demand for outsourcing services for centra government agencies and major carriers. In our temporary staffing service, we dispatched engineers to major teecommunications carriers, among other cients. As a resut, saes were 10,308 miion (up 11.7% year on year). Production and of Packaged Software For saes of our proprietary package software, we focused mainy on the F TRAN series or products, * our estabished fie conversion products, and the FENCE series of security products. In particuar, the FENCE series proved popuar as core security soutions, with strong saes to financia institutions and oca municipaities. However, with users postponing investment in information technoogy, saes fe to 416 miion (down 34.6% year on year). Hardware In saes of system equipment, we sod hardware products incidenta to the package software SAGENT. We had purchased from the suppier and sod it as part of soution business as we as for the creation of network systems. came to 1,054 miion (down 20.4% year-onyear). Chaenges for the Company Athough the Company registered an extraordinary oss in the term under review, it pans to use that experience to take the foowing measures to improve profitabiity and enhance its competitiveness. With these measures, we beieve that we wi be abe to generate profits, even in a severe environment: (1) Promoting independent businesses By bostering our technoogies and know-how in embedded systems and giving them a greater weighting, we wi activey expand our operations in the digita consumer eectronics and ITS spheres, thereby estabishing a competitive advantage. We wi aso add new product ines invoving package products and expand our soution menu, to se more products that wi enabe us to better promote independent businesses. (2) Improving profitabiity [1] We wi not ony stricty review order status, the deveopment environment, and estimates from the order negotiation stage, but we wi aso enhance risk at the eve according to the deveopment size of projects and the degree of risk; [2] To reduce costs, the entire Company wi focus on measures such as reducing personne expenses by improving the effectiveness of deveopment operations and controing orders for cooperating firms; [3] We wi continue to improve the productivity of deveopment and the quaity of our software products by promoting comprehensive standardization for project. Expanation of terms: *1 <Inteigent Transport Systems (ITS)> ITS is a new traffic system that can be used to resove road traffic probems, such as accidents and congestion, by networking peope, vehices, and roads through information using cutting-edge information and teecommunications technoogies. It comprises a few eementa technoogies, incuding the Vehice Information and Communication System Center (VICS) and the eectric to coection system (ETC). *2 <POS system> A POS system is one that records information on the sae of products each time a product is sod in a store, and uses the resuts of cacuation for inventory contro or as marketing materia. The system is aso known as a point of sae system. *3 <Data Warehouse (DWH)> The DWH is a system used to obtain information that is usefu for by accumuating data that arises from activities in the key system, and anayzing that data by purpose. (3) Deveopment of human resources We wi encourage the strategic deveopment of human resources based on the career framework (deveopment through a panned career path). This wi enabe us to deveop engineers with sophisticated skis and cost awareness, giving them the abiity to respond to customer needs. The arriva of the ubiquitous society, in which information can be exchanged via the Internet at any time and any pace, has brought sharp change to business and ifestyes. The Company wi correcty identify new trends, and wi focus its resources on a shift to a soution and service business, moving away from conventiona operations centering on contract deveopment. This approach wi enabe the Company to achieve sustained growth. We hope that we can continue to count on the support of our sharehoders as we pursue this initiative. June 2004 *4 <Business Inteigence (BI)> BI refers to the effective use of information that a company has accumuated for prompt, accurate decision-making and greater business efficiency throughout the company by anayzing the information. *5 <IP network> The IP network is a network in which a communications route is created based on Internet Protoco (IP). IP teephones that use IP networks can provide services at a ower cost compared with conventiona teephone networks. *6 <Enterprise Resource Panning (ERP)> ERP denotes a approach whereby resources are competey administrated and controed virtuay in rea time. 3 4

4 Financia statements TO OUR SHAREHOLDERS Note: Tota assets Baance sheet (as of March 31, 2004) Investments and ong-term oans Investment securities 140,641 Investment in affiiate 52,925 Tota investments and ong-term oans Property, pant and equipment 193,567 Land 1,268,884 Buidings 1,844,426 Structures 30,466 Equipment 845,955 Accumuated depreciation (1,480,310) Tota property, pant and equipment 2,509,423 Others assets 1,896,205 Tota fixed assets 4,599,195 Tota assets 24,114,576 Notes: 1. s are rounded down to the nearest one thousand yen. 2. Caims in affiiates (short term) 6,668,461, Debts due to affiiates (short term) 64,412, The items of inventories Merchandises 4,341 Materias 6,123 Goods in process 3,331,982 (Unit: Thousand-yen) Tota Long-term iabiities 3,253,700 Tota iabiities 11,720,015 Sharehoder s Common stock Authorized-43,200,000 shares Issued-11,800,000 shares 1,970,000 Capita surpus 3,012,500 Retained earnings 7,418,085 Unreaized gain on investment securities, net of tax (6,024) Tota sharehoders 12,394,561 Tota iabiities and sharehoders' 24,114,576 Profit and oss statement (Apri 1, March 31, 2004) (Unit: Thousand-yen) Assets Liabiities and Sharehoders Net Seing, genera and administrative expenses 3,208,561 2,692,346 Current assets Current iabiities 8,466,315 Operating income 516,215 Cash & cash equivaents 4,323,278 Other income Notes receivabe 34,480 Accounts payabe 3,874,529 Interest income and dividends 19,945 Misceaneous income 71,688 91,634 Accounts receivabe 9,988,354 Short-term borrowings 2,300,000 Other expenses Marketabe securities 10,526 Accrued expenses 1,832,880 Interest expense 3,108 Misceaneous expenditure 421, ,350 Inventories 3,342,447 Other current iabiities 458,905 Ordinary profit 183,498 Other current assets 564,066 Extraordinary osses Tota current iabiities 8,466,315 Loss from canceation of commissioned software deveopment 1,239,785 Deferred tax assets 1,261,226 Long-term iabiities 3,253,700 Aowance for doubtfu (9000) account Provision for empoyee 3,131,594 Tota current assets 19,515,381 retirement benefits Ordinary income Provision for retirement Fixed assets 122,105 benefits to officers Sharehoders Net income or oss (-) per share (yen) As the method for cacuating net income per share has changed since the 40 th term, net income per share for 39 th term is aso indicated based on the same cacuation method as that used in the 40 th term. Inventory written down 1,154,742 Loss from revauation of investment securities 63,282 2,457,810 Net oss before tax 2,274,311 Income taxes, inhabitant taxes and business taxes 13,012 Adjustment of income taxes (894,497) (881,484) Net oss 1,392,826 Retained profits brought forward 159,069 Interim dividend amount 70,800 Undisposed oss at end of period 1,304,557 Notes: 1. s are rounded down to the nearest one thousand yen. 2. Transactions with affiiates of operating transactions Purchases 19,816,176 (thousand-yen) 331,557 (thousand-yen) of transactions other than operating transactions 191,156 (thousand-yen) 3. Net oss per share Yen Profit appropriation Undisposed oss at end of period 1,304,557,684 Reversa of reserve for programs 30,485,340 Reversa of specia depreciation aowances 6,159,767 Reversa of genera reserve 1,530,000,000 Tota 262,087,423 The foowing appropriation is made: Dividends 70,800,000 ( 6 per share) Specia depreciation aowances 45,713,743 Retained profits carried forward 145,573,680 Note: Interim dividends of 70,800,000 ( 6 per share) were paid on November 28, (Unit: Yen) Net income or oss (-) per share -1,392

5 Using our comprehensive capabiities to promote operations in the embedded system area Focusing on enhancing the soution business We wi endeavor to step up panning and design of products, tota soutions from deveopment to assessment and examination, and package products for embedded systems, in markets such as next-generation mobie phones, digita consumer eectronics, and ITS that demand sophisticated functions. We beieve that this initiative wi enabe us to increase saes. Primary target areas and priority measures With the growing use of broadband communications, mobie area markets, incuding markets for digita consumer eectronics, ITS, and mobie phones, are ikey to expand. Meanwhie, corporate IT investment in the security, ERP (Enterprise Resource Panning), and BI (Business Inteigence) areas has been increasing steadiy. We wi improve our capabiity to provide soutions in these areas, to estabish an independent business base. Mobie phones Digita consumer eectronics Provide embedded software programs for third-generation mobie phones that require increasing functionaity Expand operations in China where demand for mobie phones is set to grow Deveop mobie/security-use software packages for mobie phones that boast greater functionaity, incuding e-commerce Provide embedded software programs for DVD recorders and digita TVs Expand and strengthen cooperation with semiconductor manufacturers Expand the IP TV teephone patform/soution MOBILE DIGITAL CONSUMAR ELECTRONICS Expand the examination business to check mafunctions of digita home appiances (V-abo), and provide a ifeine for them Logistics Demand forecast (SCP) Inventory Settement Workfow Mobie connection Marketing anaysis Finance/genera accounting (ERP) Management anaysis (BI) Groupware promotion (SFA) Fee coection Contact Center Maintenance and inspection ITS area INTELLIGENT TRANSPORT SYSTEMS Approach car navigation termina manufacturers with DVD technoogy Expand operations reated to server systems used for the transmission of information in ITS Look at entering the Chinese market in cooperation with Japanese corporations Deveopment (CAD/PDM) Production Security Procurement/ purchases Middeware patform HR and wages IP Project Product panning Inteigent Transport Systems (ITS) is a generic name for new road traffic systems created to contro peope, roads, and vehices under one tota system. ITS empoys the cutting-edge information and teecommunications technoogies for the purpose of improving road safety, transport efficiency, and comfort. in the embedded system area FY2003 (resuts) * Other incudes ITS. Other 0.8 biion 17% Mobie Digita consumer eectronics 1.3 biion 30% phones/phs 2.4 biion 53% 4.5 biion Priority items in the soution business Merchandizing new soutions in the information security and IP areas Bostering the functions of CAP 21 ERP package products for the construction sector Promoting the provision of soutions in the corporate mobie area by appying the embedded system technoogy to mobie middeware patforms, etc. Enhancing the consuting capabiity in the financia/genera accounting (ERP) area as we as the anaysis (BI) area 7 8

6 Company profie TO OUR SHAREHOLDERS Stock information STOCK INFORMATION As of March 31, 2004 As of March 31, 2004 Trade name: FUJITSU BROAD SOLUTION & CONSULTING Inc. Estabishment: November 20, 1963 Capita: Number of empoyees: 1,883 Primary business ines 1,970,000,000 yen The Company engages in software deveopment, software services, saes of package products, and saes of system equipment. Its primary businesses are as foows: Custom Software Deveopment Software Services Production and of Packaged Software Hardware Business appication software Embedded systems Contro systems for networks and precision instruments, etc. Basic software such as patforms and middeware Soution service System integration service Creation/ operation service reated to the Internet and LAN Outsourcing service Temporary staffing service Package software deveoped by the Company (Too package, security package, groupware package, ERP package) System equipment and peripheras Package software of other companies Directors and auditors (as of June 29, 2004) President (CEO): Executive Managing Standing Auditor: Auditor: Auditor: Takao Kaneko Haruyuki Kodama Mitsuhiro Nakata Hiromichi Hirata Tsuneyoshi Ishii Kazuhiro Eguchi Hirokazu Kadowaki Tsugio Niijima Hiroshi Asakawa Seishi Osato Kazuhiko Kato Takashi Nakamura Notes: 1. Hiromichi Hirata, Director, is an outside director as stipuated in Artice of the Commercia Code. 2. Kazuhiko Kato, Auditor, and Takashi Nakamura, Auditor, are outside auditors as stipuated in Artice 18-1 of the Law for Specia Exceptions to the Commercia Code Concerning Audits, etc., of Kabushiki-kaisha. Audit corporation: Shin Nihon & Co. Primary offices Head office: Gate City Ohsaki East Tower 11F, , Osaki, Shinagawa-ku, Tokyo , Japan Deveopment center: Branch: Tokyo Deveop Center (Minato, Tokyo) Fukuoka Deveop Center (Hakata, Fukuoka, Fukuoka) Sendai Branch (Miyagi), Numazu Branch (Shizuoka), Osaka Branch (Osaka) Human resources center: Tokyo Human Resources Center, Osaka Human Resources Center State of business combination The Company s parent is Fujitsu Ltd., which hods 6,660,000 shares in the Company (share of voting rights: 56.47%). The Company has been commissioned by its parent to deveop software, and saes from such activity account for 60.4% of tota saes. Authorized share capita: Shares outstanding: Number of sharehoders: 11,817 Major sharehoders 43,200,000 shares 11,800,000 shares Equity stake in the Company Name of sharehoder No. of shares hed Percentage shares % Fujitsu Ltd. 6,660, Onoe Kigyo K.K. 432, Fujitsu BSC empoyee stock ownership society 149, UBS Luxembourg S.A. 143, The Chase Manhattan Bank N.A., London SL Omnibus Account 80, Japan Trustee Services Bank, Ltd. 66, Nikko City Trust Bank Co. 58, Hidefumi Ito 50, Godman Sachs Internationa 40, Noriaki Kato 34, Note: The Company has no in major sharehoders. Acquisition, disposa, and ownership of treasury stock No reevant item Financia institutions/ Distribution of number of securities companies shares by sharehoder 1.43% Individuas/other 34.95% Foreign companies 2.25% Distribution by No. of shares hed Other corporations 61.37% 1 stock trade units 12.89% 5,000 stock trade units 56.44% 1,000 stock trade units 6.15% 5 stock trade units 5.48% 10 stock trade units 11.60% 50 stock trade units 2.47% 500 stock trade units 2.16% 100 stock trade units 2.81% 9 10

7 Information on cerica operations invoving shares Stock-transfer agent: Handing office: Mai contact address Teephone inquiry address UFJ Trust Bank Limited. UFJ Trust Bank Limited., Corporate Agency Department , Higashisuna, Koto-ku, Tokyo , Japan Te (+) URL Pace of transfer Any UFJ Trust Bank Limited. branch Fisca year end March 31 Annua meeting of sharehoders Hed in June Record date Annua meeting of sharehoders/dividends March 31 Interim dividends September 30 Other record dates Record dates wi be set by giving prior pubic notice. Number of one stock trade unit: 100 shares Newspaper in which pubic notices are made Nihon Keizai Shimbun Each sharehoder can inspect the baance sheet and profit and oss statement at the Company s website ( FUJITSU BROAD SOLUTION CONSULTING, Inc. Gate City Ohsaki East Tower 11F, , Osaki, Shinagawa-ku, Tokyo , Japan Te: (+) (main number), Fax: (+) URL: