NEC 2007 Annual Report Download - page 7

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On behalf of NEC, I would like to use this opportunity to extend my heartfelt gratitude for your
continued support of NEC during fiscal 2007, the year ended March 31, 2007. I wish to explain
NEC’s current situation and share my thoughts with shareholders, investors, customers and all
other stakeholders.
Financial Results
I would like to begin by reporting on financial results for fiscal 2007. Consolidated net sales
decreased 6% to ¥4,652.6 billion. This decrease largely resulted from the downsizing of the over-
seas mobile handset business and the sale of the European consumer PC business. Operating
income was ¥70.0 billion, down ¥2.6 billion year on year. Although there was an improvement in
profit in the Mobile/Personal Solutions business as a result of streamlining the overseas mobile
handset business, the drop in operating income was mainly due to the accrual of estimated
warranty costs for products already sold in the IT/Network Solutions business. Net income improved
¥19.2 billion to ¥9.1 billion. Cash dividends applicable to fiscal 2007 were set at ¥8 per share, ¥2
higher than in the previous fiscal year.
We fully acknowledge that our performance in fiscal 2007 did not adequately satisfy share-
holder expectations. Accordingly, the entire NEC Group will do its utmost to deliver results that
satisfy shareholders as quickly as possible.
Striving to Restore Trust
We sincerely apologize to shareholders for any inconvenience or confusion that may have been
caused by weakness related to the disclosure of our financial information in fiscal 2007, including
the delays in filing our annual report on Form 20-F for fiscal 2006 with the U.S. Securities and
Exchange Commission, and the correction of our financial results for the first half of fiscal 2007.
In January 2007, we filed an Improvement Report required by the Tokyo Stock Exchange and
other stock exchanges in Japan in relation to the correction of our financial results. This report
outlines measures to improve our information disclosure controls and procedures. We are
determined to restore the trust of all shareholders by making every effort to more appropriately
prepare financial statements and provide timely disclosure of information based upon the
Improvement Report.
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