Annual Report 2004 CONTENTS 2 4 8 10 14 16 18 19 20 22 23 24 26 27 34 36 37 38 40 56 57 57 Consolidated Financial Highlights ………………………………… To Our Shareholders ……………………………………………… Management Direction ……………………………………… Principal Products and Services ………………………………… Customer Solution Profiles ……………………………………… Software & Services …………………………………………… Platforms …………………………………………………………… Electronic Devices ………………………………………………… Research & Development ……………………………………… Intellectual Property ……………………………………………… Environmental Involvement ……………………………………… Social Contribution Activities ……………………………………… Management ……………………………………………………… Five-Year Summary ………………………………………………… Management's Discussion and Analysis of Operations ………… Consolidated Balance Sheets ……………………………………… Consolidated Statements of Operations ………………………… Consolidated Statements of Shareholders' Equity ……………… Consolidated Statements of Cash Flows ………………………… Notes to Consolidated Financial Statements …………………… Independent Auditors' Report …………………………………… Principal Subsidiaries and Affiliates ……………………………… Shareholders' Data Cautionary Statement This annual report may contain forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Words such as "anticipates," "believes," "expects," "estimates," "intends," "plans," "projects," and similar expressions which indicate future events and trends identify forward-looking statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors: general economic and market conditions in the major geographic markets for Fujitsu’s services and products, which are the United States, EU, Japan and elsewhere in Asia, particularly as such conditions may affect customer spending; rapid technological change, fluctuations in customer demand and intensifying price competition in the IT, telecommunications, and microelectronics markets in which Fujitsu competes; Fujitsu’s ability to dispose of non-core businesses and related assets through strategic alliances and sales on commercially reasonable terms, and the effect of realization of losses which may result from such transactions; uncertainty as to Fujitsu’s access to, or protection for, certain intellectual property rights; uncertainty as to the performance of Fujitsu’s strategic business partners; declines in the market prices of Japanese and foreign equity securities held by Fujitsu which could cause Fujitsu to recognize significant losses in the value of its holdings and require Fujitsu to make significant additional contributions to its pension funds in order to make up shortfalls in minimum reserve requirements resulting from such declines; poor operating results, inability to access financing on commercially reasonable terms, insolvency or bankruptcy of Fujitsu’s customers, any of which factors could adversely affect or preclude these customers’ ability to timely pay accounts receivables owed to Fujitsu; and fluctuations in rates of exchange for the yen and other currencies in which Fujitsu makes significant sales or in which Fujitsu’s assets and liabilities are denominated, particularly between the yen and the British pound and U.S. dollar, respectively.