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 January, 2008
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-Fx 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¨ Nox
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: January 29, 2008
January 29, 2008
Consolidated Financial Results for the Nine Months Ended
December 31, 2007
I. Consolidated Financial Results
Nine Months Ended December 31, 2007 | Nine Months Ended December 31, 2006 | Change | |||||||
In billions of yen | In billions of yen | % | |||||||
Sales | 3,192.8 | 3,317.7 | -3.8 | ||||||
Operating income | 43.4 | 42.5 | +2.1 | ||||||
Ordinary income | 19.3 | 11.1 | +73.8 | ||||||
Net income (loss) | (10.0 | ) | (7.3 | ) | — | ||||
Yen | Yen | Yen | |||||||
Net income (loss) per share: | |||||||||
Basic | (5.05 | ) | (3.73 | ) | (1.32 | ) | |||
Diluted | — | — | — | ||||||
Three Months Ended December 31, 2007 | Three Months Ended December 31, 2006 | Change | |||||||
In billions of yen | In billions of yen | % | |||||||
Sales | 1,052.2 | 1,096.1 | -4.0 | ||||||
Operating income | 16.0 | 35.0 | -54.3 | ||||||
Ordinary income | 9.5 | 22.9 | -58.4 | ||||||
Net income (loss) | (5.2 | ) | 2.6 | — | |||||
Yen | Yen | Yen | |||||||
Net income (loss) per share: | |||||||||
Basic | (2.62 | ) | 1.21 | (3.83 | ) | ||||
Diluted | — | 1.15 | — | ||||||
As of December 31, 2007 | As of March 31, 2007 | Change | |||||||
In billions of yen | In billions of yen | % | |||||||
Total assets | 3,684.4 | 3,731.7 | -1.3 | ||||||
Net assets | 1,189.2 | 1,240.1 | -4.1 |
Note
Number of consolidated subsidiaries and affiliated companies accounted for by the equity method is as follows:
As of December 31, 2007 | As of March 31, 2007 | As of December 31, 2006 | ||||
Consolidated subsidiaries | 337 | 342 | 346 | |||
Affiliated companies accounted for by the equity method | 68 | 68 | 69 |
1
Qualitative Information and Financial Statements
1. Analysis of Business Results
(1) Overview of the three quarters of the fiscal year ending March 31, 2008 (nine months ended December 31, 2007)
Despite a downturn in the U.S. economy owing mainly to a slowdown in the housing sector, the global economy experienced moderate overall growth in the nine months ended December 31, 2007, with sustained high growth in China and other developing countries. However, in the latter half of the same period unstable conditions prevailed in the financial markets as a result of the subprime mortgage issue in the U.S.
The Japanese economy experienced ongoing moderate economic growth, principally due to an improvement in corporate profits as a result of an increase in exports and production, despite a slump in housing investment.
Amid this business environment, NEC recorded consolidated sales of 3,192.8 billion yen for the nine-month period, a decrease of 124.9 billion yen (3.8%) year-on-year. This decrease is primarily due to the sale of the personal computer (“PC”) business in Europe in the second half of the previous fiscal year and the transfer of the sales operation of optical disc drives, despite a steady increase in sales in the area of Information Technology (“IT”) Services/System Integration.
Regarding profitability, operating income increased 0.9 billion yen (2.1%) year-on-year to 43.4 billion yen. This was mainly due to an increase in profit in the Mobile/Personal Solutions business and the Electron Devices business as a result of improvement measures, despite a drop in profit in the IT/Network Solutions business due to a change in the product mix in the area of Network Systems and decreased sales in the area of IT Platforms.
Ordinary income increased 8.2 billion yen year-on-year to 19.3 billion yen, mainly as a result of an improvement in equity in earnings (losses) of affiliated companies.
Income before income taxes and minority interests decreased 7.4 billion yen year-on-year to 17.4 billion yen. This was mainly due to a worsening of 15.6 billion yen in special gains and losses due to decreases in gain on sales of investment securities and gain on change in interests in consolidated subsidiaries and affiliated companies, despite an increase in ordinary income. Net income also fell 2.7 billion yen year-on-year and NEC recorded a net loss of 10.0 billion yen.
2
(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: | 1,887.4 billion yen | (+0.1%) | ||
Operating income: | 51.1 billion yen | (-54.0 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Nine Months Ended December 31, 2007 | Nine Months Ended December 31, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
IT Services/System Integration | 542.4 | 517.2 | +4.9 | |||
IT Platforms | 384.4 | 443.8 | -13.4 | |||
Network Systems | 759.3 | 742.4 | +2.3 | |||
Social Infrastructure | 201.3 | 182.2 | +10.5 | |||
Total | 1,887.4 | 1,885.6 | +0.1 | |||
Sales of the IT/Network Solutions business for the nine months ended December 31, 2007 increased 1.8 billion yen (0.1%) year-on-year to 1,887.4 billion yen.
Sales by products and services were as follows:
The area of IT Services/System Integration recorded sales of 542.4 billion yen, an increase of 4.9% year-on-year. This was primarily due to a steady increase in sales in almost all sectors. Sales also increased 2.3% year-on-year in the area of Network Systems to 759.3 billion yen. This can be attributed to good sales of ultra-compact, point-to-point microwave communication systems, PASOLINK®, to telecom carriers abroad and submarine cables. In the area of Social Infrastructure, sales increased 10.5% year-on-year to 201.3 billion yen. On the other hand, in the area of IT Platforms, sales fell by 13.4% year-on-year to 384.4 billion yen, mainly owing to the impact of the transfer of the sales operation of optical disc drives and the effect of large server projects in the corresponding period of the previous fiscal year.
Operating income decreased by 54.0 billion yen (51.4%) year-on-year to 51.1 billion yen. This decrease was mainly due to a change in the product mix in the area of Network Systems, and a decrease in sales in the area of IT Platforms.
Mobile/Personal Solutions Business
Sales: | 617.1 billion yen | (-14.9%) | ||
Operating income: | 10.4 billion yen | (Improvement of 45.4 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Nine Months Ended December 31, 2007 | Nine Months Ended December 31, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
Mobile Terminals | 238.4 | 259.7 | -8.2 | |||
Personal Solutions | 378.7 | 465.9 | -18.7 | |||
Total | 617.1 | 725.6 | -14.9 | |||
Sales of the Mobile/Personal Solutions business for the nine months ended December 31, 2007 decreased 108.4 billion yen (14.9%) year-on-year to 617.1 billion yen.
Sales by products and services were as follows:
In the area of Mobile Terminals, sales decreased 8.2% year-on-year to 238.4 billion yen. This decrease was principally due to streamlining of overseas mobile handset business. In the area of Personal Solutions, sales fell by 18.7% year-on-year to 378.7 billion yen, mainly due to the sale of the PC business in Europe in the second half of the previous fiscal year.
Operating income improved 45.4 billion yen year-on-year to 10.4 billion yen. This was due to completion of structural reform of overseas mobile handset business and to increased development efficiencies in the area of Mobile Terminals.
Electron Devices Business
Sales: | 632.7 billion yen | (-2.6%) | ||
Operating income: | 4.7 billion yen | (Improvement of 10.8 billion yen) |
Sales by subsegment (including inter-segment transaction)
Subsegment | Nine Months Ended December 31, 2007 | Nine Months Ended December 31, 2006 | Change | |||
In billions of yen | In billions of yen | % | ||||
Semiconductors | 521.8 | 520.9 | +0.2 | |||
Electronic Components and Others | 110.9 | 128.4 | -13.6 | |||
Total | 632.7 | 649.3 | -2.6 | |||
Sales of the Electron Devices business for the nine months ended December 31, 2007 decreased 16.6 billion yen (2.6%) year-on-year to 632.7 billion yen.
Sales by products and services were as follows:
In the area of Semiconductors, sales remained flat year-on-year at 521.8 billion yen. This was principally due to an increase in sales of semiconductors for household electronics appliances and automobiles/industrial equipment, despite a decrease in sales of semiconductors for telecom equipment and computer peripherals. In the area of Electronic Components and Others, sales decreased 13.6% year-on-year to 110.9 billion yen, mainly due to a decrease in sales of electronic components and small-sized liquid crystal displays.
Operating income improved 10.8 billion yen year-on-year to 4.7 billion yen. This was mainly due to a decrease in fixed costs in the area of semiconductors such as research and development expenses and depreciation costs.
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.
3
2. Analysis of Financial Condition
(1) Analysis of condition of assets, liabilities, net assets, and cash flow
Total assets at the end of December, 2007 amounted to 3,684.4 billion yen, a decrease of 47.3 billion yen as compared with the end of the previous fiscal year. Current assets decreased by 16.9 billion yen principally due to the collection of notes and accounts receivable, trade, despite an increase in inventories. Fixed assets decreased by 30.4 billion yen. This was mainly due to a decline in market value of investment securities.
Total liabilities at the end of December, 2007 were 2,495.2 billion yen, an increase of 3.7 billion yen as compared with the end of the previous fiscal year. This was mainly due to an increase in interest-bearing debt, despite a decrease in notes and accounts payable, trade due to payments made.
Total net assets at the end of December, 2007, were 1,189.2 billion yen, a decrease of 50.9 billion yen as compared with the end of the previous fiscal year. This was mainly due to a decrease in retained earnings and unrealized gains (losses) on available-for-sale securities. As a result, owner’s equity ratio was 27.1% (a worsening of 0.7 points as compared with the end of the previous fiscal year).
The balance of interest-bearing debt was 1,009.6 billion yen, an increase of 150.3 billion yen as compared with the end of the previous fiscal year. Debt-equity ratio was 1.01 (a worsening of 0.18 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, was 601.7 billion yen, an increase of 165.8 billion yen as compared with the end of the previous fiscal year. Net debt-equity ratio was 0.60 (a worsening of 0.18 points as compared with the end of the previous fiscal year).
Net cash flows from operating activities for the nine months ended December 31, 2007, was a cash outflow of 25.1 billion yen, a decrease of 111.2 billion yen year-on-year. This was mainly due to an increase in operating capital.
Net cash flows from investing activities for the nine months ended December 31, 2007 was a cash outflow of 111.5 billion yen, an increase of 21.2 billion yen year-on-year. This was mainly due to a decrease in cash used on capital expenditures. As a result, free cash flows (the sum of cash flows from operating activities and investing activities) for the nine months ended December 31, 2007, were cash outflows of 136.6 billion yen, a decrease of 90.0 billion yen as compared with the corresponding period of the previous fiscal year.
Net cash flows from financing activities for the nine months ended December 31, 2007, was a cash inflow of 118.6 billion yen. This was mainly due to procurement of capital from the issuance of commercial paper.
As a result, cash and cash equivalents at the end of December, 2007, amounted to 407.9 billion yen, a decrease of 15.5 billion yen as compared with the end of the previous fiscal year.
3. Financial Forecast
There is no change to the forecast for the fiscal year ending March 31, 2008, previously disclosed on November 14, 2007.
4. Others
(1) Significant changes in scope of consolidation
There are no significant changes in scope of consolidation for the nine months ended December 31, 2007.
(2) Adoption of concise accounting methods
Parts of physical inventory are omitted. Concise accounting methods have been adopted for the part of the retirement benefit obligation, depreciation expenses and others.
(3) Changes in accounting methods from the most recent fiscal year
Effective from this fiscal year, 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 amendment of the corporation tax law. The effect of this change in operating income, ordinary income, income before income taxes and minority interests and segment information is immaterial.
4
CONSOLIDATED BALANCE SHEETS
(In millions of yen, millions of U.S.dollars)
December 31, 2007 | December 31, 2006 | Increase (Decrease) | March 31, 2007 | Increase (Decrease) | December 31, 2007 | |||||||||||||||||||
Total current assets | JPY | 2,030,787 | JPY | 2,040,220 | JPY | (9,433 | ) | JPY | 2,047,681 | JPY | (16,894 | ) | $ | 18,132 | ||||||||||
Cash and deposits | 238,714 | 327,106 | (88,392 | ) | 332,446 | (93,732 | ) | 2,131 | ||||||||||||||||
Notes and accounts receivable, trade | 728,019 | 729,449 | (1,430 | ) | 874,543 | (146,524 | ) | 6,500 | ||||||||||||||||
Marketable securities | 169,648 | 97,135 | 72,513 | 91,570 | 78,078 | 1,515 | ||||||||||||||||||
Inventories | 629,773 | 621,032 | 8,741 | 493,224 | 136,549 | 5,623 | ||||||||||||||||||
Deferred tax assets | 116,692 | 101,050 | 15,642 | 114,560 | 2,132 | 1,042 | ||||||||||||||||||
Others | 154,725 | 173,558 | (18,833 | ) | 150,895 | 3,830 | 1,382 | |||||||||||||||||
Allowance for doubtful accounts | (6,784 | ) | (9,110 | ) | 2,326 | (9,557 | ) | 2,773 | (61 | ) | ||||||||||||||
Total fixed assets | 1,653,608 | 1,703,211 | (49,603 | ) | 1,683,988 | (30,380 | ) | 14,764 | ||||||||||||||||
Tangible fixed assets | 660,489 | 681,839 | (21,350 | ) | 684,529 | (24,040 | ) | 5,897 | ||||||||||||||||
Buildings | 231,053 | 239,098 | (8,045 | ) | 238,677 | (7,624 | ) | 2,063 | ||||||||||||||||
Machinery and equipment | 191,687 | 217,515 | (25,828 | ) | 214,833 | (23,146 | ) | 1,711 | ||||||||||||||||
Tools and other equipment | 109,860 | 101,122 | 8,738 | 104,925 | 4,935 | 981 | ||||||||||||||||||
Land | 90,219 | 92,362 | (2,143 | ) | 92,203 | (1,984 | ) | 806 | ||||||||||||||||
Construction in progress | 37,670 | 31,742 | 5,928 | 33,891 | 3,779 | 336 | ||||||||||||||||||
Intangible assets | 223,923 | 231,396 | (7,473 | ) | 221,991 | 1,932 | 1,999 | |||||||||||||||||
Goodwill | 94,715 | 91,035 | 3,680 | 89,566 | 5,149 | 846 | ||||||||||||||||||
Others | 129,208 | 140,361 | (11,153 | ) | 132,425 | (3,217 | ) | 1,153 | ||||||||||||||||
Investments and other assets | 769,196 | 789,976 | (20,780 | ) | 777,468 | (8,272 | ) | 6,868 | ||||||||||||||||
Investment securities | 206,408 | 272,355 | (65,947 | ) | 230,504 | (24,096 | ) | 1,843 | ||||||||||||||||
Investments in affiliated companies | 223,982 | 105,726 | 118,256 | 221,864 | 2,118 | 2,000 | ||||||||||||||||||
Deferred tax assets | 163,294 | 216,548 | (53,254 | ) | 160,810 | 2,484 | 1,458 | |||||||||||||||||
Others | 193,128 | 218,201 | (25,073 | ) | 181,098 | 12,030 | 1,724 | |||||||||||||||||
Allowance for doubtful accounts | (17,616 | ) | (22,854 | ) | 5,238 | (16,808 | ) | (808 | ) | (157 | ) | |||||||||||||
Total assets | JPY | 3,684,395 | JPY | 3,743,431 | JPY | (59,036) | JPY | 3,731,669 | JPY | (47,274) | $ | 32,896 | ||||||||||||
(Note)
* | US dollar amounts are translated from yen, for convenience only, at the rate of US$1 = 112 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 | 238,714 | JPY | 327,106 | JPY | (88,392 | ) | JPY | 332,446 | JPY | (93,732 | ) | $ | 2,132 | ||||||||||
Marketable securities | 169,648 | 97,135 | 72,513 | 91,570 | 78,078 | 1,515 | ||||||||||||||||||
Time deposits and Marketable securities with maturities of more than three months | (512 | ) | (662 | ) | 150 | (647 | ) | 135 | (5 | ) | ||||||||||||||
Cash and cash equivalents | JPY | 407,850 | JPY | 423,579 | JPY | (15,729 | ) | JPY | 423,369 | JPY | (15,519 | ) | $ | 3,642 |
5
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In millions of yen, millions of U.S.dollars)
December 31, 2007 | December 31, 2006 | Increase (Decrease) | March 31, 2007 | Increase (Decrease) | December 31, 2007 | |||||||||||||||||||
Total current liabilities | JPY | 1,730,222 | JPY | 1,672,360 | JPY | 57,862 | JPY | 1,695,479 | JPY | 34,743 | $ | 15,449 | ||||||||||||
Notes and accounts payable, trade | 676,033 | 731,127 | (55,094 | ) | 786,899 | (110,866 | ) | 6,036 | ||||||||||||||||
Short-term borrowings | 76,359 | 102,049 | (25,690 | ) | 110,385 | (34,026 | ) | 682 | ||||||||||||||||
Commercial Papers | 300,590 | 110,000 | 190,590 | 102,943 | 197,647 | 2,684 | ||||||||||||||||||
Current portion of long-term borrowings | 42,699 | 34,655 | 8,044 | 41,562 | 1,137 | 381 | ||||||||||||||||||
Current portion of bonds | 109,450 | 156,568 | (47,118 | ) | 76,570 | 32,880 | 977 | |||||||||||||||||
Accrued expenses | 232,821 | 241,178 | (8,357 | ) | 285,039 | (52,218 | ) | 2,079 | ||||||||||||||||
Advances from customers | 79,684 | 61,015 | 18,669 | 66,730 | 12,954 | 711 | ||||||||||||||||||
Reserve for bonuses to directors | 309 | 187 | 122 | 401 | (92 | ) | 3 | |||||||||||||||||
Product warranty liabilities | 38,938 | 26,659 | 12,279 | 34,459 | 4,479 | 348 | ||||||||||||||||||
Others | 173,339 | 208,922 | (35,583 | ) | 190,491 | (17,152 | ) | 1,548 | ||||||||||||||||
Total long-term liabilities | 764,995 | 825,477 | (60,482 | ) | 796,067 | (31,072 | ) | 6,830 | ||||||||||||||||
Bonds | 353,784 | 463,319 | (109,535 | ) | 443,219 | (89,435 | ) | 3,159 | ||||||||||||||||
Long-term borrowings | 84,463 | 58,225 | 26,238 | 42,759 | 41,704 | 754 | ||||||||||||||||||
Deferred tax liabilities | 15,463 | 14,530 | 933 | 11,424 | 4,039 | 138 | ||||||||||||||||||
Liabilities for retirement benefits | 227,477 | 209,365 | 18,112 | 216,769 | 10,708 | 2,031 | ||||||||||||||||||
Provision for loss on repurchase of computers | 14,505 | 17,838 | (3,333 | ) | 16,355 | (1,850 | ) | 130 | ||||||||||||||||
Long-term product warranty liabilities | 1,298 | 1,280 | 18 | 2,380 | (1,082 | ) | 12 | |||||||||||||||||
Provision for recycling expenses of personal computers | 5,411 | 5,347 | 64 | 5,634 | (223 | ) | 48 | |||||||||||||||||
Others | 62,594 | 55,573 | 7,021 | 57,527 | 5,067 | 558 | ||||||||||||||||||
Total liabilities | 2,495,217 | 2,497,837 | (2,620 | ) | 2,491,546 | 3,671 | 22,279 | |||||||||||||||||
Total shareholders’ equity | 946,327 | 956,251 | (9,924 | ) | 972,438 | (26,111 | ) | 8,449 | ||||||||||||||||
Common stock | 337,940 | 337,822 | 118 | 337,822 | 118 | 3,017 | ||||||||||||||||||
Capital surplus | 464,875 | 464,877 | (2 | ) | 464,838 | 37 | 4,151 | |||||||||||||||||
Retained earnings | 146,788 | 156,549 | (9,761 | ) | 173,003 | (26,215 | ) | 1,311 | ||||||||||||||||
Treasury stock | (3,276 | ) | (2,997 | ) | (279 | ) | (3,225 | ) | (51 | ) | (30 | ) | ||||||||||||
Total valuation and translation adjustments and others | 50,963 | 82,320 | (31,357 | ) | 66,370 | (15,407 | ) | 455 | ||||||||||||||||
Unrealized gains (losses) on available-for-sale securities | 41,848 | 73,206 | (31,358 | ) | 57,706 | (15,858 | ) | 374 | ||||||||||||||||
Unrealized gains (losses) on derivative financial instruments | 679 | 272 | 407 | (143 | ) | 822 | 6 | |||||||||||||||||
Foreign currency translation adjustments | 8,436 | 8,842 | (406 | ) | 8,807 | (371 | ) | 75 | ||||||||||||||||
Stock subscription rights | 107 | 73 | 34 | 81 | 26 | 1 | ||||||||||||||||||
Minority interests | 191,781 | 206,950 | (15,169 | ) | 201,234 | (9,453 | ) | 1,712 | ||||||||||||||||
Total net assets | 1,189,178 | 1,245,594 | (56,416 | ) | 1,240,123 | (50,945 | ) | 10,617 | ||||||||||||||||
Total liabilities and net assets | JPY | 3,684,395 | JPY | 3,743,431 | JPY | (59,036 | ) | JPY | 3,731,669 | JPY | (47,274 | ) | $ | 32,896 | ||||||||||
Interest-bearing debt | JPY | 1,009,593 | JPY | 965,423 | JPY | 44,170 | JPY | 859,292 | JPY | 150,301 | $ | 9,014 | ||||||||||||
Net interest-bearing debt (*I) | 601,743 | 541,844 | 59,899 | 435,923 | 165,820 | 5,373 | ||||||||||||||||||
Owner’s equity (*II) | 997,290 | 1,038,571 | (41,281 | ) | 1,038,808 | (41,518 | ) | 8,904 | ||||||||||||||||
Owner’s equity ratio (%) (*III) | 27.1 | 27.7 | (0.6 | ) | 27.8 | (0.7 | ) | |||||||||||||||||
Shareholders’ equity ratio (%) (*III) | 25.7 | 25.5 | 0.2 | 26.1 | (0.4 | ) | ||||||||||||||||||
Debt-equity ratio (times) (*IV) | 1.01 | 0.93 | 0.08 | 0.83 | 0.18 | |||||||||||||||||||
Net debt-equity ratio (times) (*IV) | 0.60 | 0.52 | 0.08 | 0.42 | 0.18 |
(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. |
6
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of yen, millions of U.S. dollars) | |||||||||||||||||||||||||||||
Nine months ended December 31 | 2007 | % of sales | 2006 | % of sales | Increase (Decrease) | 2007 | Fiscal year ended March 31, 2007 | % of sales | |||||||||||||||||||||
Sales | JPY | 3,192,808 | 100.0 | JPY | 3,317,742 | 100.0 | JPY | (124,934 | ) | $ | 28,507 | JPY | 4,652,649 | 100.0 | |||||||||||||||
Cost of sales | 2,165,179 | 67.8 | 2,294,078 | 69.1 | (128,899 | ) | 19,332 | 3,242,459 | 69.7 | ||||||||||||||||||||
Gross profit | 1,027,629 | 32.2 | 1,023,664 | 30.9 | 3,965 | 9,175 | 1,410,190 | 30.3 | |||||||||||||||||||||
Selling, general and administrative expenses | 984,180 | 30.8 | 981,125 | 29.6 | 3,055 | 8,787 | 1,340,214 | 28.8 | |||||||||||||||||||||
Operating income | 43,449 | 1.4 | 42,539 | 1.3 | 910 | 388 | 69,976 | 1.5 | |||||||||||||||||||||
Non-operating income | 21,406 | 0.6 | 20,001 | 0.6 | 1,405 | 191 | 26,195 | 0.6 | |||||||||||||||||||||
Interest income | 6,180 | 6,324 | (144 | ) | 55 | 8,951 | |||||||||||||||||||||||
Dividend income | 2,794 | 2,480 | 314 | 25 | 3,622 | ||||||||||||||||||||||||
Equity in earnings of affiliated companies | 1,062 | — | 1,062 | 9 | — | ||||||||||||||||||||||||
Others | 11,370 | 11,197 | 173 | 102 | 13,622 | ||||||||||||||||||||||||
Non-operating expenses | 45,547 | 1.4 | 51,431 | 1.6 | (5,884 | ) | 407 | 79,824 | 1.7 | ||||||||||||||||||||
Interest expense | 11,093 | 11,472 | (379 | ) | 99 | 16,161 | |||||||||||||||||||||||
Retirement benefit expenses | 10,365 | 10,364 | 1 | 93 | 13,863 | ||||||||||||||||||||||||
Loss on disposals of fixed assets | 5,025 | 6,248 | (1,223 | ) | 45 | 15,639 | |||||||||||||||||||||||
Foreign exchange loss | 4,966 | 1,656 | 3,310 | 44 | 2,622 | ||||||||||||||||||||||||
Equity in losses of affiliated companies | — | 2,510 | (2,510 | ) | — | 4,006 | |||||||||||||||||||||||
Others | 14,098 | 19,181 | (5,083 | ) | 126 | 27,533 | |||||||||||||||||||||||
Ordinary income | 19,308 | 0.6 | 11,109 | 0.3 | 8,199 | 172 | 16,347 | 0.4 | |||||||||||||||||||||
Special gains | 8,604 | 0.2 | 31,585 | 1.0 | (22,981 | ) | 77 | 115,155 | 2.5 | ||||||||||||||||||||
Gain on business transfers | 3,216 | — | 3,216 | 29 | — | ||||||||||||||||||||||||
Gain on sales of investment securities | 2,046 | 13,691 | (11,645 | ) | 18 | 25,651 | |||||||||||||||||||||||
Gain on sales of fixed assets | 1,340 | 923 | 417 | 12 | 2,872 | ||||||||||||||||||||||||
Reversal of provision for recycling expenses of personal computers | 924 | 1,805 | (881 | ) | 8 | 1,892 | |||||||||||||||||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | 919 | 8,630 | (7,711 | ) | 8 | 8,630 | |||||||||||||||||||||||
Gain on sales of investments in affiliated companies | 159 | — | 159 | 2 | 41 | ||||||||||||||||||||||||
Gain on transfer of securities to the pension trust | — | 6,534 | (6,534 | ) | — | 6,534 | |||||||||||||||||||||||
Gain on reversion of securities from the pension trust | — | — | — | — | 69,533 | ||||||||||||||||||||||||
Gain on lapse of stock subscription rights | — | 2 | (2 | ) | — | 2 | |||||||||||||||||||||||
Special losses | 10,559 | 0.3 | 17,929 | 0.6 | (7,370 | ) | 94 | 35,205 | 0.8 | ||||||||||||||||||||
Restructuring charges | 3,937 | 13,586 | (9,649 | ) | 35 | 15,805 | |||||||||||||||||||||||
Cost of corrective measures for products | 2,823 | — | 2,823 | 25 | 4,695 | ||||||||||||||||||||||||
Loss on retirement of fixed assets | 1,586 | — | 1,586 | 14 | — | ||||||||||||||||||||||||
Loss on devaluation of investment securities | 1,244 | 2,075 | (831 | ) | 11 | 10,058 | |||||||||||||||||||||||
Impairment loss on fixed assets | 561 | 1,283 | (722 | ) | 5 | 2,768 | |||||||||||||||||||||||
Loss on sales of investments in affiliated companies | 408 | — | 408 | 4 | 661 | ||||||||||||||||||||||||
Other retirement benefit expenses | — | 985 | (985 | ) | — | 991 | |||||||||||||||||||||||
Loss on sales of fixed assets | — | — | — | — | 208 | ||||||||||||||||||||||||
Loss on sales of investment securities | — | — | — | — | 19 | ||||||||||||||||||||||||
Income before income taxes and minority interests | 17,353 | 0.5 | 24,765 | 0.7 | (7,412 | ) | 155 | 96,297 | 2.1 | ||||||||||||||||||||
Provision for income taxes | 32,407 | 1.0 | 31,370 | 0.9 | 1,037 | 289 | 92,970 | 2.0 | |||||||||||||||||||||
Minority interests in income (loss) of consolidated subsidiaries | (5,077 | ) | (0.2 | ) | 707 | 0.0 | (5,784 | ) | (45 | ) | (5,801 | ) | (0.1 | ) | |||||||||||||||
Net income (loss) | JPY | (9,977 | ) | (0.3 | ) | JPY | (7,312 | ) | (0.2 | ) | JPY | (2,665 | ) | $ | (89 | ) | JPY | 9,128 | 0.2 | ||||||||||
7
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 2007) | (In millions of yen) |
Shareholders’ Equity | ||||||||||||||
Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Total Shareholders’ Equity | ||||||||||
Balances as of March 31, 2007 | 337,822 | 464,838 | 173,003 | (3,225 | ) | 972,438 | ||||||||
Changes during the period | ||||||||||||||
Conversion of convertible bonds with stock subscription rights | 117 | 117 | 234 | |||||||||||
Dividends | (16,202 | ) | (16,202 | ) | ||||||||||
Net loss | (9,977 | ) | (9,977 | ) | ||||||||||
Repurchases of treasury stock | (254 | ) | (254 | ) | ||||||||||
Disposals of treasury stock | (81 | ) | (36 | ) | 203 | 86 | ||||||||
Net changes in items other than shareholders’ equity during the period | — | |||||||||||||
Total changes during the period | 117 | 36 | (26,215 | ) | (51 | ) | (26,113 | ) | ||||||
Balances as of December 31, 2007 | 337,940 | 464,875 | 146,788 | (3,276 | ) | 946,327 | ||||||||
Valuation and Translation Adjustments and Others | Stock Subscription Rights | Minority Interests | Total Net Assets | ||||||||||||||
Unrealized Gains (Losses) on Available-for-sale Securities | Unrealized Gains (Losses) on Derivative Financial Instruments | Foreign Currency Translation Adjustments | |||||||||||||||
Balances as of March 31, 2007 | 57,706 | (143 | ) | 8,807 | 81 | 201,234 | 1,240,123 | ||||||||||
Changes during the period | |||||||||||||||||
Conversion of convertible bonds with stock subscription rights | 234 | ||||||||||||||||
Dividends | (16,202 | ) | |||||||||||||||
Net loss | (9,977 | ) | |||||||||||||||
Repurchases of treasury stock | (254 | ) | |||||||||||||||
Disposals of treasury stock | 86 | ||||||||||||||||
Net changes in items other than shareholders’ equity during the period | (15,858 | ) | 822 | (371 | ) | 26 | (9,453 | ) | (24,834 | ) | |||||||
Total changes during the period | (15,858 | ) | 822 | (371 | ) | 26 | (9,453 | ) | (50,945 | ) | |||||||
Balances as of December 31, 2007 | 41,848 | 679 | 8,436 | 107 | 191,781 | 1,189,178 | |||||||||||
8
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Nine months ended December 31, 2006 (From April 1, 2006 to December 31, 2006) | (In millions of yen) |
Shareholders’ Equity | ||||||||||||||
Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Total Shareholders’ Equity | ||||||||||
Balances as of March 31,2006 | 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 | D | 214 | D | 214 | ||||||||||
Dividends | D | 14,081 | D | 14,081 | ||||||||||
Net loss | D | 7,312 | D | 7,312 | ||||||||||
Repurchases and Disposals of treasury stock | D | 114 | D | 128 | D | 242 | ||||||||
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 | 23,722 | D | 17,259 | D | 128 | 6,336 | |||||||
Balances as of December 31,2006 | 337,822 | 464,877 | 156,549 | D | 2,997 | 956,251 | ||||||||
Valuation and Translation Adjustments and Others | Stock Subscription Rights | Minority Interests | Total Net Assets | ||||||||||||
Unrealized Gains (Losses) on Available-for-sale Securities | Unrealized Gains (Losses) on Derivative Financial Instruments | Foreign Currency Translation Adjustments | |||||||||||||
Balances as of March 31,2006 | 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 | D | 214 | |||||||||||||
Dividends | D | 14,081 | |||||||||||||
Net loss | D | 7,312 | |||||||||||||
Repurchases and Disposals of treasury stock | D | 242 | |||||||||||||
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 | 4,922 | 272 | 7,078 | 73 | D | 5,893 | D | 3,392 | ||||||
Total changes during the period | D | 4,922 | 272 | 7,078 | 73 | D | 5,893 | 2,944 | |||||||
Balances as of December 31,2006 | 73,206 | 272 | 8,842 | 73 | 206,950 | 1,245,594 | |||||||||
9
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Fiscal year ended March 31, 2007 | (In millions of yen) |
Shareholders’ Equity | ||||||||||||||
Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Total Shareholders’ Equity | ||||||||||
Balances as of March 31, 2006 | 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 | D | 200 | D | 200 | ||||||||||
Dividends | 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 as of March 31, 2007 | 337,822 | 464,838 | 173,003 | D | 3,225 | 972,438 | ||||||||
Valuation and Translation Adjustments and Others | Stock Subscription Rights | Minority Interests | Total Net Assets | |||||||||||||
Unrealized Gains (Losses) on Available-for-sale Securities | Unrealized Gains (Losses) on Derivative Financial Instruments | Foreign Currency Translation Adjustments | ||||||||||||||
Balances as of March 31, 2006 | 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 | D | 200 | ||||||||||||||
Dividends | 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 as of March 31, 2007 | 57,706 | D | 143 | 8,807 | 81 | 201,234 | 1,240,123 | |||||||||
10
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of yen, millions of U.S. dollars)
Nine months ended December 31 | 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 | 17,353 | JPY | 24,765 | JPY | (7,412 | ) | JPY | 96,297 | $ | 155 | |||||||||
Depreciation and amortization | 147,399 | 144,348 | 3,051 | 198,398 | 1,316 | |||||||||||||||
Equity in (earnings) losses of affiliated companies | (1,062 | ) | 2,510 | (3,572 | ) | 4,006 | (9 | ) | ||||||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | (919 | ) | (8,630 | ) | 7,711 | (8,630 | ) | (8 | ) | |||||||||||
(Increase) decrease in notes and accounts receivable, trade | 146,710 | 145,411 | 1,299 | (31,524 | ) | 1,310 | ||||||||||||||
(Increase) decrease in inventories | (144,542 | ) | (122,724 | ) | (21,818 | ) | (14,098 | ) | (1,291 | ) | ||||||||||
Increase (decrease) in notes and accounts payable, trade | (111,677 | ) | (99,345 | ) | (12,332 | ) | (24,413 | ) | (997 | ) | ||||||||||
Income taxes paid | (33,180 | ) | (24,183 | ) | (8,997 | ) | (28,107 | ) | (296 | ) | ||||||||||
Others, net | (45,170 | ) | 23,929 | (69,099 | ) | 46,389 | (404 | ) | ||||||||||||
Net cash provided by (used in) operating activities | (25,088 | ) | 86,081 | (111,169 | ) | 238,318 | (224 | ) | ||||||||||||
II. Cash flows from investing activities: | ||||||||||||||||||||
Net proceeds from (payment of) acquisitions and sales of tangible fixed assets | (79,060 | ) | (102,776 | ) | 23,716 | (136,499 | ) | (706 | ) | |||||||||||
Acquisitions of intangible assets | (25,343 | ) | (32,052 | ) | 6,709 | (36,262 | ) | (226 | ) | |||||||||||
Net proceeds from (payment of) purchases and sales of securities | (14,692 | ) | (3,584 | ) | (11,108 | ) | 3,751 | (131 | ) | |||||||||||
Others, net | 7,548 | 5,652 | 1,896 | (666 | ) | 67 | ||||||||||||||
Net cash provided by (used in) investing activities | (111,547 | ) | (132,760 | ) | 21,213 | (169,676 | ) | (996 | ) | |||||||||||
III. Cash flows from financing activities: | ||||||||||||||||||||
Net proceeds from (payment of) bonds and borrowings | 136,852 | 14,593 | 122,259 | (101,458 | ) | 1,222 | ||||||||||||||
Dividends paid | (15,935 | ) | (13,613 | ) | (2,322 | ) | (14,060 | ) | (142 | ) | ||||||||||
Others, net | (2,356 | ) | 11,845 | (14,201 | ) | 11,779 | (21 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 118,561 | 12,825 | 105,736 | (103,739 | ) | 1,059 | ||||||||||||||
IV. Effect of exchange rate changes on cash and cash equivalents | 2,555 | 5,063 | (2,508 | ) | 6,096 | 23 | ||||||||||||||
V. Net decrease in cash and cash equivalents | (15,519 | ) | (28,791 | ) | 13,272 | (29,001 | ) | (138 | ) | |||||||||||
VI. Cash and cash equivalents at beginning of period | 423,369 | 452,370 | (29,001 | ) | 452,370 | 3,780 | ||||||||||||||
VII. Cash and cash equivalents at end of period | JPY | 407,850 | JPY | 423,579 | JPY | (15,729 | ) | JPY | 423,369 | $ | 3,642 | |||||||||
Free cash flows (I+II) | JPY | (136,635 | ) | JPY | (46,679 | ) | JPY | (89,956 | ) | JPY | 68,642 | $ | (1,220 | ) | ||||||
11
SEGMENT INFORMATION
[Business segment information]
Nine months ended December 31, 2006 (From April 1, 2006 to December 31, 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 | 1,811,139 | 609,355 | 620,033 | 277,215 | 3,317,742 | — | 3,317,742 | ||||||||||
2. Intersegment sales and transfers | 74,424 | 116,220 | 29,243 | 129,335 | 349,222 | (349,222 | ) | — | |||||||||
Total sales | 1,885,563 | 725,575 | 649,276 | 406,550 | 3,666,964 | (349,222 | ) | 3,317,742 | |||||||||
Operating expenses | 1,780,379 | 760,560 | 655,441 | 391,318 | 3,587,698 | (312,495 | ) | 3,275,203 | |||||||||
Operating income (loss) | 105,184 | (34,985 | ) | (6,165 | ) | 15,232 | 79,266 | (36,727 | ) | 42,539 | |||||||
Nine months ended December 31, 2007 (From April 1,2007 to December 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 | 1,816,363 | 501,102 | 602,933 | 272,410 | 3,192,808 | — | 3,192,808 | ||||||||||
2. Intersegment sales and transfers | 71,005 | 116,046 | 29,718 | 101,918 | 318,687 | (318,687 | ) | — | |||||||||
Total sales | 1,887,368 | 617,148 | 632,651 | 374,328 | 3,511,495 | (318,687 | ) | 3,192,808 | |||||||||
Operating expenses | 1,836,228 | 606,702 | 627,991 | 363,599 | 3,434,520 | (285,161 | ) | 3,149,359 | |||||||||
Operating income (loss) | 51,140 | 10,446 | 4,660 | 10,729 | 76,975 | (33,526 | ) | 43,449 | |||||||||
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 | |||||||
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 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 | 16,218 | 4,474 | 5,383 | 2,432 | 28,507 | — | 28,507 | ||||||||||
2. Intersegment sales and transfers | 634 | 1,036 | 266 | 910 | 2,846 | (2,846 | ) | — | |||||||||
Total sales | 16,852 | 5,510 | 5,649 | 3,342 | 31,353 | (2,846 | ) | 28,507 | |||||||||
Operating expenses | 16,395 | 5,417 | 5,607 | 3,247 | 30,666 | (2,547 | ) | 28,119 | |||||||||
Operating income (loss) | 457 | 93 | 42 | 95 | 687 | (299 | ) | 388 | |||||||||
(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, Computer software, Enterprise network systems, Network systems for telecommunications carriers, Broadcast video systems, Control systems, Aerospace/Defense systems | |
Mobile/PersonalSolutions Business | Mobile handsets, Personal computers, Personal communication devices, BIGLOBE | |
ElectronDevices Business | System LSI and other semiconductors, Electronic components, LCD modules etc | |
Others | LightingEquipment Business, Logistics Business, Projector Business, Display Business |
3. | Unallocable operating expenses included in “Eliminations / Corporate ” for the nine months ended December 31, 2007, 2006 and the fiscal year ended March 31, 2007 are ¥33,997 million ($304 million), ¥34,598 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. |
12
SEGMENT INFORMATION (CONTINUED)
[Geographical segment]
Nine months ended December 31, 2006 (From April 1, 2006 to December 31, 2006) | (In millions of yen) | |||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 2,573,674 | 196,959 | 302,723 | 244,386 | 3,317,742 | — | 3,317,742 | |||||||||||
2. Intersegment sales and transfers | 322,600 | 129,823 | 12,566 | 21,061 | 486,050 | (486,050 | ) | — | ||||||||||
Total sales | 2,896,274 | 326,782 | 315,289 | 265,447 | 3,803,792 | (486,050 | ) | 3,317,742 | ||||||||||
Operating expenses | 2,848,151 | 327,337 | 316,548 | 265,788 | 3,757,824 | (482,621 | ) | 3,275,203 | ||||||||||
Operating income (loss) | 48,123 | (555 | ) | (1,259 | ) | (341 | ) | 45,968 | (3,429 | ) | 42,539 | |||||||
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 2007) | (In millions of yen) | |||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 2,530,313 | 200,748 | 218,858 | 242,889 | 3,192,808 | — | 3,192,808 | |||||||||||
2. Intersegment sales and transfers | 327,104 | 139,299 | 7,757 | 19,993 | 494,153 | (494,153 | ) | — | ||||||||||
Total sales | 2,857,417 | 340,047 | 226,615 | 262,882 | 3,686,961 | (494,153 | ) | 3,192,808 | ||||||||||
Operating expenses | 2,779,456 | 329,491 | 227,210 | 270,739 | 3,606,896 | (457,537 | ) | 3,149,359 | ||||||||||
Operating income (loss) | 77,961 | 10,556 | (595 | ) | (7,857 | ) | 80,065 | (36,616 | ) | 43,449 | ||||||||
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 | ||||||||
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 2007) | (In millions of U.S. dollars) | |||||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Sales to customers | 22,592 | 1,792 | 1,954 | 2,169 | 28,507 | — | 28,507 | |||||||||||
2. Intersegment sales and transfers | 2,921 | 1,244 | 69 | 178 | 4,412 | (4,412 | ) | — | ||||||||||
Total sales | 25,513 | 3,036 | 2,023 | 2,347 | 32,919 | (4,412 | ) | 28,507 | ||||||||||
Operating expenses | 24,817 | 2,942 | 2,028 | 2,417 | 32,204 | (4,085 | ) | 28,119 | ||||||||||
Operating income (loss) | 696 | 94 | (5 | ) | (70 | ) | 715 | (327 | ) | 388 | ||||||||
(Notes)
1 | Geographical distances are considered in classification of country or region. |
2 | Changes in geographical segmentation |
“Asia” is separately disclosed from this period due to the increase in importance of the area, while it was included in “Others” before.
In the above geographical segmentation for the nine months ended December 31, 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 included in “Eliminations / Corporate” starting from this period, whereas the same had been included in “Japan” previously. This change is made in order to be in consistent with the method of disclosing Business segment information. |
Unallocable operating expenses for the nine months ended December 31, 2007, 2006 and the fiscal year ended March 31, 2007 are ¥33,997 million ($304 million), ¥34,598 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.
13
SEGMENT INFORMATION (CONTINUED)
[Overseas sales]
Nine months ended December 31, 2006 (From April 1, 2006 to December 31, 2006) | (In millions of yen) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 323,482 | 345,927 | 252,813 | 922,222 | ||||
Consolidated sales | — | — | — | 3,317,742 | ||||
Percentage of overseas sales to consolidated sales (%) | 9.8 | 10.4 | 7.6 | 27.8 | ||||
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 2007) | (In millions of yen) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 351,773 | 250,069 | 279,244 | 881,086 | ||||
Consolidated sales | — | — | — | 3,192,808 | ||||
Percentage of overseas sales to consolidated sales (%) | 11.0 | 7.8 | 8.8 | 27.6 | ||||
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 | ||||
Nine months ended December 31, 2007 (From April 1, 2007 to December 31, 2007) | (In millions of U.S. dollars) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 3,141 | 2,233 | 2,493 | 7,867 | ||||
Consolidated sales | — | — | — | 28,507 |
(Notes)
1. | Geographical distances are considered in classification of country or region. |
2. | Changes in regional segmentation |
"Asia" is separately disclosed from this period due to the increase in importance of the area, while it was included in “Others” before.
In the above regional segmentation for the nine months ended December 31, 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. |
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CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of yen, millions of U.S. dollars) | ||||||||||||||||||||
Three months ended December 31 | 2007 | % of sales | 2006 | % of sales | Increase (Decrease) | 2007 | ||||||||||||||
Sales | JPY | 1,052,215 | 100.0 | JPY | 1,096,138 | 100.0 | JPY | (43,923 | ) | $ | 9,395 | |||||||||
Cost of sales | 707,205 | 67.2 | 744,835 | 68.0 | (37,630 | ) | 6,314 | |||||||||||||
Gross profit | 345,010 | 32.8 | 351,303 | 32.0 | (6,293 | ) | 3,080 | |||||||||||||
Selling, general and administrative expenses | 328,997 | 31.3 | 316,268 | 28.8 | 12,729 | 2,937 | ||||||||||||||
Operating income | 16,013 | 1.5 | 35,035 | 3.2 | (19,022 | ) | 143 | |||||||||||||
Non-operating income | 7,386 | 0.7 | 6,918 | 0.6 | 468 | 66 | ||||||||||||||
Interest income | 1,554 | 1,940 | (386 | ) | 14 | |||||||||||||||
Dividend income | 758 | 700 | 58 | 7 | ||||||||||||||||
Equity in earnings of affiliated companies | 1,070 | — | 1,070 | 10 | ||||||||||||||||
Foreign exchange gain | — | 759 | (759 | ) | — | |||||||||||||||
Others | 4,004 | 3,519 | 485 | 35 | ||||||||||||||||
Non-operating expenses | 13,859 | 1.3 | 19,025 | 1.7 | (5,166 | ) | 124 | |||||||||||||
Interest expense | 3,479 | 4,031 | (552 | ) | 31 | |||||||||||||||
Retirement benefit expenses | 3,454 | 3,479 | (25 | ) | 31 | |||||||||||||||
Loss on disposals of fixed assets | 493 | 737 | (244 | ) | 4 | |||||||||||||||
Foreign exchange loss | 1,311 | — | 1,311 | 12 | ||||||||||||||||
Equity in losses of affiliated companies | — | 3,065 | (3,065 | ) | — | |||||||||||||||
Others | 5,122 | 7,713 | (2,591 | ) | 46 | |||||||||||||||
Ordinary income | 9,540 | 0.9 | 22,928 | 2.1 | (13,388 | ) | 85 | |||||||||||||
Special gains | 122 | 0.0 | 3,539 | 0.3 | (3,417 | ) | 1 | |||||||||||||
Gain on sales of investment securities | 129 | 2,721 | (2,592 | ) | 1 | |||||||||||||||
Gain on sales of fixed assets | — | 816 | (816 | ) | — | |||||||||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | (7 | ) | — | (7 | ) | 0 | ||||||||||||||
Gain on lapse of stock subscription rights | — | 2 | (2 | ) | — | |||||||||||||||
Special losses | 1,845 | 0.2 | 3,346 | 0.3 | (1,501 | ) | 16 | |||||||||||||
Restructuring charges | 1,201 | 2,809 | (1,608 | ) | 11 | |||||||||||||||
Loss on retirement of fixed assets | 576 | — | 576 | 5 | ||||||||||||||||
Loss on devaluation of investment securities | 36 | 530 | (494 | ) | 0 | |||||||||||||||
Impairment loss on fixed assets | 32 | — | 32 | 0 | ||||||||||||||||
Other retirement benefit expenses | — | 7 | (7 | ) | — | |||||||||||||||
Income before income taxes and minority interests | 7,817 | 0.7 | 23,121 | 2.1 | (15,304 | ) | 70 | |||||||||||||
Provision for income taxes | 16,507 | 1.5 | 20,152 | 1.9 | (3,645 | ) | 147 | |||||||||||||
Minority interests in income (loss) of consolidated subsidiaries | (3,460 | ) | (0.3 | ) | 354 | 0.0 | (3,814 | ) | (30 | ) | ||||||||||
Net income (loss) | JPY | (5,230 | ) | (0.5 | ) | JPY | 2,615 | 0.2 | JPY | (7,845 | ) | $ | (47 | ) | ||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of yen, millions of U.S. dollars)
Three months ended December 31 | 2007 | 2006 | Increase (Decrease) | 2007 | ||||||||||||
I. Cash flows from operating activities: | ||||||||||||||||
Income before income taxes and minority interests | JPY | 7,817 | JPY | 23,121 | JPY | (15,304 | ) | $ | 70 | |||||||
Depreciation and amortization | 54,667 | 51,337 | 3,330 | 488 | ||||||||||||
Equity in (earnings) losses of affiliated companies | (1,070 | ) | 3,065 | (4,135 | ) | (10 | ) | |||||||||
Gain on change in interests in consolidated subsidiaries and affiliated companies | 7 | 0 | 7 | 0 | ||||||||||||
(Increase) decrease in notes and accounts receivable, trade | (140 | ) | 9,659 | (9,799 | ) | (1 | ) | |||||||||
(Increase) decrease in inventories | (98,912 | ) | (68,017 | ) | (30,895 | ) | (883 | ) | ||||||||
Increase (decrease) in notes and accounts payable, trade | (7,888 | ) | (32,617 | ) | 24,729 | (70 | ) | |||||||||
Income taxes paid | (10,855 | ) | (8,400 | ) | (2,455 | ) | (97 | ) | ||||||||
Others, net | (29,429 | ) | 1,854 | (31,283 | ) | (263 | ) | |||||||||
Net cash provided by (used in) operating activities | (85,803 | ) | (19,998 | ) | (65,805 | ) | (766 | ) | ||||||||
II. Cash flows from investing activities: | ||||||||||||||||
Net proceeds from (payment of) acquisitions and sales of tangible fixed assets | (25,012 | ) | (53,675 | ) | 28,663 | (223 | ) | |||||||||
Acquisitions of intangible assets | (7,253 | ) | (13,292 | ) | 6,039 | (65 | ) | |||||||||
Net proceeds from (payment of) purchases and sales of securities | (3,020 | ) | (4,766 | ) | 1,746 | (27 | ) | |||||||||
Others, net | (1,479 | ) | 3,910 | (5,389 | ) | (13 | ) | |||||||||
Net cash provided by (used in) investing activities | (36,764 | ) | (67,823 | ) | 31,059 | (328 | ) | |||||||||
III. Cash flows from financing activities: | ||||||||||||||||
Net proceeds from (payment of) bonds and borrowings | 136,595 | 77,775 | 58,820 | 1,220 | ||||||||||||
Dividends paid | (7,848 | ) | (7,652 | ) | (196 | ) | (70 | ) | ||||||||
Others, net | (1,210 | ) | (1,326 | ) | 116 | (11 | ) | |||||||||
Net cash provided by (used in) financing activities | 127,537 | 68,797 | 58,740 | 1,139 | ||||||||||||
IV. Effect of exchange rate changes on cash and cash equivalents | (881 | ) | 2,811 | (3,692 | ) | (8 | ) | |||||||||
V. Net increase (decrease) in cash and cash equivalents | 4,089 | (16,213 | ) | 20,302 | 37 | |||||||||||
VI. Cash and cash equivalents at beginning of period | 403,761 | 439,792 | (36,031 | ) | 3,605 | |||||||||||
VII. Cash and cash equivalents at end of period | JPY | 407,850 | JPY | 423,579 | JPY | (15,729 | ) | $ | 3,642 | |||||||
Free cash flows (I+II) | JPY | (122,567 | ) | JPY | (87,821 | ) | JPY | (34,746 | ) | $ | (1,094 | ) | ||||
16
SEGMENT INFORMATION
[Business segment information]
Three months ended December 31, 2006 (From October 1, 2006 to December 31, 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 | 604,589 | 189,660 | 211,400 | 90,489 | 1,096,138 | — | 1,096,138 | ||||||||||
2. Intersegment sales and transfers | 16,501 | 36,901 | 10,831 | 42,160 | 106,393 | (106,393 | ) | — | |||||||||
Total sales | 621,090 | 226,561 | 222,231 | 132,649 | 1,202,531 | (106,393 | ) | 1,096,138 | |||||||||
Operating expenses | 571,466 | 224,204 | 224,150 | 132,728 | 1,152,548 | (91,445 | ) | 1,061,103 | |||||||||
Operating income (loss) | 49,624 | 2,357 | (1,919 | ) | (79 | ) | 49,983 | (14,948 | ) | 35,035 | |||||||
Three months ended December 31, 2007 (From October 1, 2007 to December 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 | 590,396 | 166,888 | 203,733 | 91,198 | 1,052,215 | — | 1,052,215 | ||||||||||
2. Intersegment sales and transfers | 22,841 | 38,532 | 8,303 | 32,539 | 102,215 | (102,215 | ) | — | |||||||||
Total sales | 613,237 | 205,420 | 212,036 | 123,737 | 1,154,430 | (102,215 | ) | 1,052,215 | |||||||||
Operating expenses | 597,252 | 203,059 | 208,764 | 118,621 | 1,127,696 | (91,494 | ) | 1,036,202 | |||||||||
Operating income (loss) | 15,985 | 2,361 | 3,272 | 5,116 | 26,734 | (10,721 | ) | 16,013 | |||||||||
Three months ended December 31, 2007 (From October 1, 2007 to December 31, 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 | 5,271 | 1,490 | 1,819 | 815 | 9,395 | — | 9,395 | ||||||||
2. Intersegment sales and transfers | 204 | 344 | 74 | 290 | 912 | (912 | ) | — | |||||||
Total sales | 5,475 | 1,834 | 1,893 | 1,105 | 10,307 | (912 | ) | 9,395 | |||||||
Operating expenses | 5,332 | 1,813 | 1,864 | 1,059 | 10,068 | (816 | ) | 9,252 | |||||||
Operating income (loss) | 143 | 21 | 29 | 46 | 239 | (96 | ) | 143 | |||||||
(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 | Mobilehandsets, Personal computers, Personal communication devices, BIGLOBE | |
ElectronDevices Business | SystemLSI and other semiconductors, Electronic components, LCD modules | |
Others | LightingEquipment Business, Logistics Business, Projector Business, Display Business |
3 | Unallocable operating expenses included in “Eliminations / Corporate” for the three months ended December 31, 2007 and 2006 are ¥10,459 million ($93 million) and ¥11,743 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. |
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SEGMENT INFORMATION (CONTINUED)
[Geographical segment]
Three months ended December 31, 2006 (From October 1, 2006 to December 31, 2006) | (In millions of yen) |
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 860,677 | 67,544 | 87,514 | 80,403 | 1,096,138 | — | 1,096,138 | ||||||||||
2. Intersegment sales and transfers | 106,886 | 48,080 | 2,706 | 5,091 | 162,763 | (162,763 | ) | — | |||||||||
Total sales | 967,563 | 115,624 | 90,220 | 85,494 | 1,258,901 | (162,763 | ) | 1,096,138 | |||||||||
Operating expenses | 928,908 | 113,987 | 90,914 | 88,384 | 1,222,193 | (161,090 | ) | 1,061,103 | |||||||||
Operating income (loss) | 38,655 | 1,637 | (694 | ) | (2,890 | ) | 36,708 | (1,673 | ) | 35,035 | |||||||
Three months ended December 31, 2007 (From October 1, 2007 to December 31, 2007) |
| (In millions of yen) | |||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 829,381 | 65,530 | 77,506 | 79,798 | 1,052,215 | — | 1,052,215 | ||||||||||
2. Intersegment sales and transfers | 109,461 | 46,395 | 2,384 | 6,237 | 164,477 | (164,477 | ) | — | |||||||||
Total sales | 938,842 | 111,925 | 79,890 | 86,035 | 1,216,692 | (164,477 | ) | 1,052,215 | |||||||||
Operating expenses | 910,849 | 108,078 | 80,855 | 88,691 | 1,188,473 | (152,271 | ) | 1,036,202 | |||||||||
Operating income (loss) | 27,993 | 3,847 | (965 | ) | (2,656 | ) | 28,219 | (12,206 | ) | 16,013 | |||||||
Three months ended December 31, 2007 (From October1, 2007 to December 31, 2007) |
| (In millions of U.S. dollars) | |||||||||||||||
Japan | Asia | Europe | Others | Total before Eliminations/ Corporate | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Sales to customers | 7,405 | 585 | 692 | 713 | 9,395 | — | 9,395 | ||||||||||
2. Intersegment sales and transfers | 978 | 414 | 21 | 55 | 1,468 | (1,468 | ) | — | |||||||||
Total sales | 8,383 | 999 | 713 | 768 | 10,863 | (1,468 | ) | 9,395 | |||||||||
Operating expenses | 8,133 | 965 | 722 | 791 | 10,611 | (1,359 | ) | 9,252 | |||||||||
Operating income (loss) | 250 | 34 | (9 | ) | (23 | ) | 252 | (109 | ) | 143 | |||||||
(Notes)
1. | Geographical distances are considered in classification of country or region. |
2. | Changes in geographical segmentation |
“Asia” is separately disclosed from this period due to the increase in importance of the area, while it was included in “Others” before. In the above geographical segmentation for the three months ended December 31, 2006, 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 included in “Eliminations / Corporate” starting from this period, whereas the same had been included in “Japan” previously. This change is made in order to be in consistent with the method of disclosing Business segment information. Unallocable operating expenses for the three months ended December 31, 2007 and 2006 are ¥10,459 million ($93 million) and ¥11,743 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. |
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SEGMENT INFORMATION (CONTINUED)
[Overseas sales]
Three months ended December 31, 2006 (From October 1, 2006 to December 31, 2006) | (In millions of yen) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 110,245 | 112,137 | 76,645 | 299,027 | ||||
Consolidated sales | — | — | — | 1,096,138 | ||||
Percentage of overseas sales to consolidated sales (%) | 10.1 | 10.2 | 7.0 | 27.3 | ||||
Three months ended December 31, 2007 (From October 1, 2007 to December 31, 2007) | (In millions of yen) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 107,469 | 92,548 | 93,165 | 293,182 | ||||
Consolidated sales | — | — | — | 1,052,215 | ||||
Percentage of overseas sales to consolidated sales (%) | 10.2 | 8.8 | 8.9 | 27.9 | ||||
Three months ended December 31, 2007 (From October 1, 2007 to December 31, 2007) | (In millions of U.S. dollars) | |||||||
Asia | Europe | Others | Total | |||||
Overseas sales | 960 | 826 | 832 | 2,618 | ||||
Consolidated sales | — | — | — | 9,395 |
(Notes)
1. | Geographical distances are considered in classification of country or region. |
2. | Changes in regional segmentation |
“Asia” is separately disclosed from this period due to the increase in importance of the area, while it was included in “Others” before. In the above regional segmentation for the three months ended December 31, 2006, 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. |
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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.
###
Contacts: Diane Foley/Makoto Miyakawa
Corporate Communication Division
NEC Corporation
TEL: +81-3-3798-6511
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