FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of November, 2007
Commission File Number: 000-12713
NEC CORPORATION
(Translation of registrant’s name into English)
7-1, Shiba 5-chome, Minato-ku, Tokyo, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEC Corporation | ||
(Registrant) | ||
By | /S/ FUJIO OKADA | |
Fujio Okada | ||
Associate Senior Vice President |
Date: November 14, 2007
November 14, 2007
Consolidated Financial Results for First Half of
Fiscal Year Ending March 31, 2008
Consolidated Financial Results
Six Months Ended September 30, 2007 | Six Months Ended September 30, 2006 | Change | ||||||
In billions of yen | In billions of yen | % | ||||||
Sales | 2,140.6 | 2,221.6 | -3.6 | |||||
Operating income | 27.4 | 7.5 | +265.6 | |||||
Ordinary income (loss) | 9.8 | (11.8 | ) | — | ||||
Net income (loss) | (4.7 | ) | (9.9 | ) | — | |||
Yen | Yen | Yen | ||||||
Net income (loss) per share: | ||||||||
Basic | (2.43 | ) | (4.94 | ) | 2.51 | |||
Diluted | — | — | — |
As of September 30, 2007 | As of September 30, 2006 | Change | ||||
In billions of yen | In billions of yen | % | ||||
Total assets | 3,598.5 | 3,694.5 | -2.6 | |||
Number of employees | 156,613 | 156,545 | — |
(Notes)
1. | NEC prepares its consolidated financial statements under accounting principles generally accepted in Japan (“Japan GAAP”). |
2. | Number of consolidated subsidiaries and affiliated companies accounted for by the equity method is as follows: |
As of September 30, 2007 | As of September 30, 2006 | |||
Consolidated subsidiaries | 339 | 365 | ||
Affiliated companies accounted for by the equity method | 68 | 68 |
Qualitative Information and Financial Statements
1. | Analysis of Business Results |
<1>Overview of the first half of the fiscal year and outlook for the full fiscal year ending March 31, 2008
During the first half of the fiscal year ending March 31, 2008, the global economy experienced continuous moderate growth, with sustained high growth in China, despite a slowing economy, mainly in the housing sector due to the impact of the battered financial markets resulting from the subprime mortgage issue in the U.S.
The Japanese economy also enjoyed continuous moderate growth, despite a slowdown in capital expenditures and sluggish consumer spending.
For the first half, NEC recorded consolidated sales of 2,140.6 billion yen, a decrease of 81.0 billion yen (3.6%) year on year. Despite good sales in the area of Network Systems, this was primarily due to the sale of the personal computer (PC) business in Europe in the corresponding period of the previous fiscal year and the transfer of the sales operation of optical disc drives.
Regarding profitability, operating income rose by 19.9 billion yen (265.6%) year on year, to 27.4 billion yen. This can be attributed to a recovery in profitability in the Mobile/Personal Solutions business and the Electron Devices business owing to measures to improve business performance, despite a decrease in income in the IT/Network Solutions business resulting from a fall in sales in the area of IT Platforms and a change in the product mix in the area of Network Systems. Ordinary income improved by 21.6 billion yen year on year, bringing profit to 9.8 billion yen.
NEC recorded income before income taxes and minority interests of 9.5 billion yen, an increase of 7.9 billion yen year on year. This was due to an improvement in ordinary income, despite a worsening of 13.7 billion yen in special gain (loss) owing to decreases in gain on sale of investment securities and gain on change in interests in consolidated subsidiaries and affiliated companies. Despite an improvement of 5.2 billion yen year on year in net income, NEC recorded a net loss of 4.7 billion yen.
There is no change to the full year financial target for the fiscal year ending March 31, 2008 disclosed on July 31, 2007 due to uncertainty over global market environments and future currency movements.
Consolidated | Target for Fiscal Year Ending March 31, 2008 | Comparison With Fiscal Year Ended March 31, 2007 | |||
In billions of yen | |||||
Sales | 4,700.0 | +1.0 | % | ||
Operating income | 130.0 | +60.0 billion yen | |||
Ordinary income | 80.0 | +63.7 billion yen | |||
Net income | 30.0 | +20.9 billion yen |
NEC was requested to complete revenue recognition analysis of maintenance support services included in multiple-element contracts by its independent auditor with regard to its annual report on Form 20-F to be filed with the Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2006 (“2006 Form 20-F”). This revenue recognition analysis was required based on U.S. GAAP under the auditing standard of the U.S. Public Companies Accounting Oversight Board. In September 2007, NEC announced that it is unable to complete the analysis and accordingly cannot file the 2006 Form 20-F with the SEC. NEC also announced that its U.S. GAAP consolidated financial statements previously filed with or submitted to the SEC for all financial periods for fiscal years ended on and after March 31, 2000 should no longer be relied upon and that it had concluded that a restatement would not be practicable due to the complexities involved in determining the adjustments required to restate its U.S. GAAP results. Subsequent to this announcement, the Nasdaq Stock Market LLC delisted NEC’s ADRs.
(2)Results by business segments (including inter-segment transactions and profit/loss figures)
Sales and operating income of NEC’s main segments were as follows (figures in brackets denote increases or decreases as compared with the corresponding period of the previous fiscal year):
IT/Network Solutions Business
Sales: | 1,274.1 billion yen | (+0.8%) | ||
Operating income: | 35.2 billion yen | (-20.4 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Six Months Ended September 30, 2007 | Six Months Ended September 30, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
IT Services/System Integration | 364.8 | 343.9 | +6.1 | |||
IT Platforms | 257.4 | 312.5 | -17.6 | |||
Network Systems | 514.3 | 485.2 | +6.0 | |||
Social Infrastructure | 137.6 | 122.9 | +12.0 | |||
Total | 1,274.1 | 1,264.5 | +0.8 | |||
Sales of the IT/Network Solutions business for the six months ended September 30, 2007 amounted to 1,274.1 billion yen, an increase of 9.7 billion yen (0.8%) year on year.
Sales by products and services were as follows:
The area of IT Services/System Integration recorded sales of 364.8 billion yen, an increase of 6.1% year on year, due to a steady increase in sales in most sectors. In addition, in the area of Network Systems, sales increased by 6.0% year on year, to 514.3 billion yen. This was mainly due to good sales of ultra-compact, point-to-point microwave communication systems, Pasolink, to telecom carriers overseas and submarine cable networks. Furthermore, there was a 12% increase year on year in sales in the area of Social Infrastructure, to 137.6 billion yen. On the other hand, in the area of IT Platforms, sales fell by 17.6% year on year, to 257.4 billion yen, mainly as a result of the effects of the transfer of the sales operation of optical disc drives and large server projects in the first half of the previous fiscal year.
Operating income decreased by 20.4 billion yen (36.7%) year on year, to 35.2 billion yen. Despite an improvement in profitability in the area of IT Services/System Integration, this was primarily due to a decrease in sales in the area of IT Platforms and a change in the product mix in the area of Network Systems.
Mobile/Personal Solutions Business
Sales: | 411.7 billion yen | (-17.5%) | ||
Operating income: | 8.1 billion yen | (Improvement of 45.4 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Six Months Ended September 30, 2007 | Six Months Ended September 30, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
Mobile Terminals | 150.4 | 163.1 | -7.8 | |||
Personal Solutions | 261.3 | 335.9 | -22.3 | |||
Total | 411.7 | 499.0 | -17.5 | |||
Sales of the Mobile/Personal Solutions business for the six months ended September 30, 2007 were 411.7 billion yen, a decrease of 87.3 billion yen (17.5%) year on year.
Sales by products and services were as follows:
In the area of Mobile Terminals, sales were 150.4 billion yen, a decrease of 7.8% year on year, mainly due to the streamlining of overseas mobile handset business. In the area of Personal Solutions, sales fell by 22.3% year on year, to 261.3 billion yen. This was mainly due to the sale of the PC business in Europe.
Operating income improved by 45.4 billion yen year on year, to 8.1 billion yen. This was due to the completion of structural reform of overseas mobile handset business and to increased development efficiencies in the area of Mobile Terminals.
Electron Devices Business
Sales: | 420.6 billion yen | (-1.5%) | ||
Operating income: | 1.4 billion yen | (Improvement of 5.6 billion yen) |
Sales by subsegment (including inter-segment transaction)
Subsegment | Six Months Ended September 30, 2007 | Six Months Ended September 30, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
Semiconductors | 351.0 | 343.0 | +2.3 | |||
Electronic Components and Others | 69.6 | 84.0 | -17.1 | |||
Total | 420.6 | 427.0 | -1.5 | |||
Sales of the Electron Devices business for the six months ended September 30, 2007 amounted to 420.6 billion yen, a decrease of 6.4 billion yen (1.5%) year on year.
Sales by products and services were as follows:
In the area of Semiconductors, sales increased 2.3% year on year, to 351.0 billion yen, owing mainly to an increase in sales of semiconductors for game consoles and digital televisions. In the area of Electronic Components and Others, sales totaled 69.6 billion yen, a decrease of 17.1% year on year. This was due to a decrease in sales of electronics components and small-sized liquid crystal displays.
Operating income improved by 5.6 billion yen year on year, to 1.4 billion yen. This was mainly due to a reduction in research and development expenses and benefits from a weaker yen, in addition to an increase in sales in the area of Semiconductors.
Note
The results for the area of Semiconductors are the official public figures of NEC Electronics Corporation, which are prepared in accordance with U.S. GAAP. The difference that arises as a result of the adjustment to Japan GAAP is included in Electronic Components and Others.
2. | Analysis of Financial Condition |
<1>Analysis of condition of assets, liabilities, net assets, and cash flow
Total assets at the end of the first half of the fiscal year ending March 31, 2008 were 3,598.5 billion yen, a 133.2 billion yen decrease as compared with the end of the previous fiscal year. Current assets decreased by 125.8 billion yen, mainly due to the collection of notes and accounts receivable, trade. Fixed assets fell by 7.4 billion yen, primarily as a result of a decrease in tangible fixed assets.
Total liabilities at the end of the first half of the fiscal year ending March 31, 2008 were 2,380.5 billion yen, a decrease of 111.1 billion yen as compared with the end of the previous fiscal year, mainly as a result of the payment of notes and accounts payable, trade. However, the balance of interest-bearing debt increased by 11.0 billion yen as compared with the end of the previous fiscal year, to 870.3 billion yen. Debt-equity ratio was 0.85 (a worsening of 0.02 points as compared with the end of the previous fiscal year). The balance of interest-bearing debt (net), obtained by offsetting the balance of interest-bearing debt with the balance of cash and cash equivalents, amounted to 466.6 billion yen, an increase of 30.7 billion yen as compared with the end of the previous fiscal year. Net debt-equity ratio was 0.46 (a worsening of 0.04 points as compared with the end of the previous fiscal year).
Total net assets at the end of the first half of the fiscal year ending March 31, 2008 were 1,218.0 billion yen, a decrease of 22.1 billion yen as compared with the end of the previous fiscal year. As a result, owner’s equity ratio was 28.4% (an improvement of 0.6 points as compared with the end of the previous fiscal year).
Net cash provided by operating activities for the first half of the fiscal year ending March 31, 2008 was 60.7 billion yen, a decrease of 45.4 billion yen year on year, mainly due to an increase in operating capital.
Net cash used in investing activities for the first half of the fiscal year ending March 31, 2008 was 74.8 billion yen, an increase of 9.8 billion yen year on year. This was mainly due to an increase in cash used relating to capital expenditures and a decrease in gain on sale of investment securities, despite gain provided by the transfer of business. As a result, free cash flows (the sum of cash flows from operating activities and investing activities) were cash outflows of 14.1 billion yen, a decrease of 55.2 billion yen year on year.
Net cash used in financing activities for the first half of the fiscal year ending March 31, 2008 was 9.0 billion yen, mainly owing to the redemption of bonds and the payment of dividends, despite the procurement of capital from the issuance of commercial paper. As a result, cash and cash equivalents amounted to 403.8 billion yen, a decrease of 19.6 billion yen as compared with the end of the previous fiscal year.
<2>Changes in cash flow-relating indices
Year Ended March 31, 2006 | Year Ended March 31, 2007 | Six Months Ended September 30, 2007 | |||||||
Owner’s equity ratio | 27.1 | % | 27.8 | % | 28.4 | % | |||
Owner’s equity ratio on market value basis | 43.3 | % | 34.3 | % | 31.4 | % | |||
Cash flow to interest-bearing debt ratio | 3.8 times | 7.1 times | |||||||
Interest coverage ratio | 13.4 times | 14.7 times | 8.0 times |
Calculation methods for the above indices:
Owner’s equity ratio:
Owner’s equity/total assets
Owner’s equity ratio on market value basis:
Aggregated market value of owner’s equity based on the stock price at the end of the period / total assets at the end of each period
Cash flow to interest-bearing debt ratio:
Average balance of interest-bearing debt / cash flows from operating activities
* Average balance of interest-bearing debt = (balance of interest-bearing debt at the beginning of the period + balance of interest-bearing debt at the end of the period)/2
Interest coverage ratio:
Cash flows from operating activities / interest expenses
Note
Aggregated market value of owner’s equity is calculated based on the total number of issued shares minus treasury stock.
The above indices do not show the figures for the cash flow to interest-bearing debt ratio for the fiscal year ended March 31, 2006 as NEC’s audited consolidated financial statements for the fiscal year ended March 31, 2005 were not prepared under Japan GAAP.
3. Fundamental Policy on Distribution of Profits, and Dividends for the First Half and Full Fiscal Year Ending March 31, 2008
As NEC needs to adopt a flexible policy in order to better respond to the rapidly changing business environment, NEC considers, among other factors, the following factors in determining its cash dividends: the profits earned in the relevant fiscal period; the financial outlook for the following fiscal periods, the dividend payout ratio, and the internal demand for funds such as capital expenditures.
NEC will pay an interim dividend of 4 yen per share of common stock for the fiscal year ending March 31, 2008, which will be paid starting on December 3, 2007. NEC plans to pay an annual dividend of 8 yen per share of common stock, including the interim dividend of 4 yen per share of common stock.
Management Policy
There are no material changes to NEC’s
1. Fundamental Management Policy
2. Management Indicator Goals, and
3. Mid- to Long-Term Business Strategy.
Please refer to the consolidated financial results for the full fiscal year ended March 31, 2007, disclosed on May 21, 2007, for further information.
http://www.nec.co.jp/press/en/0705/2101.html
Tokyo Stock Exchange: Company Search (The code for NEC is 6701)
http://www.tse.or.jp/tseHpFront/HPLCDS0101E.do?method=init&callJorEFlg=1
4. Challenges to be Addressed by NEC Group
Through the advancement of IT and network technologies, a ubiquitous networked society, which enables interchange of necessary information via a variety of information communication devices at anytime, and anywhere, is now being realized. In addition, it is anticipated that next generation networks (“NGNs”) will become the platform to create a convenient, comfortable, and safe and secure society, and a variety of new services will be created on this platform.
Embracing these changes in the business environment as new business opportunities, the NEC Group will promote further growth through the provision of total solutions, leveraging its world-class technological competence in the three business domains of IT/Network Solutions, Mobile/Personal Solutions, and Electron Devices.
To be more exact, leveraging NGNs, the NEC Group will create a wide variety of solutions that will be useful for the realization of a ubiquitous networked society in areas such as national and local governments, communications and media, distribution, finance, transport, and medical care, as well as telecom carriers. Along with expanding its business in markets revitalized by NGNs, the NEC Group will expand the product and device businesses that support NGNs, aiming for increasing profitability in its NGN-related businesses which mainly provide service platforms.
In addition, it is necessary to further expand the global businesses of the NEC Group in order to promote its enhanced growth. The NEC Group is currently strengthening its operating bases by realigning overseas subsidiaries in the United States, Europe and Asia, aiming to create synergy in each country or region, and strengthening its sales and technical support structure. The NEC Group will carry out aggressive sales activities in overseas markets, focusing primarily on mobile communication systems in the area of Network Systems, and on competitive solutions and products, such as thin client systems (terminals with no memory storage such as a hard disk drive), in the areas of IT Services/System Integration and IT Platforms.
Furthermore, to increase profitability, in addition to further strengthening ongoing production innovation in the product manufacturing divisions and software development divisions, the NEC Group is aiming to secure profitability in the mobile terminal area through acceleration of mobile handset development and strengthening of supply chain management. In addition, in the area of Semiconductors, the NEC Group is strengthening collaboration between NEC Electronics Corporation and all of the other NEC Group companies toward steady execution of the restructuring measures disclosed by NEC Electronics Corporation in February, 2007, such as concentration of its resources in the digital consumer and automotive areas, and reduction of manufacturing costs by reorganizing its manufacturing lines in Japan and overseas.
By executing these measures, the NEC Group aims to develop into a global and innovative corporate group, achieving business growth and enhanced profitability.
NEC submitted an Improvement Report to Tokyo and other stock exchanges in Japan pertaining to an announcement it made on December 2006 to correct its semiannual financial results, originally announced in November. NEC later submitted an Improvement Status Report to the same stock exchanges with improvement measures that it has implemented in accounting and other related divisions. These measures include (a) enhancement of systems for streamlining and improving accuracy of account closing, (b) improvement of operations for streamlining responsiveness to audits, and (c) enhancement, education and training of personnel. These measures have been taken to improve NEC’s information disclosure structure.
CONSOLIDATED BALANCE SHEETS
(In millions of yen, millions of U.S. dollars) | ||||||||||||||||||||||||||
Note No. | September 30, 2007 | September 30, 2006 | Increase (Decrease) | March 31, 2007 | Increase (Decrease) | September 30, 2007 | ||||||||||||||||||||
Total current assets | JPY | 1,921,893 | JPY | 2,004,951 | (JPY | 83,058 | ) | JPY | 2,047,681 | (JPY | 125,788 | ) | $ | 16,712 | ||||||||||||
Cash and deposits | 234,790 | 347,815 | (113,025 | ) | 332,446 | (97,656 | ) | 2,042 | ||||||||||||||||||
Notes and accounts receivable, trade | *4,5,7 | 727,323 | 732,616 | (5,293 | ) | 874,543 | (147,220 | ) | 6,325 | |||||||||||||||||
Marketable securities | 169,517 | 93,303 | 76,214 | 91,570 | 77,947 | 1,474 | ||||||||||||||||||||
Inventories | 534,515 | 550,643 | (16,128 | ) | 493,224 | 41,291 | 4,648 | |||||||||||||||||||
Deferred tax assets | 118,280 | 109,092 | 9,188 | 114,560 | 3,720 | 1,029 | ||||||||||||||||||||
Others | 144,957 | 181,908 | (36,951 | ) | 150,895 | (5,938 | ) | 1,259 | ||||||||||||||||||
Allowance for doubtful accounts | (7,489 | ) | (10,426 | ) | 2,937 | (9,557 | ) | 2,068 | (65 | ) | ||||||||||||||||
Total fixed assets | 1,676,612 | 1,689,581 | (12,969 | ) | 1,683,988 | (7,376 | ) | 14,579 | ||||||||||||||||||
Tangible fixed assets | *1,2 | 671,379 | 682,422 | (11,043 | ) | 684,529 | (13,150 | ) | 5,838 | |||||||||||||||||
Buildings | 233,086 | 241,504 | (8,418 | ) | 238,677 | (5,591 | ) | 2,027 | ||||||||||||||||||
Machinery and equipment | 197,170 | 216,595 | (19,425 | ) | 214,833 | (17,663 | ) | 1,715 | ||||||||||||||||||
Tools and other equipment | 110,383 | 102,057 | 8,326 | 104,925 | 5,458 | 960 | ||||||||||||||||||||
Others | 130,740 | 122,266 | 8,474 | 126,094 | 4,646 | 1,136 | ||||||||||||||||||||
Intangible assets | 225,224 | 237,224 | (12,000 | ) | 221,991 | 3,233 | 1,958 | |||||||||||||||||||
Goodwill | 95,641 | 92,976 | 2,665 | 89,566 | 6,075 | 832 | ||||||||||||||||||||
Others | 129,583 | 144,248 | (14,665 | ) | 132,425 | (2,842 | ) | 1,126 | ||||||||||||||||||
Investments and other assets | 780,009 | 769,935 | 10,074 | 777,468 | 2,541 | 6,783 | ||||||||||||||||||||
Investment securities | 221,007 | 253,214 | (32,207 | ) | 230,504 | (9,497 | ) | 1,922 | ||||||||||||||||||
Investments in affiliated companies | 223,795 | 103,605 | 120,190 | 221,864 | 1,931 | 1,946 | ||||||||||||||||||||
Deferred tax assets | 164,930 | 223,524 | (58,594 | ) | 160,810 | 4,120 | 1,434 | |||||||||||||||||||
Others | 187,802 | 215,246 | (27,444 | ) | 181,098 | 6,704 | 1,633 | |||||||||||||||||||
Allowance for doubtful accounts | (17,525 | ) | (25,654 | ) | 8,129 | (16,808 | ) | (717 | ) | (152 | ) | |||||||||||||||
Total assets | JPY | 3,598,505 | JPY | 3,694,532 | (JPY | 96,027 | ) | JPY | 3,731,669 | (JPY | 133,164 | ) | $ | 31,291 | ||||||||||||
(Note)
US | dollar amounts are translated from yen, for convenience only, at the rate of US$1 = 115 yen. |
Cash and cash equivalents in CONSOLIDATED STATEMENTS OF CASH FLOWS are calculated as follows.
(In millions of yen, millions of U.S. dollars) | ||||||||||||||||||||||||||
Cash and deposits | JPY | 234,790 | JPY | 347,815 | (JPY | 113,025 | ) | JPY | 332,446 | (JPY | 97,656 | ) | $ | 2,042 | ||||||||||||
Marketable securities | 169,517 | 93,303 | 76,214 | 91,570 | 77,947 | 1,474 | ||||||||||||||||||||
Time deposits and Marketable securities with maturities of more than three months | (546 | ) | (1,326 | ) | 780 | (647 | ) | 101 | (5 | ) | ||||||||||||||||
Cash and cash equivalents | JPY | 403,761 | JPY | 439,792 | (JPY | 36,031 | ) | JPY | 423,369 | (JPY | 19,608 | ) | $ | 3,511 | ||||||||||||
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In millions of yen, millions of U.S. dollars) | |||||||||||||||||||||
September 30, 2007 | September 30, 2006 | Increase (Decrease) | March 31, 2007 | Increase (Decrease) | September 30, 2007 | ||||||||||||||||
Total current liabilities | JPY 1,601,856 | JPY 1,627,077 | (JPY 25,221 | ) | JPY 1,695,479 | (JPY 93,623 | ) | $ | 13,929 | ||||||||||||
Notes and accounts payable, trade | *7 | 683,235 | 761,633 | (78,398 | ) | 786,899 | (103,664 | ) | 5,941 | ||||||||||||
Short-term borrowings | *2,6 | 117,225 | 118,155 | (930 | ) | 151,947 | (34,722 | ) | 1,019 | ||||||||||||
Commercial Papers | 149,881 | 40,000 | 109,881 | 102,943 | 46,938 | 1,303 | |||||||||||||||
Current portion of bonds | 104,055 | 146,418 | (42,363 | ) | 76,570 | 27,485 | 905 | ||||||||||||||
Accrued expenses | 273,260 | 269,762 | 3,498 | 285,039 | (11,779 | ) | 2,376 | ||||||||||||||
Reserve for bonuses to directors | 344 | 145 | 199 | 401 | (57 | ) | 3 | ||||||||||||||
Product warranty liabilities | 39,621 | 24,924 | 14,697 | 34,459 | 5,162 | 345 | |||||||||||||||
Others | 234,235 | 266,040 | (31,805 | ) | 257,221 | (22,986 | ) | 2,037 | |||||||||||||
Total long-term liabilities | 778,608 | 828,725 | (50,117 | ) | 796,067 | (17,459 | ) | 6,771 | |||||||||||||
Bonds | 369,216 | 473,504 | (104,288 | ) | 443,219 | (74,003 | ) | 3,211 | |||||||||||||
Long-term borrowings | *2,6 | 87,865 | 62,576 | 25,289 | 42,759 | 45,106 | 764 | ||||||||||||||
Deferred tax liabilities | 13,919 | 11,422 | 2,497 | 11,424 | 2,495 | 121 | |||||||||||||||
Liabilities for retirement benefits | 224,093 | 204,466 | 19,627 | 216,769 | 7,324 | 1,949 | |||||||||||||||
Provision for loss on repurchase of computers | 14,925 | 17,689 | (2,764 | ) | 16,355 | (1,430 | ) | 130 | |||||||||||||
Long-term product warranty liabilities | 1,793 | 723 | 1,070 | 2,380 | (587 | ) | 16 | ||||||||||||||
Provision for recycling expenses of personal computers | 5,183 | 5,044 | 139 | 5,634 | (451 | ) | 45 | ||||||||||||||
Others | 61,614 | 53,301 | 8,313 | 57,527 | 4,087 | 535 | |||||||||||||||
�� | |||||||||||||||||||||
Total liabilities | 2,380,464 | 2,455,802 | (75,338 | ) | 2,491,546 | (111,082 | ) | 20,700 | |||||||||||||
Total shareholders’ equity | 959,701 | 961,836 | (2,135 | ) | 972,438 | (12,737 | ) | 8,345 | |||||||||||||
Common stock | 337,939 | 337,822 | 117 | 337,822 | 117 | 2,939 | |||||||||||||||
Capital surplus | 464,876 | 464,924 | (48 | ) | 464,838 | 38 | 4,042 | ||||||||||||||
Retained earnings | 160,155 | 162,050 | (1,895 | ) | 173,003 | (12,848 | ) | 1,393 | |||||||||||||
Treasury stock | (3,269 | ) | (2,960 | ) | (309 | ) | (3,225 | ) | (44 | ) | (29 | ) | |||||||||
Total valuation and translation adjustments and others | 60,759 | 71,335 | (10,576 | ) | 66,370 | (5,611 | ) | 528 | |||||||||||||
Unrealized gains (losses) on available-for-sale securities | 51,029 | 66,461 | (15,432 | ) | 57,706 | (6,677 | ) | 444 | |||||||||||||
Unrealized gains (losses) on derivative financial instruments | (225 | ) | 9 | (234 | ) | (143 | ) | (82 | ) | (2 | ) | ||||||||||
Foreign currency translation adjustments | 9,955 | 4,865 | 5,090 | 8,807 | 1,148 | 86 | |||||||||||||||
Stock subscription rights | 98 | 66 | 32 | 81 | 17 | 1 | |||||||||||||||
Minority interests | 197,483 | 205,493 | (8,010 | ) | 201,234 | (3,751 | ) | 1,717 | |||||||||||||
Total net assets | 1,218,041 | 1,238,730 | (20,689 | ) | 1,240,123 | (22,082 | ) | 10,591 | |||||||||||||
Total liabilities and net assets | JPY 3,598,505 | JPY 3,694,532 | (JPY 96,027 | ) | JPY 3,731,669 | (JPY 133,164 | ) | $ | 31,291 | ||||||||||||
Interest-bearing debt | JPY 870,336 | JPY 877,202 | (JPY 6,866 | ) | JPY 859,292 | JPY 11,044 | $ | 7,568 | |||||||||||||
Net interest-bearing debt (*I) | 466,575 | 437,410 | 29,165 | 435,923 | 30,652 | 4,057 | |||||||||||||||
Owner’s equity (*II) | 1,020,460 | 1,033,171 | (12,711 | ) | 1,038,808 | (18,348 | ) | 8,874 | |||||||||||||
Owner’s equity ratio (%) (*III) | 28.4 | 28.0 | 0.4 | 27.8 | 0.6 | ||||||||||||||||
Shareholders’ equity ratio (%) (*III) | 26.7 | 26.0 | 0.7 | 26.1 | 0.6 | ||||||||||||||||
Debt-equity ratio (times) (*IV) | 0.85 | 0.85 | 0.00 | 0.83 | 0.02 | ||||||||||||||||
Net debt-equity ratio (times) (*IV) | 0.46 | 0.42 | 0.04 | 0.42 | 0.04 |
(Notes)
*I | Net interest-bearing debt is interest-bearing debt less cash and cash equivalents. |
*II | Owner’s equity is total net assets less stock subscription rights and minority interests. |
*III | Owner’s equity ratio is owner’s equity divided by total assets. Shareholders’ equity ratio is shareholders’ equity divided by total assets. |
*IV | Debt-equity ratio and net debt-equity ratio are interest-bearing debt and net interest-bearing debt divided by owner’s equity, respectively. |
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of yen, millions of U.S. dollars) | |||||||||||||||||||||||||||
Six months ended September 30 | Note No. | 2007 | % of sales | 2006 | % of sales | Increase (Decrease) | 2007 | Fiscal year ended March 31, 2007 | % of sales | ||||||||||||||||||
Sales | JPY 2,140,593 | 100.0 | JPY 2,221,604 | 100.0 | (JPY 81,011 | ) | $ | 18,614 | JPY 4,652,649 | 100.0 | |||||||||||||||||
Cost of sales | 1,457,974 | 68.1 | 1,549,243 | 69.7 | (91,269 | ) | 12,678 | 3,242,459 | 69.7 | ||||||||||||||||||
Gross profit | 682,619 | 31.9 | 672,361 | 30.3 | 10,258 | 5,936 | 1,410,190 | 30.3 | |||||||||||||||||||
Selling, general and administrative expenses | *1 | 655,183 | 30.6 | 664,857 | 30.0 | (9,674 | ) | 5,697 | 1,340,214 | 28.8 | |||||||||||||||||
Operating income | 27,436 | 1.3 | 7,504 | 0.3 | 19,932 | 239 | 69,976 | 1.5 | |||||||||||||||||||
Non-operating income | 14,028 | 0.7 | 14,397 | 0.7 | (369 | ) | 122 | 26,195 | 0.6 | ||||||||||||||||||
Interest income | 4,626 | 4,384 | 242 | 40 | 8,951 | ||||||||||||||||||||||
Dividend income | 2,036 | 1,780 | 256 | 18 | 3,622 | ||||||||||||||||||||||
Equity in earnings of affiliated companies | — | 555 | (555 | ) | — | — | |||||||||||||||||||||
Others | 7,366 | 7,678 | (312 | ) | 64 | 13,622 | |||||||||||||||||||||
Non-operating expenses | 31,696 | 1.5 | 33,720 | 1.5 | (2,024 | ) | 276 | 79,824 | 1.7 | ||||||||||||||||||
Interest expense | 7,614 | 7,441 | 173 | 66 | 16,161 | ||||||||||||||||||||||
Retirement benefit expenses | 6,911 | 6,885 | 26 | 60 | 13,863 | ||||||||||||||||||||||
Loss on disposals of fixed assets | 4,532 | 5,511 | (979 | ) | 39 | 15,639 | |||||||||||||||||||||
Foreign exchange loss | 3,655 | 2,415 | 1,240 | 32 | 2,622 | ||||||||||||||||||||||
Equity in losses of affiliated companies | 8 | — | 8 | — | 4,006 | ||||||||||||||||||||||
Others | 8,976 | 11,468 | (2,492 | ) | 79 | 27,533 | |||||||||||||||||||||
Ordinary income (loss) | 9,768 | 0.5 | (11,819 | ) | (0.5 | ) | 21,587 | 85 | 16,347 | 0.4 | |||||||||||||||||
Special gains | 8,482 | 0.3 | 28,046 | 1.3 | (19,564 | ) | 74 | 115,155 | 2.5 | ||||||||||||||||||
Gain on business transfers | *2 | 3,216 | — | 3,216 | 28 | — | |||||||||||||||||||||
Gain on sales of investment securities | 1,917 | 10,970 | (9,053 | ) | 17 | 25,651 | |||||||||||||||||||||
Gain on sales of fixed assets | *3 | 1,340 | 107 | 1,233 | 12 | 2,872 | |||||||||||||||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | *4 | 926 | 8,630 | (7,704 | ) | 8 | 8,630 | ||||||||||||||||||||
Reversal of provision for recycling expenses of personal computers | 924 | 1,805 | (881 | ) | 8 | 1,892 | |||||||||||||||||||||
Gain on sales of investments in affiliated companies | *5 | 159 | — | 159 | 1 | 41 | |||||||||||||||||||||
Gain on reversion of securities from the pension trust | *6 | — | — | — | — | 69,533 | |||||||||||||||||||||
Gain on transfer of securities to the pension trust | *7 | — | 6,534 | (6,534 | ) | — | 6,534 | ||||||||||||||||||||
Gain on lapse of stock subscription rights | — | — | — | — | 2 | ||||||||||||||||||||||
Special losses | 8,714 | 0.4 | 14,583 | 0.7 | (5,869 | ) | 76 | 35,205 | 0.8 | ||||||||||||||||||
Cost of corrective measures for products | *8 | 2,823 | — | 2,823 | 24 | 4,695 | |||||||||||||||||||||
Restructuring charges | *9 | 2,736 | 10,777 | (8,041 | ) | 24 | 15,805 | ||||||||||||||||||||
Loss on devaluation of investment securities | *10 | 1,208 | 1,545 | (337 | ) | 10 | 10,058 | ||||||||||||||||||||
Loss on retirement of fixed assets | *11 | 1,010 | — | 1,010 | 9 | — | |||||||||||||||||||||
Impairment loss on fixed assets | *12 | 529 | 1,283 | (754 | ) | 5 | 2,768 | ||||||||||||||||||||
Loss on sales of investments in affiliated companies | *13 | 408 | — | 408 | 4 | 661 | |||||||||||||||||||||
Other retirement benefit expenses | *14 | — | 978 | (978 | ) | — | 991 | ||||||||||||||||||||
Loss on sales of fixed assets | *15 | — | — | — | — | 208 | |||||||||||||||||||||
Loss on sales of investment securities | — | — | — | — | 19 | ||||||||||||||||||||||
Income before income taxes and minority interests | 9,536 | 0.4 | 1,644 | 0.1 | 7,892 | 83 | 96,297 | 2.1 | |||||||||||||||||||
Income taxes – current | 18,180 | 0.8 | 11,371 | 0.5 | 6,809 | 158 | 30,728 | 0.7 | |||||||||||||||||||
Income taxes – deferred | (2,280 | ) | (0.1 | ) | (153 | ) | 0.0 | (2,127 | ) | (20 | ) | 62,242 | 1.3 | ||||||||||||||
Minority interests in income (loss) of consolidated subsidiaries | (1,617 | ) | (0.1 | ) | 353 | 0.0 | (1,970 | ) | (14 | ) | (5,801 | ) | (0.1 | ) | |||||||||||||
Net income (loss) | (JPY 4,747 | ) | (0.2 | ) | (JPY 9,927 | ) | (0.4 | ) | JPY 5,180 | $ | (41 | ) | JPY 9,128 | 0.2 | |||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007)
(In millions of yen) | ||||||||||||||
Shareholders’ equity | ||||||||||||||
Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity | ||||||||||
Balances at beginning of period | 337,822 | 464,838 | 173,003 | D | 3,225 | 972,438 | ||||||||
Changes during the period | ||||||||||||||
Conversion of convertible bonds with stock | 116 | 116 | 233 | |||||||||||
Dividends | D | 8,101 | D | 8,101 | ||||||||||
Net loss | D | 4,747 | D | 4,747 | ||||||||||
Repurchases of treasury stock | D | 200 | D | 200 | ||||||||||
Disposals of treasury stock | D | 79 | 156 | 77 | ||||||||||
Net changes in items other than shareholders’ equity during the period | — | |||||||||||||
Total changes during the period | 116 | 37 | D | 12,848 | D | 44 | D | 12,738 | ||||||
Balances at end of period | 337,939 | 464,876 | 160,155 | D | 3,269 | 959,701 |
Valuation and translation adjustments and others | Stock | Minority | Total net | |||||||||||||
Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on derivative financial instrument | Foreign currency translation adjustments | ||||||||||||||
Balances at beginning of period | 57,706 | D | 143 | 8,807 | 81 | 201,234 | 1,240,123 | |||||||||
Changes during the period | ||||||||||||||||
Conversion of convertible bonds with stock subscription rights | 233 | |||||||||||||||
Dividends | D | 8,101 | ||||||||||||||
Net loss | D | 4,747 | ||||||||||||||
Repurchases of treasury stock | D | 200 | ||||||||||||||
Disposals of treasury stock | 77 | |||||||||||||||
Net changes in items other than shareholders’ equity during the period | D | 6,677 | D | 82 | 1,148 | 17 | D | 3,751 | D | 9,345 | ||||||
Total changes during the period | D | 6,677 | D | 82 | 1,148 | 17 | D | 3,751 | D | 22,082 | ||||||
Balances at end of period | 51,029 | D | 225 | 9,955 | 98 | 197,483 | 1,218,041 |
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | (In millions of yen) | |||||||||||||
Shareholders’ equity | ||||||||||||||
Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity | ||||||||||
Balances at beginning of period | 337,821 | 441,155 | 173,808 | D | 2,869 | 949,915 | ||||||||
Changes during the period | ||||||||||||||
Increase due to stock-for-stock exchange | 24,382 | 24,382 | ||||||||||||
Conversion of convertible bonds with stock subscription rights | 1 | 1 | 2 | |||||||||||
Bonuses to directors (Note) | D | 200 | D | 200 | ||||||||||
Dividends (Note) | D | 5,979 | D | 5,979 | ||||||||||
Net loss | D | 9,927 | D | 9,927 | ||||||||||
Repurchases and disposals of treasury stock | D | 67 | D | 91 | D | 158 | ||||||||
Effect of change in scope of affiliated companies accounted for by the equity method | 4,348 | 4,348 | ||||||||||||
Others | D | 547 | D | 547 | ||||||||||
Net changes in items other than shareholders’ equity during the period | — | |||||||||||||
Total changes during the period | 1 | 23,769 | D | 11,758 | D | 91 | 11,921 | |||||||
Balances at end of period | 337,822 | 464,924 | 162,050 | D | 2,960 | 961,836 |
Valuation and translation adjustments and others | Stock | Minority | Total net | ||||||||||||
Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on derivative financial instrument | Foreign currency translation adjustments | |||||||||||||
Balances at beginning of period | 78,128 | — | 1,764 | — | 212,843 | 1,242,650 | |||||||||
Changes during the period | |||||||||||||||
Increase due to stock-for-stock exchange | 24,382 | ||||||||||||||
Conversion of convertible bonds with stock subscription rights | 2 | ||||||||||||||
Bonuses to directors (Note) | D | 200 | |||||||||||||
Dividends (Note) | D | 5,979 | |||||||||||||
Net loss | D | 9,927 | |||||||||||||
Repurchases and disposals of treasury stock | D | 158 | |||||||||||||
Effect of change in scope of affiliated companies accounted for by the equity method | 4,348 | ||||||||||||||
Others | D | 547 | |||||||||||||
Net changes in items other than shareholders’ equity during the period | D | 11,667 | 9 | 3,101 | 66 | D | 7,350 | D | 15,841 | ||||||
Total changes during the period | D | 11,667 | 9 | 3,101 | 66 | D | 7,350 | D | 3,920 | ||||||
Balances at end of period | 66,461 | 9 | 4,865 | 66 | 205,493 | 1,238,730 |
Note: The appropriation approved at the ordinary general meeting of shareholders in June 2006.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | (In millions of yen) | |||||||||||||
Shareholders’ equity | ||||||||||||||
Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity | ||||||||||
Balances at beginning of year | 337,821 | 441,155 | 173,808 | D | 2,869 | 949,915 | ||||||||
Changes during the fiscal year | ||||||||||||||
Increase due to stock-for-stock exchange | 24,382 | 24,382 | ||||||||||||
Conversion of convertible bonds with stock subscription rights | 1 | 1 | 2 | |||||||||||
Bonuses to directors (Note 1) | D | 200 | D | 200 | ||||||||||
Dividends (Note 2) | D | 14,081 | D | 14,081 | ||||||||||
Net income | 9,128 | 9,128 | ||||||||||||
Repurchases of treasury stock | D | 558 | D | 558 | ||||||||||
Disposals of treasury stock | D | 153 | 202 | 49 | ||||||||||
Effect of change in scope of affiliated companies accounted for by the equity method | 4,348 | 4,348 | ||||||||||||
Others | D | 547 | D | 547 | ||||||||||
Net changes in items other than shareholders’ equity during the fiscal year | — | |||||||||||||
Total changes during the fiscal year | 1 | 23,683 | D | 805 | D | 356 | 22,523 | |||||||
Balances at end of year | 337,822 | 464,838 | 173,003 | D | 3,225 | 972,438 |
Valuation and translation adjustments and others | Stock | Minority | Total net | |||||||||||||
Unrealized gains on available-for- sale securities | Unrealized losses on derivative financial instrument | Foreign currency translation adjustments | ||||||||||||||
Balances at beginning of year | 78,128 | — | 1,764 | — | 212,843 | 1,242,650 | ||||||||||
Changes during the fiscal year | ||||||||||||||||
Increase due to stock-for-stock exchange | 24,382 | |||||||||||||||
Conversion of convertible bonds with stock subscription rights | 2 | |||||||||||||||
Bonuses to directors (Note 1) | D | 200 | ||||||||||||||
Dividends (Note 2) | D | 14,081 | ||||||||||||||
Net income | 9,128 | |||||||||||||||
Repurchases of treasury stock | D | 558 | ||||||||||||||
Disposals of treasury stock | 49 | |||||||||||||||
Effect of change in scope of affiliated companies accounted for by the equity method | 4,348 | |||||||||||||||
Others | D | 547 | ||||||||||||||
Net changes in items other than shareholders’ equity during the fiscal year | D | 20,422 | D | 143 | 7,043 | 81 | D | 11,609 | D | 25,050 | ||||||
Total changes during the fiscal year | D | 20,422 | D | 143 | 7,043 | 81 | D | 11,609 | D | 2,527 | ||||||
Balances at end of year | 57,706 | D | 143 | 8,807 | 81 | 201,234 | 1,240,123 |
Note | 1: The appropriation approved at the ordinary general meeting of shareholders in June 2006. |
Note | 2: Out of total dividends, 5,979 million yen was the appropriation approved at the ordinary general meeting of shareholders in June 2006 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of yen, millions of U.S. dollars) | ||||||||||||||||||||||
Six months ended September 30 | Note No. | 2007 | 2006 | Increase (Decrease) | fiscal year ended March 31, 2007 | 2007 | ||||||||||||||||
I. Cash flows from operating activities: | ||||||||||||||||||||||
Income before income taxes and minority interests | JPY | 9,536 | JPY | 1,644 | JPY | 7,892 | JPY | 96,297 | $ | 83 | ||||||||||||
Depreciation and amortization | 92,732 | 93,011 | (279 | ) | 198,398 | 806 | ||||||||||||||||
Equity in (earnings) losses of affiliated companies | 8 | (555 | ) | 563 | 4,006 | 0 | ||||||||||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | (926 | ) | (8,630 | ) | 7,704 | (8,630 | ) | (8 | ) | |||||||||||||
(Increase) decrease in notes and accounts receivable, trade | 146,850 | 135,752 | 11,098 | (31,524 | ) | 1,277 | ||||||||||||||||
(Increase) decrease in inventories | (45,630 | ) | (54,707 | ) | 9,077 | (14,098 | ) | (397 | ) | |||||||||||||
Increase (decrease) in notes and accounts payable, trade | (103,789 | ) | (66,728 | ) | (37,061 | ) | (24,413 | ) | (903 | ) | ||||||||||||
Income taxes paid | (22,325 | ) | (15,783 | ) | (6,542 | ) | (28,107 | ) | (194 | ) | ||||||||||||
Others, net | (15,741 | ) | 22,075 | (37,816 | ) | 46,389 | (136 | ) | ||||||||||||||
Net cash provided by (used in) operating activities | 60,715 | 106,079 | (45,364 | ) | 238,318 | 528 | ||||||||||||||||
II. Cash flows from investing activities: | ||||||||||||||||||||||
Net proceeds from (payment of) acquisitions and sales of tangible fixed assets | (54,048 | ) | (49,101 | ) | (4,947 | ) | (136,499 | ) | (470 | ) | ||||||||||||
Acquisitions of intangible assets | (18,090 | ) | (18,760 | ) | 670 | (36,262 | ) | (157 | ) | |||||||||||||
Net proceeds from (payment of) purchases and sales of securities | (11,672 | ) | 1,182 | (12,854 | ) | 3,751 | (101 | ) | ||||||||||||||
Others, net | 9,027 | 1,742 | 7,285 | (666 | ) | 78 | ||||||||||||||||
Net cash provided by (used in) investing activities | (74,783 | ) | (64,937 | ) | (9,846 | ) | (169,676 | ) | (650 | ) | ||||||||||||
III. Cash flows from financing activities: | ||||||||||||||||||||||
Net proceeds from (payment of) bonds and borrowings | 257 | (63,182 | ) | 63,439 | (101,458 | ) | 2 | |||||||||||||||
Dividends paid | (8,087 | ) | (5,961 | ) | (2,126 | ) | (14,060 | ) | (70 | ) | ||||||||||||
Others, net | (1,146 | ) | 13,171 | (14,317 | ) | 11,779 | (10 | ) | ||||||||||||||
Net cash provided by (used in) financing activities | (8,976 | ) | (55,972 | ) | 46,996 | (103,739 | ) | (78 | ) | |||||||||||||
IV. Effect of exchange rate changes on cash and cash equivalents | 3,436 | 2,252 | 1,184 | 6,096 | 30 | |||||||||||||||||
V. Net decrease in cash and cash equivalents | (19,608 | ) | (12,578 | ) | (7,030 | ) | (29,001 | ) | (170 | ) | ||||||||||||
VI. Cash and cash equivalents at beginning of period | 423,369 | 452,370 | (29,001 | ) | 452,370 | 3,681 | ||||||||||||||||
VII. Cash and cash equivalents at end of period | *1 | JPY | 403,761 | JPY | 439,792 | (JPY | 36,031 | ) | JPY | 423,369 | $ | 3,511 | ||||||||||
Free cash flows (I+II) | (JPY | 14,068 | ) | JPY | 41,142 | (JPY | 55,210 | ) | JPY | 68,642 | $ | (122 | ) | |||||||||
Significant Items for Presenting Consolidated Financial Statements
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
1. Scope of consolidation | The interim consolidated financial statements include the accounts of the Company and its 365 subsidiaries. | The interim consolidated financial statements include the accounts of the Company and its 339 subsidiaries. | The consolidated financial statements include the accounts of the Company and its 342 subsidiaries. | |||
Major consolidated subsidiaries
NEC Electronics Corporation (hereinafter referred to as the “NEC Electronics”)
NEC Electronics America, Inc.
Wuhan NEC Mobile Communication Co. Ltd
NEC Corporation of America (hereinafter referred to as the “NEC America”)
NEC Personal Products, Ltd.
NEC Europe Ltd.
NEC Networks and System Integration Corporation
NEC TOKIN Corporation (hereinafter referred to as the “NEC TOKIN”)
NEC Infrontia Corporation
NEC Fielding, Ltd.
Nippon Avionics Co., Ltd.
NEC Mobiling, Ltd. | Major consolidated subsidiaries
NEC Electronics Corporation (hereinafter referred to as the “NEC Electronics”)
NEC Corporation of America (hereinafter referred to as the “ NEC America”)
NEC Personal Products, Ltd.
NEC Europe Ltd.
NEC (China) Co., Ltd.
NEC Networks and System Integration Corporation (hereinafter referred to as the “NESIC”)
NEC TOKIN Corporation (hereinafter referred to as the “NEC TOKIN”)
NEC Infrontia Corporation (hereinafter referred to as the “NEC Infrontia”)
NEC Fielding, Ltd.
Nippon Avionics Co., Ltd.
NEC Mobiling, Ltd. | Major consolidated subsidiaries
NEC Electronics Corporation (hereinafter referred to as the “NEC Electronics”)
NEC Corporation of America (hereinafter referred to as the “NEC America”)
NEC Personal Products, Ltd.
NEC Europe Ltd.
NEC (China) Co., Ltd.
NEC Networks and System Integration Corporation (hereinafter referred to as the “NESIC”)
NEC TOKIN Corporation (hereinafter referred to as the “NEC TOKIN”)
NEC Infrontia Corporation (hereinafter referred to as the “NEC Infrontia”)
NEC Fielding, Ltd.
Nippon Avionics Co., Ltd.
NEC Mobiling, Ltd. | ||||
Change in the scope of interim consolidation includes additions of 27 and exclusions of 18 subsidiaries. Significant changes were as follows: | Change in the scope of consolidation includes additions of 8 and exclusions of 11 subsidiaries. Significant changes were as follow | Change in the scope of consolidation includes additions of 32 and exclusions of 46 subsidiaries. Significant changes were as follows: | ||||
Consolidated subsidiaries included in the consolidation scope as a result of acquisitions and incorporation, etc. 27 subsidiaries | Consolidated subsidiaries included in the consolidation scope as a result of acquisitions and incorporation, etc. 8 subsidiaries | Consolidated subsidiaries included in the consolidation scope as a result of acquisitions and incorporation, etc. 32 subsidiaries |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
NEC BIGLOBE, Ltd.
NEC Electronics Korea Ltd.
Qorval Integrated Solutions, Inc.
NEC Phillips Unified Solutions Italia S.P.A.
Others | Sphere Communications, Inc.
Others | NEC BIGLOBE, Ltd. (hereinafter referred to as the “NEC BIGLOBE”)
NEC Electronic Korea Ltd.
NEC Philips Unified Solution B.V.
NEC TOKIN Korea Co., Ltd.
Others | ||||
Consolidated subsidiaries excluded from the consolidation scope as a result of sales and liquidation, etc.
11 subsidiaries
Hokko Denshi Co., Ltd.
Others | Consolidated subsidiaries excluded from the consolidation scope as a result of sales and liquidation, etc.
5 subsidiaries
NEC Akita. Ltd.
NEC Kagoshima. Ltd.
NT Sales Co., Ltd.
Others | Consolidated subsidiaries excluded from the consolidation scope as a result of sales and liquidation, etc.
36 subsidiaries
Hokko Denshi Co., Ltd.
Packard Bell B.V.
NEC USA, Inc.
NEC Laser & Automation, Ltd.
NEC Gotemba, Ltd.
Others |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||||||||
Subsidiaries excluded from the
7 subsidiaries | Subsidiaries excluded from the
6 subsidiaries | Subsidiaries excluded from the
10 subsidiaries | ||||||||||
Previous | New | Previous | New | Previous | New | |||||||
TOKIN Shoko Corporation
| NEC TOKIN | ABeam System Engineering Ltd.
| ABeam Consulting Ltd. | TOKIN Shoko Corporation
| NEC TOKIN | |||||||
NEC TOKIN Toyama, Ltd.
| ABeam Consulting Ltd.
| NEC TOKIN Toyama, Ltd.
| ||||||||||
NEC TOKIN Iwate, Ltd.
| NEC Postal Technorex. Ltd.
| NEC Control Systems, Ltd. | NEC TOKIN Iwate, Ltd.
| |||||||||
NEC TOKIN Tochigi, Ltd.
| NEC Robotics Engineering. Ltd.
| NEC TOKIN Tochigi, Ltd.
| ||||||||||
NEC TOKIN Hyogo, Ltd.
| NEC View technology, LTD.
| NEC Display Solutions, Ltd. | NEC TOKIN Hyogo, Ltd.
| |||||||||
NEC TOKIN Corporation
| NEC Display Solutions, Ltd.
| NEC TOKIN Corporation
| ||||||||||
NEC America
| NEC Corporation of America | NEC TOKIN International Inc.
| NEC TOKIN America, Inc. | NEC America
| NEC Corporation of America | |||||||
NEC Solutions (America), Inc.
| Tokin Magnetics Inc.
| NEC Solutions (America), Inc.
| ||||||||||
NEC Compound Semiconductor Devices, Ltd.
| NEC Electronics | NEC TOKIN America, Inc
| NEC Compound Semiconductor Devices, Ltd.
| NEC Electronics | ||||||||
NEC Electronics Corporation
| NEC Telenetworx. Ltd.
| NESIC | NEC Deviceport, Ltd.
| |||||||||
NESIC | NEC Electronics Corporation | |||||||||||
Epiphany Solutions, Ltd.
| ABeam System Engineering Ltd. | |||||||||||
ABeam System Engineering Ltd.
| ||||||||||||
Qorval Integrated Solutions, Inc.
| Abeam Consulting (USA) Ltd. | |||||||||||
Abeam Consulting (USA) Ltd. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
2. Application of equity method | 1. Number of unconsolidated subsidiaries accounted for by the equity method
None | 1. Same as on the left | 1. Same as on the left | |||
2. Investments in 68 affiliated companies are accounted for by the equity method. | 2. Same as on the left | 2. Same as on the left | ||||
Major affiliated companies accounted for by the equity method | Major affiliated companies accounted for by the equity method | Major affiliated companies accounted for by the equity method | ||||
Pleomart.Inc Keyware Solutions Inc. Nippon Computer System Co.,Ltd South Tokyo Cabletelevision Alaxala Networks Corporation NEC Leasing, Ltd. Nippon Electric Glass Co., Ltd.
Anritsu Corporation Japan Aviation Electronics Industry,Ltd Honda Elesys Co., Ltd. NEC SCHOTT Components Corporation Sincere Corporation NEC TOPPAN Circuit Solutions, Inc. Shanghai SVA NEC Liquid Crystal Display., Co., Ltd (hereinafter referred to as the “Shanghai SVA NEC Liquid Crystal Display”) Sony NEC Optiarc Inc. (hereinafter referred to as the “Sony NEC Optiarc”) Adcore-Tech Co.,Ltd. (hereinafter referred to as the “Adcore-Tech”) | Pleomart. Inc Keyware Solutions Inc.
Automotive Energy Supply Corporation (hereinafter referred to as the “AESC”) | Pleomart. Inc Nippon Computer System Co., Ltd NEC SCHOTT Components Corporation | ||||
3 affiliated companies, including Sony NEC Optiarc and Adcore-Tech, were newly accounted for by the equity method. 3 affiliated companies, including Biwagin Software Co., Ltd. were excluded from the affiliated companies accounted for by the equity method. | 2 affiliated companies, including AESC and NT Sales Co.,Ltd, were newly accounted for by the equity method. 2 affiliated companies, including AUTHENTIC, Ltd. were excluded from the affiliated companies accounted for by the equity method. | 5 affiliated companies, including Sony NEC Optiarc and Adcore-Tech, were newly accounted for by the equity method. 5 affiliated companies, including Hua Hong Semiconductor and Biwagin Software Co., Ltd. were excluded from the affiliated companies accounted for by the equity method. | ||||
3. Unconsolidated subsidiaries and affiliated companies not accounted for by the equity method
None | 3. Same as on the left | 3. Same as on the left | ||||
4. Although the Company owns over 20% of the total outstanding shares of Japan Electronic Computer Co., Ltd. (hereinafter referred to as the “JECC”), JECC was excluded from affiliated companies, because it is jointly owned and managed by 6 domestic electronic computer manufacturers to promote the data-processing industry. | 4. Same as on the left | 4. Same as on the left |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
3. Interim period (fiscal year) ends of consolidated subsidiaries | The interim period end of consolidated subsidiaries is September 30 except for the following subsidiaries: | The interim period end of consolidated subsidiaries is September 30 except for the following subsidiaries: | The fiscal year end of consolidated subsidiaries is March 31 except for the following subsidiaries: | |||
NEC do Brasil S.A. NEC Solutions Brasil S.A. Shougang NEC Electronics Co., Ltd. NEC Argentina S.A. NEC Chile S.A.
70 other companies | NEC do Brasil S.A. NEC Solutions Brasil S.A. Shougang NEC Electronics Co., Ltd. NEC Argentina S.A. NEC Chile S.A. NEC Philips Unified Solutions B.V.
43 other companies | NEC do Brasil S.A. NEC Solutions Brasil S.A. Shougang NEC Electronics Co., Ltd. NEC Argentina S.A. NEC Chile S.A. NEC Philips Unified Solutions B.V.
53 other subsidiaries | ||||
The interim period ends of subsidiaries listed above are usually June 30, and the financial statements as of and for the period ended June 30 were included in the NEC consolidation.
The Company made adjustments for material transactions between the interim period ends of the subsidiaries and the interim period end of the Company, as needed. | Same as on the left | The fiscal year ends of subsidiaries listed above are usually December 31, and the financial statements as of and for the year ended December 31 were included in the NEC consolidation.
The Company made adjustments for material transactions between the fiscal year ends of the subsidiaries and the fiscal year end of the Company, as needed. | ||||
4. Accounting policies | Accounting policies adopted by consolidated subsidiaries are, in general, the same as those adopted by the Company. Certain accounting policies adopted by overseas consolidated subsidiaries are in accordance with those of respective countries. | Same as on the left | Same as on the left | |||
(1) Valuation basis and method of major assets | 1. Marketable and investment securities
Available-for-sale securities
• Securities with market prices
Securities with market prices are valued at the quoted market prices prevailing at interim period end. Unrealized gains or losses are included in a component of net assets. The cost of securities sold is determined based on the moving-average cost method. | 1. Marketable and investment securities
Available-for-sale securities
• Securities with market prices
Same as on the left | 1. Marketable and investment securities
Available-for-sale securities
• Securities with market prices
Securities with market prices are valued at the quoted market prices prevailing at fiscal year end. Unrealized gains or losses are included in a component of net assets. The cost of securities sold is determined based on the moving-average cost method. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
• Securities without market prices
Moving-average cost method | • Securities without market prices
Same as on the left | • Securities without market prices
Same as on the left | ||||
— | • Investments in limited partnerships, etc.
Based on the latest available financial statements, the investments in limited partnerships were accounted for by the equity method. | • Investments in limited partnerships, etc.
Same as on the left | ||||
2. Derivatives
Market value method | 2. Derivatives
Same as on the left | 2. Derivatives
Same as on the left | ||||
3. Inventories
Inventories are stated at the lower of cost or market, determined by the following valuation methods:
Valuation method
Finished products
Custom-made products
Mainly, specific identification method
Mass produced standard products
Mainly, first-in, first-out method
Work-in process
Custom-made products
Mainly, specific identification method
Mass produced standard products
Mainly, average cost method
Semi-finished products, raw materials and others
Mainly, first-in, first-out method | 3. Inventories
Same as on the left | 3. Inventories
Same as on the left |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
(2) Valuation standard and method of major depreciable assets | 1. Tangible fixed assets
Depreciation is computed principally by the declining-balance method
Estimated useful lives are as follows:
Buildings and structures
7 - 50 years
Machinery and equipment, tools and other equipment
2-22 years
Leased assets are depreciated by the declining-balance method over the respective lease periods. | 1. Tangible fixed assets
Depreciation is computed principally by the declining-balance method
Estimated useful lives are as follows:
Buildings and structures
7 - 50 years
Machinery and equipment, tools and other equipment
2-22 years
Leased assets are depreciated by the declining-balance method over the respective lease periods.
(Change in accounting policies)
Effective from this interim period, certain domestic consolidated subsidiaries have changed their depreciation method in terms of the tangible fixed assets acquired after April 1, 2007 in accordance with the corporation tax law as amended.
The effect of this change in operating income, ordinary income and income before income taxes and minority interests is immaterial.
(Additional information)
Effective from this interim period, after having depreciated fixed assets acquired before March 31, 2007 up to 5 percent of the remaining acquisition cost based on the prior corporate tax law, the Company and certain domestic consolidated subsidiaries have depreciated 5 percent of the remaining acquisition cost less minimum salvage value, using a straight line method over 5 years and booked as depreciation expense, according to the corporation tax laws as amended.
The effect of the change was to decrease operating income, ordinary income and income before income taxes and minority interests by 1,210 million yen, respectively.
For the impact on the Segment information, please refer to the corresponding notes information. | 1. Tangible fixed assets
Depreciation is computed principally by the declining-balance method
Estimated useful lives are as follows:
Buildings and structures
7 - 50 years
Machinery and equipment, tools and other equipment
2-22 years
Leased assets are depreciated by the declining-balance method over the respective lease periods. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
2. Intangible assets
• Software
Software for sale to the market is amortized based on projected sales volumes (Mainly the estimated valid period of 3 years or less). Software for internal use is amortized on a straight-line basis over the estimated useful lives of 5 years at maximum.
• Goodwill
Goodwill is amortized on a straight-line basis over the periods that are estimated by each acquisition, ranging up to 20 years. | 2. Intangible assets
• Software
Software for sale to the market is amortized either based on projected sales volumes or projected sales amounts (Mainly the estimated valid period of 3 years or less). Software for internal use is amortized on a straight-line basis over the estimated useful lives of 5 years at maximum.
• Goodwill
Same as on the left | 2. Intangible assets
• Software
Same as on the left
• Goodwill
Same as on the left | ||||
— | 3. Investments and other assets
Long-term prepaid expenses are amortized on a straight-line basis, or amortized based on the actual sales volume. | 3. Investments and other assets
Same as on the left | ||||
(3) Accounting standards for significant reserves | 1. Allowance for doubtful accounts
An allowance for doubtful accounts is provided against potential losses on collection at an amount determined using a historical bad debt ratio for normal receivables, plus an amount individually estimated on the collectibility of receivables that are expected to be uncollectible due to bad financial condition or insolvency. | 1. Allowance for doubtful accounts
Same as on the left | 1. Allowance for doubtful accounts
Same as on the left | |||
2. Reserve for bonuses to directors
The Company and its domestic consolidated subsidiaries provide a reserve for bonuses to directors in the amount which is attributable to this interim period, out of the estimated amount to be paid during the following fiscal year. | 2. Reserve for bonuses to directors
Same as on the left | 2. Reserve for bonuses to directors
The Company and its domestic consolidated subsidiaries provide a reserve for bonuses to directors in the amount which is attributable to this fiscal year, out of the estimated amount to be paid during the following fiscal year. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
3. Product warranty liabilities
The Company and its consolidated subsidiaries accrue product warranty liabilities for estimated future warranty costs using the historical ratio of warranty costs to sales, plus an amount individually measured on the incremental costs that are expected to be incurred, in expectation of expenditures for warranty costs after sale of products, or upon delivery of developed software. | 3. Product warranty liabilities
Same as on the left | 3. Product warranty liabilities
Same as on the left | ||||
(Additional information)
The cost of after service during the charge free warranty period of products has in the past been recorded at the time of repair as it has been during the previous interim period. However, from the previous consolidated fiscal year (second half of the year), the method has been changed to record an estimated amount based on past actual results against the sales amount. As the result of this, the operating income of previous interim period is 838 million yen less, ordinary loss of previous interim period is recorded as 838 million yen more and income before income taxes and minority interest of previous interim period as 7,556 million yen more.
Furthermore, “Practical Solution on Revenue Recognition of Software (PITF Report No.17 dated March 30, 2006) was adopted effective for this interim period. In accordance with PITF No.17, the Company and its consolidated subsidiaries additionally accrued for defect mending costs to be incurred subsequent to the delivery of software to customers, using the historical ratio of such cost, plus an amount individually measured on the incremental costs. The effects of the adoption were to decrease operating income, ordinary income, and income before income taxes and minority interests by 10,523 million yen, respectively. | (Additional information)
“Practical Solution on Revenue Recognition of Software (PITF Report No.17 dated March 30, 2006) was adopted effective for this fiscal year. In accordance with PITF No.17, the Company and its consolidated subsidiaries additionally accrued for defect mending costs to be incurred subsequent to the delivery of software to customers, using the historical ratio of such cost, plus an amount individually measured on the incremental costs. The effects of the adoption were to decrease operating income, ordinary income, and income before income taxes and minority interests by 13,370 million yen, respectively. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
4. Liabilities for retirement benefits
Liabilities for retirement benefits or prepaid pension expenses are provided for employees’ pension and severance payments based on the projected benefit obligation and the estimated fair value of plan assets as of this fiscal year end. | 4. Liabilities for retirement benefits or prepaid pension costs
Liabilities for retirement benefits or prepaid pension expenses are provided for employees’ pension and severance payments based on the projected benefit obligation and the estimated fair value of plan assets as of this fiscal year end. | 4. Liabilities for retirement benefits or prepaid pension costs
Liabilities for retirement benefits or prepaid pension expenses are provided for employees’ pension and severance payments based on the projected benefit obligation and the estimated fair value of plan assets as of this fiscal year end. | ||||
Transitional obligation is amortized on a straight-line basis mainly over 15 years. | Transitional obligation is amortized on a straight-line basis mainly over 15 years. | Transitional obligation is amortized on a straight-line basis mainly over 15 years. | ||||
Prior service costs are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 14 years). | Prior service costs are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 13 years). | Prior service costs are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 14 years). | ||||
Actuarial gains and losses are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 12 years), starting the following year after incurrence. | Actuarial gains and losses are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 13 years), starting the following year after incurrence. | Actuarial gains and losses are amortized on a straight-line basis over the employees’ estimated average remaining service periods (mainly 12 years), starting the following year after incurrence. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
5. Provision for loss on repurchase of computers
The Company provides provision for the estimated losses arising from the repurchase of computers based on the actual loss incurred in the past. | 5. Provision for loss on repurchase of computers
Same as on the left | 5. Provision for loss on repurchase of computers
Same as on the left | ||||
6. Provision for recycling expenses of personal computers
In accordance with personal computer recycling regulation, certain domestic consolidated subsidiaries provide for estimated recycling costs to be incurred upon collection of household personal computers that were sold, based on volume of shipments and collection ratio.
The Company semiannually reviews the various rates used in the calculation of the provision based on reports issued by JEITA (Japan Electronics and Information Technology Industries Association) and the actual collection and recycling records of consolidated subsidiaries. The Company records prior year adjustments as special gain. | 6. Provision for recycling expenses of personal computers
Same as on the left | 6. Provision for recycling expenses of personal computers
In accordance with personal computer recycling regulation, certain domestic consolidated subsidiaries provide for estimated recycling costs to be incurred upon collection of household personal computers that were sold, based on volume of shipments and collection ratio.
The Company annually reviews the various rates used in the calculation of the provision based on reports issued by JEITA (Japan Electronics and Information Technology Industries Association) and the actual collection and recycling records of consolidated subsidiaries. The Company records prior year adjustments as special gain. | ||||
(4) Standard for converting major foreign assets or liabilities to domestic currency | Foreign currency denominated assets and liabilities are translated into Japanese yen at the current exchange rate prevailing at the interim period end. Translation gains and losses are recognized in income. In addition, assets and liabilities of consolidated overseas subsidiaries are translated into Japanese yen at the current exchange rate prevailing at the respective interim period ends. Income and expenses are translated into Japanese yen at the average exchange rate of the interim period. The translation differences are included in foreign currency translation adjustments and minority interests in net assets. | Same as on the left | Foreign currency denominated assets and liabilities are translated into Japanese yen at the current exchange rate prevailing at the fiscal year end. Translation gains and losses are recognized in income. In addition, assets and liabilities of consolidated overseas subsidiaries are translated into Japanese yen at the current exchange rate prevailing at the respective fiscal year ends. Income and expenses are translated into Japanese yen at the average exchange rate of the fiscal year. The translation differences are included in foreign currency translation adjustments and minority interests in net assets. |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
(5) Significant leasing transactions | Finance leases as lessee are accounted for as ordinary sales transactions. | Same as on the left | Same as on the left | |||
(6) Accounting for significant hedging activities | 1. Method of hedge accounting
Derivative transactions that are utilized to hedge interest rate risk are measured at fair value at the balance sheet date and the unrealized gains or losses are deferred until the maturity of such derivatives. | 1. Method of hedge accounting
Same as on the left. | 1. Method of hedge accounting
Same as on the left | |||
2. Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Bonds and long-term borrowings | 2. Hedging instruments and hedged items
Same as on the left | 2. Hedging instruments and hedged items
Same as on the left | ||||
3. The Company’s policy for hedging
Derivative transactions are entered into in accordance with “Risk management policy”, which is the internal policy of the Company and its consolidated subsidiaries, to offset market fluctuations or to fix the cash flows of the hedged items. | 3. The Company’s policy for hedging
Same as on the left | 3. The Company’s policy for hedging
Same as on the left | ||||
4. Assessment of hedge effectiveness
The Company assesses the hedge effectiveness by comparing the changes in fair value or the cumulative changes in cash flows of hedging instruments with the corresponding changes of hedged items. | 4. Assessment of hedge effectiveness
Same as on the left | 4. Assessment of hedge effectiveness
Same as on the left |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | Fiscal year ended (From April 1, 2006 to March 31, 2007) | |||
(7) Other significant accounting policies | 1. Consumption taxes
Consumption taxes are separately accounted for by excluding them from each transaction amount. | 1. Consumption taxes
Same as on the left | 1. Consumption taxes
Same as on the left | |||
2. Application of consolidated corporate-tax return system
The Company files its tax return under the consolidated corporate-tax return system. | 2. Application of consolidated corporate-tax return system
Same as on the left | 2. Application of consolidated corporate-tax return system
Same as on the left | ||||
5. Cash and cash equivalents in interim consolidated statements of cash flows | Cash and cash equivalents in interim consolidated statements of cash flows are cash on hand, deposits which may be withdrawn at anytime without notice, and short-term investments that are readily convertible into cash, that are exposed to insignificant risk of changes in value, and that mature or become due within 3 months of the date of acquisition. | Same as on the left | Cash and cash equivalents in consolidated statements of cash flows are cash on hand, deposits which may be withdrawn at anytime without notice, and short-term investments that are readily convertible into cash, that are exposed to insignificant risk of changes in value, and that mature or become due within 3 months of the date of acquisition. |
Changes in Presentation Method
Six months ended (From April 1, 2006 to September, 30 2006) | Six months ended (From April 1, 2007 to September 30, 2007) | |
(Consolidated Balance Sheet)
“Consolidated adjustment accounts” which were separately disclosed in the previous interim period were renamed as “Goodwill”.
| —
(Consolidated Balance Sheet)
Certificate of deposit which had been incorporated in “Cash and deposit” on six months ended September 30, 2006 and fiscal year ended March 31, 2007 has been categorized as “Marketable securities” starting from six months ended September 30, 2007. This change is in accordance with “Practice Guidance for financial instruments” amended on July 4, 2007 as final which stipulates to treat them as “Marketable securities”.
The balance of certificate of deposit as of September 30, 2006, September 30, 2007 and March 31, 2007 are 96,000 million yen, 116,200 million yen and 70,000 million yen, respectively. | |
(Consolidated Statement of Cash Flows)
“Amortization of consolidated adjustment accounts” which was separately disclosed in the previous interim period was renamed as “Amortization of goodwill”. |
—
|
Notes to Consolidated Financial Statements
(Consolidated Balance Sheets)
(In millions of yen)
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended | Fiscal year ended | |||||||||
*1. Accumulated depreciation of tangible fixed assets | 1,802,220 | 1,799,326 | 1,789,062 | |||||||||
*2. Assets pledged as and debt secured by collateral | ||||||||||||
Balances of assets pledged as collateral | Buildings | 7,295 | Buildings | 7,099 | Buildings | 6,846 | ||||||
Machinery and equipment | 1,466 | Machinery and equipment | 1,315 | Machinery and equipment | 1,385 | |||||||
Land | 7,135 | Land | 7,132 | Land | 7,132 | |||||||
Others | 121 | Others | 214 | Others | 103 | |||||||
Total | 16,017 | Total | 15,760 | Total | 15,466 | |||||||
Balance of liabilities secured by collateral | Short-term borrowings | 2,529 | Short-term borrowings | 2,228 | Short-term borrowings | 2,267 | ||||||
Long-term borrowings | 1,501 | Long-term borrowings | 1,957 | Long-term borrowings | 2,249 | |||||||
Others | 313 | Others | 149 | Others | 162 | |||||||
Total | 4,343 | Total | 4,334 | Total | 4,678 | |||||||
3. Contingent liabilities | ||||||||||||
Guarantees for bank loans and others | Shanghai SVA NEC Liquid Crystal Display | 21,899 | Shanghai SVA NEC Liquid Crystal Display | 19,309 | Shanghai SVA NEC Liquid Crystal Display | 20,688 | ||||||
Employees | 14,447 | Employees | 11,824 | Employees | 12,928 | |||||||
NEC NEVA Communications System | 1,692 | Other | 4,007 | Sony NEC Optiarc | 770 | |||||||
Other | 4,562 | Total | 35,140 | NEC Toppan Circuit Solutions, Inc. | 554 | |||||||
Others | 2,022 | |||||||||||
Total | 42,600 | Total | 36,962 |
Item | Six months ended (From April 1, 2006 to September 30, 2006) | Six months ended | Fiscal year ended | |||||||||
(Additional information)
The Company signed an agreement with financial institutions on October 1, 2007 to provide an additional guarantee for bank borrowings of Sony NEC Optiarc, an affiliated company, financing its business.
The guaranteed amount as of October 31, 2007, net of liability recorded in equity method of accounting included in other long-term liabilities at the end of the interim period, is 4,562 million yen. | ||||||||||||
Guarantees of residual value of operating leases | SMBC Leasing | 19,806 | SMBC Leasing | 19,502 | SMBC Leasing | 19,393 | ||||||
BOT Lease | 3,705 | BOT Lease | 3,810 | BOT Lease | 3,810 | |||||||
IBJ Leasing | 2,084 | IBJ Leasing | 1,496 | IBJ Leasing | 1,496 | |||||||
Other | 463 | Other | 344 | Other | 452 | |||||||
Total | 26,058 | Total | 25,152 | Total | 25,151 |
Item | Six months ended | Six months ended | Fiscal year ended | |||
Other | NEC Electronics America, Inc., a consolidated subsidiary of the Company, has been named as one of the defendants in a number of class action civil antitrust lawsuits filed by direct and indirect purchasers of dynamic random access memory (“DRAM”) and the Attorneys General of a number of the states in the U.S., seeking damages from alleged antitrust violations in the U.S. DRAM industry. The NEC Group has entered into settlement agreements with a number of the customers to which it sold DRAM in the past (including plaintiffs’ representatives in direct purchaser class actions), but settlement negotiations with some customers are still underway.
In addition, the NEC Group is fully cooperating with the European Commission in an investigation of potential violations of European competition laws in the DRAM industry. Although the final outcome has not been reached at this time in connection with the civil lawsuits or settlement negotiations in the U.S. or the investigations by the European Commission, the NEC Group has provided an accrual in a reasonably estimated amount in connection with the civil lawsuits and settlements with customers in the U.S. | NEC Electronics America, Inc., a consolidated subsidiary of the Company, has settled a number of class action civil antitrust lawsuits from direct DRAM purchasers seeking damages for alleged antitrust violations in the DRAM industry, but is still in litigations or in settlement negotiations with several customers who have opted out of such class action lawsuits. NEC Electronics America, Inc has also been named as one of the defendants in a number of class action civil antitrust lawsuits from indirect DRAM purchasers (customers who had purchased products containing DRAM), as well as a number of antitrust lawsuits filed by the Attorneys General of numerous states in the United States. NEC group companies are also fully cooperating with, and providing information to, the European Commission in its investigation of potential violations of European competition laws in the DRAM industry. Although the outcome of the aforementioned civil lawsuits and settlement negotiations in the United States and investigation by the European Commission is not known at this time, the NEC Group has provided an accrual in a reasonably estimated amount of potential losses in connection with the civil lawsuits and settlement negotiations with customers in the United States. | NEC Electronics America, Inc., a consolidated subsidiary of the Company, has been named as one of the defendants in a number of class action civil antitrust lawsuits filed by direct and indirect purchasers of dynamic random access memory (“DRAM”) and the Attorneys General of a number of the states in the U.S., seeking damages from alleged antitrust violations in the U.S. DRAM industry. The NEC Group has entered into settlement agreements with a number of the customers to which it sold DRAM in the past (including plaintiffs’ representatives in direct purchaser class actions), but settlement negotiations with some customers are still underway.
In addition, the NEC Group is fully cooperating with the European Commission in an investigation of potential violations of European competition laws in the DRAM industry. Although the final outcome has not been reached at this time in connection with the civil lawsuits or settlement negotiations in the U.S. or the investigations by the European Commission, the NEC Group has provided an accrual in a reasonably estimated amount in connection with the civil lawsuits and settlements with customers in the U.S. | |||
*4: Notes receivable, trade, discounted | 523 | 507 | 447 | |||
*5: Notes receivable, trade, endorsed | 2,149 | 20 | 959 | |||
* 6. Commitment line contract | — | The Company and its consolidated subsidiaries maintain commitment line contracts for short-term borrowings with 26 financial institutions for stable and expeditious short-term fundings. The amounts of unused portions of commitment lines for short-term borrowings as of September 30, 2007 were as follows: | The Company and its consolidated subsidiaries maintain commitment line contracts for short-term borrowings with 26 financial institutions for stable and expeditious short-term fundings. The amounts of unused portions of commitment lines for short-term borrowings as of March 31, 2007 were as follows: |
Item | Six months ended | Six months ended | Fiscal year ended March 31, 2007 (From April 1, 2006 to | |||||||
Commitment line, total | 307,000 | Commitment line, total | 307,000 | |||||||
Commitment line, used | 34,490 | Commitment line, used | 57,100 | |||||||
Commitment line, unused | 272,510 | Commitment line, unused | 249,900 | |||||||
The Company and its consolidated subsidiaries maintain commitment line contracts for long-term borrowings with 11 financial institutions for stable and expeditious long-term fundings. The amounts of unused portions of commitment lines for long-term borrowings as of September 30, 2007 were as follows: | The Company and its consolidated subsidiaries maintain commitment line contracts for long-term borrowings with 11 financial institutions for stable and expeditious long-term fundings. The amounts of unused portions of commitment lines for long-term borrowings as of March 31, 2007 were as follows: | |||||||||
Commitment line, total | 110,000 | Commitment line, total | 110,000 | |||||||
Commitment line, used | 2,000 | Commitment line, used | — | |||||||
Commitment line, unused | 108,000 | Commitment line, unused | 110,000 | |||||||
*7 Accounting for notes due on the closing date | Notes receivable, trade and notes payable, trade due on the end of this interim period, which was a holiday of financial institutions, were accounted for as if they were settled on that date.
The balances of such notes, trade, are as follows.
Notes receivable, trade: 2,632
Notes payable, trade: 2,439 | Notes receivable, trade and notes payable, trade due on the end of this interim period, which was a holiday of financial institutions, were accounted for as if they were settled on that date.
The balances of such notes, trade, are as follows.
Notes receivable, trade: 584
Notes payable, trade: 457 | Notes receivable, trade and notes payable, trade due on the end of this fiscal year, which was a holiday of financial institutions, were accounted for as if they were settled on that date.
The balances of such notes, trade, are as follows.
Notes receivable, trade: 1,842
Notes payable, trade: 1,155 |
(Consolidated Statements of Operations)
(In millions of yen) | ||||||||||||
Item | Six months ended | Six months ended | Fiscal year ended | |||||||||
*1 Selling, general and administrative expenses | ||||||||||||
Major account titles and amounts | Salaries for employees | 177,332 | Salaries for employees | 179,044 | Salaries for employees | 362,999 | ||||||
Research and development expenses | 159,368 | Research and development expenses | 170,548 | Research and development expenses | 329,605 | |||||||
Provision for loss on repurchase of computers | 1,501 | Provision for loss on repurchase of computers | 750 | Provision for product warranty liabilities | 26,789 | |||||||
Provision for product warranty liabilities | 15,580 | Provision for product warranty liabilities | 19,444 | Retirement benefit expenses | 972 | |||||||
Provision for loss on repurchase of computers | 3,870 | |||||||||||
Allowance for doubtful accounts | 2,374 | |||||||||||
*2 Gain on business transfer | — | Gain mainly for disposal of assets following the liquidations of electron device business and IT/Network solutions business in Europe. | — | |||||||||
*3. Gain on sales of fixed assets | Due to sales of land, etc. | Same as on the left. | Same as on the left. | |||||||||
*4. Gain on change in interests in consolidated subsidiaries and affiliated companies | Mainly due to changes in interests from the new share issuance to designated third party shareholders conducted by NEC BIGLOBE, and NESIC’s acquisition of NEC Telenetworx, Ltd (hereinafter referred to as the “NEC Telenetworx”) by which NEC Telenetworx became a wholly owned subsidiary of NESIC. | Due to changes in interests from the new share issuance to designated third party shareholders conducted by Shanghai SVA NEC Liquid Crystal Display. | Mainly due to changes in interests from the new share issuance to designated third party shareholders conducted by NEC BIGLOBE, and NESIC’s acquisition of NEC Telenetworx, Ltd (hereinafter referred to as the “NEC Telenetworx”) by which NEC Telenetworx became a wholly owned subsidiary of NESIC. | |||||||||
*5. Gain on sales of investments in affiliated companies | — | Due to sale of shares of NT Sales Co., LTD. | Mainly due to sale of shares of Netwin Inc. | |||||||||
*6. Gain on reversion of securities from the pension trust | — | — | The Company had an over funded status in that the plan assets at fair value exceeded the retirement benefit obligations as a result of an improvement in the pension fund status. Certain of the shares of Nippon Electric Glass held in the pension trust were reversed to the Company and a gain was recognized on such asset reversion. |
Item | Six months ended | Six months ended | Fiscal year ended | |||
*7. Gain on transfer of securities to the pension trust | Due to transfer of securities to the pension trust by certain of the Company’s domestic consolidated subsidiary. | — | Due to transfer of securities to the pension trust by certain of the Company’s domestic consolidated subsidiary. | |||
*8. Cost of corrective measures for products | — | Mainly cost of corrective measures for defective products and substitution of products. | Mainly cost of corrective measures for products and expenses incurred due to customers’ claim for picking up products. | |||
*9. Restructuring charges | Expenses mainly for disposal of assets and transfer of employees following the liquidations of electron device business and mobile terminal business in China. | Expenses mainly for dismissal of employees following the liquidations of electron device business and IT/Network solutions business in Europe. | Expenses mainly for disposal of assets, transfer of employees and revision of the product configuration following the liquidations of electron device business and mobile terminal business in China. | |||
*10. Loss on devaluation of investment securities | — | Impairment loss recognized mainly for investment securities. | Same as on the left. | |||
*11. Loss on retirement of fixed assets | — | Rebuilding expenses and cost in Tamagawa and Fuchu plants. | — |
Item | Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | |||||||||||||||
*12. Impairment loss on fixed assets | (1) Summary of assets and asset groups for which impairment losses were recognized. | (1) Summary of assets and asset groups for which impairment losses were recognized. | (1) Summary of assets and asset groups for which impairment losses were recognized. | |||||||||||||||
Use | Type | Location | Use | Type | Location | Use | Type | Location | ||||||||||
Assets for business use | Buildings intangible assets and others | Shinagawa-ku, Tokyo | Assets for business use | Buildings, intangible assets and others | Shinagawa-ku, Tokyo | Assets for business use | Buildings intangible assets and others | Shinagawa-ku, Tokyo | ||||||||||
Idle assets |
Land |
Sunto-gun , |
Idle assets |
Land |
Sapporo City, |
Assets for |
Buildings, tools and |
Yokohama | ||||||||||
Idle assets |
Land, |
Sendai City, |
Idle assets |
Land |
Shiroishi City, |
Idle assets |
Land, machinery |
Tsuruoka | ||||||||||
Idle assets |
Land |
Igu-gun, |
Idle assets |
Land |
Sunto-gun, | |||||||||||||
(2) Background to the recognition of impairment loss.
The investments in certain fixed assets | (2) Background to the recognition of impairment loss.
Same as on the left. | (2) Background to the recognition of impairment loss.
Same as on the left. | ||||||||||||||||
(3) Amounts of impairment loss | (3) Amounts of impairment loss | (3) Amounts of impairment loss | ||||||||||||||||
Buildings | 144 | Buildings | 17 | Buildings | 231 | |||||||||||||
Land | 299 | Machinery and equipment | 36 | Machinery and equipment | 338 | |||||||||||||
Intangible assets | 671 | Tools and other equipment | 45 | Tools and other equipment | 310 | |||||||||||||
Others | 169 | Tangible assets—others | 282 | Tangible assets—others | 400 | |||||||||||||
Total | 1,283 | Intangible assets—others | 149 | Intangible assets—others | 1,340 | |||||||||||||
Total | 529 | Investments and other assets— others | 149 | |||||||||||||||
Total | 2,768 |
Item | Six months ended | Six months ended | Fiscal year ended | |||
(4) Method for grouping assets
In principle, the Company groups assets for business use based on its business units and managerial accounting segments. The Company groups idle assets into a single asset group. | (4) Method for grouping assets
Same as on the left. | (4) Method for grouping assets
Same as on the left. | ||||
(5) Measurement of recoverable amounts
The higher of the net realizable the value and value in use is used for the recoverable amounts of fixed assets for business use. Net realizable value is used for the recoverable amounts of idle assets.
Net realizable value is estimated based on the assessed value for property tax purposes, etc. The value in use is assessed at 1 yen because the total of future cash flow is a negative amount. | (5) Measurement of recoverable amounts
Same as on the left. | (5) Measurement of recoverable amounts
Same as on the left. | ||||
*13. Loss on sales of investments in affiliated companies | — | Mainly due to sale of shares of AUTHENTIC, Ltd. | Mainly due to sale of shares of Packard Bell B.V. | |||
*14. Other retirement benefit expenses | Expenses incurred mainly by the transition of the pension and severance plan of the consolidated subsidiaries. | — | Expenses incurred mainly by the transition of the pension and severance plan of the consolidated subsidiaries. | |||
*15. Loss on sales of tangible fixed assets | — | — | Due to sales of land and others. |
(Notes to Consolidated Statements of Changes in Net Assets)
Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006)
1 Stocks, issued
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2006 | Increase | Decrease | Number of shares as of September 30, | ||||
Common stock | 1,995,923 | 33,632 | — | 2,029,555 |
Reasons for the change
Main reason for the increase in number of shares is as follows
Increase due to the stock-for-stock exchange between the Company and NEC Inflontia 33,631 thousand shares
2 Treasury stock
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2006 | Increase | Decrease | Number of shares as of September 30, | ||||
Common stock | 2,974 | 1,023 | 45 | 3,952 |
Reasons for the change
Main reasons for the increase in number of shares are as follows
Increase due to the stock-for-stock exchange between the Company and NEC Infrontia 743 thousand shares
Increase due to repurchase of odd-lot shares 276 thousand shares
Main reason for the decrease in number of shares is as follows
Decrease due to repurchase of odd-lot shares by investors 43 thousand shares
3 Stock subscription rights
Company name | Description | Balances as of September 30, 2006 (In millions of yen) | ||
NEC | Stock subscription rights as stock options 2006 Stock Options | 57 | ||
NEC Electronics | Stock subscription rights as stock options 2006 Stock Options | 9 | ||
Total | 66 | |||
4 Dividends
(1) Payment of dividends
Resolution | Class of stock | Total dividends (In millions of yen) | Dividends per share (In yen) | Record date | Effective date | |||||
Ordinary general shareholders meeting held on June 22, 2006 | Common stock | 5,979 | 3 | March 31, 2006 | June 23, 2006 |
(2) Dividends whose record dates are within this interim period and effective dates are within the following interim period.
Resolution | Class of stock | Total dividends (In millions of yen) | Dividends per share (In yen) | Record date | Effective date | |||||
Board of directors meeting held on November 21, 2006 | Common stock | 8,105 | 4 | September 30, 2006 | December 1, 2006 |
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007)
1 Stocks, issued
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2007 | Increase | Decrease | Number of shares as of September 30, | ||||
Common stock | 2,029,555 | 176 | — | 2,029,731 |
Reasons for the change
Reason for the increase in number of shares is as follows
Increase due to the conversion of convertible bonds 176 thousand shares
2 Treasury stock
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2007 | Increase | Decrease | Number of shares as of September 30, | ||||
Common stock | 4,546 | 314 | 31 | 4,829 |
Reasons for the change
Main reason for the increase in number of shares is as follows
Increase due to repurchase of odd-lot shares 303 thousand shares
Main reason for the decrease in number of shares are as follows
Decrease due to repurchase of odd-lot shares by investors 31 thousand shares
3 Stock subscription rights
Company name | Description | Class of stock | Number of shares | Balances as (In millions | ||||||||||
Number of as of March 31, 2007 | Increase | Decrease | Number of shares as of September 30, 2007 | |||||||||||
NEC | Stock subscription rights as stock options | — | 56 | |||||||||||
NEC Electronics | Stock subscription rights as stock options | — | 42 | |||||||||||
Total | — | 98 | ||||||||||||
4 Dividends
(1) Payment of dividends
Resolution | Class of stock | Total dividends (In millions of yen) | Dividends per share (In yen) | Record date | Effective date | |||||
Extraordinary board of directors meeting held on May 21, 2007 | Common stock | 8,104 | 4 | March 31, 2007 | June 7, 2007 |
(2) Dividends whose record dates are within this interim period and effective dates are within the following interim period.
Resolution | Class of stock | Resource of dividend | Total dividends (In millions of yen) | Dividends per share (In yen) | Record date | Effective date | ||||||
Extraordinary board of directors meeting held on November 14, 2007 | Common stock | Retained earnings | 8,104 | 4 | September 30, 2007 | December 3, 2007 |
Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007)
1 Stocks, issued
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2006 | Increase | Decrease | Number of shares as of March 31, 2007 | ||||
Common stock | 1,995,923 | 33,632 | — | 2,029,555 |
Reasons for the change
Main reason for the increase in number of shares is as follows
Increase due to the stock-for-stock exchange between the Company and NEC Inflontia 33,631 thousand shares
2 Treasury stock
(In thousands of shares) | ||||||||
Class of stock | Number of shares as of March 31, 2006 | Increase | Decrease | Number of shares as of March 31, 2007 | ||||
Common stock | 2,974 | 1,651 | 79 | 4,546 |
Reasons for the change
Main reason for the increase in number of shares is as follows
Increase due to the stock-for-stock exchange between the Company and NEC Infrontia 744 thousand shares
Increase due to repurchase of odd-lot shares 556 thousand shares
Main reason for the decrease in number of shares is as follows
Decrease due to repurchase of odd-lot shares by investors 77 thousand shares
3 Stock subscription rights
Company name | Description | Class of stock | Number of shares | Balances as (In millions | ||||||||||
Number of shares as of March 31, 2006 | Increase | Decrease | Number of shares as of March 31, 2007 | |||||||||||
NEC | Stock subscription rights as stock options | — | 56 | |||||||||||
NEC Electronics | Stock subscription rights as stock options | — | 25 | |||||||||||
Total | — | 81 | ||||||||||||
4 Dividends
(1) Payment of dividends
Resolution | Class of stock | Total dividends (In millions of yen) | Dividends per share (In yen) | Record date | Effective date | |||||
Ordinary general | Common stock | 5,979 | 3 | March 31, 2006 | June 23, 2006 | |||||
Board of directors | Common stock | 8,105 | 4 | September 30, 2006 | December 1, 2006 |
(2) Dividends whose record dates are within this fiscal year and effective dates are within the following fiscal year
Resolution | Class of stock | Resource of dividend | Total dividends (In millions of | Dividends per (In yen) | Record date | Effective date | ||||||
Extraordinary board of | Common stock | Retained earnings | 8,104 | 4 | March 31, 2007 | June 7, 2007 |
(Notes to Consolidated Statements of Cash Flows)
(In millions of yen) | |||||||||||||||
Item | Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||||||||||
*1 Reconciliation between cash and cash equivalents at end of interim period (fiscal year) and the amounts on the consolidated balance sheet | Cash and deposits | 347,815 | Cash and deposits | 234,790 | Cash and deposits | 332,446 | |||||||||
Marketable securities | 93,303 | Marketable securities | 169,517 | Marketable securities | 91,570 | ||||||||||
Time deposits and marketable securities with maturities of more than three months | (1,326 | ) | Time deposits and marketable securities with maturities of more than three months | (546 | ) | Time deposits and marketable securities with maturities of more than three months | (647 | ) | |||||||
Cash and cash equivalents | 439,792 | Cash and cash equivalents | 403,761 | Cash and cash equivalents | 423,369 | ||||||||||
*2 Significant non-cash transactions | Stock-for-stock exchange | 24,405 | Finance leases | 5,285 | Stock-for-stock exchange | 24,382 | |||||||||
Finance leases | 5,645 | Conversion of convertible bonds with stock subscription rights | 233 | Finance leases | 9,432 | ||||||||||
Conversion of convertible bonds with stock subscription rights | 2 | Conversion of convertible bonds with stock subscription rights | 2 |
SEGMENT INFORMATION
[Business segment information]
Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | |||||||||||||||||
(In millions of yen) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 1,206,550 | 419,695 | 408,633 | 186,726 | 2,221,604 | — | 2,221,604 | ||||||||||
2. Intersegment sales and transfers | 57,923 | 79,319 | 18,412 | 87,175 | 242,829 | (242,829 | ) | — | |||||||||
Total sales | 1,264,473 | 499,014 | 427,045 | 273,901 | 2,464,433 | (242,829 | ) | 2,221,604 | |||||||||
Operating expenses | 1,208,913 | 536,356 | 431,291 | 258,590 | 2,435,150 | (221,050 | ) | 2,214,100 | |||||||||
Operating income (loss) | 55,560 | (37,342 | ) | (4,246 | ) | 15,311 | 29,283 | (21,779 | ) | 7,504 | |||||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | |||||||||||||||||
(In millions of yen) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 1,225,967 | 334,214 | 399,200 | 181,212 | 2,140,593 | — | 2,140,593 | ||||||||||
2. Intersegment sales and transfers | 48,164 | 77,514 | 21,415 | 69,379 | 216,472 | (216,472 | ) | — | |||||||||
Total sales | 1,274,131 | 411,728 | 420,615 | 250,591 | 2,357,065 | (216,472 | ) | 2,140,593 | |||||||||
Operating expenses | 1,238,976 | 403,643 | 419,227 | 244,978 | 2,306,824 | (193,667 | ) | 2,113,157 | |||||||||
Operating income (loss) | 35,155 | 8,085 | 1,388 | 5,613 | 50,241 | (22,805 | ) | 27,436 | |||||||||
Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | |||||||||||||||||
(In millions of yen) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 2,659,774 | 801,692 | 816,918 | 374,265 | 4,652,649 | — | 4,652,649 | ||||||||||
2. Intersegment sales and transfers | 99,032 | 163,311 | 44,083 | 174,401 | 480,827 | (480,827 | ) | — | |||||||||
Total sales | 2,758,806 | 965,003 | 861,001 | 548,666 | 5,133,476 | (480,827 | ) | 4,652,649 | |||||||||
Operating expenses | 2,604,742 | 998,493 | 884,036 | 530,928 | 5,018,199 | (435,526 | ) | 4,582,673 | |||||||||
Operating income (loss) | 154,064 | (33,490 | ) | (23,035 | ) | 17,738 | 115,277 | (45,301 | ) | 69,976 | |||||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | |||||||||||||||||
(In millions of U.S. dollars) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 10,661 | 2,906 | 3,471 | 1,576 | 18,614 | — | 18,614 | ||||||||||
2. Intersegment sales and transfers | 418 | 674 | 187 | 603 | 1,882 | (1,882 | ) | — | |||||||||
Total sales | 11,079 | 3,580 | 3,658 | 2,179 | 20,496 | (1,882 | ) | 18,614 | |||||||||
Operating expenses | 10,773 | 3,510 | 3,646 | 2,130 | 20,059 | (1,684 | ) | 18,375 | |||||||||
Operating income (loss) | 306 | 70 | 12 | 49 | 437 | (198 | ) | 239 |
(Notes)
1 | The business segments are defined based on similarity of types, characteristics, and affinity of sales market of products and services. |
2 | Major services and products for each business segment |
IT/Network Solutions Business | System Construction, Consulting, Outsourcing, Support (Maintenance), Servers, Storage products, Professional workstations, Business PCs, IT software, Enterprise network systems, Network systems for telecommunications carriers, Broadcast video systems, Control systems, Aerospace/Defense systems | |
Mobile/Personal Solutions Business | Mobile handsets, Personal computers, Personal communication devices, BIGLOBE | |
Electron Devices Business | System LSI and other semiconductors, Electronic components, LCD modules | |
Others | Lighting Business, Logistics Business, Projector Business, Display Business |
3 | Unallocable operating expenses included in “Eliminations / Corporate “ for six months ended September 30, 2007, 2006 and fiscal year ended March 31, 2007 are ¥23,538 million ($205 million), ¥22,855 million, and ¥47,136 million respectively. The main components of such expenses are both general and administrative expenses incurred at the headquarters of the Company and research and development expenses. |
4 | Effective from this interim period after having depreciated fixed assets acquired before March 31, 2007 up to 5 percent of the remaining acquisition cost based on the prior corporate tax law, the Company and certain domestic consolidated subsidiaries have depreciated 5 percent of the remaining acquisition cost less minimum salvage value, using a straight line method over 5 years and booked as depreciation expense, according to the corporation tax laws as amended. The effect of the change was to decrease operating income by 1,210 million yen (IT/Network Solutions Business ¥446 million, Mobile/Personal Solutions Business ¥68 million, Electron Devices Business ¥337 million, Others ¥359 million, respectively). |
5 | Changes in accounting policies |
(Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006)) Effective from the interim accounting period ended September 30, 2006, the Company has adopted the “Accounting Standard for Directors’ Bonus (ASBJ Statement No.4, November 29, 2005) “. There was little effect on each of the business segment information. |
The Company has adopted the “Amendments to Accounting Standards for Retirement Benefits (ASBJ Statement No.3, March 16, 2005)” and the “Implementation Guidance on Amendments to Accounting Standard for Retirement Benefits (ASBJ Guidance No.7, March 16, 2005). As a result of this change, the increase of operating income for six months ended September 30, 2005 and Fiscal 2006 was ¥2,953 million (IT/Network Solutions Business ¥2,326 million, Mobile/Personal Solutions Business ¥216 million, Others ¥411 million), and ¥5,910 million (IT/Network Solutions Business ¥4,655 million, Mobile/Personal Solutions Business ¥431 million, Others ¥824 million), respectively. |
(Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007)) |
None |
(Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007)) |
Effective from the fiscal year ended March 31, 2007, the Company adopted the “Accounting Standard for Directors’ Bonus” |
(ASBJ Statement No. 4, issued on November 29, 2005)”. There was little effect on each of the business segment information. |
SEGMENT INFORMATION (CONTINUED)
[Geographical segment]
Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | ||||||||||||||||||
(In millions of yen) | ||||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 1,712,997 | 129,415 | 215,209 | 163,983 | 2,221,604 | — | 2,221,604 | |||||||||||
2. Intersegment sales and transfers | 215,714 | 81,743 | 9,860 | 15,970 | 323,287 | (323,287 | ) | ? | ||||||||||
Total sales | 1,928,711 | 211,158 | 225,069 | 179,953 | 2,544,891 | (323,287 | ) | 2,221,604 | ||||||||||
Operating expenses | 1,919,243 | 213,350 | 225,634 | 177,404 | 2,535,631 | (321,531 | ) | 2,214,100 | ||||||||||
Operating income (loss) | 9,468 | (2,192 | ) | (565 | ) | 2,549 | 9,260 | (1,756 | ) | 7,504 | ||||||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | ||||||||||||||||||
(In millions of yen) | ||||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 1,700,932 | 135,218 | 141,352 | 163,091 | 2,140,593 | — | 2,140,593 | |||||||||||
2. Intersegment sales and transfers | 217,643 | 92,904 | 5,373 | 13,756 | 329,676 | (329,676 | ) | — | ||||||||||
Total sales | 1,918,575 | 228,122 | 146,725 | 176,847 | 2,470,269 | (329,676 | ) | 2,140,593 | ||||||||||
Operating expenses | 1,868,607 | 221,413 | 146,355 | 182,048 | 2,418,423 | (305,266 | ) | 2,113,157 | ||||||||||
Operating income (loss) | 49,968 | 6,709 | 370 | (5,201 | ) | 51,846 | (24,410 | ) | 27,436 | |||||||||
Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||||||||||||||||
(In millions of yen) | ||||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 3,683,325 | 261,430 | 387,962 | 319,932 | 4,652,649 | — | 4,652,649 | |||||||||||
2. Intersegment sales and transfers | 418,520 | 176,751 | 17,255 | 28,357 | 640,883 | (640,883 | ) | — | ||||||||||
Total sales | 4,101,845 | 438,181 | 405,217 | 348,289 | 5,293,532 | (640,883 | ) | 4,652,649 | ||||||||||
Operating expenses | 4,024,759 | 434,941 | 409,139 | 350,335 | 5,219,174 | (636,501 | ) | 4,582,673 | ||||||||||
Operating income (loss) | 77,086 | 3,240 | (3,922 | ) | (2,046 | ) | 74,358 | (4,382 | ) | 69,976 | ||||||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | ||||||||||||||||||
(In millions of U.S. dollars) | ||||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 14,791 | 1,176 | 1,229 | 1,418 | 18,614 | — | 18,614 | |||||||||||
2. Intersegment sales and transfers | 1,892 | 808 | 47 | 120 | 2,867 | (2,867 | ) | — | ||||||||||
Total sales | 16,683 | 1,984 | 1,276 | 1,538 | 21,481 | (2,867 | ) | 18,614 | ||||||||||
Operating expenses | 16,248 | 1,926 | 1,273 | 1,583 | 21,030 | (2,655 | ) | 18,375 | ||||||||||
Operating income (loss) | 435 | 58 | 3 | (45 | ) | 451 | (212 | ) | 239 |
(Notes)
1 | Geographical distances are considered in classification of country or region. |
2 | Changes in geographic segmentation |
The figure in Asia is being segregated from this interim period as the importance of this area has increased. These figures were previously included in Others. In the above geographical segmentation for the six months ended September 30, 2006 and the fiscal year ended March 31, 2007, the figures in Asia are categorized separately from Others accordingly.
3 | Major countries and regions in segments other than Japan |
(1) Asia … China, Chinese Taipei, India, Singapore, and Indonesia
(2) Europe … U.K., France, the Netherlands, Germany, Italy, and Spain
(3) Others … U.S.A.
4 | Unallocable operating expenses are being included in “Eliminations / Corporate “ starting from the six months ended September 30, 2007, whereas the same had been included in “Japan” previously. This change is made in order to be in consistent with the way of disclosing Business segment information. Unallocable operating expenses ended September 30, 2007, 2006 and March 31, 2007 are ¥23,538 million ($205 million), ¥22,855 million, and ¥47,136 million respectively. The main components of such expenses are both general and administrative expenses incurred at the headquarters of the Company and research and development expenses. |
5 | Effective from this interim period after having depreciated fixed assets acquired before March 31, 2007 up to 5 percent of the remaining acquisition cost based on the prior corporate tax law, the Company and certain domestic consolidated subsidiaries have depreciated 5 percent of the remaining acquisition cost less minimum salvage value, using a straight line method over 5 years and booked as depreciation expense, according to the corporation tax laws as amended. The effect of the change was to decrease operating income by 1,210 million yen (Japan). |
6 | Changes in accounting policies |
(Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006))
Effective from the interim accounting period ended September 30, 2006, the Company has adopted the “Accounting Standard for Directors’ Bonus (ASBJ Statement No.4, November 29, 2005) “. There was little effect on each of the business segment information.
The Company has adopted the “Amendments to Accounting Standards for Retirement Benefits (ASBJ Statement No.3, March 16, 2005)” and the “Implementation Guidance on Amendments to Accounting Standard for Retirement Benefits (ASBJ Guidance No.7, March 16, 2005). As a result of this change, the increase of operating income for six months ended September 30, 2005 and Fiscal 2006 was ¥2,953 million (Japan) and ¥5,910 million (Japan), respectively.
(Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007))
None
(Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007))
Effective from the fiscal year ended March 31, 2007, the Company adopted the “Accounting Standard for Directors’ Bonus” (ASBJ Statement No. 4, issued on November 29, 2005)”. There was little effect on each of the business segment information.
SEGMENT INFORMATION (CONTINUED)
[Overseas sales]
Six months ended September 30, 2006 (From April 1, 2006 to September 30, 2006) | ||||||||
(In millions of yen) | ||||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 213,237 | 233,790 | 176,168 | 623,195 | ||||
Consolidated sales | — | — | — | 2,221,604 | ||||
Percentage of overseas sales to consolidated sales (%) | 9.6 | 10.5 | 8.0 | 28.1 | ||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | ||||||||
(In millions of yen) | ||||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 244,304 | 157,521 | 186,079 | 587,904 | ||||
Consolidated sales | — | — | — | 2,140,593 | ||||
Percentage of overseas sales to consolidated sales (%) | 11.4 | 7.4 | 8.7 | 27.5 | ||||
Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||||||
(In millions of yen) | ||||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 421,949 | 448,487 | 343,249 | 1,213,685 | ||||
Consolidated sales | — | — | — | 4,652,649 | ||||
Percentage of overseas sales to consolidated sales (%) | 9.1 | 9.6 | 7.4 | 26.1 | ||||
Six months ended September 30, 2007 (From April 1, 2007 to September 30, 2007) | ||||||||
(In millions of U.S. dollars) | ||||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 2,124 | 1,370 | 1,618 | 5,112 | ||||
Consolidated sales | — | — | — | 18,614 |
(Notes)
1 | Geographical distances are considered in classification of country or region. |
2 | Changes in regional segmentation The figure in Asia is being segregated from this interim period as the importance of this area has increased. These figures were previously included in Others. In the above geographical segmentation for the six months ended September 30, 2006 and the fiscal year ended March 31, 2007, the figures in Asia are categorized separately from Others accordingly. |
3 | Major countries and regions in segments other than Japan |
(1) Asia …......China, Chinese Taipei, India, Singapore, and Indonesia
(2) Europe …..U.K., France, the Netherlands, Germany, Italy, and Spain
(3) Others …...U.S.A.
4 | Overseas sales represent sales of the Company and its consolidated subsidiaries to countries and regions outside of Japan. |
(SECURITIES)
As of September 30, 2006
(1) | Marketable securities as of September 30, 2006 |
(In millions of yen) | |||||||
Description | Acquisition cost | Carrying value | Unrealized gains (losses) | ||||
1. Stocks | JPY 65,637 | JPY 168,787 | JPY 103,150 | ||||
2. Bonds | 900 | 936 | 36 | ||||
3. Others | 1,361 | 1,311 | (50 | ) | |||
Total | JPY 67,898 | JPY 171,034 | JPY 103,136 | ||||
(2) | The carrying value and a description of major securities whose fair value was not determinable as of September 30, 2006 |
(In millions of yen) | ||
Carrying Value | ||
Other Securities | ||
1. Stocks | JPY 74,085 | |
2. Bonds | 25,987 | |
3. Investment in limited partnership and similar partnership | 7,017 | |
4. Commercial Paper | 54,085 | |
5. M M F | 12,862 |
As of September 30, 2007
(1) | Marketable securities as of September 30, 2007 |
(In millions of yen) | |||||||
Description | Acquisition cost | Carrying value | Unrealized gains (losses) | ||||
1. Stocks | JPY 65,473 | JPY 141,655 | JPY 76,182 | ||||
2. Bonds | 1,018 | 1,003 | (15 | ) | |||
3. Others | 3,646 | 3,753 | 107 | ||||
Total | JPY 70,137 | JPY 146,411 | JPY 76,274 | ||||
(2) | The carrying value and a description of major securities whose fair value was not determinable as of September 30, 2007 |
(In millions of yen) | ||
Carrying Value | ||
Other Securities | ||
1. Stocks | JPY 63,367 | |
2. Bonds | 5,140 | |
3. Investment in limited partnership and similar partnership | 9,801 | |
4. Negotiable certificate of deposit | 116,200 | |
5. Commercial Paper | 38,047 | |
6. M M F | 9,964 |
Fiscal year ended March 31, 2007
(1) | Marketable securities as of March 31, 2007 |
(In millions of yen) | |||||||
Description | Acquisition cost | Carrying value | Unrealized gains (losses) | ||||
1. Stocks | JPY 63,235 | JPY 149,841 | JPY 86,606 | ||||
2. Bonds | 627 | 628 | 1 | ||||
3. Others | 1,715 | 1,711 | (4 | ) | |||
Total | JPY 65,577 | JPY 152,180 | JPY 86,603 | ||||
(2) | The carrying value and a description of major securities whose fair value was not determinable as of March 31, 2007 |
(In millions of yen) | ||
Carrying Value | ||
Other Securities | ||
1. Stocks | JPY 70,132 | |
2. Bonds | 24,979 | |
3. Investment in limited partnership and similar partnership | 6,945 | |
4. Commercial Paper | 54,970 | |
5. M M F | 11,477 |
(Notes Relating to Per Share Information)
(In Yen) | ||||||||
Six months ended September 30, 2006 (From April 1 to September 30, 2006) | Six months ended September 30, 2007 (From April 1 to September 30, 2007) | Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||||
Net assets per share | 510.06 | 503.96 | 512.99 | |||||
Basic net income (loss) per share | (4.94 | ) | (2.43 | ) | 4.43 | |||
Diluted net income per share | — | — | 4.23 |
Notes: Basic for calculation
1. | Although there was the potential dilution, diluted net income per share is not disclosed for the six months ended September 30, 2006 and the six months ended September 30, 2007 because of the Company’s net loss position. |
2. | The basis for calculating net assets per share was as follows: |
Six months ended September 30, 2006 (From April 1 to September 30, 2006) | Six months ended September 30, 2007 (From April 1 to September 30, 2007) | Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||
Net assets per share | ||||||
Total net assets (In millions of yen) | 1,238,730 | 1,218,041 | 1,240,123 | |||
Amounts deducted from total net assets (In millions of yen) | 205,559 | 197,581 | 201,315 | |||
<stock subscription rights included in the above> | <66> | <98> | <81> | |||
<minority interests included in the above> | <205,493> | <197,483> | <201,234> | |||
Net assets at end of period attributable to common stock (In millions of yen) | 1,033,171 | 1,020,460 | 1,038,808 | |||
Number of common stocks to calculate net assets per share (In thousands of shares) | 2,025,603 | 2,024,902 | 2,025,009 |
3. | The basis for calculating net income (loss) per share (basic and diluted) was as follows: |
Six months ended September 30, 2006 (From April 1 to September 30, 2006) | Six months ended September 30, 2007 (From April 1 to September 30, 2007) | Fiscal year ended March 31, 2007 (From April 1, 2006 to March 31, 2007) | ||||||
Net income and loss per share (In millions of yen) | ||||||||
Net income and loss (In millions of yen) | (9,927 | ) | (4,747 | ) | 9,128 | |||
Amounts not attributable to common shareholders (In millions of yen) | 38 | 172 | 181 | |||||
<Participating convertible securities included in the above> | <38> | <172> | <181> | |||||
Net income and loss attributable to common stock (In millions of yen) | (9,965 | ) | (4,919 | ) | 8,947 | |||
The average number of common stocks outstanding for the period (In thousands of shares) | 2,016,334 | 2,024,955 | 2,020,369 | |||||
Diluted net income per share (In millions of yen) | ||||||||
Adjustments to net income | — | — | — | |||||
Increased number of common stocks (In thousands of shares) | — | — | 92,429 | |||||
<Convertible bonds included in the above (In thousands of shares)> | — | — | <92,426> | |||||
<Stock subscription rights included in the above (In thousands of shares)> | — | — | <3> | |||||
Summary of equity instruments which were not included in the basis for calculating diluted net income per share as they are anti-dilutive | (1) Convertible bonds | | (1) Convertible bonds | | (1) Convertible bonds | |||
— | 10th unsecured yen convertible bonds (face value of 100,000 million yen) | | 10th unsecured yen convertible bonds (face value of 100,000 million yen) | |||||
Euro-yen convertible bonds due in 2010 (face value of 100,000 million yen) | | |||||||
(2) Bonds with stock subscription rights issued by consolidated subsidiaries | | (2) Bonds with stock subscription rights issued by consolidated subsidiaries | | (2) Bonds with stock subscription rights issued by consolidated subsidiaries | ||||
— | Euro-yen zero coupon convertible bonds with stock subscription rights due in 2011 subject to certain covenants which were issued by NEC Electronics (face value of 110,000 million yen) | | Euro-yen zero coupon convertible bonds with stock subscription rights due in 2011 subject to certain covenants which were issued by NEC Electronics (face value of 110,000 million yen) | |||||
Euro-yen convertible bonds with stock subscription rights due in 2010 which were issued by NEC TOKIN (face value of 15,000 million yen) | | Euro-yen convertible bonds with stock subscription rights due in 2010 which were issued by NEC TOKIN (face value of 15,000 million yen) | ||||||
(3) Stock subscription rights | | (3) Stock subscription rights | | (3) Stock subscription rights | ||||
— | 5 kinds of stock subscription rights (the number of stock subscription rights is 1,082 units) | | 4 kinds of stock subscription rights (the number of stock subscription rights is 923 units) and treasury stock for stock options in accordance with Articles 210-2 of the former Commercial Code of Japan (the number of common stock is 62,000) | |||||
2 kinds of stock subscription rights issued by NEC Electronics (the number of stock subscription rights is 2,790 units) | | 2 kinds of stock subscription rights issued by NEC Electronics (the number of stock subscription rights is 3,070 units) |
(Omission of Disclosure)
Disclosure of items such as lease transactions, derivatives, stock options, business combination related items and significant subsequent events are not included as they are considered to be of less material importance.
CAUTIONARY STATEMENTS:
This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services, and business performance of NEC Corporation and its consolidated subsidiaries (collectively “NEC”). Written forward-looking statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the U.S. Securities and Exchange Commission, and in reports to shareholders and other communications. The U.S. Private Securities Litigation Reform Act of 1995 contains, and other applicable laws may contain, a safe-harbor for forward-looking statements, on which NEC relies in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “targets,” “aims,” or “anticipates,” or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them. You should not place undue reliance on forward-looking statements, which reflect NEC’s analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements include (i) global economic conditions and general economic conditions in NEC’s markets, (ii) fluctuating demand for, and competitive pricing pressure on, NEC’s products and services, (iii) NEC’s ability to continue to win acceptance of NEC’s products and services in highly competitive markets, (iv) NEC’s ability to expand into foreign markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC’s business and operations, (vi) NEC’s ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, (vii) movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar, (viii) impact of NEC’s announcement that its previously issued financial statements may not be relied upon and inability to prepare the financial statements for inclusion in the 2006 Form 20-F and to restate historical financial statements, and (ix) uncertainty relating to the ongoing informal inquiry by the SEC. Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise.
The management targets included in this material are not projections, and do not represent management’s current estimates of future performance. Rather, they represent targets that management will strive to achieve through the successful implementation of NEC’s business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. The securities may not be offered or sold in any jurisdiction in which registration is required absent registration or an exemption from registration under the applicable securities laws. For example, any public offering of securities to be made in the United States must be registered under the U.S. Securities Act of 1933 and made by means of an English language prospectus that contains detailed information about NEC and management, as well as NEC’s financial statements.
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Contacts: Diane Foley/Makoto Miyakawa
Corporate Communication Division
NEC Corporation
+81-3-3798-6511