Integrated Report 2016 Fujitsu Group Forward-Looking Statements This Integrated 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. 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 key markets (particularly in Japan, Europe, North America, and Asia, including China); rapid changes in the high-technology market (particularly semiconductors, PCs, etc.); fluctuations in exchange rates or interest rates; fluctuations in capital markets; intensify- ing price competition; changes in market positioning due to competition in R&D; changes in the environment for the procurement of parts and components; changes in competitive relationships relating to collaborations, alliances, and technical provisions; potential emergence of unprofitable projects; and changes in accounting policies. Disclaimer regarding the Gartner Reports The Gartner Reports described herein, (the “Gartner Reports”) represent research opinions or viewpoints published as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Integrated Report) and the opinions expressed in the Gartner Reports are subject to change without notice. Fujitsu Group Integrated Report 2016 01 THE FUJITSU WAY CORPORATE VISION Through our constant pursuit of innovation, the Fujitsu Group aims to contribute to the creation of a net- worked society that is rewarding and secure, bringing about a prosperous future that fulfills the dreams of people throughout the world. Since our founding in 1935, we at Fujitsu have continu- ously adapted to ever-changing business and social environments and, in tandem with this, have passed along the unbroken chain of our DNA inheritance. The Fujitsu Way is the guiding light of our organization’s management and the actions of each and every one of our 160,000 employees. Based on this immutable principle, we place the utmost importance on relationships of trust with our customers and think and act from their point of view. We pledge to contribute to the creation of a better society by continually embracing the challenge of innovation. Representative Director and President CORPORATE VALUES What we strive for: Society and In all our actions, we protect the environment Environment and contribute to society. Profit and We strive to meet the expectations of customers, Growth employees, and shareholders. Shareholders We seek to continuously increase our corporate and Investors value. Global Perspective We think and act from a global perspective. What we value: Employees We respect diversity and support individual growth. Customers We seek to be their valued and trusted partner. Business Partners We build mutually beneficial relationships. Technology We seek to create new value through innovation. Quality We enhance the reputation of our customers and the reliability of social infrastructure. 02 Fujitsu Group Integrated Report 2016 CONTENTS PRINCIPLES Global Citizenship We act as good global citizens, FUJITSU GROUP OVERVIEW attuned to the needs of society and 02 THE FUJITSU WAY the environment. 04 FUJITSU AT A GLANCE Customer-Centric We think from the customer’s 06 FINANCIAL HIGHLIGHTS / ENVIRONMENT, SOCIETY, AND Perspective perspective and act with sincerity. GOVERNANCE HIGHLIGHTS 08 MESSAGE FROM THE REPRESENTATIVE DIRECTOR AND CHAIRMAN Firsthand We act based on a firsthand under- 10 BOARD OF DIRECTORS / AUDIT & SUPERVISORY Understanding standing of the actual situation. BOARD MEMBERS Spirit of Challenge We strive to achieve our highest goals. 12 MESSAGE TO SHAREHOLDERS AND OTHER INVESTORS Tatsuya Tanaka Representative Director and President Speed and Agility We act flexibly and promptly to achieve our objectives. Teamwork We share common objectives across PROGRESS IN BUSINESS MODEL organizations, work as a team, TRANSFORMATION and act as responsible members of 18 PART 1 CREATING VALUE THROUGH DIGITAL INNOVATION the team. 20 Interview: Change Seen from the Digital Innovation Front Lines 24 PART 2 EVOLUTION OF THE GLOBAL MATRIX ORGANIZATION 28 Business Overview by Region 30 Review of Operations by Region MANAGING CAPITAL TO ACCELERATE GROWTH STRATEGIES 40 CSR AT THE FUJITSU GROUP 42 STAKEHOLDER DIALOGUE 44 SIX TYPES OF CAPITAL REVIEW OF OPERATIONS 52 PERFORMANCE HIGHLIGHTS 54 BUSINESS OVERVIEW 56 OPERATIONAL REVIEW AND OUTLOOK CODE OF CONDUCT We respect human rights. We comply with all laws and CORPORATE GOVERNANCE / CORPORATE DATA regulations. 63 ROUNDTABLE DISCUSSION AMONG EXTERNAL DIRECTORS We act with fairness in our business 68 MANAGEMENT dealings. 70 CORPORATE GOVERNANCE We protect and respect intellectual 78 RISK MANAGEMENT property. 80 INFORMATION SECURITY MANAGEMENT We maintain confidentiality. 82 SHAREHOLDER DATA We do not use our position in our 83 FUJITSU GROUP’S INFORMATION DISCLOSURE organization for personal gain. Fujitsu Group Integrated Report 2016 03 FUJITSU GROUP OVERVIEW FUJITSU AT A GLANCE The Fujitsu Group has established a global service structure with operations in more than 180 countries around the world. Fujitsu’s IT services business ranks top by market share in Japan and fifth worldwide, a record that reflects our outstanding technologies and long track record in buildinglarge-scale, cutting-edge systems. Revenue / Operating Profit (Year ended March 31, 2016) Breakdown of Revenue by Region (Year ended March 31, 2016) Overseas Japan Oceania Asia 40% 60% 2% 9% The Americas 8% Revenue ¥4,739.2 billion Operating profit EMEIA 18% ¥120.6 billion Japan 63% Overseas Japan 4% 96% Note: Percentage of operating profit is calculated after excluding elimination and corporate. Note: Percentage of revenue is calculated after excluding elimination and corporate. Global Presence EMEIA Japan 130 companies 205 companies 29,000 people 99,000 people Asia 2 locations 2 locations The Americas 90 companies 50 companies 18,000 people Oceania 8,000 people 3 locations 39 companies 2 locations Number of consolidated subsidiaries 4,000 people Number of employees 0 locations Number of R&D bases As of March 31, 2016 04 Fujitsu Group Integrated Report 2016 Fujitsu’s Position in the IT Services Market GLOBAL IT SERVICES SALES IN 2015 JAPAN IT SERVICES SALES IN 2015 FUJITSU OVERVIEW GROUP (Billions of US dollars) (Billions of US dollars) 11 60 12 1 1 6 7.5 0 8 2 5.9 2 22 1 20 4 0 IBM Aenture Deoitte HP Fujitsu 0 Fujitsu NTT Data NEC Hitai IBM PROGRESS IN BUSINESS MODEL TRANSFORMATION Source: Gartner, “Market Share: IT Services 2015,” April 6, 2016. Chart created by Fujitsu based on Gartner data. IT Services: Market Share in Japan Fujitsu has an abundant track record in delivering IT systems tailored to customers’ business operations and specific needs. We pride ourselves on high shares of IT services markets across a wide industry spectrum. A key Fujitsu strength is the ability to understand customers’ business objectives and challenges and to GROWTH STRATEGIES ACCELERATE CAPITALMANAGING TO together drive innovation forward. We enhance value for customers by honing specialist knowledge and expertise cultivated over many years through applying leading-edge digital technologies. 2015 MARKET SHARE BY CUSTOMER INDUSTRY (TOTAL VALUE OF EACH MARKET) Finance (Bank and securities / Insurance) Manufacturing ¥2,918.2 billion ¥2,784.1 billion REVIEW OF OPERATIONS Distribution (Retail / Wholesale / Transport) ¥1,561.0 billion No.3 No.1 No.1 (10.6%) (8.3%) (13.0%) Public sector DATA / CORPORATE GOVERNANCE CORPORATE Communications / Media / Services Public (Electricity and gas / Medical services / Education) ¥1,483.6 billion ¥1,784.7 billion ¥529.2 billion No.1 No.1 No. (23.9%) (11.2%) 1 (17.1%) Source: Gartner, “Market Share: IT Services 2015,” April 6, 2016. Chart created by Fujitsu based on Gartner data. Calculations performed by Fujitsu. Fujitsu Group Integrated Report 2016 05 FUJITSU GROUP OVERVIEW FINANCIAL HIGHLIGHTS / ENVIRONMENT, SOCIETY, AND GOVERNANCE HIGHLIGHTS FINANCIAL HIGHLIGHTS Fujitsu Limited and Consolidated Subsidiaries The Fujitsu Group adopted International Financial Reporting Standards (IFRS) in fiscal 2014. NET SALES (REVENUE) AND PERCENTAGE OF SALES OUTSIDE JAPAN OPERATING PROFIT AND OPERATING PROFIT MARGIN (¥ Billions) (%) (¥ Billions) (%) 6000 600 200 16 60 62 2 432 6 1 12 6 4 37.8 10 3.8 4.5 33.7 2 12 000 00 10 1 2 100 0 2 2 2000 200 20 0 1 0 2012 201 201 201 2016 00 0 2012 201 201 201 2016 00 IFRS IFRS (IFRS) IFRS IFRS (IFRS) (Fiscal year ended March 31) (Fiscal year ended March 31) Net sales (revenue) (left scale) Percentage of sales outside Japan (right scale) Operating profit (left scale) Operating profit margin (right scale) Percentage of sales outside Japan +0.4 of a percentage point Up Operating profit margin −1.3 percentage points Down Revenue decreased 0.3% year on year. Due to exchange rates, the ratio of revenue outside Operating profit margin decreased 1.3 percentage points year on year due to the recognition Japan increased 0.4 of a percentage point year on year, to 40.0%. of business model transformation expenses and to an increase in US dollar- denominated component procurement costs at European bases, which accompanied