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NEC Corporation
Annual Report 2011
Year ended March 31, 2011

Table of contents

  • Page 1
    Annual Report 2011 Year ended March 31, 2011 NEC Corporation

  • Page 2
    ...03 05 TO OUR SHAREHOLDERS FINANCIAL HIGHLIGHTS MESSAGE FROM THE PRESIDENT MANAGEMENT PERSPECTIVE ON BUSINESS STRATEGIES AT A GLANCE REVIEW OF OPERATIONS 15 IT SERVICES BUSINESS 17 PLATFORM BUSINESS 19 CARRIER NETWORK BUSINESS 21 SOCIAL INFRASTRUCTURE BUSINESS 23 PERSONAL SOLUTIONS BUSINESS 25 28 29...

  • Page 3
    ...the NEC Group Vision 2017, with the aim of enhancing shareholder and corporate value over the medium and long terms. We look forward to your continued support and understanding as we work to reach our goals. June 2011 NOBUHIRO ENDO President, NEC Corporation NEC Corporation Annual Report 2011 02

  • Page 4
    ....0 2007 2008 2009 2010 2011 0 2007 2008 2009 2010 2011 (At year end) Net sales Percentage of overseas sales to consolidated net sales Operating income (loss) Operating income ratio Net income (loss) Net income ratio Owner's equity Owner's equity ratio 03 NEC Corporation Annual Report 2011

  • Page 5
    ...end) 0 2007 2008 2009 2010 2011 0 2007 2008 2009 2010 2011 -200.0 2007 2008 2009 2010 2011 Interest-bearing debt Debt-equity ratio R&D expenses R&D expenses ratio Cash flows from operating activities Cash flows from investing activities Free cash flows NEC Corporation Annual Report 2011 04

  • Page 6
    ... 2017 NEC Group Vision 2017 To be a leading global company leveraging the power of innovation to realize an information society friendly to humans and the earth FY2010/3 (Billion ¥) Results FY2011/3 Results FY2013/3 Targets 2012 Net sales Overseas sales Overseas sales ratio Operating income...

  • Page 7
    ... our initial forecast, and we were thus unable to achieve the targets as set in the plan. As the president of NEC, I deeply regret that the Company posted a net loss and has decided to pay no dividend for fiscal 2011. Nobuhiro Endo President, NEC Corporation NEC Corporation Annual Report 2011 06

  • Page 8
    ... or use cloud services. The third area is the Platform business for developing foundations supporting the first two areas. NEC aims to expand sales of "C&C Cloud Strategy" related businesses, including outsourcing and wireless broadband access. In fiscal 2011, NEC reported net sales of approximately...

  • Page 9
    ... STRATEGY" ACTIVITIES/ACHIEVEMENTS â- Ticketless service for Shiki Theatre Company â- Integrated hotel cloud service for Nippon View Hotel Co., Ltd. â- CRM cloud system for Sugi Holdings Co., Ltd. Government, Public and Healthcare Retail and Services â- Financial accounting cloud service for...

  • Page 10
    ... education system for San South-East Asia Japan Cable (SJC) system Juan Province Ministry of Education, Argentina â- LTE field trial with Singapore â- Medical equipment location management system Telecommunications Ltd. (SingTel) for Albert Einstein Hospital 09 NEC Corporation Annual Report 2011

  • Page 11
    ... storing surplus electricity in the power distribution grid-the infrastructure that links power supply facilities such as power stations with end users including commercial facilities, plants and homes. Together with partner companies, NEC also actively conducted trials of energy management systems...

  • Page 12
    ... of local staff to management positions. The goal is to drive business expansion through speedy decisionmaking. Our efforts will be focused on high-growth areas, including education, the Smart Energy and Green business, healthcare, and public safety, especially in Asia and other emerging markets. In...

  • Page 13
    ... system utilizing the technology of the NEC Group's lithiumion rechargeable batteries, energy management systems that optimize energy usage in commercial facilities and homes, and energy-efficient products such as eco-friendly servers, as well as related technologies and expertise. The NEC Group...

  • Page 14
    ... PC Servers, UNIX Servers, Mainframes, Supercomputers, Storage and ATMs Software Integrated Operation Management, Application Server, Security, Operating System (OS) and Database Software n Enterprise Network Solutions IP Telephony Systems, WAN/Wireless Access Equipment, LAN Products n Network...

  • Page 15
    ... Sensors n Smartphones and Mobile Phones n PCs n Tablet Devices n Mobile Routers and Wireless Routers n "BIGLOBE" Internet Services n Display Solutions (Monitors, Projectors, Public Displays for Digital Signage) n Lithium-ion Rechargeable Batteries n Electronic Components n Lighting Equipment...

  • Page 16
    ... support, and outsourcing, as well as cloud services. Using its extensive experience in building highly reliable systems backed by state-of-the-art IT and network technologies, NEC aims to realize an information society friendly to humans and the earth. Takaaki Shimizu Senior Vice President SALES...

  • Page 17
    ... five global regions to convert such locally born solutions into global services. NEC will continue working to drive business expansion in these key areas, while continuously promoting SI innovation activities in order to enhance profitability in the SI business. NEC Corporation Annual Report 2011...

  • Page 18
    ... 17 NEC Corporation Annual Report 2011 *1 Source: IDC Japan, Japan Server Quarterly Model Analysis 2011Q1 (2010 calendar year) *2 Source: Nikkei Computer (15th Customer Satisfaction Survey, August 18, 2010 issue); 1st place Web application server software category/1st place integrated operation...

  • Page 19
    ... Paperless Documents management Phone Communications Enhancement Video conference Teleconference Groupware *3 Source: Gartner, "Market Share: Enterprise Telephony Equipment, Worldwide 2010" 29 March 2011 (Seat license shipment basis, 2010 calendar year) NEC Corporation Annual Report 2011 18

  • Page 20
    ...cable television-related systems. Operating income rose ¥9.4 billion year on year to ¥40.7 billion, mainly due to streamlined costs and higher sales from the second half of the fiscal year. In fiscal 2011, NEC shipped wireless base stations for NTT DOCOMO, INC.'s new LTE-based mobile phone service...

  • Page 21
    ... solution capabilities in consulting, sales and services. Harnessing these strengths, NEC will help telecom carriers to reduce operating costs. times greater 2009 2015 Average annual growth rate: 92% 50 400.0 300.0 200.0 200.0 100.0 15.0 60.0 Mobile phones 2009 2015 0 2009 2010 2011 2012...

  • Page 22
    ... the development and sales organization in the social systems field, despite efforts to reduce costs and tighten risk management. In fiscal 2011, NEC saw the rapid emergence of replacement demand due to regional restructuring and digitization of wireless communications networks of fire and...

  • Page 23
    ...renewable energy and multiplying means of electricity trading, which are expected to advance further. NEC set up the Overseas Business Strategy Office in September 2010 to promote overseas development of systems that support the advanced use of social infrastructure developed in Japan. Collaboration...

  • Page 24
    ...â„¢-based tablet devices such as the Cloud Communicator LT-W, which features operability equivalent to a PC using a built-in keyboard. Moreover, in fiscal 2011, NEC agreed to a strategic partnership with Lenovo Group Limited in order to drive growth in the PC business through a more powerful market...

  • Page 25
    ... solutions from networks, service platforms to devices. NEC will also respond to the needs of business customers who provide various services in fields such as electronic books, educational services, electric power and housing by offering distinctive product lineups featuring dual-screen tablet...

  • Page 26
    ... term, NEC will closely follow this long-term R&D policy, as it establishes key research areas to expand and enhance "C&C Cloud Strategy" related businesses, the Smart Energy and Green business, and other operations. At the same time, we will focus on producing research achievements that support the...

  • Page 27
    ... Looking ahead, NEC intends to use this technology to provide a variety of applications, including the provision of services and information linked to promotional videos, surveys to track content usage, and advertising distribution linked to video viewing history. VIDEO SIGNATURE GENERATION PROCESS...

  • Page 28
    ... establishing a global patent network, to support achieving an overseas sales ratio of 50% as targeted in the NEC Group Vision 2017. One key focus is the core areas set forth in "V2012", including "C&C Cloud Strategy" related businesses and the Smart Energy and Green business. In these areas, NEC is...

  • Page 29
    ... shifts on weekends and other holidays at its offices and plants, and certain affiliated companies within the Tokyo Electric Power service area during the summer, in addition to using natural gas as a power source and operating private power generators. Through these measures, the NEC Group aims to...

  • Page 30
    ... COMMITTEE around 20 corporate officers BUSINESS PROGRESS COMMITTEE corporate officers and executive general managers of business units, etc. (Corporate Officers) Business Units/Corporate Staff/Affiliate Companies BUSINESS EXECUTION Internal Audits 29 NEC Corporation Annual Report 2011

  • Page 31
    ... covering status reports on their audits and audit plans, as well as on audits of the internal control systems based on the Financial Instruments and Exchange Law, and exchanging opinions on their audits. NEC has established the Corporate Auditors Office with approximately 5 corporate staff members...

  • Page 32
    ... of particular importance are reported to the Board of Directors. The Corporate Auditing Bureau conducts audits of the NEC Group's risk management system and the implementation status of risk management in cooperation with internal auditing section of subsidiaries. 4 In order to ensure that the...

  • Page 33
    ...31, 2011 Number of shares (Thousands of shares) Book value (Millions Holding of yen) Purpose Name of stock Elpida Memory, Inc. Sumitomo Electric Industries, Ltd. Anritsu Corporation The Sumitomo Trust and Banking Co., Ltd. MEIDENSHA CORPORATION MS&AD Insurance Group Holdings, Inc. NIPPON TELEGRAPH...

  • Page 34
    ... to business units and promoting business development, in order to achieve the NEC Group Vision 2017 *4 NEC has notified the securities exchanges of Tokyo, Osaka, Nagoya, Fukuoka and Sapporo, on which NEC has listed its shares, of the independent directors and corporate auditors who will have...

  • Page 35
    ... STATEMENTS OF CHANGES IN NET ASSETS 51 CONSOLIDATED STATEMENTS OF CASH FLOWS 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 95 INDEPENDENT AUDITORS' REPORT Note: U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥83 = U.S.$1. NEC Corporation Annual Report 2011 34

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    ... on closing value on the Tokyo Stock Exchange, Stock Code: 6701) Stock Price (Yen) 2007 2008 2009 2010 2011 Year's high Year's low 916 543 670 376 605 218 ... 397 210 312 162 (On a quarterly basis for the years ended March 31) NEC Corporation Annual Report 2011 96

  • Page 98
    ...,840 (NEC Corporation and consolidated subsidiaries) (As of March 31, 2011) Shares of Common Stock Issued 2,604,732,635 shares (As of March 31, 2011) Number of Employees Organization Chart Sales Business Unit International Sales and Operations Business Unit IT Services Business Unit Platform...

  • Page 99
    ... on this website. CAUTIONARY STATEMENTS: This annual report 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...

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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 ISSN 0910-0229 ©NEC Corporation 2011 Printed in Japan