Financial Results for the Fiscal Year Ended March 31, 2016 April 28, 2016 NEC Corporation (http://www.nec.com/en/global/ir) 1 © NEC Corporation 2016 Index Ⅰ. Financial Results for FY16/3 (J-GAAP) Ⅱ. Financial Forecasts for FY17/3 (IFRS) Financial Results for FY16/3 (Appendix) Financial Forecasts for FY17/3 (Appendix) Reference (Financial data) * Net income/loss or profit/loss for FY16/3 (actual) or FY17/3 (forecast) refers to profit/loss attributable to owners of the parent for the same period. * FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 2 © NEC Corporation 2016 Ⅰ. Financial Results for FY16/3 (J-GAAP) 3 © NEC Corporation 2016 Results FY16/3 Summary of Financial Results for FY16/3 Net Sales YoY -3.9% Variance from forecast -78.8 Operating Income YoY -20.8 Variance from forecast +7.3 Net Income YoY +11.4 Variance from forecast +3.7 (J-GAAP) (Billions of Yen) ▐ Decreased year on year • Decrease in Public business, Telecom Carrier business and Others, despite a significant increase in Enterprise business ▐ Decreased year on year, topped 100 billion yen • Decrease in Public and Telecom Carrier business, despite an increase in Enterprise and System Platform business ▐ Increased year on year, outperformed company forecast and mid-term target • Improvement mainly due to a decrease in tax expense through the dissolution of a consolidated subsidiary ▐ Decided on a 6 yen year-end dividend per share *Variance from forecast as of February 29, 2016 4 © NEC Corporation 2016 Results FY16/3 Summary of Financial Results for FY16/3 (J-GAAP) Q4 <January to March> Net Sales FY16/3 Actual Actual YoY FY15/3 FY16/3 Actual Actual 872.1 -6.6% 2,935.5 2,821.2 -3.9% -78.8 92.4 89.0 -3.4 128.1 107.3 -20.8 +7.3 9.9% 10.2% 4.4% 3.8% 75.7 67.5 112.1 82.7 -29.4 -2.3 8.1% 7.7% 3.8% 2.9% 34.5 68.4 57.3 68.7 +11.4 +3.7 3.7% 7.8% 2.0% 2.4% 116.1 114.6 40.4 65.6 +25.2 +5.6 USD 1 118.78 118.42 108.42 120.75 EUR 1 139.75 129.54 139.68 132.99 % to Net Sales Ordinary Income % to Net Sales Net Income % to Net Sales Free Cash Flows -8.2 +33.9 -1.5 Note: Assumed exchange rates for Q4 of FY16/3 $1=¥115, €1=¥130 5 © NEC Corporation 2016 YoY 933.5 Operating Income Note: Average Exchange Rates (yen) FY15/3 Full Year (Billions of Yen) Variance from Forecast as of Feb 29 Results FY16/3 Results by Segment for FY16/3 (J-GAAP) (Billions of Yen) Net Sales Public Enterprise Operating Income % to Net Sales 12.5% 12.9% Net Sales Operating Income 82.6 5.5 83.0 9.6 % to Net Sales 6.7% 11.5% 236.9 36.6 212.2 29.2 Net Sales Telecom Carrier System Platform Operating Income % to Net Sales 15.4% 13.7% Net Sales 213.0 18.3 209.8 24.4 8.6% 11.6% 105.1 9.9 96.0 2.4 Operating Income % to Net Sales Net Sales Others Operating Income/Loss Adjustment Operating Income/Loss % to Net Sales Net Sales Total Operating Income % to Net Sales 6 © NEC Corporation 2016 Q4 <January to March> FY15/3 FY16/3 YoY Actual Actual 295.9 271.1 -8.4% 37.1 35.1 -2.0 9.4% 2.5% -14.9 933.5 92.4 -11.6 872.1 89.0 9.9% 10.2% Full Year FY15/3 FY16/3 Actual Actual 821.9 766.8 74.8 57.5 9.1% 7.5% 270.5 8.3 300.7 22.2 3.1% 7.4% -10.4% -7.4 740.2 62.0 698.9 45.6 8.4% 6.5% -1.5% +6.1 728.9 31.4 728.5 37.5 4.3% 5.2% -8.7% -7.5 374.1 4.0 326.2 -8.9 1.1% -2.7% +3.3 -6.6% -3.4 -52.4 2,935.5 128.1 -46.7 2,821.2 107.3 4.4% 3.8% +0.4% +4.1 YoY Variance from Forecast as of Feb 29 -6.7% -17.2 -33.2 -4.5 +11.2% +13.9 -6.3 +2.2 -5.6% -16.4 -11.1 +4.6 -0.0% +6.1 -14.5 +1.5 -12.8% -12.9 -13.8 -2.9 +5.7 -3.9% -20.8 +6.3 -78.8 +7.3 Results FY16/3 Public Business (J-GAAP) (Billions of Yen) YoY Sales 821.9 738.4 +11.3% +8.5% Operating Income FY14/3 7 © NEC Corporation 2016 -6.7% 57.5 9.1% FY15/3 ▌Sales 766.8 7.5% FY16/3 (-6.7%) Sales for the central government decreased due to a decline in large-scale projects in the previous fiscal year ▌Operating Income 57.5 74.8 58.6 7.9% Operating Income Ratio 766.8 Billions of Yen (YoY) (-17.2) Decreased due to a sales decline and an increase in loss-making projects Results FY16/3 Enterprise Business (J-GAAP) (Billions of Yen) YoY Sales 272.3 300.7 270.5 +11.2% +8.2% Operating Income Operating Income Ratio 2.4% 6.5 8.3 7.4% © NEC Corporation 2016 FY15/3 ▌Sales 300.7 (+11.2%) Increased due to large-scale projects in retail and services, as well as manufacturing ▌Operating Income 22.2 (+13.9) Improved due to a sales increase and higher profitability in system construction services 3.1% FY14/3 8 22.2 -0.7% Billions of Yen (YoY) FY16/3 Results FY16/3 Telecom Carrier Business (J-GAAP) (Billions of Yen) YoY Sales 740.2 725.8 +2.3% Operating Income +2.0% 60.3 8.3% 8.4% 9 © NEC Corporation 2016 698.9 (-5.6%) Decreased in Japan International sales increased in submarine cable systems ▌Operating Income 45.6 45.6 6.5% FY15/3 ▌Sales -5.6% 62.0 Operating Income Ratio FY14/3 698.9 Billions of Yen (YoY) FY16/3 (-16.4) Decreased due to a sales decline and a lossmaking international project Results FY16/3 System Platform Business (J-GAAP) (Billions of Yen) YoY Sales 780.8 +4.9% Operating Income 728.9 728.5 -6.6% -0.0% 30.7 3.9% Operating Income Ratio FY14/3 10 © NEC Corporation 2016 37.5 31.4 5.2% 4.3% FY15/3 FY16/3 Billions of Yen (YoY) ▌Sales 728.5 (-0.0%) Remained flat due to a decrease in maintenance services, despite an increase in hardware ▌Operating Income 37.5 (+6.1) Increased due to higher profitability in hardware Results FY16/3 Others (J-GAAP) (Billions of Yen) YoY Sales 525.9 -23.3% 374.1 Operating Income Ratio -0.3% Operating Income/Loss -1.4 4.0 11 © NEC Corporation 2016 FY15/3 (-12.8%) Worsened due to a sales decline and deterioration of profitability in the energy business -2.7% -8.9 FY14/3 326.2 ▌Operating Income/Loss -8.9 (-12.9) -12.8% 1.1% ▌Sales Decreased due to deconsolidation of logistics business, a decrease in the energy business and mobile handsets business 326.2 -28.9% Billions of Yen (YoY) FY16/3 Results FY16/3 Net Income Change(Year on Year) (J-GAAP) (Billions of Yen) Public -17.2 Telecom Carrier -16.4 Others -12.9 Adjustment +5.7 System Platform +6.1 Enterprise +13.9 Foreign exchange gains/losses -13.0 Settlement package and Compensation for damage -4.7 Retirement benefit expenses +10.4 +6.0 Others +40.8 Non-operating Income/Loss -8.6 -9.6 FY15/3 57.3 12 © NEC Corporation 2016 Operating Income -20.8 +7.3 Income taxes +36.9 Business structure improvement expenses +11.8 Profit/Loss attributable to non-controlling interests -6.7 Variance from Forecast as of Feb 29 FY16/3 68.7 +3.7 II. Financial Forecasts for FY17/3 (IFRS) 13 © NEC Corporation 2016 Forecasts FY17/3 Voluntary Adoption of IFRS Accounting Standards Timing of Disclosure April 2016 (IFRS) J-GAAP IFRS Earnings Releases for FY16/3 (FY16/3 Actual) Earnings Releases for FY16/3 (FY17/3 Forecast) Consolidated Financial Statements Summary of Consolidated Statements of Operations Sales and Operating Income/Loss by Segment for FY16/3 Actual Sales and Operating Income/Loss by Segment for FY16/3 Actual and FY17/3 Forecast Annual Securities Report - June 2016 From July 2016 - Quarterly Earnings Releases Quarterly Securities Reports * FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 14 © NEC Corporation 2016 Forecasts FY17/3 Summary of Financial Forecasts (IFRS) Achieve 50.0 billion yen in profit, continue an annual dividend of 6 yen per share (Billions of Yen) Full Year FY16/3 FY17/3 Actual Forecasts Net Sales 2,824.8 2,880.0 Operating Income % to Net Sales Profit % to Net Sales 91.4 100.0 3.2% 3.5% 75.9 50.0 2.7% 1.7% YoY +2.0% +8.6 Public % to Net Sales Enterprise Note: Average Exchange Rates (yen) 6.00 6.00 USD 1 120.75 115.00 EUR 1 132.99 125.00 Net Sales Operating Income % to Net Sales -25.9 Telecom Carrier Net Sales Operating Income % to Net Sales System Platform Dividends per Share (yen) Net Sales Operating Income Net Sales Operating Income % to Net Sales 0.00 Net Sales Others Operating Income/Loss Adjustment Operating Income/Loss % to Net Sales Total Net Sales Operating Income % to Net Sales Full Year FY16/3 FY17/3 Actual Forecasts 771.6 735.0 57.3 69.0 7.4% 9.4% 300.3 23.9 305.0 19.0 8.0% 6.2% 697.5 46.5 705.0 48.0 6.7% 6.8% 728.6 31.7 755.0 32.0 4.4% 4.2% 326.8 -18.2 380.0 1.0 -5.6% 0.3% -49.8 2,824.8 91.4 -69.0 2,880.0 100.0 3.2% 3.5% YoY -4.7% +11.7 +1.6% -4.9 +1.1% +1.5 +3.6% +0.3 +16.3% +19.2 -19.2 +2.0% +8.6 *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 15 © NEC Corporation 2016 Forecasts FY17/3 Summary of Financial Forecasts (J-GAAP->IFRS) (IFRS) (Billions of Yen) Full Year FY16/3 FY17/3 Actual (J-GAAP) Goodwill Net Sales Pension Costs Reclassification 2,821.2 Operating Income/Loss 107.3 % to Net Sales 3.8% Non-operating Income/Expenses -24.6 Financial Income/Expenses (*1) Others 3.7 10.6 -1.3 -25.6 0.4 24.6 0.8 -0.1 -3.8 Total Actual Forecasts (IFRS) (IFRS) 3.7 2,824.8 2,880.0 -15.9 91.4 100.0 3.2% 3.5% -1.8 +8.6 -4.9 Profit/Loss before Income Tax 77.9 11.4 -1.4 -1.4 8.6 86.6 Profit/Loss 68.7 11.4 -1.0 -3.2 7.2 75.9 50.0 2.7% 1.7% *1 4.8 -4.9 -4.8 2.4% +2.0% 24.6 Extraordinary Income/Loss % to Net Sales YoY 4.8 -25.9 Financial income, Financial expenses and Equity in earnings of affiliates *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 16 © NEC Corporation 2016 Forecasts FY17/3 Public Business (IFRS) (Billions of Yen) YoY Sales 766.8 771.6 -6.7% ▌Sales 735.0 (-4.7%) Decrease* due to a decline in the public areas, despite an increase of sales for the central government * Including transfer of certain business (Approx. -40 billion yen) -4.7% Operating Income Operating Income Ratio 735.0 Billions of Yen (YoY) 57.5 57.3 7.5% 7.4% FY16/3 (J-GAAP) FY16/3 (IFRS) 69.0 9.4% FY17/3 Forecasts (IFRS) ▌Operating Income 69.0 (+11.7) Improve due to a decrease in loss-making projects and cost reduction *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 17 © NEC Corporation 2016 Forecasts FY17/3 Enterprise Business (IFRS) (Billions of Yen) YoY Sales 300.7 +11.2% 300.3 Operating Income 22.2 23.9 305.0 +1.6% 19.0 Operating Income Ratio 7.4% 8.0% FY16/3 (J-GAAP) FY16/3 (IFRS) Billions of Yen (YoY) ▌Sales 305.0 (+1.6%) Increase in manufacturing industries ▌Operating Income 19.0 (-4.9) Decrease due to project lineup changes and an investment increase in the IT services business for retail industries 6.2% FY17/3 Forecasts (IFRS) *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 18 © NEC Corporation 2016 Forecasts FY17/3 Telecom Carrier Business (IFRS) (Billions of Yen) YoY Sales 698.9 697.5 -5.6% 705.0 +1.1% Operating Income 45.6 6.5% 46.5 6.7% 48.0 Billions of Yen (YoY) ▌Sales 705.0 (+1.1%) Increase in TOMS and SDN/NFV in the international market Decrease in Japan ▌Operating Income 48.0 (+1.5) Improve due to a sales increase 6.8% Operating Income Ratio FY16/3 (J-GAAP) FY16/3 (IFRS) FY17/3 Forecasts (IFRS) * TOMS:Telecom Operations & Management Solutions SDN:Software-Defined Networking NFV:Network Functions Virtualization *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 19 © NEC Corporation 2016 Forecasts FY17/3 System Platform Business (IFRS) (Billions of Yen) YoY Sales 728.6 728.5 -0.0% Operating Income 31.7 5.2% FY16/3 (J-GAAP) ▌Sales 755.0 (+3.6%) Increase* in services and enterprise networks * Including transfer of certain business (Approx. +10 billion yen) +3.6% 37.5 Operating Income Ratio 755.0 Billions of Yen (YoY) 32.0 4.4% 4.2% FY16/3 (IFRS) FY17/3 Forecasts (IFRS) ▌Operating Income 32.0 (+0.3) Remain flat due to project lineup changes, despite a sales increase *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 20 © NEC Corporation 2016 Forecasts FY17/3 Others (IFRS) (Billions of Yen) YoY Sales 326.2 326.8 Billions of Yen (YoY) ▌Sales 380.0 (+16.3%) Increase due to expansion of international business while the energy business remains flat 380.0 * Including transfer of certain business (Approx. +30 billion yen) +16.3% -12.8% ▌Operating Income Operating Income Ratio Operating Income/ Loss 1.0 1.0 (+19.2) Move it into the black due to profit improvement in the energy business 0.3% -2.7% -8.9 -5.6% -18.2 FY16/3 (J-GAAP) FY16/3 (IFRS) FY17/3 Forecasts (IFRS) *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 21 © NEC Corporation 2016 Forecasts FY17/3 Profit Change (Year on Year) (IFRS) (Billions of Yen) Operating Income +8.6 Gain on sales of securities (the previous fiscal year), etc. Decrease in tax expense through dissolution of a consolidated subsidiary (the previous fiscal year), etc. Financial Income/Expenses Tax Expense FY16/3 75.9 Others Public Telecom Carrier System Platform Enterprise Adjustment +19.2 +11.7 +1.5 +0.3 -4.9 -19.2 FY17/3 Forecast 50.0 *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 22 © NEC Corporation 2016 24 © NEC Corporation 2016 Financial Results for FY16/3 (Appendix) 25 © NEC Corporation 2016 Results FY16/3 Results for FY16/3 by Segment (three-year transition) (J-GAAP) (Billions of Yen) Net Sales 3,043.1 738.4 Public Enterprise Telecom Carrier System Platform Others 26 272.3 725.8 780.8 2,935.5 821.9 270.5 740.2 728.9 Operating Income/Loss 128.1 2,821.2 766.8 300.7 728.5 374.1 326.2 FY14/3 FY15/3 FY16/3 74.8 107.3 57.5 Public 58.6 Enterprise 6.5 8.3 22.2 Telecom Carrier 60.3 62.0 45.6 System Platform Others 30.7 -1.4 31.4 4.0 37.5 -8.9 Adjustment -48.6 -52.4 -46.7 FY14/3 FY15/3 FY16/3 698.9 525.9 © NEC Corporation 2016 106.2 Results FY16/3 Financial Results for FY16/3 by Segment (Billions of Yen) Net Sales Operating Income/Loss Others 11% Public 57.5 Public 27% System Platform 26% Sales for FY16/3 2,821.2 Enterprise 11% Telecom Carrier 25% 27 © NEC Corporation 2016 (J-GAAP) Telecom Carrier 45.6 System Platform 37.5 Operating Income for FY16/3 107.3 Enterprise 22.2 Others -8.9 Results FY16/3 Sales Change (Year on Year) (J-GAAP) Increased in manufacturing, as well as retail and services Variance from Forecast as of Feb 29 Enterprise +30.2 -6.3 FY15/3 2,935.5 Public -55.1 -33.2 System Platform -0.3 -14.5 Telecom Carrier -41.2 -11.1 Decreased due to a decline in large-scale projects in the previous fiscal year 28 © NEC Corporation 2016 (Billions of Yen) Decreased in Japan Decreased due to deconsolidation of logistics business, a decrease in the energy business and mobile handsets business Others -47.9 -13.8 Decreased in maintenance services while increased in hardware FY16/3 2,821.2 -78.8 Results FY16/3 Operating Income Change (Year on Year) Decreased due to a sales decline and an increase in lossmaking projects Decreased due to a sales decline and a loss-making international project +2.2 Enterprise +13.9 FY15/3 128.1 Public -17.2 -4.5 Improved due to a sales increase and higher profitability in system construction services 29 © NEC Corporation 2016 +1.5 (J-GAAP) (Billions of Yen) Worsened due to a sales decline and deterioration of profitability in the energy business System Platform +6.1 Variance from Forecast as of Feb 29 +6.3 Adjustment +5.7 Telecom Carrier -16.4 Others -12.9 +4.6 -2.9 Increased due to higher profitability in hardware Improved due to higher cost efficiency FY16/3 107.3 +7.3 Results FY16/3 International Sales (J-GAAP) Sales by Region International Sales Ratio 18.7% 20.0% Greater 21.4% China, APAC (Billions of Yen) EMEA 4.9% 9.4% 603.2 569.2 586.8 The Americas 202.3 203.9 Greater China, APAC 239.5 246.4 264.2 EMEA 127.4 136.6 138.4 FY14/3 FY15/3 FY16/3 The Americas 200.5 7.1% Sales for FY16/3 2,821.2 Japan 78.6% *Sales are classified by country or region based on customer locations. 30 © NEC Corporation 2016 Results FY16/3 Free Cash Flows (J-GAAP) (Billions of Yen) 150.0 +Improvement of working capital -Deterioration of working capital 100.0 55.2 50.0 87.9 94.1 97.8 40.4 0.0 -38.9 -Increase in cash outflows for M&A -100.0 FY14/3 Cash flows from operating activities 31 © NEC Corporation 2016 -32.2 -47.5 -50.0 65.6 +Decrease in cash outflows for M&A FY15/3 Cash flows from investing activities FY16/3 Free cash flows Results FY16/3 Financial Position Data (J-GAAP) (Billions of Yen) End of March 2015 Variance from end of March 2015 2,620.7 2,493.4 -127.2 Net assets 884.2 852.5 -31.7 Interest-bearing debt 520.8 481.0 -39.8 Shareholders' equity 823.7 792.1 -31.6 31.4% 31.8% +0.4pt D/E ratio (times) 0.63 0.61 + 0.02pt Net D/E ratio (times) 0.41 0.36 + 0.05pt 181.1 192.3 +11.2 Total assets Equity ratio (%) Cash and cash equivalents 32 End of March 2016 © NEC Corporation 2016 Results FY16/3 <Ref.> Balance Sheets (At the end of March 2016) (J-GAAP) (Billions of Yen) Liabilities Current Assets 1,527.3 1,640.9 Decrease in net defined benefit asset and goodwill Noncurrent Assets 33 © NEC Corporation 2016 -95.5 -49.5 Collection of accounts receivable-trade 966.2 Compared to end of March 2015 Total Assets 2,493.4 (-127.2 compared to end of March 2015) -77.7 -31.7 Decrease in notes and accounts payable-trade, and interest-bearing debt Decrease in remeasurements of defined benefit plans and foreign currency translation adjustments, despite booked profit attributable to owners of the parent for the period Net Assets 852.5 Business Environment The order trend for IT investment in services and hardware in Japan remains high level ▌ IT services in Japan for FY16/3 grew, particularly in the retail and services areas, as well as public areas IT Services Order Trend in Japan (by Quarter, YoY) FY16/3 Order 106% 116% 108% 105% 110% 100% 95% FY15/3 Q1 34 © NEC Corporation 2016 Q2 Q3 Q4 FY16/3 Q1 Q2 Q3 Q4 Financial Forecasts for FY17/3 (Appendix) 35 © NEC Corporation 2016 Forecasts FY17/3 Financial Forecasts by Segment (two-year transition) Net Sales 2,821.2 766.8 Public Enterprise 300.7 2,824.8 Operating Income/Loss 771.6 735.0 300.3 305.0 698.9 697.5 705.0 System Platform 728.5 728.6 755.0 326.2 326.8 380.0 FY16/3 (J-GAAP) FY16/3 (IFRS) FY17/3 Forecasts (IFRS) (Billions of Yen) 100.0 107.3 91.4 Public 57.5 57.3 69.0 Enterprise 22.2 23.9 19.0 Telecom Carrier 45.6 46.5 48.0 System Platform 31.7 Others 37.5 -8.9 32.0 1.0 Adjustment -46.7 2,880.0 Telecom Carrier Others (IFRS) FY16/3 (J-GAAP) -18.2 -49.8 FY16/3 (IFRS) -69.0 FY17/3 Forecasts (IFRS) *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 36 © NEC Corporation 2016 Forecasts FY17/3 Financial Forecasts by Segment (IFRS) Net Sales Operating Income Public 69.0 Others 13% System Platform 26% Sales Forecast for FY17/3 2,880.0 Telecom Carrier 24% Operating Income Forecast for FY17/3 Telecom Carrier 48.0 Public 26% (Billions of Yen) 100.0 System Platform 32.0 Enterprise 11% Enterprise 19.0 Others 1.0 *Forecasts as of April 28, 2016 37 © NEC Corporation 2016 Forecasts FY17/3 Sales Change (Year on Year) Increase in TOMS and SDN/NFV in the international market Decrease in Japan Decrease due to a decline in the public areas, despite an increase of sales for the central government Enterprise +4.7 (IFRS) (Billions of Yen) Increase due to expansion of international business while the energy business remains flat Others +53.2 Telecom Carrier +7.5 System Platform +26.4 Forecast 2,880.0 FY16/3 2,824.8 Public -36.6 Increase in manufacturing industries FY17/3 Increase in services and enterprise networks *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 38 © NEC Corporation 2016 Forecasts FY17/3 Operating Income Change (Year on Year) Improve due to a sales increase (IFRS) (Billions of Yen) Move it into the black due to profit improvement in the energy business Increase in costs Decrease due to project lineup changes and an investment increase in the IT services business for retail industries Telecom Carrier +1.5 Public +11.7 Enterprise -4.9 FY16/3 91.4 Improve due to a decrease in lossmaking projects and cost reduction System Platform +0.3 Others +19.2 Adjustment -19.2 Remain flat due to project lineup changes, despite a sales increase FY17/3 Forecast 100.0 *Forecasts as of April 28, 2016 *FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3. 39 © NEC Corporation 2016 Forecasts FY17/3 Capital Expenditure, Depreciation and R&D expenses (IFRS) (Billions of Yen) Capital Expenditure 45.0 37.4 Depreciation 48.5 R&D Expenses 50.0 % to Sales Enterprise 36.3 134.2 Enterprise 16.1 18.0 1.2 Telecom Carrier 52.6 Telecom Carrier 0.3 5.9 System Platform 7.6 System Platform 39.8 Others 7.5 Others 22.5 FY15/3 FY16/3 FY17/3 (J-GAAP) (J-GAAP) Forecast (IFRS) 4.4% 4.3% 44.9 Public Public 4.6% FY15/3 FY16/3 FY17/3 (J-GAAP) (J-GAAP) Forecast (IFRS) FY15/3 124.0 FY16/3 125.0 FY17/3 (J-GAAP) (J-GAAP) Forecast (IFRS) *Forecasts as of April 28, 2016 40 © NEC Corporation 2016 Reference (Financial data) 41 © NEC Corporation 2016 Net Sales, Operating Income/Loss J-GAAP (Billions of Yen) 3.0% 3.9% 3.3% 959.6 -3.4% Net Sales 743.0 640.1 700.4 -1.2% 726.1 +6.4% -2.3% -3.0% +1.4% 3.2% 2.1% 933.5 598.7 -9.0% 677.2 721.5 586.6 641.0 28.6 -6.6% -5.4% 92.4 23.4 10.2% -0.6% -2.0% -7.1 -21.8 0.8% 872.1 -3.3% 82.5 22.2 -1.7% -2.7% -6.5% Operating Income/ Loss YoY 9.9% 8.6% Operating Income Ratio 89.0 23.4 14.1 4.9 -10.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 42 © NEC Corporation 2016 FY15/3 FY16/3 International Sales J-GAAP (Billions of Yen) 23.1% International Sales Ratio 20.5% 18.9% 20.9% 19.7% 20.8% 21.1% 152.3 120.8 157.8 138.2 +22.9% +11.8% +14.1% +24.0% 23.2% 151.1 125.3 167.8 142.6 +6.3% -0.8% 162.3 135.6 148.6 +7.4% +4.2% +3.2% +3.7% YoY 18.0% 18.0% 16.4% International Sales 22.5% 156.6 -6.7% +8.2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 43 © NEC Corporation 2016 FY15/3 FY16/3 Sales, Operating Income/Loss (Public) J-GAAP (Billions of Yen) Operating Income Ratio 8.0% 10.7% 10.2% 9.8% 8.7% 1.1% 0.3% YoY 12.5% 6.9% 295.9 271.0 6.1% -0.4% 12.9% 271.1 +9.2% +6.5% 176.7 Sales 126.6 +9.1% +10.1% 164.0 +9.9% 14.2 17.6 198.1 146.4 26.5 +15.7% 189.2 181.4 +12.1% 37.1 145.5 +10.6% 20.3 15.8 -8.4% 161.0 -4.5% 35.1 -11.3% -0.6% 13.1 9.9 1.6 0.4 Operating Income /Loss -0.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 44 © NEC Corporation 2016 FY15/3 FY16/3 Sales, Operating Income/Loss (Enterprise) J-GAAP (Billions of Yen) Operating Income Ratio -4.1% 4.4% 7.4% -0.3% 5.6% -3.3% 6.7% 0.9% 82.6 81.5 72.3 71.3 Sales 60.7 58.7 +10.7% +3.7% 54.4 61.2 +1.3% +1.3% YoY 5.1% 11.5% 83.0 78.4 71.1 68.3 +0.4% +8.4% +16.2% +25.5% +0.8% +2.8% +17.4% 4.1% 7.9% -7.4% Operating Income/ Loss 6.0 3.1 -0.2 -2.4 4.0 0.5 5.5 2.8 6.2 3.6 9.6 -1.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 45 © NEC Corporation 2016 FY15/3 FY16/3 Sales, Operating Income/Loss (Telecom Carrier) J-GAAP (Billions of Yen) Operating Income Ratio 7.7% 3.6% 7.2% 219.0 Sales 180.0 154.0 -4.0% Operating Income/ Loss 172.7 +9.4% 28.5 13.8 5.6 2.9% 6.8% 181.5 +3.8% -0.7% 15.4% 13.0% 151.0 -2.0% 5.1% 170.8 YoY 7.3% 236.9 -2.3% -1.1% 212.2 184.9 +8.2% 142.6 +0.8% 13.7% 3.9% 36.6 159.2 +1.9% -6.8% -5.6% 12.3 12.4 4.3 -10.4% 29.2 13.6 8.8 6.1 -3.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 46 © NEC Corporation 2016 FY15/3 FY16/3 Sales, Operating Income/Loss (System Platform) J-GAAP (Billions of Yen) Operating Income Ratio - 4.2% 4.3% 157.7 1.5% 3.5% YoY 8.6% 3.0% 2.6% 3.1% 1.4% 11.6% 244.3 193.1 Sales 4.3% 8.6% -5.4% 213.0 185.7 +16.4% 166.9 +11.0% +5.9% -3.3% 178.5 -7.5% 170.5 8.4 8.0 -12.8% 160.2 209.8 170.9 -1.5% +5.1% -8.2% 20.9 Operating Income/ Loss 187.6 +0.3% -4.0% 24.4 18.3 2.5 6.2 4.4 4.9 5.8 2.4 -6.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 47 © NEC Corporation 2016 FY15/3 FY16/3 Sales, Operating Income/Loss (Others) J-GAAP (Billions of Yen) Operating Income Ratio -1.6% -6.9% 9.4% 6.7% YoY 3.2% 2.3% 0.7% 2.5% -3.4% -6.1% -9.9% -8.7% Sales 143.1 121.8 143.7 117.3 -3.5% -12.1% -37.2% -34.9% 80.0 95.8 93.3 -21.3% Operating Income/ Loss -9.9 0.8 -2.0 9.6 -44.1% -20.5% -26.9% 70.1 9.9 -12.4% 2.2 -3.1 -4.9 105.1 81.5 78.7 -14.9% -15.6% 2.6 96.0 -8.7% 2.4 -6.9 -7.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> FY14/3 48 © NEC Corporation 2016 FY15/3 FY16/3 Exchange Rate (Yen) 145 132.99 135 130 125 120.75 115 115 105 49 4/1 4/30 5/29 6/30 7/31 8/31 9/30 10/30 11/30 12/31 1/29 2/29 Dollar/Yen Exchange Rate (Actual) Dollar/Yen Assumed Exchange Rate Dollar/Yen Average Exchange Rate Euro/Yen Exchange Rate (Actual) Euro/Yen Assumed Exchange Rate Euro/Yen Average Exchage Rate © NEC Corporation 2016 3/31 Stock Price April 28: Full Year Earnings Release 21,000 (Yen) September 29: Public Business Briefing 440 January 28: Q3 Earnings Release 420 20,000 400 19,000 380 360 18,000 340 17,000 320 16,000 October 29: Q2 Earnings Release June 22: Ordinary General Meeting of Shareholders 15,000 14,000 December 10: R&D Briefing July 30: Q1 Earnings Release 4/1 4/30 5/29 6/30 7/31 8/28 9/30 The Nikkei Stock Average 50 300 © NEC Corporation 2016 10/30 11/30 NEC 12/30 280 260 1/29 February 29: Revision of Financial Forecasts 2/29 3/31 240 Cautionary Statement with Respect to Forward-Looking Statements This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial conditions and other overall management of the NEC Group (the “forward-looking statements”). The forward-looking statements are made based on information currently available to NEC and certain assumptions considered reasonable as of the date of this material. These determinations and assumptions are inherently subjective and uncertain. These forward-looking statements are not guarantees of future performance, and actual operating results may differ substantially due to a number of factors. The factors that may influence the operating results include, but are not limited to, the following: • Effects of economic conditions, volatility in the markets generally, and fluctuations in foreign currency exchange and interest rate • Trends and factors beyond the NEC Group’s control and fluctuations in financial conditions and profits of the NEC Group that are caused by external factors • Risks arising from acquisitions, business combinations and reorganizations, including the possibility that the expected benefits cannot be realized or that the transactions may result in unanticipated adverse consequences • Developments in the NEC Group’s alliances with strategic partners • Effects of expanding the NEC Group’s global business • Risk that the NEC Group may fail to keep pace with rapid technological developments and changes in customer preferences • Risk that the NEC Group may lose sales due to problems with the production process or due to its failure to adapt to demand fluctuations • Defects in products and services • Shortcomings in material procurement and increases in delivery cost • Acquisition and protection of intellectual property rights necessary for the operation of business • Risk that intellectual property licenses owned by third parties cannot be obtained and/or are discontinued • Risk that the NEC Group may be exposed to unfavorable pricing environment due to intensified competition • Risk that a major customer changes investment targets, reduces capital investment and/or reduces the value of transactions with the NEC Group • Risk that the NEC Group may be unable to provide or facilitate payment arrangements (such as vendor financing) to its customers on terms acceptable to them or at all, or risk that the NEC Group’s customers are unable to make payments on time, due to the customers’ financial difficulties or otherwise • Risk that the NEC Group may experience a substantial loss of, or an inability to attract, talented personnel • Risk that the NEC Group’s ability to access the commercial paper market or other debt markets are adversely affected due to a downgrade in its credit rating • Risk that the NEC Group may incur large costs and/or liabilities in relation to internal control, legal proceedings, laws and governmental policies, environmental laws and regulations, tax practice, information management, and human rights and working environment • Consequences of natural and fire disasters • Changes in methods, estimates and judgments that the NEC Group uses in applying its accounting policies • Risk that the NEC Group may incur liabilities and losses in relation to its retirement benefit obligations The forward-looking statements contained in this material are based on information that NEC possesses as of the date hereof. 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 the NEC Group. NEC does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 51 © NEC Corporation 2016