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NEC CORPORATION
Annual Report 2009
Year ended March 31, 2009

Table of contents

  • Page 1
    Annual Report 2009 Year ended March 31, 2009 NEC CORPORATION

  • Page 2
    ... 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...

  • Page 3
    FINANCIAL HIGHLIGHTS NEC Corporation and Consolidated Subsidiaries For the years ended March 31, 2007, 2008 and 2009 (Japan GAAP) In millions of yen 2007 2008 2009 In millions of U.S. dollars 2009 Percent change 2009/2008 For the year: Net sales ...Operating income (loss) ...Ordinary income (loss)...

  • Page 4
    TO OUR SHAREHOLDERS 02 NEC CORPORATION Annual Report 2009

  • Page 5
    ... securities, NEC recorded a consolidated net loss of ¥296.6 billion in fiscal 2009. In light of these circumstances, NEC has regrettably suspended its annual dividend payment for fiscal 2009. We deeply regret that we must report this outcome to our shareholders. In fiscal 2010, we expect business...

  • Page 6
    ... environmental accolades, including the METI Minister Award of Green IT Award 2008 and the Environment Minister's Prize at the Eco-Products Awards. Orders from all sectors for ECO CENTER, including customers such as Kyoto University, have steadily increased. 04 NEC CORPORATION Annual Report 2009

  • Page 7
    ... eye to the future expansion of our global business, we also strategically acquired NetCracker Technology Corp. of the United States, a company with exceptional expertise in operational support systems for communications service providers. In Japan, we obtained management control of OCC Corporation...

  • Page 8
    ... NEC has taken steps to merge and consolidate production bases and reduce the number of personnel. In the personal solutions business, we have also taken drastic measures such as withdrawing from businesses in Europe and Asia that had continued to post losses. 06 NEC CORPORATION Annual Report 2009

  • Page 9
    ... entails integrating all sales, accounting and procurement systems for internal use at a data center and developing platform systems for these functions. Using this infrastructure, we first plan to provide "Cloud-oriented" services to NEC Corporation and more than 50 NEC Group companies. Based on...

  • Page 10
    ...-ion batteries for automotive applications through a joint venture established with Nissan Motor Co., Ltd. and NEC TOKIN Corporation. Over the medium and long terms, we plan to leverage the strengths of the NEC Group to create other new businesses in this sector, in areas such as energy-efficiency...

  • Page 11
    ... costs, including selling, advertising and other expenses. In fiscal 2010, we plan to reduce fixed costs by ¥270 billion year on year. We are already executing activities that have been budgeted for at the individual business segment and division levels, and are closely monitoring progress against...

  • Page 12
    ... Putting the NEC Group Core Values into practice Change business structure to pursue growth Aim to meet the earnings forecast for fiscal 2010, concentrate on core competencies in order to support the next phase of growth Pursuing the NEC Group Vision 2017 10 NEC CORPORATION Annual Report 2009

  • Page 13
    ... of the disclosure of information. These segment figures have not been audited by the accounting auditors. The presentation of sales for new segments has been changed to sales to outside customers. (Sales of former segments included inter-segment sales.) NEC CORPORATION Annual Report 2009 11

  • Page 14
    ... and Support Outsourcing IA Servers  UNIX Servers  Mainframe Computers  Supercomputers  Storage Products  Professional Workstations  Computer Software  Network Systems for Communications Service Providers  Network Infrastructure (Mobile Communications Systems, Fixed-line...

  • Page 15
    ...  Electronic Components and Others  Lithium-ion Rechargeable Batteries  Capacitors  Piezoelectric Devices  IC Cards, IC Tags  Various light sources and lighting fixtures  LCDs   Digital terrestrial TV transmitter for overseas markets NEC CORPORATION Annual Report 2009 13

  • Page 16
    ... volume-based market share in 2008 *2 The manufacturing and sales company in North America for leading Japanese general food manufacturer Toyo Suisan Kaisha, Ltd. expertise in information systems to research new possibilities in retailing using the Internet. 14 NEC CORPORATION Annual Report 2009

  • Page 17
    ...PC Center thin client system launched by NEC ahead of the industry has posted significant sales growth. NEC has won the No. 1*4 share of the Japanese market for product license shipments in the overall client virtualization software field. *1 Source: IDC Japan (Japan Server 4Q08 Analysis, March 2009...

  • Page 18
    ... during fiscal 2009, claiming the top share of the global market for the second consecutive year. Orders from both domestic and overseas clients for systems based on emerging technologies such as WiMAX and femtocell systems also grew during the year. FOR FURTHER GROWTH Going forward, NEC is working...

  • Page 19
    ... Going forward, NEC aims to expand sales mainly in overseas markets, based on the extensive orders it has won and superior technologies. In broadcasting and control systems, NEC plans to accelerate overseas development of its digital terrestrial TV transmitters, which have already been supplied to...

  • Page 20
    ... a higher domestic market share in consumer products such as mobile handsets and PCs by continuing to supply models that are attractive and easy to use. In mobile handsets, while further building on its strengths in ultra-slim models, NEC plans to focus on catering to emerging user requirements by...

  • Page 21
    ... batteries (NEC TOKIN) FISCAL 2009 PERFORMANCE AND MAIN ACCOMPLISHMENTS Business segment sales declined 22% in year-on-year terms to ¥671.6 billion. This was mainly attributable to significantly lower sales of semiconductors and electronic components following substantial falls in market prices...

  • Page 22
    ...each business area, adapting to the differences in product development cycles and market trends.   THREE RESEARCH GROUPS SUPPORTING R&D AT NEC  Solution Platforms Research Group: R&D in service platforms and common platforms that are the foundation of solutions implementation IT/NW System...

  • Page 23
    ... development activities at overseas locations. At the same time, NEC carefully monitors infringements of its patents, trademarks, and designs by other companies as well as illegal copies of products. Through warnings and lawsuits, NEC works to protect its rights. NEC CORPORATION Annual Report 2009...

  • Page 24
    ... between the programmable flow switches and control servers uses "OpenFlow"* technology, an open standard developed by the OpenFlow Switch Consortium. Going forward, NEC plans to develop network Infrastructure virtualization/optimization equipment that supports OpenFlow technology as part of...

  • Page 25
    ... 30, 2009), including Toray Industries, Inc., Tokyu Corporation and Ricoh Co., Ltd. for use at general shareholders' meetings and lecture presentations. Going forward, NEC will work to expand service menus to drive further growth in this market. NEC's Central Research Laboratories is developing the...

  • Page 26
    ... such means as briefing Outside Directors in advance on particularly important proposals to be put forward to the meetings of the Board of Directors. NEC considers various factors when nominating Outside Directors. These include whether the candidate embraces the NEC Group Corporate Philosophy...

  • Page 27
    ... members. This committee deliberates and reports on matters related to the status of the NEC Group's business execution, such as monitoring progress with respect to meeting budgets adopted by the Board of Directors, with the aim of sharing management information and promoting execution efficiency...

  • Page 28
    ... perspective of proper and efficient operations of the NEC Group, NEC shall endeavor to conduct improvement and standardization of business processes, and further strengthen its internal control utilizing information systems. (7) NEC shall assign full-time employees to assist Corporate Auditors in...

  • Page 29
    ... policy is disclosed on NEC's website at the following URL: http://www.nec.co.jp/profile/en/internalcontrol.html INFORMATION DISCLOSURE STRUCTURE NEC recognizes the importance of providing timely, proper and fair disclosure to obtain a fair evaluation of its corporate value from the capital markets...

  • Page 30
    ... Tatsuzo Homma*2 Satoshi Itoh*2 full-time full-time Chairman, Representative Director, Sumitomo Life Insurance Company Attorney at Law Certified Public Accountant *2 outside corporate auditors as stipulated in Item 16 of Article 2 of the Company Law of Japan 28 NEC CORPORATION Annual Report 2009

  • Page 31
    ... NEC Group Corporate Philosophy NEC Group Charter of Corporate Behavior (Values and guiding principles) Daily work Fiscal year management strategy Mid-term growth plan NEC Group Vision 2017 Telehealth consultations at the Crown Prince Hospital, Chiang Khong NEC CORPORATION Annual Report 2009...

  • Page 32
    ..."ZERO NET" CO2 EMISSIONS NEC is implementing environmental management targeting "zero net" CO2 emissions by fiscal 2011, while helping customers and society as a whole reduce CO2 emissions. In fiscal 2009, which marked the 10th year of MDD activities, the program saw 881 sites organize approximately...

  • Page 33
    ...2009) and other indices •฀฀ SRI฀Funds Included in Sumitomo Trust SRI Japan Open "Good Company" (as of December 2008) and other funds Please visit the NEC website at the following URL for further details on NEC's CSR activities. http://www.nec.co.jp/csr/en NEC CORPORATION Annual Report 2009...

  • Page 34
    ... STATEMENTS OF CHANGES IN NET ASSETS 50 CONSOLIDATED STATEMENTS OF CASH FLOWS 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 125 INDEPENDENT AUDITORS' REPORT * Figures in the Financial Section represent results based on the former segment classification. 32 NEC CORPORATION Annual Report 2009

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    ... 4.63% Japanese Individuals and Others 38.06% Number of shareholders 244,521 STOCK PRICE RANGE ON THE TOKYO STOCK EXCHANGE (Yen) 1,200 800 400 0 I II III 2005 IV I II III 2006 IV I II III 2007 IV I II III 2008 IV I II III 2009 IV (Year ended March 31) 126 NEC CORPORATION Annual Report 2009

  • Page 129
    ...NET SALES BUSINESS SEGMENTS NEC Corporation 7-1, Shiba 5-chome, Minato-ku, Tokyo, Japan July 17, 1899 Kaoru Yano ¥337.9 billion (As of March 31, 2009) 2,029,732,635 shares (As of March 31, 2009) ¥4,215.6 billion (Year ended March 31, 2009) IT Services Business IT Products Business Network Systems...

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    7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan Telephone: +81-3-3454-1111 NEC home page: http://www.nec.com Investor Relations home page: http://www.nec.co.jp/ir/en ISSN 0910-0229 ©NEC Corporation 2009 Printed in Japan