Financial Results for 1H Fiscal Year Ending March 31, 2013 October 26, 2012 NEC Corporation (http://www.nec.com/en/global/ir) Index I. Financial Results for 1H, FY13/3 II. Progress on Restructuring III. Summary of Financial Forecasts for FY13/3 IV. Formulating mid-term management plan l Financial Results for 1H, FY13/3 (Appendix) l Financial Forecasts for FY13/3 (Appendix) l Reference (Financial data) ※ As stated in the July 6, 2012 announcement, “NEC Revises Business Segments,” NEC has revised its business segments from the first quarter of the fiscal year ending March 31, 2013. Figures for the corresponding period of the previous fiscal year have been adjusted in accordance with the new segments Page 2 © NEC Corporation 2012 I. Financial Results for 1H, FY13/3 Summary of Financial Results for 1H 1H Results l Increased year on year and achieved forecast Sales *increase by approximately 3% excluding the impact of deconsolidation of consumer PC and LCD module businesses • Expanded mainly in IT Solutions and Carrier Network YoY +0.3% Difference from Jul 31 +47.8B Yen Operating Income YoY +40.6B Yen Difference from Jul 31 +46.4B Yen Net Income/Loss YoY +19.0B Yen Difference from Jul 31 +32.0B Yen Page 4 • Sold LCD patents to Hon Hai Precision Industry Co., Ltd for approximately 9.5B Yen (figures included in Others) l Secured operating income in all segments • Improved in IT Solutions and Carrier Network significantly • 13.0B Yen effect of restructuring (in line with original plan) • Invested approximately 4.0B Yen for future growth l Turned to the black due to improvement in operating income • Improved in equity in earnings/losses of affiliates • Sold Lenovo stakes © NEC Corporation 2012 1H Results Summary of Financial Results for 1H (Billions of Yen) Q2 <Jul-Sep> FY12/3 FY13/3 Actual Actual 1H <Apr-Sep> YoY FY12/3 FY13/3 Actual Actual YoY Difference from Jul 31 Net Sales 774.1 816.3 5.4% 1,443.2 1,447.8 0.3% 47.8 Operating Income 26.2 55.2 29.0 6.8 47.4 40.6 46.4 % to Net Sales 3.4% 6.8% 0.5% 3.3% Ordinary Income/Loss 19.2 42.0 -10.4 29.9 40.3 45.9 % to Net Sales 2.5% 5.2% - 2.1% Net Income/ Loss 18.7 25.9 -11.0 8.0 19.0 32.0 % to Net Sales 2.4% 3.2% - 0.6% Free Cash Flow -7.3 -58.6 9.2 -32.0 Note: Page 5 22.8 7.1 -51.3 Average exchange rates for 1H, FY13/3: 1$= ¥80.13, 1€= ¥102.06 (Assumed exchange rates for FY13/3 as of July 31, 2012: 1$ = ¥75, 1€= ¥100) © NEC Corporation 2012 -41.2 1H Results 1H Results by Segment (Billions of Yen) Net Sales IT Solutions Operating Income % to Net Sales Carrier Network Social Infrastructure Personal Solutions Others Eliminations/ Unclassifiable expenses Total 4.5% 8.7% 156.0 12.9 170.7 15.7 % to Net Sales 8.3% 9.2% Net Sales Operating Income 81.5 5.7 82.7 6.8 % to Net Sales 6.9% 8.2% 170.8 2.1 170.0 4.2 % to Net Sales 1.2% 2.4% Net Sales Operating Income 66.5 4.3 63.7 14.4 % to Net Sales 6.5% 22.5% Operating Loss -12.3 -14.4 Net Sales 774.1 26.2 816.3 55.2 3.4% 6.8% Net Sales Operating Income Net Sales Operating Income Operating Income % to Net Sales Page 6 Q2 <Jul-Sep> FY12/3 FY13/3 Actual Actual 299.3 329.2 13.6 28.6 © NEC Corporation 2012 YoY 10.0% 15.1 1H <Apr-Sep> FY12/3 FY13/3 Actual Actual 536.7 578.3 0.8 22.8 YoY 7.8% 22.1 0.1% 3.9% 283.5 15.3 312.0 27.0 5.4% 8.6% 140.3 6.1 141.9 8.2 4.3% 5.7% 354.3 3.4 302.5 1.2 1.0% 0.4% 128.5 3.0 113.0 13.0 2.4% 11.5% -2.1 -21.8 -24.7 -2.9 5.4% 29.0 1,443.2 6.8 1,447.8 47.4 0.3% 40.6 0.5% 3.3% 9.4% 2.9 1.4% 1.1 - 0.4% 2.1 - 4.2% 10.0 10.1% 11.7 1.1% 2.1 - 14.6% -2.2 - 12.0% 10.0 1H Results IT Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales YoY -2.0% 547.7 578.3 536.7 (+7.8%) r IT Services Solid sales in telecom, manufacturing and retail sectors Consolidation of CSG Limited's Technology Solutions business +7.8% Sales 578.3 +8.0% -2.2% IT Services 371.0 3.9% 391.8 362.7 0.4% Operating income ratio 0.1% 22.8 Platform 176.8 Operating Income 2.0 FY11/3 1H Page 7 r Platform Increase in IT hardware and software due to large-scale projects ▐ Operating Income 22.8 +7.2% -1.6% 186.6 174.0 0.8 FY12/3 1H <Effect of Restructuring> +5.0 (+22.1) r Improve by sales increase and cost reductions FY13/3 1H © NEC Corporation 2012 1H Results Carrier Network Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales s Overseas: Almost flat by consolidation of Convergys BSS business and sales expansion in submarine cable systems despite decrease in mobile backhaul in sluggish market 312.0 283.5 261.4 +10.1% +8.4% Operating income ratio 8.6% 5.4% 2.9% Operating Income 27.0 ▐ Operating Income 27.0 15.3 <Effect of Restructuring> +2.0 Page 8 FY12/3 1H (+11.7) r Increase from sales expansion in Japan and cost reduction despite making an investment for future growth 7.5 FY11/3 1H (+10.1%) r Japan: Healthy sales YoY Sales 312.0 FY13/3 1H © NEC Corporation 2012 1H Results Social Infrastructure Business Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales rIncrease by stable sales in aerospace and defense systems Sales 141.9 140.3 137.9 ▐ Operating Income 8.2 (+2.1) +1.1% +1.8% 5.7% Operating income ratio 4.3% rIncrease by sales expansion and cost reductions 2.9% Operating Income 8.2 6.1 4.0 <Effect of Restructuring> +１.0 FY11/3 1H Page 9 141.9 (+1.1%) FY12/3 1H FY13/3 1H © NEC Corporation 2012 1H Results Personal Solutions Business Billions of Yen (YoY) (Billions of Yen) Sales 392.1 354.3 Mobile Terminals 0.7% PCs and Others 302.5 236.7 1.0% sPCs and Others: Decline due to deconsolidation Approx. +9% excluding of consumer PC business, the impact of the despite the rise of tablet devices 0.4% deconsolidation and increase in business PCs 134.4 ▐ Operating Income 1.2 (-2.2) -10.6% Operating 188.0 Income FY11/3 1H deconsolidation -19.2% -20.6% 2.9 Page 10 sMobile Terminals: Decline due to decrease in Approx. -5% excluding shipment of mobile handset the impact of the -14.6% +7.0% Operating income 166.3 ratio 302.5 (-14.6%) YoY -9.6% 155.4 ▐ Sales 168.1 3.4 FY12/3 1H <Effect of Restructuring> +4.0 sDecrease due to sales decrease in mobile terminals 1.2 FY13/3 1H © NEC Corporation 2012 1H Results Others Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales (-12.0%) s Decrease due to deconsolidation of LCD module business and decrease in energy business and electronic component business Sales 130.1 113.0 128.5 r Sale of LCD patents to Hon Hai Precision Industry Co., Ltd 113.0 -1.3% 11.5% -12.0% Operating income ratio 1.7% Operating Income 2.2 FY11/3 1H Page 11 ▐ Operating Income 13.0 2.4% 13.0 3.0 FY12/3 1H r Improve due to the sale of LCD patents despite sales decrease <Effect of Restructuring> +1.0 * FY13/3 1H (+10.0) *include Effect of Restructuring in Eliminations/Unclassifiable expenses © NEC Corporation 2012 1H Results Net Income Change (Year on Year) Worsening nonoperating income and expenses Difference from Jul 31 (Billions of Yen) -0.5 Equity in earnings / losses of affiliates +4.2 -0.3 IT Solutions Carrier Network Others +22.1 +11.7 +10.0 Income taxes Extraordinary income/loss Others -21.3 +46.4 Improvement in operating income +40.6 -13.9 FY13/3 1H 8.0 FY12/3 1H -11.0 <Effect of Restructuring> +13.0 Page 12 -18.6 -5.1 © NEC Corporation 2012 +32.0 II. Progress on Restructuring © NEC Corporation 2012 Restructuring Progress on Expenses Restructuring ▐ Expect to secure 40.0B Yen from restructuring and reduce headcount as planned Business Restructuring + Streamline Corporate staff Effect in FY13/3: +20.0B Yen Reduction of External Resources l Employees applying for early retirement program: 2,393 in administrative staff, mobile terminal and platform businesses etc. • Additional 2.9B Yen posted in non-operating expenses - Reduced employees in NEC TOKIN (early retirement program in Japan / establishment of new plant in Thailand), Nippon Avionics Co., Ltd. (early retirement program ) l Expect to secure results as planned Effect in FY13/3 : +4.0B Yen Immediate Cost Reductions Effect in FY13/3: +16.0B Yen l Expect to reduce monthly salary at all levels of staff in Japan as planned *Forecasts (results for FY13/3) as of Oct 26, 2012 Page 14 © NEC Corporation 2012 Restructuring Progress on Business Restructuring ▐ Executing drastic restructuring in Mobile Terminal Business Mobile Terminal Effect in FY13/3: +11.0B Yen Platform Effect in FY13/3 : +6.0B Yen l Streamlined resources for development and manufacturing operations in NEC CASIO Mobile Communications Ltd, and NEC Saitama Ltd (reduced headcount by approx. 500) l Started to utilize offshore JDM （Joint Design Manufacturer） l Streamlined administrative staff, hardware development and manufacturing l Restructured capacitor business NEC TOKIN (Electronic component) • Established new plant in Thailand Reduced headcount by approx. 3,000 l Capital and business alliance with KEMET Corporation of the U.S. (announced in March) *Forecasts (results for FY13/3) as of Oct 26, 2012 Page 15 © NEC Corporation 2012 III. Summary of Financial Forecasts for FY13/3 Toward Achievement of Financial Forecasts Full Year Forecasts Achieve financial forecasts(*) to resume dividend payments under good business momentum in IT Solutions and Carrier Networks despite economic uncertainty Forecasts(*) : 100.0B Yen operating income 20.0B Yen net income 4 Yen year-end dividend *Forecasts as of Oct 26, 2012 Page 17 © NEC Corporation 2012 Full Year Forecasts Summary of Financial Forecasts for FY13/3 (Billions of Yen) Full Year 2H <Oct-Mar> Net Sales Operating Income % to Net Sales Ordinary Income % to Net Sales Net Income/ Loss % to Net Sales Free Cash Flow FY12/3 FY13/3 Actual Forecasts YoY FY12/3 FY13/3 Actual Forecasts YoY Difference from Jul 31 1,593.6 1,702.2 6.8% 3,036.8 3,150.0 3.7% 0.0 67.0 52.6 -14.3 73.7 100.0 26.3 0.0 4.2% 3.1% 2.4% 3.2% 52.5 40.1 42.1 70.0 28.0 0.0 3.3% 2.4% 1.4% 2.2% -99.3 12.0 -110.3 20.0 130.3 0.0 - 0.7% - 0.6% 24.9 32.0 34.2 0.0 -12.3 111.3 7.0 -34.2 Note: Assumed exchange rates for 2H, FY13/3 1$=¥75, 1€=¥100 *Forecasts as of Oct 26, 2012 Page 18 © NEC Corporation 2012 Full Year Forecasts Financial Forecasts for FY13/3 by Segment (Billions of Yen) Net Sales IT Solutions Operating Income % to Net Sales Carrier Network Social Infrastructure Personal Solutions Net Sales Operating Income % to Net Sales Net Sales Operating Income % to Net Sales Net Sales Operating Income/Loss % to Net Sales Net Sales Others Operating Income % to Net Sales Elim inations/ Unclassifiable expenses Operating Loss Net Sales Total Operating Income % to Net Sales 2H <Oct-Mar> FY12/3 FY13/3 Actual Forecasts 652.5 676.7 44.0 49.2 6.7% 7.3% 319.3 35.4 383.0 26.0 11.1% 6.8% 190.1 10.1 233.1 10.8 5.3% 4.7% 306.7 -2.4 307.5 8.8 YoY 3.7% 5.2 Full Year FY12/3 FY13/3 Actual Forecasts 1,189.2 1,255.0 44.8 72.0 3.8% 5.7% 602.7 50.6 695.0 53.0 8.4% 7.6% 330.4 16.2 375.0 19.0 4.9% 5.1% 0.3% 11.2 661.0 1.0 610.0 10.0 0.2% 1.6% - 18.4% -5.1 253.5 11.1 215.0 16.0 4.4% 7.4% 20.0% -9.3 22.6% 0.8 YoY Difference from Jul 31 5.5% 27.2 0.0 0.0 15.3% 2.4 0.0 0.0 13.5% 2.8 0.0 0.0 - 7.7% 9.0 0.0 0.0 - 15.2% 4.9 0.0 0.0 - 2.9% 125.0 8.1 102.0 3.0 6.5% 3.0% -28.2 -45.3 -17.1 -50.0 -70.0 -20.0 0.0 1,593.6 67.0 1,702.2 52.6 6.8% -14.3 3,036.8 73.7 3,150.0 100.0 3.7% 26.3 0.0 0.0 4.2% 3.1% 2.4% 3.2% *Forecasts as of Oct 26, 2012 Page 19 © NEC Corporation 2012 Full Year Forecasts IT Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales YoY +5.5% +0.8% Sales 1,180.0 1,255.0 1,189.2 +4.7% +1.6% IT Services 804.2 Operating income 5.7% ratio 855.0 816.9 3.8% 1,255.0 (+5.5%) r IT Services Increase in telecom sector with continuing healthy market demand and IT investment recovery in manufacturing and retail services sectors r Platform Increase due to large-scale projects 2.6% 72.0 Operating Income Platform 375.8 30.3 FY11/3 44.8 -0.9% 372.4 FY12/3 ▐ Operating Income 72.0 r Increase due to sales expansion and the effect of restructuring +7.4% 400.0 (+27.2) <Effect of Restructuring> +14.0 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 20 © NEC Corporation 2012 Full Year Forecasts Carrier Network Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales r Overseas: Increase due to sales expansion in services & management and submarine cable systems 695.0 602.7 577.2 +15.3% +4.4% Operating income ratio 6.6% Operating Income 8.4% 50.6 (+15.3%) r Japan: Expect healthy sales growth YoY Sales 695.0 ▐ Operating Income 53.0 7.6% 53.0 (+2.4) r Expect an increase from sales expansion and cost reduction despite making an investment for future growth 37.9 <Effect of Restructuring> +5.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 21 © NEC Corporation 2012 Full Year Forecasts Social Infrastructure Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 375.0 w Social systems will be the same level as the previous year due to the sales increase in fire and disaster prevention systems offset by a decrease in demand for broadcasting systems 330.4 318.8 +13.5% +3.6% Operating income ratio 4.9% 5.1% 4.6% ▐ Operating Income Operating Income 14.6 16.2 (+13.5%) r Aiming to increase in aerospace and defense systems YoY Sales 375.0 19.0 19.0 (+2.8) r Improve due to sales increase, cost reduction and the effect of restructuring despite making an investment for future growth <Effect of Restructuring> +3.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 22 © NEC Corporation 2012 Full Year Forecasts Personal Solutions Business Billions of Yen (YoY) (Billions of Yen) Sales ▐ Sales -13.8% -7.7% 661.0 Mobile Terminals 303.5 610.0 s PCs and Others: Decrease due to the deconsolidation of consumer PCs -0.8% -1.7% Operating income 301.0 ratio 0.2% - 0.2% PCs and 463.0 Others 296.0 1.6% Operating Income/ 360.0 Loss -1.9 ▐ Operating Income/Loss 10.0 (+9.0) -12.8% -22.2% 314.0 (-7.7%) s Mobile Terminals: Aim to accumulate greater shipments in Japan with new models despite sales decrease YoY 766.5 610.0 10.0 r Improve due to the effect of restructuring in the mobile terminal business despite sales decrease 1.0 <Effect of Restructuring> +13.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 23 © NEC Corporation 2012 Full Year Forecasts Others Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales 273.0 253.5 Operating Income 9.2 r Sale of LCD patents to Hon Hai Precision Industry Co., Ltd 215.0 -7.1% 3.4% (-15.2%) s Decrease due to deconsolidation of LCD module business and decrease in electronic component business and energy business Sales Operating income ratio 215.0 -15.2% 7.4% ▐ Operating Income 4.4% 16.0 (+4.9) r Improve due to the effect of restructuring and sale of LCD patents 16.0 11.1 <Effect of Restructuring> +5.0 ** FY11/3 FY12/3 FY13/3 Forecasts(*) **include effect of restructuring in Eliminations/Unclassifiable expenses *Forecasts as of Oct 26, 2012 Page 24 © NEC Corporation 2012 IV.Formulating mid-term management plan © NEC Corporation 2012 NEC’s Challenges ▐ NEC’s current challenges: “Need to generate more profit and cash flow” “Need to strengthen financial structure” Generate profit and cash flow Strengthen financial structure Page 26 l Not enough increase in operating income although improving for 3 consecutive fiscal years (FY10/3-FY12/3) l Lack of competitiveness in Mobile handset and Platform Businesses (Executing business restructuring to improve profitability) l Capital reduction due to the implementation of structural reforms l Our pension deficit will be shown on our balance sheet at the end of FY14/3. © NEC Corporation 2012 Basic Policy ▐ Key measures for next 3 years: “Growth strategy” and “Reinforcement of our business base” Growth Strategy l Focus on delivering social infrastructure platforms for governments and corporations worldwide to realize a safe, secure, fair, efficient and affluent society • Strengthen existing businesses • Expand new business for future growth Reinforcement of our business base l Improve profitability through expense restructuring l Streamline assets to generate cash flow ⇒ Strengthen Balance Sheet Page 27 © NEC Corporation 2012 Focus on Four Key Businesses ▐ Strengthen Global Services Businesses l Expand TOMS* and SDN* Businesses in response to data traffic hikes • Expand global business in Carrier Network *TOMS : Telecom Operations Management Systems *SDN : Software Defined Network ～Acquired U.S. based Convergys BSS business～ – Started integrated operations with NetCracker OSS business for telecom carriers l Reinforce Global IT Solutions leveraging our competitive safety, distribution and logistics infrastructure • Strengthen global business in IT Services ～Acquired Australia based CSG Technology Solutions business～ – Took over competitive services, solutions and customer bases such as governments and major companies NEC Australia and NEC ITS (ex CSG Technology Solutions Business) MD, Alan Hyde l Expand Social infrastructure business worldwide such as satellite business for emerging countries, railway communication systems and monitoring of important facilities Page 28 © NEC Corporation 2012 Focus on Four Key Businesses ▐ Strengthen “Energy services” leveraging our competitive electrodes l Expand electrode and energy storage system businesses ～Reached agreement on supplying lithium-ion battery components to GS Yuasa～ l Start consideration of joint energy service business renting residential storage batteries with ORIX and EPCO • Newly established company with joint investment aims to provide battery design, construction, repair and maintenance in addition to a service that supports electricity reductions “visually” through the long-term rental of NEC’s grid connected lithium ion storage batteries. l Awarded contract from Enel (power company in Italy) for providing one of the largest lithium-ion energy storage systems in Europe • A first step to providing large-capacity energy storage systems in Europe supporting power systems and electrical distribution networks of utilities Page 29 © NEC Corporation 2012 Toward Creation of New Values / Maximization of Values “ＣＳ ＮＯ.１” “Ｇｌｏｂａｌ Ｆｉｒｓｔ” “Ｏｎｅ ＮＥＣ” Page 30 © NEC Corporation 2012 Next Mid-Term Management Plan Our target in the next 3 years (FY14/3 - FY16/3): “Reconstructing management and generating constant cash flow” “Securing competitiveness through execution of strategies for future growth” Page 31 © NEC Corporation 2012 Page 2011 32 © NEC Corporation © NEC Corporation 2012 Financial Results for 1H,FY13/3 (Appendix) 1H Results 1H Results by Segment (Billions of Yen) Net Sales Operating Income/Loss 47.4 1,469.2 1,443.2 547.7 IT Solutions Carrier Network 261.4 Social Infrastructure 137.9 536.7 283.5 1,400.0 570.0 315.0 140.3 145.0 Personal Solutions 392.1 354.3 1.0 IT Solutions 312.0 141.9 113.0 105.0 FY11/3 1H FY12/3 1H Forecasts as of Jul 31 6.8 578.3 265.0 128.5 Page 34 1,447.8 302.5 130.1 Others 22.8 FY13/3 1H Carrier Network Social Infrastructure Personal Solutions Others 1.1 2.0 7.5 4.0 2.92.2 - 17.5 0.8 15.3 6.1 3.4 3.0 14.0 27.0 17.0 8.2 1.2 13.0 6.0 4.0 - 2.0 - 21.8 Eliminations/ Unclassifiable expenses - 24.7 - 38.0 Personal Solutions FY11/3 1H © NEC Corporation 2012 FY12/3 1H Forecasts as of Jul 31 FY13/3 1H Summary of Financial Results for 1H by Segment 1H Results (Billions of Yen) Net Sales Operating Income IT Solutions Others 40% 8% Personal Solutions Carrier Network IT Solutions 21% 47.4 27.0 22.8 Sales for 1H FY13/3 Others Social Infrastructure 1,447.8 13.0 8.2 Social Infrastructure Personal Solutions 10% 1.2 Carrier Network 21% Page 35 Operating Income for 1H, FY13/3 © NEC Corporation 2012 Key Points of Results for 1H by Segment (Year on Year) IT Solutions Carrier Network Social Infrastructure 1H Results l Increase due to solid sales in IT services and Platform l Improve by sales increase and cost reductions l Increase due to solid sales in Japan and consolidation of Convergys BSS Business l Increase from sales expansion and cost reductions despite making an investment for future growth l Increase due to solid sales in aerospace and defense systems l Improve by sales increase and cost reductions Personal Solutions l Decline due to deconsolidation of consumer PC business and decrease in shipment of mobile terminals l Decrease due to sales decrease in mobile terminal business Others l Decline due to deconsolidation of LCD module business and decrease in electronic component business l Improve due to sale of LCD patents Note: First bullet refer to changes in sales, second bullet refer to changes in operating income/loss Page 36 © NEC Corporation 2012 1H Results Sales Change (Year on Year) (Billions of Yen) Difference from Jul 31 Increase in aerospace and defense systems -3.1 +37.5 Deconsolidation of consumer PC Decrease in shipment of mobile terminals Social Infrastructure Personal Solutions +1.6 (+1.1%) -51.8 (-14.6%) Decrease due to deconsolidation of LCD module business and Carrier Network decreasing of electronic +8.0 +28.6 (+10.1%) component business Increase sales in Japan and consolidation of Convergys BSS Business -3.0 FY12/3 1H <Apr-Sep> Others -15.4 1,443.2 1,447.8 IT Solutions +41.7 (+7.8%) +47.8 +8.3 Stable business in IT Services and Platform Page 37 FY13/3 1H <Apr-Sep> © NEC Corporation 2012 1H Results Operating Income/Loss Change (Year on Year) (Billions of Yen) <Effect of Restructuring> +1.0 Difference from Jul 31 <Effect of Restructuring> +2.0 Increase from sales expansion and cost reduction despite making an investment for future growth <Effect of Restructuring> +5.0 IT Solutions +22.1 FY12/3 1H <Apr-Sep> 6.8 Page 38 Social Infrastructure +2.2 +2.1 Others +10.0 <Effect of Restructuring> +1.0 +13.3 Personal Solutions -2.2 FY13/3 1H <Apr-Sep> 47.4 Carrier Network +10.0 +11.7 Sales increase Cost reductions +8.8 Sale of LCD patents +9.0 Sales Increase and cost reduction +3.2 +46.4 Eliminations/ Unclassifiable expenses -2.9 Increase in investment costs <Effect of Restructuring> +13.0 Sales decrease in mobile terminals © NEC Corporation 2012 <Effect of Restructuring> +4.0 Restructuring Progress on Restructuring ▐ Effect in 1H Result 13.0B Yen (almost in line with forecasts) Item Effect in 1H Result Effect in FY13/3 (forecasts) Business Restructuring 3.0 20.0 Streamline Corporate staffs Reduction of External Resources 1.0 4.0 Immediate Cost Reductions 9.0 16.0 Total 13.0 40.0 Segment Effect in 1H Result (Billions of Yen) Effect in FY13/3 (forecasts) IT Solutions 5.0 14.0 Carrier Network 2.0 5.0 Social Infrastructure 1.0 3.0 Personal Solutions 4.0 13.0 Others／Eliminations Unclassifiable exp 1.0 5.0 13.0 40.0 Total *Forecasts (effect in FY13/3) as of Oct 26, 2012 Page 39 © NEC Corporation 2012 1H Results Overseas Sales (Billions of Yen) Q2 <Jul - Sep> FY12/3 FY13/3 YoY Actual Actual Asia Europe Others Total Net Sales 48.7 43.1 To consolidated total sales（％） 6.3% 5.3% Net Sales 31.5 23.0 To consolidated total sales（％） 4.1% 2.8% Net Sales 58.6 70.2 To consolidated total sales（％） 7.6% 8.6% 138.8 136.2 17.9% 16.7% Net Sales To consolidated total sales（％） * Sales Page 40 1H <Apr - Sep> FY12/3 FY13/3 YoY Actual Actual - 11.6% - 26.9% 19.8% - 1.9% 79.7 79.1 5.5% 5.5% 55.8 40.8 3.9% 2.8% 118.4 113.8 8.2% 7.9% 253.9 233.6 17.6% 16.1% - 0.8% - 26.9% - 3.9% Major countries and regions China,Chinese Taipei,India, Singapore and Indonesia UK,France,Netherlands, Germany,Italy and Spain U.S.A - 8.0% are classified into country or region based on the locations of customers © NEC Corporation 2012 1H Results Financial Positions (Billions of Yen) End of Mar End of Sep 2012 2012 End of Sep 2011 2,557.6 2,432.2 -125.3 2,450.6 Net Assets 777.6 766.3 -11.3 853.9 Interest-bearing debt 692.7 683.3 -9.4 647.0 Shareholder's Equity 657.0 647.1 -9.8 734.2 25.7% 26.6% 0.9pt 30.0% 1.05 1.06 - 0.01pt 0.88 0.67 0.74 - 0.07pt 0.64 251.8 204.4 -47.4 178.6 Total Assets Equity ratio(%) D/E ratio (times) Net D/E ratio (times) Balance of cash and cash equivalents Page 41 Difference from Mar 2012 © NEC Corporation 2012 1H Results <Ref.> Balance Sheets (At the end of Sep, 2012) (Billions of Yen) Total Assets 2,432.2 <Compared to end of March, 2012> (-125.3) Compared to end of March, 2012 Current Assets 1,390.6 Liabilities 1,665.9 -123.8 Collection of notes and accounts receivable Non-current Assets 1,041.7 -114.0 Net Assets 766.3 -1.5 -11.3 Page 42 Decrease in notes and accounts payable-trade and Provision for business structure improvement © NEC Corporation 2012 Decrease in valuation on available-for-sale securities due to the decline in the market value of equity despite recording of net income Financial Forecasts for FY13/3 (Appendix) Forecasts FY13/3 Financial Forecasts for FY13/3 by Segment (Billions of yen) Net Sales Operating Income/Loss 100.0 3,115.4 IT Solutions 1,180.0 Carrier Network 577.2 Social Infrastructure 318.8 3,036.8 3,150.0 73.7 57.8 1,189.2 602.7 330.4 1,255.0 695.0 IT Solutions 30.3 Carrier Network 37.9 Social Infrastructure Others 375.0 Personal Solutions Personal Solutions 766.5 661.0 610.0 Others 273.0 253.5 215.0 FY11/3 FY12/3 FY13/3 Forecasts(*) 14.6 9.2 - 1.9 - 32.2 Eliminations/ Unclassifiable expenses FY11/3 72.0 44.8 53.0 50.6 16.2 1.0 11.1 - 50.0 FY12/3 19.0 10.0 16.0 - 70.0 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 44 © NEC Corporation 2012 Forecasts FY13/3 Summary of Financial Forecasts for FY13/3 by Segment (Billions of Yen) Net Sales Operating Income IT Solutions Others Operating Income Forecast for FY13/3 40% 7% IT Solutions Personal Solutions 72.0 19% 53.0 Sales Forecast for FY13/3 Social Infrastructure Personal 19.0 Solutions 3,150.0 Social Infrastructure 12% Carrier Network 100.0 Others 16.0 10.0 Carrier Network 22% *Forecasts as of Oct 26, 2012 Page 45 © NEC Corporation 2012 Key Points of FY13/3 Forecasts by Segment IT Solutions Carrier Network Social Infrastructure Personal Solutions Others (Year on Year) Forecasts FY13/3 l Increase steadily both in ＩＴ services and Platform l Improve by sales expansion and the effect of restructuring l Increase mainly in global business such as services & management, submarine cable systems l Expect to increase from sales expansion and cost reductions despite making an investment for future growth l Increase in aerospace and defense systems l Improve due to sales increase, cost reduction and effect of restructuring despite making an investment for future growth l Decrease due to deconsolidation of consumer PC business l Improve due to the effect of restructuring mainly in mobile terminal business l Decrease due to deconsolidation of LCD module business and decreasing of electronic component business l Improve due to the effect of restructuring and sale of LCD patents Note: Top bullet refers to changes in sales, Bottom bullet refers to changes in operating income/loss Page 46 © NEC Corporation 2012 Forecasts FY13/3 Sales Change (Year on Year) (Billions of Yen) Increase in aerospace and defense systems Deconsolidation of consumer PC business Increase mainly in global business such as services & management, submarine cable systems Social Infrastructure Personal Solutions +44.6 (+13.5%) -51.0 (-7.7%) FY13/3 Forecast (*) Carrier Network +92.3 (+15.3%) 3,150.0 Others -38.5 FY12/3 3,036.8 IT Solutions +65.8 (+5.5%) Decrease due to deconsolidation of LCD module business and decrease in electronic component business Increase both IT services and Platform *Forecasts as of Oct 26, 2012 Page 47 © NEC Corporation 2012 Forecasts FY13/3 Operating Income/Loss Change (Year on Year) (Billions of Yen) <Effect of Restructuring> +13.0 Effect of restructuring in mobile terminal business Improve due to the effect of restructuring and sale of LCD patents <Effect of Restructuring> +5.0 Expect to increase from sales expansion despite making an investment for future growth Carrier Network +2.4 Personal Solutions +9.0 Others +4.9 <Effect of Restructuring> +5.0 FY13/3 Forecast (*) 100.0 Eliminations/ Social Unclassifiable Infrastructure expenses -20.0 +2.8 FY12/3 73.7 Increase in investment costs IT Solutions +27.2 <Effect of Restructuring> +40.0 <Effect of Restructuring> +3.0 <Effect of Restructuring> +14.0 Sales expansion and the effect of restructuring Page 48 Sales increase, cost reduction and effect of restructuring despite making an investment for future growth © NEC Corporation 2012 *Forecasts as of Oct 26, 2012 Forecasts FY13/3 Net Income/Loss Change (Year on Year) (Billions of Yen) Restructuring expenses (FY12/3) Revision of deferred tax assets (FY12/3) +40.5 +70.0 Others +102.3 FY12/3 -110.3 FY13/3 Forecast(*) 20.0 Improvement in non-operating income/loss +1.7 Improvement in operating income +26.3 IT Solutions +27.2 Personal Solutions +9.0 Eliminations/unclassifiable expenses -20.0 Page 49 © NEC Corporation 2012 *Forecasts as of Oct 26, 2012 Capital Expenditure, Depreciation and R&D expenses Full Year Forecasts (Billions of Yen) FY12/3 FY13/3 Actual Forecasts YoY Capial Expenditure 42.0 50.0 19.1% Depreciation 53.3 55.0 3.2% 162.0 170.0 5.0% 5.3% 5.4% R&D expenses To consolidated total sales （％） * Forecasts as of Oct 26, 2012 (Note: Unchanged from forecasts announced on Jul 31) Page 50 © NEC Corporation 2012 Reference (Financial data) Net Sales, Operating Income/Loss (Billions of yen) 7.6% Operating income ratio 3.0% -8.4% -14.2% Overseas Sales （Overseas Sales Ratio） Sales in Japan 128.8 (16.1%) 114.2 (17.1%) -5.6% 118.7 (12.8%) 669.0 138.8 (17.9%) 108.9 (16.3%) 115.1 (17.2%) 816.3 136.2 (16.7%) 631.5 97.4 (15.4%) 75.2 70.2 55.2 26.2 24.3 -19.4 -13.5 -23.2 -7.9 -8.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 52 -7.2% 669.1 117.5 (16.3%) +5.4% 924.6 774.1 118.8 (12.8%) 720.7 Operating Income/ Loss -3.4% +0.2% 801.6 667.5 -0.1% 925.5 -12.7% - 1.2% - 1.2% - 2.9% -16.2% Net Sales 6.8% 3.4% - 1.9% - 3.5% 8.1% FY12/3 © NEC Corporation 2012 FY13/3 YoY Sales, Operating Income/Loss (IT Solutions) Operating income ratio 9.7% 8.7% 4.5% 4.0% - 1.4% - 3.4% - 4.2% - 5.4% 306.5 253.5 IT Services Platform 80.0 -10.1 36.9 171.0 Operating Income/ Loss 249.2 278.4 225.9 47.6 205.2 175.8 157.5 165.9 28.6 13.6 12.1 96.7 82.5 -8.6 116.5 79.9 -12.8 94.1 80.5 -3.6 117.9 83.3 -5.8 103.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 53 256.3 209.7 161.2 329.2 +5.0% +1.1% 299.3 237.4 262.2 +10.0% -2.3% -1.6% 241.3 - 2.3% +4.6% 396.3 378.7 Net Sales (Billions of yen) 12.0% FY12/3 © NEC Corporation 2012 FY13/3 YoY Sales, Operating Income/Loss (Carrier Network) (Billions of yen) 15.3% 14.3% Operating income ratio 8.7% YoY 7.9% 8.3% 9.2% 5.8% 3.5% 1.9% 179.8 - 4.9% 177.6 170.7 156.0 149.1 141.7 136.0 Net Sales 141.3 -1.2% +9.4% 127.5 +4.6% 112.3 +4.2% +10.9% +13.5% 27.1 25.7 Operating Income/ Loss -5.5 13.0 12.9 4.7 8.2 2.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 54 15.7 11.2 FY12/3 © NEC Corporation 2012 FY13/3 Sales, Operating Income/Loss (Social Infrastructure) (Billions of yen) YoY Operating income ratio 8.8% 4.6% 2.4% 0.7% 0.6% 8.2% 7.3% 6.9% 114.3 1.9% 0.7% 120.1 +5.1% Net Sales 82.7 81.5 79.5 70.0 66.6 +2.6% 58.8 58.4 +1.4% 59.2 +5.1% +0.7% +0.8% 10.1 Operating Income 3.7 0.4 0.3 6.8 1.4 1.3 0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 55 8.7 5.7 FY12/3 © NEC Corporation 2012 FY13/3 Sales, Operating Income/Loss (Personal Solutions) (Billions of yen) YoY Operating income ratio - 0.2% 1.6% - 0.8% 0.7% 2.4% 1.2% 0.3% - 1.8% - 2.1% - 2.2% Net Sales -5.2% 198.5 193.5 Mobile Terminals 193.0 76.3 79.1 -14.0% 183.5 181.5 -0.4% -9.2% -26.4% 170.8 -27.8% 164.7 142.0 80.3 67.8 132.5 79.5 86.8 77.0 75.3 59.4 PCs and Others Operating Income/ Loss 122.3 114.4 112.7 104.0 3.3 -0.4 -1.6 -3.2 84.0 1.3 2.1 57.4 89.4 82.6 -3.0 93.0 75.1 0.6 4.2 -3.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 56 113.7 170.0 FY12/3 © NEC Corporation 2012 FY13/3 Sales, Operating Income/Loss (Others) (Billions of yen) 22.5% YoY Operating income ratio 6.7% 5.7% 8.7% 6.5% 4.0% 3.1% - 2.8% - 2.1% -0.1% Net Sales 71.6 68.1 62.0 - 2.8% -2.3% -7.5% -4.2% -17.5% 71.3 66.5 61.9 66.0 -20.4% 63.7 59.0 49.3 14.4 Operating Income/ Loss 4.8 3.9 2.2 -1.7 2.4 -1.3 -1.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> FY11/3 Page 57 5.8 4.3 FY12/3 © NEC Corporation 2012 FY13/3 Exchange Rate (Yen) 115 Euro/Yen Exchange Rate (Actual) Assumed Exchange Rate Average Exchange Rate ¥102.06 110 105 100 95 Average Exchange Rate ¥80.13 90 85 Dollar/Yen Exchange Rate (Actual) Assumed Exchange Rate 80 75 70 4/2 Page 58 4/30 5/31 6/29 © NEC Corporation 2012 7/31 8/31 9/28 Stock Price (Yen) 10,500 180 NEC the Nikkei Stock Apr 27:FY12/3 Earnings 170 May 30 : Announced acquisition of Australian ICT company CSG Limited's Technology Solutions business 10,000 160 Jun 6 ： Reach Agreement with GS Yuasa on Supplying Lithium-Ion Battery Components 150 9,500 Aug 28 : Announced the results of early retirement program 140 130 9,000 120 Jun 22:Ordinary General Meeting of Shareholders 110 8,500 100 Jul 10 : Smart Energy Business Briefing Jul 31:Q1 Earnings 8,000 90 4/2 Page 59 4/27 5/31 6/29 © NEC Corporation 2012 7/31 8/31 9/28 CAUTIONARY STATEMENTS: This material 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"). 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