Fujitsu Limited

euro adhoc: Fujitsu Limited
Notice Regarding Signing of Exchange Offer Agreement (E)

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Fujitsu Limited

                                                                            Fujitsu Support and
Service Inc.

                      Notice Regarding Signing of Exchange Offer Agreement

Tokyo, May 17, 2004 - Fujitsu Limited ("Fujitsu") and Fujitsu Support and Service Inc. ("Fsas") today announced that, in accordance with decisions taken by their respective boards of directors, they have signed an agreement for an exchange of shares whereby Fsas will become a wholly owned subsidiary of Fujitsu. Pending ratification of the exchange offer agreement at Fsas' Annual Shareholders' Meeting, scheduled to be held June 29, 2004, the exchange of shares is expected to take place on October 1, 2004. In accordance with 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 Fsas a Wholly Owned Subsidiary through Exchange of Shares Information technology has become commonplace in business activities as well as in society and daily life, and the convenience it provides is rapidly expanding in diverse fields. Along with the increasing sophistication of IT usage, IT is becoming more and more crucial to customers' businesses. Accordingly, customers are increasingly looking for comprehensive solutions spanning the entire IT system lifecycle from partners who can demonstrate a deep understanding of their overall business and operating environment, and with whom they can establish long-term relationships based on trust.

In order to enhance full IT lifecycle support to its customers, Fujitsu has been working to realign its business structure to one that is simple and straightforward from the customer's standpoint. Measures to date have included bringing together its systems engineering and sales organizations to create customer-centric teams and designating systems engineer liaisons for specific customers.  Going forward, through actions such as the following, the company intends to further integrate its sales and systems engineering units and reform its business structure including group companies to enhance the customer-centric nature of its organization.

    (1) Create a simple and straightforward organizational     structure from thecustomer's point of view.     (2) Consolidate the point of contact with the customer.     (3) Clarify functions and responsibilities within the Fujitsu Group.     (4) Unify IT infrastructure and promote information sharing across the group.

The decisions today by the boards of Fujitsu and Fsas to make Fsas a wholly owned subsidiary of Fujitsu represent one step in this process.  Through this realignment, Fujitsu will enhance its systems support business and pursue further business expansion leveraging the area of operational services, for which strong growth is expected.

Through consolidation and integration of both companies' resources, Fujitsu will strive to make its systems support and operational services organizational structure easier to understand from the customer's perspective and improveservice quality and efficiency.   In addition, through the integration and optimal alignment of resources within the group and further strengthening of links between companies, Fujitsu aims to expand its high value-added business covering the operational portion of the IT system lifecycle.

Through the efforts announced today, Fujitsu believes that it will be able to improve the quality of its services, as well as its responsiveness in meeting customers' changing IT needs, which are being impacted by rapid shifts in their businesses.

2. Details Regarding Exchange of Shares

(1) Calendar
May 17, 2004        Ratification of exchange offer agreement by boards
                          of directors Signing of exchange offer agreement
May 18, 2004        Exchange offer notification (Fujitsu)
June 29, 2004*    Ratification of exchange offer agreement at Fsas
                          Annual Shareholders' Meeting
October 1, 2004* Date of share transfer
Late Nov., 2004* Issuance of stock certificates

* Planned

(2) Share Exchange Ratio

                                        Fujitsu Limited                            Fsas
                                        (Parent Company)          (Wholly Owned
Share Exchange Ratio                  1                                 2.72

Note: 1. Share Allocation Ratio     An allocation of 2.72 shares of Fujitsu Limited common stock will be issued for 1 share of Fsas common stock.  However, Fujitsu's shareholding of 32 million shares of Fsas common stock will not be exchanged.

2. Basis for Determining Share Exchange Ratio     The share exchange ratio was agreed upon through discussions between Fujitsu and Fsas, based on analyses provided by Nikko Citigroup Limited, the financial advisor for Fujitsu, and KPMG Corporate Finance K.K., the financial advisor for Fsas.

3. Third Parties' Determination Regarding Share Exchange Ratio and the Basis for and Methods of Calculation

      Nikko Citigroup calculated the share exchange ratio through
    consideration of methods such as market price analysis, discounted
cash flow analysis, and comparable transaction premiums analysis.

    KPMG Corporate Finance K.K. based its calculations on methods including market price analysis and discounted cash flow analysis.

4. Number of New Shares to Be Issued by Fujitsu in Conjunction with Exchange of Shares Fujitsu will issue 68,054,400 shares of its common stock.

5. Dividend Calculation Date     The dividends payable on the new shares to be issued upon the share exchange will be calculated from October 1, 2004.

3. Summary Information on Companies Exchanging Shares

                                                                         (As of March 31, 2004)
(1)Trade Name                      Fujitsu Limited         Fujitsu Support and
                                                                            Service Inc.
                                    (company becoming wholly (company becoming  
                                      owning parent company)  owned subsidiary)

(2)Principal              Development, manufacture,        Planning, design,
Lines of Business      sales and service of products deployment,
                                 in the fields of Software and operation, and
                                 Services, Information              of information
                                 Telecommunications Equipment
                                 and Electronic Devices

(3)Date of                 June 1935                                 March 1989
(4)Registered            Kawasaki City, Kanagawa      Shinagawa-ku, Tokyo
    Head Office
(5)Representative      Hiroaki Kurokawa, President Tatsuhiko Ohtaki,
(6)Capitalization      324,624 million yen              9,401 million yen

(7)Shares Issued        2,001,962,672 shares          57,020,000 shares

(8)Shareholders' Equity      934,603 million yen      52,623 million yen

(9)Total Assets              3,022,975 million yen      124,264 million yen
(10)Fiscal Year-End        March 31                            March 31

(11)Employees                 34,836                                4,380
(12)Major Customers  Governmental entities, Fujitsu Limited, Fujitsu
                                 telecommunication carriers,    Group companies,
                                 manufacturers, distributors,  institutions,
                                 and financial institutions      entities and

(13)Principal            The Master Trust Bank of         Fujitsu Limited
Shareholders            Japan, Ltd. (Trust Account)
and Ownership                                         8.00%                      56.13%
as of March 31, 2004 Japan Trustee Services Bank,  Japan Trustee
                                          Ltd. (Trust Account)        Bank,Ltd.
                                                                 6.68%         3.98%
                                        Fuji Electric Holdings        Trust&Custody
                                        Co., Ltd  Services              Bank,Ltd
                                                                 3.90%         2.54%

                                        Mizuho Trust & Banking Co.,The Master
                                                                                  Trust Bank of
                                 Ltd. Retirement Benefit Trust  Japan, Ltd.
                                (for Fuji Electric Systems
                                    Co., Ltd.)
                                                                 3.04%          2.33%
                                The Chase Manhattan  
                                Bank NA                 Fsas Employee Stock
                                London                  Ownership
                                                                 2.75%          1.92%

(14)Major Banks    Mizuho Corporate         Mizuho Bank, Ltd.
                            Sumitomo Mitsui
                            The Bank of Tokyo-Mitsubishi,
(15)Relationship  Capital         Fujitsu Owns 56.30% of Fsas'
Between                                      outstanding
the Parties                                shares, including indirect holdings.
                            Personnel      Two of Fujitsu's directors/employees
                                                 also serve as Fsas directors.
                            Business         31.4%  (7.13 billion yen for the  
                                                 year ended March 31, 2004) of Fsas'
                                                 revenues are generated from
                                                  business with Fujitsu

                                          (billion yen, except for per share data)
    (16) Financial Results for the Three Most Recent Fiscal Years

                                                                 Fujitsu Limited                  
  Fiscal Year Ended                         March                March         March  
                                                         2002                2003          2004    
  Net Sales                                    3,034.4          2,695.0      2,788.5

  Operating Income (Loss)                 (54.6)              21.8          32.9

  Recurring Profit (Loss)                 (81.5)                3.0          38.3

  Net Income (Loss)                         (265.1)          (175.0)         17.0

  Net Income (Loss) per                 (133.74)          (87.48)         8.49
  Share (Yen)                                                                                        
  Annual Dividend per Share                    5                    0                3

  Shareholders' Equity per              479.40            385.49        467.18
  Share (Yen)                                                                                        

                                                  Fujitsu Support and Service Inc.      
  Fiscal Year Ended                          March                March        March  
                                                         2002                  2003         2004  
  Net Sales                                      209.5                 207.5        227.1

  Operating Income (Loss)                  9.8                    9.9          9.0

  Recurring Profit (Loss)                  8.4                    8.5          7.7

  Net Income (Loss)                            4.2                    4.3          6.4

  Net Income (Loss) per                  74.11                 75.12      111.11
  Share (Yen)                                                                                        
  Annual Dividend per                          15                      10            10
  Share (Yen)                                                                                        

  Shareholders' Equity per            778.26                 828.22    939.30
  Share (Yen)                                                                                        

4. Situation Following Share Exchange (1) Capitalization Fujitsu's capitalization will not increase as a result of the share exchange. (Fujitsu's capitalization as of March 31, 2004, was 324,624 million yen.) All net assets acquired through the share exchange will be allocated to capital reserves.

(2) Impact on Financial Results As Fsas is already a consolidated subsidiary of Fujitsu, the share exchange is not expected to have a substantial immediate effect on consolidated operating results.

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

end of announcement            euro adhoc 17.05.2004

Further inquiry note: Press Contacts

Fujitsu Limited                      Fujitsu Support and Service Inc.
Public & Investor Relations  Corporate Communications Dept.
Tel: +81 (0)3-6252-2175         Corporate Planning Office

Inquiries                                Tel: +81 (0) 3-5471-4746

Branche: Hardware
ISIN:      JP3818000006
WKN:        0354912
Börsen:  Frankfurter Wertpapierbörse / official dealing
              SWX Swiss Exchange / official dealing
              London Stock Exchange / official dealing

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