RNS Number:3386R
NEC Corporation
27 October 2003
October 23, 2003
Consolidated Financial Results for the First Half of the Fiscal Year Ending
March 31, 2004
Consolidated Financial Results
Six months ended Six months ended Increase
September 30, 2003 September 30, 2002 (Decrease)
In billions of yen
%
Net sales 2,283.0 2,173.8 5.0
Operating income 58.0 26.7 117.1
Income before income taxes 77.7 20.3 281.8
Net income 15.4 1.0 -
Yen Yen Yen
Net income per share:
Basic: 9.38 0.63 8.75
Diluted: 8.70 0.60 8.10
As of September 30, As of September 30, Increase
2003 2002 (Decrease)
In billions of yen In billions of yen %
Total assets: 4,140.5 4,575.3 (9.5)
Number of Employees: 147,004 149,318 -
(Notes)
1. The consolidated financial statements of NEC are prepared in accordance with
accounting principles generally accepted in the United States, or U.S. GAAP.
2. Number of consolidated subsidiaries and affiliated companies accounted for by
the equity method is as follows:
As of September 30, 2003 As of September 30, 2002
Consolidated subsidiaries 196 181
Affiliated companies accounted for by the equity method 17 11
3. 16 subsidiaries were newly consolidated and 3 subsidiaries were excluded, and
no affiliated companies were newly accounted or excluded by the equity
method during the six months ended September 30, 2003.
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I. Management Policy
1. Fundamental Management Policy
NEC is currently facing tumultuous changes in its markets. The global economy is
weak and Japan is experiencing continuing deflation, which was partly triggered
by the emergence of China as the world's "manufacturing center." At the same
time, there is growing demand for solutions that will help corporations persist
in this challenging business climate. Adoption of IP (Internet Protocol) and
broadband networks is rapidly advancing, and servers and personal computers
("PCs") are becoming more sophisticated. NEC intends to leverage these
technologies in order to enhance corporate value, and expand its solutions
businesses based on communications technologies, and Integrated IT/Network
Solutions that solve our customers' issues by combining both information and
network technologies.
2. Fundamental Policy on Distribution of Profits
In addition to moving forward with the restructuring of its businesses, NEC
needs to adopt a flexible policy in order to better respond to the rapidly
changing business environment. In light of these business requirements, NEC
takes the following factors into account in determining its cash dividends,
among other factors: the profits earned in each fiscal period, the profitability
outlook for the following fiscal periods, the dividend payout ratio, and the
demand for internal funds such as funds for capital expenditure.
Payment of dividends for this interim period was undetermined until today. NEC
declared interim dividends of 3 yen per common share for the six months ended
September 30, 2003, and plans to pay year-end dividends of 3 yen per common
share for the fiscal year ending March 31, 2004.
3. The Company's Principles and Policies on Reducing the Number of Shares in a
Unit of Stock
Reducing the number of shares in a unit of stock is recognized as an effective
way to increase the number of individual investors and enhance stock liquidity,
but it entails substantial expense. NEC will continue studying the possibility
of reducing the number of shares in a unit of stock, taking into account, among
other issues, the stock price levels, the number of shareholders, the
shareholder composition, cost effectiveness, and NEC's financial condition.
4. Mid- to Long-Term Business Strategy
During the previous year, recognizing the differences in customers in each
business domain and what is required to survive competition, NEC divided its
business domains into two main areas; 'Integrated IT/Network Solutions' and
'Semiconductor Solutions'.
On April 1, 2003, NEC shifted from an in-house company system to a business line
system based on nine business lines to encourage open and flat operations. The
Domestic Sales line is responsible for the provision of Integrated IT/Network
Solutions, which are expected to be a rapidly growing market. NEC assigned
executive directors to establish a structure for the Integrated IT/Network
Solutions business and to strengthen software and hardware development in the
integrated areas.
NEC's semiconductor business, NEC Electronics Corporation, was separated from
NEC through a corporate separation, and listed on the Tokyo Stock Exchange on
July 24, 2003. NEC Electronics Corporation aims to enhance its corporate value
as a specialized semiconductor solutions provider, and to create a financial
base rivaling that of its international competitors. NEC Electronics Corporation
pursues synergies in the areas of business and technology as a strategic partner
of NEC.
5. Growth Strategy
NEC is currently grappling with the challenge to increase its shareholder
equity. To increase shareholder equity, it is imperative for NEC to increase
operating income, which is the profit obtained from ordinary business
activities. Therefore, NEC intends to improve its business structure and to
carry forward with its new growth strategy, and to implement management reforms
to realize these objectives.
First, as a measure to improve the business structure, NEC continues to enhance
innovations in production and supply-chain-management, and to improve its
profitability and financial condition through further reductions in materials
costs and reduction of assets. Through these measures, NEC intends to establish
a healthy business from which profits can be obtained even under deflationary
economic conditions in order to improve its financial results.
Next, the new emphasis on strategy for growth is based on two main concepts, the
first of which is providing services that integrate the IT solution and network
solution. Overlapping fields between IT and network have appeared due to the
increasingly sophisticated use of information systems and diversification of
communications services. NEC intends to generate new demand, taking advantage of
its strength in both of these fields. Furthermore, NEC also aims to offer total
solutions by building network infrastructures, and developing and operating
business application software as well as providing hardware and software.
The second concept is global business expansion. In order to achieve this, NEC
is strengthening its IT Solutions business in four global regions (Europe, China
/Taiwan, Asia/Pacific, and North America), and implementing a cross-cutting
business management in each region. Another key driver of global expansion is
mobile terminals that are part of NEC's Network Solutions business. Based on a
solid domestic operating base, NEC will actively introduce its products in
overseas markets, focusing particularly in Europe and China.
NEC intends to undertake management reforms to realize the foregoing concepts of
strategy for growth. Through a new management structure based on its business
lines, NEC aims to achieve open and flat operations that concentrate on the
market and customers, making it possible to satisfy the increasing market
demands that follow the development of fusion of IT and network technologies.
NEC's overall aim is to create a corporate climate where the guiding principles
are 'market and customer oriented', and where customer satisfaction is the
byword in all activities.
Through these measures, NEC will seek to achieve a status as a global excellent
company.
6. Basic Policy and Implementation Status of Plan Regarding Corporate Governance
NEC believes that strong corporate governance is vital in maximizing its
corporate value, which embodies the company's value for its shareholders,
customers, and employees. Recognizing this, NEC aims to strengthen its corporate
governance, in accordance with the following three principles:
(i) Transparency and integrity of management.
(ii)Clear accountability.
(iii)Timely and fair disclosure.
Corporate Governance Structure
To achieve fast decision-making and clearly delineate business responsibilities,
NEC established a corporate officer system in April 2000. In accordance with
this system, NEC has adjusted its personnel numbers and the structure of its
Board of Directors.
Board of Directors
The Board of Directors includes 3 outside members and consists of a total of 15
members as of September 30, 2003. In order to strengthen its monitoring function
NEC plans to increase the number of outside members to one third of the total.
In principle, the Board of Directors holds ordinary meetings once a month. The
Board also holds extraordinary meetings when urgent decisions are required. It
deliberates and decides on matters concerning corporate management plans as well
as NEC's important organizational structure, personnel affairs, investments,
business reforms and restructurings and the terms of significant contracts.
Issues of particular importance are discussed prior to board meetings by the
Executive Committee, which consists of 15 directors and 5 corporate officers as
of September 30, 2003.
To supplement the supervisory functions of the Board of Directors, NEC
established the Management Advisory Committee and the Compensation Committee.
Management Advisory Committee
The Management Advisory Committee discusses a wide range of management
issues from objective and independent perspectives. As of September 30,
2003, the committee consists of 12 members, 5 of whom are prominent
individuals outside the NEC group.
The committee holds meetings 4 times a year to discuss important
management issues such as the NEC group's medium-term management
strategy.
Compensation Committee
The Compensation Committee is a consultative body to the Board of
Directors, which from an objective standpoint, regularly reviews the
executive remuneration system and deliberates on the appropriate level
of compensation for directors and corporate officers. As of September
30, 2003 the committee consists of 5 members, 2 of whom are from outside
the NEC group. This committee holds meetings twice a year.
Corporate Auditors and Board of Corporate Auditors
Corporate auditors are elected at the ordinary general meeting of shareholders
and act independently of directors. Their responsibility is to monitor the
actions of the directors to confirm that they comply with applicable laws and
regulations. NEC has 2 full-time auditors and 2 auditors from outside the NEC
group as of September 30, 2003. In principle, the Board of Auditors meets once a
month.
Each corporate auditor carries out audits through methods that include attending
important corporate meetings, requesting business reports from directors, and
investigating subsidiaries. Corporate auditors also request additional reporting
as needed from the corporate internal auditing sections and the independent
auditors.
Corporate Auditing Bureau
The Corporate Auditing Bureau carries out internal audits related to
accounts and compliance in close cooperation with corporate auditors and
independent auditors.
II. Business Results & Financial Condition
1. Business Results
Overview of the first half of the fiscal year ending March 31, 2004, and
outlook for the full fiscal year ending March 31, 2004
Since hitting bottom at the outbreak of the war on Iraq, the stock market in
Japan has been making gradual improvement, and business confidence has returned
somewhat during the current interim period. However, as price competition
continued to intensify in the hardware sector and prices continued to drop in
the software services sector as well, business condition of NEC remained severe.
In this business environment, NEC achieved consolidated net sales of 2,283.0
billion yen for the first half of the fiscal year ending March 31, 2004 as a
result of increased earnings from mobile handsets etc., an increase of 5% as
compared with the corresponding period of the previous fiscal year. In addition
to increased sales, the promotion of structural reforms and cost reductions
helped NEC achieve operating income of 58.0 billion yen (an increase of 31.3
billion yen as compared with the corresponding period of the previous fiscal
year). NEC recorded an interim net income before income taxes of 77.7 billion
yen (an increase of 57.4 billion yen as compared with the corresponding period
of the previous fiscal year). The main reason for such an increase in interim
net income before income taxes was that NEC recorded a considerable amount of
gain from stock issuances as a result of the listings of NEC Electronics
Corporation and NEC System Technologies, Ltd. Interim net income for the six
months ended September 30, 2003 was 15.4 billion yen, an increase of 14.4
billion yen as compared with the corresponding period of the previous fiscal
year.
For the full fiscal year ending March 31, 2004, the mobile communications
business is expected to expand even further. Although systems integration ("SI")
services and network infrastructure remain under difficult business conditions,
both are anticipated to grow steadily, and net sales are expected to exceed the
forecast for the full fiscal year announced in April, 2003. NEC also expects to
achieve its operating income forecast.
Consolidated income before income taxes and consolidated net income are both
expected to exceed the forecast for the fiscal year ending March 31, 2004 that
was announced in April 2003, mainly due to gains recorded from the stock
issuance by NEC Electronics Corporation, a subsidiary of NEC Corporation.
The following table presents our revised financial results forecast for the full
fiscal year ending March 31, 2004:
Consolidated Revised forecast on Comparison with the
October 23, 2003 forecast on April 24,
2003
In billions of yen In billions of yen
Net Sales 4,850.0 +50.0
Operating income 180.0 -
Income before income 160.0 +40.0
taxes
Net income 40.0 +10.0
Non-consolidated Revised forecast on Comparison with the
October 23, 2003 forecast on April 24,
2003
In billions of yen In billions of yen
Net Sales 2,400.0 -
Ordinary income 35.0 -
Net income 25.0 +10.0
Results by business segments (including inter-segment transactions and
profit/loss figures)
Sales and segment profits 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 Solutions Business
Sales: 949.4 billion yen (+- 0%)
Segment profit: 33.9 billion yen (+ 4.0 billion yen)
Sales of IT Solutions business for the first half of the fiscal year ending
March 31, 2004 amounted to 949.4 billion yen. Although the domestic environment
of IT investments remained severe, NEC was able to maintain sales on a level
almost equivalent to that of the corresponding period in the previous fiscal
year.
Sales for the main product areas were as follows: In the area of SI services,
sales were 326.1 billion yen, an increase of 3% as compared with the
corresponding period of the previous fiscal year. This was mainly due to steady
growth in the sales of SI services to the private sector, as well as steady
demand in the public sector. In the area of software, sales decreased by 16% to
41.6 billion yen due to the fact that large shipments were secured during the
corresponding period of the previous fiscal year. In the area of computer
platforms, despite the lack of large shipments as compared with the
corresponding period of the previous fiscal year, sales increased by 3% to 233.8
billion yen as compared with the corresponding period of the previous fiscal
year mainly due to the growth in sales of optical disk drives. In the area of
personal solutions business, the steady growth in domestic shipments of personal
computers in the three months ended September 30, 2003 failed to compensate for
the decreases in the three months ended June 30, 2003, resulting in a decrease
of 3% to 347.9 billion yen as compared with the corresponding period of the
previous fiscal year.
Segment profit of the IT Solutions business was 33.9 billion yen, an increase of
4.0 billion yen as compared with the corresponding period of the previous fiscal
year. The main contributing factor was the significant improvement in the
profitability of the personal solutions business, mainly in personal computers,
resulting from the cost reductions achieved through centralized purchasing and
the standardization of parts, as well as reduced fixed expenses achieved through
restructuring initiatives.
Network Solutions Business
Sales: 852.5 billion yen (+ 21%)
Segment profit: 25.0 billion yen (+ 12.8 billion yen)
Sales of the Network Solutions business were 852.5 billion yen for the first
half of the fiscal year ending March 31, 2004, an increase of 21% as compared
with the corresponding period of the previous fiscal year. The increase was
mainly due to the significant growth in shipments of mobile handsets in both
overseas and domestic markets.
Sales for main product areas were as follows: In the area of broadband, new
business opportunities emerged with the rapid spreading of broadband access in
the domestic market, and demands for new services by corporate customers were
increasing. Nonetheless, shipments for telecommunications carriers in the
overseas market decreased significantly contributing to a 3% decrease of
broadband sales to 221.9 billion yen as compared with the corresponding period
of the previous fiscal year. In the area of mobile communications, although
sales of mobile infrastructure decreased largely from the corresponding period
of the previous year, shipments for mobile handsets with cameras in the domestic
market grew steadily and full-scale shipments to overseas markets were launched
which led to the increase of 36% in sales to 515.6 billion yen, as compared with
the corresponding period of the previous fiscal year. In the area of social
infrastructure, due to the growth of shipments of digital terrestrial
broadcasting systems to customers in Japan, sales increased by 17% to 115.0
billion yen as compared with the corresponding period of the previous fiscal
year.
Segment profit of the Network Solutions business doubled as compared with the
corresponding period of the previous fiscal year, to 25.0 billion yen. This was
mainly due to the improved profitability in the broadband area stemming from the
various measures to reduce fixed expenses and costs that are implemented from
the previous fiscal year.
Electron Devices Business
Sales: 460.9 billion yen (- 3%)
Segment profit: 21.6 billion yen (+ 26.7 billion yen)
Sales of Electron Devices business for the first half of the fiscal year ending
March 31, 2004 decreased by 3% to 460.9 billion yen as compared with the
corresponding period of the previous fiscal year. The decrease reflected the
restructuring of businesses implemented in the previous fiscal year.
Sales in the main product areas were as follows: Sales of semiconductors
increased by 3% to 360.4 billion yen as compared with the corresponding period
of the previous fiscal year, although sales of semiconductors for game consoles
decreased significantly. The sales increase in semiconductors was mainly due to
increased sales of non-DRAM, the core business for NEC in the area of
semiconductors, for mobile handsets and automobiles, as well as resale products.
In the display area, action was taken to shift to high value-added color liquid
crystal displays ("LCDs") used in industrial applications, and efforts were made
to reduce the amount of business in unprofitable general-purpose products for
personal computers. This resulted in a decrease in sales of 25% to 43.0 billion
yen as compared with the corresponding period of the previous fiscal year.
Although the electronic components business grew steadily, sales of electronic
components and others decreased by 16% as compared with the corresponding period
of the previous fiscal year to 57.5 billion yen as a result of the printed
wiring boards business and car electronics business being deconsolidated due to
business reorganization implemented during the previous fiscal year.
Electron Devices business recorded segment profit of 21.6 billion yen for the
first half of the fiscal year ending March 31, 2004. Although Electron Devices
business recorded a loss of 5.0 billion yen in the corresponding period of the
previous fiscal year, sales started realizing profit from the three months ended
March 31, 2003. This was mainly due to increased profit in the semiconductor
area, the core business of the Electron Devices business, reflecting steady
market trends, and the positive effects of structural reforms, in addition to
improved profitability in the LCD business, a loss making business area, and to
the profits made in the electronic components business.
2. Financial Condition
Net cash provided by operating activities for the first half of the fiscal year
ending March 31, 2004 was 107.0 billion yen, an increase of 56.4 billion yen as
compared with the corresponding period of the previous fiscal year. This was a
result of the company's profits in interim net income, and a reduction in
inventories as NEC reduced its materials costs.
Net cash used in investing activities totaled 8.8 billion yen, an improvement of
1.6 billion yen as compared with the corresponding period of the previous fiscal
year. As a result, free cash flows (the total of cash flows from operating
activities and cash flows from investing activities) were cash inflows of 98.2
billion yen, an improvement of 58.0 billion yen as compared with the
corresponding period of the previous fiscal year.
Net cash provided by financing activities was 5.6 billion yen. This money was
brought in through proactively decreasing interest-bearing debts, and proceeds
from the listing of subsidiaries. As a result, cash and cash equivalents
amounted to 448.3 billion yen, an increase of 103.9 billion as compared with the
end of the previous fiscal year that ended March 31, 2003.
The balance of interest-bearing debt amounted to 1,382.8 billion yen, a decrease
of 104.2 billion yen as compared with the end of the previous fiscal year,
mainly due to the fact that free cash flows were improved. Debt equity ratio was
3.54 (an improvement of 0.61 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 equivalents, amounted to 934.5
billion yen, a decrease of 208.2 billion yen as compared with the end of the
previous fiscal year, and the debt equity ratio was 2.39 (an improvement of 0.80
points as compared with the end of the previous fiscal year).
***
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of yen, millions of U.S. dollars)
Six months ended September 30 2003 (% of net 2002 (% of net Increase 2003 Fiscal (% of net
(Unaudited) sales) (Unaudited) sales) (decrease)(Unaudited) 2003 sales)
Net sales JPY 2,283,019 (100.0)JPY2,173,878 (100.0)JPY 109,141 $20,568 JPY4,695,035 (100.0)
Cost of sales 1,676,519 (73.4) 1,572,488 (72.3) 104,031 15,104 3,453,010 (73.5)
Selling, general and 548,478 (24.1) 574,669 (26.5) (26,191) 4,941 1,121,136 (23.9)
administrative expenses
Operating income 58,022 (2.5) 26,721 (1.2) 31,301 523 120,889 (2.6)
Non-operating income 89,926 (3.9) 100,555 (4.6) (10,629) 810 153,597 (3.3)
Interest and dividends 6,490 9,702 (3,212) 58 18,396
Other 83,436 90,853 (7,417) 752 135,201
Non-operating expenses 70,161 (3.0) 106,900 (4.9) (36,739) 632 212,990 (4.6)
Interest 14,131 17,307 (3,176) 127 30,218
Other 56,030 89,593 (33,563) 505 182,772
Income before income taxes 77,787 (3.4) 20,376 (0.9) 57,411 701 61,496 (1.3)
Provision for income taxes 38,893 (1.7) 8,558 (0.4) 30,335 351 58,714 (1.3)
Minority interest in income of 6,933 (0.3) 931 (0.0) 6,002 62 6,896 (0.1)
consolidated subsidiaries
Equity in losses of affiliated (16,464) (-0.7) (9,850) (-0.5) (6,614) (148) (20,444) (-0.4)
companies
Net income (loss) JPY 15,497 (0.7) JPY 1,037 (0.0) JPY 14,460 $140(JPY 24,558) (-0.5)
(Note)
US dollar amounts are translated from yen, for convenience only, at the rate of
US$1 = 111 yen.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of yen, millions of U.S. dollars)
September 30, September 30, Increase March 31, Increase September 30,
2003 2002 (decrease) 2003 (decrease) 2003
(Unaudited) (Unaudited) (Unaudited)
Current assets JPY 2,021,940 JPY 2,091,792 (JPY69,852)JPY1,920,042 JPY101,898 $18,216
Cash and cash equivalents 448,303 272,859 175,444 344,345 103,958 4,039
Notes and accounts receivable, trade 737,718 675,889 61,829 821,985 (84,267) 6,646
Current portion of investment in leases - 244,640 (244,640) - - -
Inventories 631,271 636,261 (4,990) 553,820 77,451 5,687
Other current assets 204,648 262,143 (57,495) 199,892 4,756 1,844
Long-term assets 2,118,560 2,483,594 (365,034) 2,183,258 (64,698) 19,086
Long-term receivables, trade 24,397 30,643 (6,246) 33,073 (8,676) 220
Investments and advances 436,563 463,154 (26,591) 433,027 3,536 3,933
Investment in leases - 247,442 (247,442) - - -
Property, plant and equipment 807,821 944,255 (136,434) 838,341 (30,520) 7,278
Other assets 849,779 798,100 51,679 878,817 (29,038) 7,655
Total assets JPY 4,140,500 JPY 4,575,386(JPY434,886)JPY4,103,300 JPY37,200 $37,302
Current liabilities JPY 1,728,001 JPY 1,917,538(JPY189,537)JPY1,774,224(JPY46,223) $15,568
Short-term borrowings and current portion of 457,984 744,496 (286,512) 483,306 (25,322) 4,126
long-term debt
Notes and accounts payable, trade 856,403 723,743 132,660 875,018 (18,615) 7,715
Other current liabilities 413,614 449,299 (35,685) 415,900 (2,286) 3,727
Long-term liabilities 1,663,799 1,877,558 (213,759) 1,737,219 (73,420) 14,989
Long-term debt 924,854 1,389,338 (464,484) 1,003,787 (78,933) 8,332
Accrued pension and severance costs 706,083 459,220 246,863 705,551 532 6,361
Other 32,862 29,000 3,862 27,881 4,981 296
Minority shareholders' equity in 259,521 152,465 107,056 135,613 123,908 2,338
consolidated subsidiaries
Preferred securities issued by a subsidiary 98,100 97,500 600 97,800 300 884
Common stock 244,726 244,726 - 244,726 - 2,205
Additional paid-in capital 362,016 361,820 196 361,820 196 3,261
Retained earnings 52,102 67,162 (15,060) 41,567 10,535 469
Accumulated other comprehensive income (265,015) (140,893) (124,122) (286,417) 21,402 (2,387)
(loss)
Treasury stock (2,750) (2,490) (260) (3,252) 502 (25)
Total shareholders' equity 391,079 530,325 (139,246) 358,444 32,635 3,523
Total liabilities and shareholders' equity JPY 4,140,500 JPY 4,575,386 (JPY JPY JPY 37,200 $37,302
434,886) 4,103,300
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CONDENSED CONSOLIDATED BALANCE SHEETS (SUPPLEMENTARY INFORMATION)
(In millions of yen, millions of U.S.dollars)
September 30, September 30, Increase March 31, Increase September 30,
2003 2002 (decrease) 2003 (decrease) 2003
(Unaudited) (Unaudited) (Unaudited)
Current assets JPY 2,021,940 JPY 1,814,462 JPY JPY JPY $18,216
207,478 1,920,042 101,898
Cash and cash equivalents 448,303 248,074 200,229 344,345 103,958 4,039
Notes and accounts receivable, trade 737,718 697,176 40,542 821,985 (84,267) 6,646
Inventories 631,271 636,261 (4,990) 553,820 77,451 5,687
Other current assets 204,648 232,951 (28,303) 199,892 4,756 1,844
Long-term assets 2,118,560 2,219,261 (100,701) 2,183,258 (64,698) 19,086
Long-term receivables, trade 24,397 30,643 (6,246) 33,073 (8,676) 220
Investments and advances 436,563 483,000 (46,437) 433,027 3,536 3,933
Property, plant and equipment 807,821 916,980 (109,159) 838,341 (30,520) 7,278
Other assets 849,779 788,638 61,141 878,817 (29,038) 7,655
Total assets JPY 4,140,500 JPY 4,033,723 JPY JPY JPY 37,200 $37,302
106,777 4,103,300
Current liabilities JPY 1,728,001 JPY 1,727,636 JPY 365 JPY (JPY $15,568
1,774,224 46,223)
Short-term borrowings and current portion 457,984 531,585 (73,601) 483,306 (25,322) 4,126
of long-term debt
Notes and accounts payable, trade 856,403 763,258 93,145 875,018 (18,615) 7,715
Other current liabilities 413,614 432,793 (19,179) 415,900 (2,286) 3,727
Long-term liabilities 1,663,799 1,542,440 121,359 1,737,219 (73,420) 14,989
Long-term debt 924,854 1,057,593 (132,739) 1,003,787 (78,933) 8,332
Accrued pension and severance costs 706,083 458,231 247,852 705,551 532 6,361
Other 32,862 26,616 6,246 27,881 4,981 296
Minority shareholders' equity in 259,521 135,822 123,699 135,613 123,908 2,338
consolidated subsidiaries
Preferred securities issued by a subsidiary 98,100 97,500 600 97,800 300 884
Common stock 244,726 244,726 - 244,726 - 2,205
Additional paid-in capital 362,016 361,820 196 361,820 196 3,261
Retained earnings 52,102 67,162 (15,060) 41,567 10,535 469
Accumulated other comprehensive income (265,015) (140,893) (124,122) (286,417) 21,402 (2,387)
(loss)
Treasury stock (2,750) (2,490) (260) (3,252) 502 (25)
Total shareholders' equity 391,079 530,325 (139,246) 358,444 32,635 3,523
Total liabilities and shareholders' equity JPY 4,140,500 JPY 4,033,723 JPY JPY JPY 37,200 $37,302
106,777 4,103,300
(Note)
In the condensed consolidated balance sheets on this page, the investment in a
leasing subsidiary is accounted for by the equity method.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of yen, millions of U.S. dollars)
Six months ended September 30 2003 2002 Increase 2003 Fiscal
(Unaudited) (Unaudited) (Decrease) (Unaudited) 2003
I. Cash flows from operating activities:
Net income JPY 15,497 JPY 1,037 JPY 14,460 $140 (JPY
24,558)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 83,003 95,631 (12,628) 748 195,594
Equity in losses of affiliated companies, net of dividends 16,949 11,280 5,669 153 22,006
Decrease in notes and accounts receivable 88,442 241,638 (153,196) 797 116,340
(Increase) decrease in inventories (81,794) 13,004 (94,798) (737) 79,343
Increase (decrease) in notes and accounts payable 3,691 (208,548) 212,239 33 (109,387)
Other, net (18,708) (103,417) 84,709 (169) (31,835)
Net cash provided by operating activities 107,080 50,625 56,455 965 247,503
II. Cash flows from investing activities:
Proceeds from sales of fixed assets 27,009 22,569 4,440 243 99,722
Additions to fixed assets (115,442) (104,116) (11,326) (1,040) (210,261)
Proceeds from sales of marketable securities 21,723 57,746 (36,023) 196 71,919
Purchase of marketable securities (7) (1,422) 1,415 0 (2,277)
Other, net 57,910 14,773 43,137 522 29,311
Net cash used in investing activities (8,807) (10,450) 1,643 (79) (11,586)
Free cash flows (I + II) 98,273 40,175 58,098 886 235,917
III. Cash flows from financing activities:
Net repayment of bonds and borrowings (100,675) (148,695) 48,020 (907) (272,448)
Proceeds from stock issuances by subsidiaries 106,419 15,747 90,672 959 17,923
Dividends paid (920) (6,359) 5,439 (8) (7,291)
Other, net 849 (171) 1,020 7 (933)
Net cash provided by (used in) financing activities 5,673 (139,478) 145,151 51 (262,749)
Effect of exchange rate changes on cash and cash equivalents 12 (5,610) 5,622 (0) (6,595)
Net increase (decrease) in cash and cash equivalents 103,958 (104,913) 208,871 937 (33,427)
Cash and cash equivalents at beginning of period 344,345 377,772 (33,427) 3,102 377,772
Cash and cash equivalents at end of period JPY 448,303 JPY 272,859 JPY $4,039 JPY
175,444 344,345
--------------------------------------------------------------------------------
SEGMENT INFORMATION
1.Business Segment Information
(1) Net Sales (Including internal sales to other segments)
(In millions of yen, millions of U.S. dollars)
Six months ended 2003 (% of % 2002 (% of 2003 Fiscal 2003 (% of
September 30 (Unaudited) total) change (Unaudited) total) (Unaudited) total)
IT Solutions business JPY 949,485 (41.6) 0.0 JPY 949,693 (43.7) $8,554 JPY (44.4)
2,082,624
Network Solutions 852,571 (37.3) +20.9 705,018 (32.4) 7,681 1,576,333 (33.6)
business
Electron Devices business 460,920 (20.2) -3.4 476,921 (21.9) 4,152 936,719 (20.0)
Others 313,526 (13.7) +3.1 304,172 (14.0) 2,825 661,694 (14.0)
Eliminations (293,483) (-12.8) - (270,953) (-12.4) (2,644) (579,867) (-12.4)
Electronics business 2,283,019 (100.0) +5.5 2,164,851 (99.6) 20,568 4,677,503 (99.6)
total
Leasing business - - - 19,627 (0.9) - 38,222 (0.8)
Eliminations - - - (10,600) (-0.5) - (20,690) (-0.4)
Consolidated total JPY (100.0) +5.0 JPY (100.0) $20,568 JPY (100.0)
2,283,019 2,173,878 4,695,035
(2) Segment Profit or Loss
(In millions of yen, millions of U.S. dollars)
Six months ended 2003 (% of profit Increase 2002 (% of profit 2003 Fiscal 2003 (% of
September 30 (Unaudited) on sales) (decrease) (Unaudited) on sales) (Unaudited) profit on
sales)
IT Solutions business JPY 33,992 (3.6) JPY 4,089 JPY 29,903 (3.1) $306 JPY 105,815 (5.1)
Network Solutions 25,002 (2.9) 12,826 12,176 (1.7) 225 34,284 (2.2)
business
Electron Devices 21,645 (4.7) 26,704 (5,059) (-1.1) 195 (2,282) (-0.2)
business
Others 308 (0.1) (3,134) 3,442 (1.1) 3 14,838 (2.2)
Eliminations (3,432) - (4,645) 1,213 - (31) 156 -
Unallocated corporate (19,493) - (1,787) (17,706) - (175) (38,486) -
expenses*
Electronics business 58,022 (2.5) 34,053 23,969 (1.1) 523 114,325 (2.4)
total
Leasing business - - (3,941) 3,941 (20.1) - 8,154 (21.3)
Eliminations - - 1,189 (1,189) - - (1,590) -
58,022 (2.5) 31,301 26,721 (1.2) 523 JPY 120,889 (2.6)
Other income 89,926 (10,629) 100,555 810 153,597
Other expenses (70,161) 36,739 (106,900) (632) (212,990)
Consolidated income JPY 77,787 JPY 57,411 JPY 20,376 $701 JPY 61,496
before income taxes
(Notes)
* Corporate expenses include general corporate expenses and research and
development expenses at NEC Corporation which are not allocated to any business
segment.
(3) Net Sales to External Customers (Unaudited)
(In billions of yen, millions of U.S. dollars)
Six months ended September 30 2003 2002 % change 2003
IT Solutions business JPY 855.6 JPY 865.8 -1.2 $7,709
Domestic 707.4 749.3 -5.6 6,374
Overseas 148.1 116.4 +27.2 1,335
Network Solutions business 809.1 653.3 +23.8 7,290
Domestic 627.2 472.3 +32.8 5,651
Overseas 181.8 181.0 +0.5 1,639
Electron Devices business 400.5 434.9 -7.9 3,608
Domestic 231.0 276.8 -16.5 2,081
Overseas 169.4 158.1 +7.2 1,527
Others 217.6 203.3 +7.0 1,961
Domestic 160.0 161.3 -0.8 1,442
Overseas 57.5 41.9 +37.1 519
Electronics business total 2,283.0 2,157.5 +5.8 20,568
Domestic 1,725.8 1,659.8 +4.0 15,548
Overseas 557.1 497.6 +12.0 5,020
Leasing business - 16.3 - -
Domestic - 16.3 - -
Overseas - - - -
Consolidated total JPY 2,283.0 JPY 2,173.8 +5.0 $20,568
Domestic 1,725.8 1,676.2 +3.0 15,548
Overseas 557.1 497.6 +12.0 5,020
(4) Net Sales by Products and Services (Including internal sales to other
segments) (Unaudited)
(In billions of yen, millions of U.S. dollars)
Six months ended September 30 2003 2002 % change 2003
IT Solutions business JPY 949.4 JPY 949.6 0.0 $8,554
SI / Services 326.1 316.3 +3.1 2,938
Software 41.6 49.3 -15.6 375
Computers / Platforms 233.8 226.9 +3.0 2,106
Personal Solutions 347.9 357.1 -2.6 3,135
Network Solutions Business JPY 852.5 JPY 705.0 +20.9 $7,681
Broadband 221.9 227.7 -2.5 1,999
Mobile 515.6 378.7 +36.1 4,645
Social Infrastructure 115.0 98.6 +16.6 1,037
Electron Devices business JPY 460.9 JPY 476.9 -3.4 $4,152
Semiconductors 360.4 350.7 +2.8 3,247
Displays 43.0 57.5 -25.2 387
Electronic Components 57.5 68.7 -16.3 518
2. Geographic Segment Information
(1) Net Sales
(In millions of yen, millions of U.S. dollars)
Six months ended 2003 (% of % 2002 (% of 2003 Fiscal 2003 (% of
September 30 (Unaudited) total) change (Unaudited) total) (Unaudited) total)
Location
Japan JPY 1,808,049 (79.2) (1.4) JPY 1,783,192 (82.0) $16,289 JPY (82.6)
3,879,454
Overseas 474,970 (20.8) (21.6) 390,686 (18.0) 4,279 815,581 (17.4)
Consolidated JPY 2,283,019 (100.0) (5.0) JPY 2,173,878 (100.0) $20,568 JPY (100.0)
4,695,035
(2) Geographic Profit or Loss
Six months ended 2003 (% of profit Increase 2002 (% of profit 2003 Fiscal 2003 (% of
September 30 (Unaudited) on sales) (decrease) (Unaudited) on sales) (Unaudited) profit on
sales)
Location
Japan JPY 55,193 (3.1) JPY 28,919 JPY 26,274 (1.5) $497 JPY 118,277 (3.0)
Overseas 2,829 (0.6) 2,382 447 (0.1) 26 2,612 (0.3)
58,022 (2.5) 31,301 26,721 (1.2) 523 120,889 (2.6)
Other income 89,926 (10,629) 100,555 810 153,597
Other expenses (70,161) 36,739 (106,900) (632) (212,990)
Consolidated income JPY 77,787 JPY 57,411 JPY 20,376 $701 JPY 61,496
before income taxes
3. Sales by Market (Unaudited)
Six months ended September 30 2003 % change 2002 2003 Fiscal 2003
Market
Japan JPY 1,725,879 (3.0) JPY 1,676,266 $15,548 JPY 3,644,673
Overseas 557,140 (12.0) 497,612 5,020 1,050,362
Consolidated JPY 2,283,019 (5.0) JPY 2,173,878 $20,568 JPY 4,695,035
--------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS
(1) Fair value of derivative financial instruments
Contract or notional principal amounts, carrying amounts and estimated fair
value are summarized as follows:
(In millions of yen)
September 30, 2003 (Unaudited) September 30, 2002 (Unaudited) March 31, 2003
Derivatives: Contract or Carrying Estimated Contract or Carrying Estimated Contract or Carrying Estimated
notional amounts fair notional amounts fair notional amounts fair
amounts value amounts value amounts value
Forward exchange (JPY 26,144) (JPY (JPY (JPY 20,305) JPY 377 JPY 377 JPY 21,902 (JPY (JPY 458)
contracts:* 1,821) 1,821) 458)
Interest rate and 442,641 (10,696) (10,696) 1,007,794 (15,000) (15,000) 405,414 (10,479) (10,479)
currency swap
agreements
Option contracts
Written 2,225 (95) (95) - - - - - -
Purchased 8,251 511 511 - - - - - -
*Contract or notional amounts of forward exchange contracts are net amount of
"sale" minus "purchase".
March 31, 2003
Purchase of foreign currency (the equivalent of yen) 45,571
Sale of foreign currency (the equivalent of yen) 67,473
September 30, 2002
Purchase of foreign currency (the equivalent of yen) 95,104
Sale of foreign currency (the equivalent of yen) 74,799
September 30, 2003
Purchase of foreign currency (the equivalent of yen) 93,271
Sale of foreign currency (the equivalent of yen) 67,127
(2) Marketable securities
The cost, fair value and net unrealized holding gains/losses for marketable
securities by major security type are summarized as follows:
(In millions of yen)
September 30, 2003 September 30, 2002 March 31, 2003
(Unaudited) (Unaudited)
Available-for-sale:
Equity securities
Cost JPY 101,712 JPY 139,272 JPY 111,192
Fair value 136,951 162,043 111,983
Net unrealized holding gains 35,239 22,771 791
Debt securities
Cost 3,071 4,060 4,231
Fair value 3,070 3,938 4,110
Net unrealized holding losses (1) (122) (121)
(3) Investments in affiliated companies accounted for by the equity method
The carrying amount and market value of stocks of affiliated companies accounted
for by the equity method which have quoted market values are summarized as
follows:
(In millions of yen, millions of U.S. dollars)
September 30, 2003 September 30, 2002 March 31, 2003
(Unaudited) (Unaudited)
Carrying amount JPY 97,255 JPY 101,945 JPY 97,123
Market value 123,978 97,499 87,661
26,723 (4,446) (9,462)
-------------------------------------------------------------------------------
LEASING ARRANGEMENTS
(1). Leasing of computer equipment
For NEC's leasing business for computer and others, future minimum lease
payments from non-cancelable leases under operating leases at September 30, 2002
and 2003 and March 31, 2003 are as follows:
(In millions of yen)
September 30, 2003 September 30, 2002 March 31, 2003
(Unaudited) (Unaudited)
Within one year 2,522 5,918 4,093
Over one year 120 110 199
(2). Lease of facilities and equipment for internal use
NEC leases certain facilities and equipment for its own use. Future minimum
rental payments under non-cancelable operating leases at September 30, 2002 and
2003 and March 31, 2003 are as follows:
(In millions of yen)
September 30, 2003 September 30, 2002 March 31, 2003
(Unaudited) (Unaudited)
Within one year 38,413 37,965 40,875
Over one year 113,812 83,596 124,689
--------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE
A reconciliation of the numerators and the denominators of the basic and diluted
per share computations for net income (loss) is as follows:
(In millions of yen)
Six months ended September 30 2003 2002 Fiscal 2003
Net income (loss) available to common shareholders JPY 15,497 JPY 1,037 (JPY 24,558)
Effect of dilutive securities 284 17 -
Diluted net income (loss) JPY 15,781 JPY 1,054 (JPY 24,558)
(Number of shares)
Six months ended September 30 2003 2002 Fiscal 2003
Weighted-average number of shares of common stock outstanding 1,652,731,358 1,653,895,061 1,653,389,121
for the period
Effect of dilutive securities 160,195,458 88,985,258 -@@@@
Weighted-average number of shares of diluted common stock 1,812,926,816 1,742,880,319 1,653,389,121
outstanding for the period
Net Income (Loss) Per Share:
(In yen)
Six months ended September 30 2003 2002 Fiscal 2003
Basic JPY 9.38 JPY 0.63 (JPY 14.85)
Diluted 8.70 0.60 (14.85)
Securities that could potentially dilute basic EPS in the future that were not
included in the fully diluted computation because they would have been
antidilutive were as follows:
(Number of shares)
Six months ended September 30 2003 2002 Fiscal 2003
Convertible debt 60,372,918 131,577,282 220,562,540
Stock options 853,000 966,000 966,000
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions of yen, millions of U.S. dollars)
Three months ended September 30 2003 (% of net 2002 (% of net Increase 2003
sales) sales) (decrease)
Net sales JPY (100.0) JPY (100.0) JPY 99,637 $11,282
1,252,276 1,152,639
Cost of sales 920,646 (73.5) 815,324 (70.7) 105,322 8,294
Selling, general and administrative expenses 285,644 (22.8) 303,509 (26.4) (17,865) 2,574
Operating income 45,986 (3.7) 33,806 (2.9) 12,180 414
Non-operating income 71,896 (5.7) 32,469 (2.8) 39,427 648
Interest and dividends 2,846 5,527 (2,681) 26
Other 69,050 26,942 42,108 622
Non-operating expenses 49,989 (4.0) 65,777 (5.7) (15,788) 450
Interest 6,356 8,098 (1,742) 57
Other 43,633 57,679 (14,046) 393
Income before income taxes 67,893 (5.4) 498 (0.0) 67,395 612
Provision for income taxes 33,946 (2.7) 221 (0.0) 33,725 306
Minority interest in income of consolidated 6,655 (0.5) 1,670 (0.1) 4,985 60
subsidiaries
Equity in losses of affiliated companies (12,495) (-1.0) (4,801) (-0.4) (7,694) (113)
Net income (loss) JPY 14,797 (1.2) (JPY 6,194) (-0.5) JPY 20,991 $133
--------------------------------------------------------------------------------
SEGMENT INFORMATION
Business Segment Information
(1) Net Sales (Including internal sales to other segments)
(In millions of yen, millions of U.S. dollars)
Three months ended September 30 2003 (% of total) % change 2002 (% of total) 2003
IT Solutions business JPY 547,912 (43.8) +8.5 JPY 504,800 (43.8) $4,936
Network Solutions business 463,937 (37.0) +23.8 374,840 (32.5) 4,180
Electron Devices business 236,154 (18.9) -4.6 247,584 (21.5) 2,128
Others 182,859 (14.6) +5.7 172,967 (15.0) 1,647
Eliminations (178,586) (-14.3) - (152,120) (-13.2) (1,609)
Electronics business total 1,252,276 (100.0) +9.1 1,148,071 (99.6) 11,282
Leasing business - - - 9,435 (0.8) -
Eliminations - - - (4,867) (-0.4) -
Consolidated total JPY 1,252,276 (100.0) +8.6 JPY 1,152,639 (100.0) $11,282
(2) Segment Profit or Loss
(In millions of yen, millions of U.S. dollars)
Three months ended September 30 2003 (% of profit on Increase 2002 (% of profit on 2003
sales) (decrease) sales)
IT Solutions business JPY (5.2) JPY 1,939 JPY (5.3) $256
28,456 26,517
Network Solutions business 14,372 (3.1) 7,513 6,859 (1.8) 129
Electron Devices business 11,113 (4.7) 12,924 (1,811) (-0.7) 100
Others 5,382 (2.9) (2,829) 8,211 (4.7) 48
Eliminations (758) - (4,768) 4,010 - (6)
Unallocated corporate expenses* (12,579) - (1,345) (11,234) - (113)
Electronics business total 45,986 (3.7) 13,434 32,552 (2.8) 414
Leasing business - - (1,698) 1,698 (18.0) -
Eliminations - - 444 (444) - -
45,986 (3.7) 12,180 33,806 (2.9) 414
Other income 71,896 39,427 32,469 648
Other expenses (49,989) 15,788 (65,777) (450)
Consolidated income (loss) before JPY JPY 67,395 JPY 498 $612
income taxes 67,893
(Notes)
* Corporate expenses include general corporate expenses and research and
development expenses at NEC Corporation which are not allocated to any business
segment.
(3) Net Sales to External Customers (Unaudited)
(In billions of yen, millions of U.S. dollars)
Three months ended September 30 2003 2002 % change 2003
IT Solutions business JPY 482.8 JPY 457.5 +5.5 $4,350
Domestic 394.4 393.7 +0.2 3,554
Overseas 88.3 63.7 +38.6 796
Network Solutions business 434.6 345.7 +25.7 3,916
Domestic 349.4 246.8 +41.6 3,148
Overseas 85.1 98.8 -13.9 768
Electron Devices business 207.6 226.5 -8.3 1,871
Domestic 117.9 147.6 -20.1 1,063
Overseas 89.7 78.8 +13.8 808
Others 127.0 114.6 +10.8 1,145
Domestic 94.3 92.3 +2.2 850
Overseas 32.7 22.2 +46.8 295
Electronics business total 1,252.2 1,144.4 +9.4 11,282
Domestic 956.2 880.6 +8.6 8,615
Overseas 296.0 263.7 +12.2 2,667
Leasing business - 8.1 - -
Domestic - 8.1 - -
Overseas - - - -
Consolidated total JPY 1,252.2 JPY 1,152.6 +8.6 $11,282
Domestic 956.2 888.8 +7.6 8,615
Overseas 296.0 263.7 +12.2 2,667
(4) Net Sales by Products and Services (Including internal sales to other
segments) (Unaudited)
(In billions of yen, millions of U.S. dollars)
Three months ended September 30 2003 2002 % change 2003
IT Solutions business JPY 547.9 JPY 504.8 +8.5 $4,936
SI / Services 194.5 191.7 +1.5 1,752
Software 25.6 31.3 -18.2 231
Computers / Platforms 147.0 114.7 +28.2 1,324
Personal Solutions 180.8 167.1 +8.2 1,629
Network Solutions business JPY 463.9 JPY 374.8 +23.8 $4,180
Broadband 133.2 124.2 +7.2 1,200
Mobile 266.4 193.7 +37.5 2,400
Social Infrastructure 64.3 57.0 +12.8 580
Electron Devices business JPY 236.1 JPY 247.5 -4.6 $2,128
Semiconductors 182.4 184.1 -0.9 1,644
Displays 23.2 28.4 -18.3 209
Electronic Components 30.5 35.1 -13.1 275
--------------------------------------------------------------------------------
(Note 1) According to the introduction of the new business line system in April
2003, NEC revised the classification of the product area in each business
segment. Sales by product areas in each business segment of the six months ended
September 30, 2002 have been reclassified and displayed to conform to those of
the six months ended September 30, 2003.
Operating income set forth above is a measure commonly used by companies
reporting in accordance with accounting principles generally accepted in Japan.
Management believes this measure is useful to investors in comparing NEC's
results of operations to other Japanese companies. This measure, however, should
not be construed as an alternative to "income before income taxes" or "net
income" as determined in accordance with U.S. GAAP. Please refer to the
condensed consolidated statement of operations for the calculation of the
operating income.
CAUTIONARY STATEMENTS:
The statements in this material with respect to the plans, strategies and
forecasts of NEC Corporation and its consolidated subsidiaries (collectively
"NEC") are forward-looking statements involving risks and uncertainties.
Moreover, 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.
NEC cautions you in advance that actual results could differ materially from
such forward-looking statements due to several factors. The important factors
that could cause actual results to differ materially from such statements
include, but are not limited to, general economic conditions in NEC's markets,
which are primarily Japan, North America, Asia and Europe; fluctuating demand
for, and competitive pricing pressure on, NEC's products and services in the
marketplace; NEC's ability to continue to win acceptance of its products and
services in these highly competitive markets; NEC's ability to expand into
foreign markets such as China; regulatory change and uncertainty and potential
legal liability relating to NEC's businesses and operations; and movements in
currency exchange rates, particularly the rate between the yen and the U.S.
dollar. Among other factors, a worsening of the world economy resulting from the
downturn in the IT and telecommunications industries, a worsening of financial
conditions in the world markets, and a deterioration in the domestic and
overseas stock markets, would cause actual results to differ from the
forward-looking statements, including management's targets.
You should keep in mind that any forward-looking statement made by NEC speaks
only as of the date on which NEC makes it. 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. In light of these risks and uncertainties, you should keep
in mind that any forward-looking statement might not occur. Therefore, you
should not place undue reliance on any forward-looking statements. 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.
In cases where the information contained in this material falls within the
definition of "Material Information" under Paragraph 2 of Article 166 of the
Securities and Exchange Law of Japan, if you (and directors or employees of your
company if the content of this material comes to their knowledge in connection
with their duty) read this material before the time of "Publication" (which is
defined under the Securities and Exchange Law of Japan and its Enforcement
Ordinance as twelve hours after its release; i.e., approximately 3:30 AM on
October 24, 2003 (JST)), you (and directors or employees of your company if the
content of this material comes to their knowledge in connection with their
duties) may be prohibited from purchasing, selling, or making other transactions
of shares of stock or other securities of NEC before the time of Publication.
***
--------------------------------------------------------------------------------
Contact: Diane Foley
Corporate Communications Division
NEC Corporation
+81-3-3798-6511
This information is provided by RNS
The company news service from the London Stock Exchange
END
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