Financial Results for Q1 Fiscal Year Ending March 31, 2012 July 28, 2011 NEC Corporation (http://www.nec.co.jp/ir/en) Index I. Financial Results for Q1, FY12/3 II. Summary of Financial Forecasts for 1H, FY12/3 l Financial Results for Q1, FY12/3 (Appendix) l Financial Forecasts for 1H, FY12/3 (Appendix) l Reference (Financial data) Page 2 © NEC Corporation 2011 I. Financial Results for Q1, FY12/3 Q1 Results Summary of Financial Results for Q1, FY12/3 ▐ Sales and profits improved year on year l Carrier Network and Personal Solutions retained operating profit (Billions of Yen) Q1 (Apr-Jun) FY11/3 Actual FY12/3 Actual YoY Net Sales 667.5 669.1 0.2% Operating Loss -23.2 -19.4 3.8 % to Net Sales Ordinary Loss - -40.5 % to Net Sales Net Loss Free Cash Flow -29.6 - 10.8 - -43.1 % to Net Sales Net Loss Per Share (Yen) - -29.7 - 13.4 - -16.61 -11.43 5.18 -42.2 16.5 58.8 Note: Average exchange rates for Q1, FY12/3: 1$= ¥82.16, 1€= ¥116.90 Page 4 © NEC Corporation 2011 Q1 Results Q1 Results by Segment (Billions of Yen) Net Sales Operating Income/Loss 778.5 IT Services Platform 167.6 73.9 667.5 161.2 Carrier Network 669.1 Personal Solutions 141.7 Social Infrastructure 57.2 Personal Solutions Others 79.9 Social Infrastructure 116.8 131.9 58.4 58.8 193.5 183.5 194.9 Others Eliminations/ Unclassifiable expenses 143.1 FY10/3 Q1 Page 5 80.0 0.5 8.9 -0.6 IT Services 157.5 Platform Carrier Network -40.0 57.6 57.6 FY11/3 Q1 FY12/3 Q1 © NEC Corporation 2011 -14.1 -0.7 -23.2 0.3 -5.7 -4.4 -6.0 -0.4 -1.1 -6.0 -19.4 1.8 0.4 1.3 -7.4 -5.4 -0.5 -9.7 -24.7 -9.4 FY10/3 Q1 FY11/3 Q1 FY12/3 Q1 Q1 Results Sales Change (Year on Year) Increase in social systems, offset by decrease in aerospace and defense Lower sales of PCs and displays Social Infrastructure Personal Solutions -10.0 (-5.2%) +0.4 (+0.7%) Solid sales of governments and medical services, decrease in retails and telecom carriers FY11/3 Q1 667.5 (Billions of Yen) Increase in battery business, offset by decrease in electronic components business Others ±0.0 IT Services -3.7 (-2.3%) Carrier Network +15.1 (+12.9%) Solid business environment with hikes in data traffic Platform -0.2 (-0.2%) Solid sales of software and enterprise network, offset by decrease in hardware Page 6 © NEC Corporation 2011 FY12/3 Q1 669.1 Operating Loss Change (Year on Year) Q1 Results (Billions of Yen) FY11/3 Q1 -23.2 Back in black from improved profitability in mobile terminal business Sales increase and lower costs Higher procurement costs in securing stable supply Personal Solutions +1.7 Social Infrastructure +0.1 Platform -1.0 Sales decrease Page 7 IT Services -1.7 FY12/3 Q1 Sales expansion in battery business -19.4 Others +0.6 Eliminations/ Carrier Network Unclassifiable expenses +7.8 -3.7 Sales increase in submarine cable systems and solid domestic business © NEC Corporation 2011 Increase in investments for new business development Key Points of Q1, FY12/3 Results by Segment (Year on Year) IT Services Q1 Results l Decrease from retails and telecom carrier, while local and central governments and medical services are solid l Lower profits due to decreased sales Platform l Flat sales due to solid software and enterprise network, offset by decrease in hardware l Lower profits from higher procurement costs in securing stable supply Carrier Network l Increase from solid business environment backed by hikes in data traffic l Higher profits from large projects for submarine cable systems and solid growth in domestic business Social Infrastructure Personal Solutions Others ✔ l Flat sales due to increase in social systems, offset by decrease in aerospace and defense l Higher profits from sales increase and lower costs l Decrease due to lower sales of PCs and displays l Back in black with improved profitability in mobile terminal business ✔ l Flat sales from increase in battery business, offset by decrease in electronic components business l Higher profits from sales expansion in battery business Note: First bullets refer to changes in sales, second bullets refer to changes in operating income/loss Page 8 © NEC Corporation 2011 Q1 Results IT Services Business (Billions of Yen) YoY 161.2 157.5 -3.8% ▐ Operating Loss - 3.5% - 4.7% Operating Loss -0.6 FY10/3 Q1 Page 9 (-2.3%) -2.3% Operating margin ratio - 0.4% 157.5 sDecrease in retails and telecom carriers, despite stable sales in local and central governments and medical services Sales 167.6 ▐ Sales -5.7 FY11/3 Q1 -7.4 (-1.7) sDecline due to sales decrease, despite cost reduction -7.4 FY12/3 Q1 © NEC Corporation 2011 Q1 Results Platform Business (Billions of Yen) YoY Sales 73.9 80.0 79.9 +8.3% -0.2% Operating margin ratio r Software : Decline due to a decrease in largescale projects, despite the steady demands for data centers - 6.8% r Enterprise Network : -4.4 Increase by winning a large project -5.4 ▐ Operating Loss FY10/3 Q1 Page 10 (-0.2%) s Hardware : Operating Loss -14.1 79.9 Increase in operation management software such as server integration, virtualization and cloud computing platform backed by steady demand for data centers - 5.5% - 19.1% ▐ Sales FY11/3 Q1 FY12/3 Q1 -5.4 (-1.0) s Decrease due to an increase in procurement costs for stable product supply © NEC Corporation 2011 Q1 Results Carrier Network Business (Billions of Yen) ▐ Sales 131.9 (+12.9%) YoY r Increase in sales in Japan, due to launch of LTE market and CATV projects with national supplementary budget Sales 141.7 131.9 r Increase in sales of submarine cable systems, due to steady executing of large projects 116.8 +12.9% -17.6% r Recover sales of mobile backhaul (PASOLINK) Operating Margin Ratio 1.4% 0.4% ▐ Operating Income 1.8 (+7.8) -5.1% Operating Income/Loss 0.5 FY10/3 Q1 Page 11 -6.0 FY11/3 Q1 1.8 r Back in black from increase in sales in Japan and sales recovery in submarine cable systems FY12/3 Q1 © NEC Corporation 2011 Q1 Results Social Infrastructure Business (Billions of Yen) YoY 58.8 58.4 ▐ Operating Income 0.4 Operating Margin Ratio 0.6% 0.7% -1.2% Page 12 0.3 FY11/3 Q1 (+0.1) r Improve due to sales increases and cost reduction Operating Income/Loss FY10/3 Q1 (+0.7%) +0.7% +2.0% -0.7 58.8 r Remain flat due to an increase in social systems such as broadcasting and fire and disaster prevention, offset by a decrease in aerospace and defense systems Sales 57.2 ▐ Sales 0.4 FY12/3 Q1 © NEC Corporation 2011 Q1 Results Personal Solutions Business (Billions of Yen) YoY Sales ▐ Sales Remain flat due to an increase in shipment with the full-scale development of smartphones worldwide, while the shift to smartphones led to price erosion -5.2% 193.5 183.5 -15.1% Mobile 93.2 Terminals 79.1 +0.5% s PCs and Others : 79.5 4.6% Decrease due to currency impact in display business, a rebound from digital cinema upsurge in the previous year, and price erosions of PCs Operating Margin Ratio 0.7% Operating Income/Loss PCs and Others 101.7 8.9 Page 13 -0.2% 114.4 ▐ Operating Income 104.0 +12.5% -0.4 FY10/3 Q1 (-5.2%) r Mobile Terminals : -0.7% 194.9 183.5 FY11/3 Q1 -9.1% 1.3 1.3 (+1.7) r Back in black from improved profitability of Mobile terminals due to an increase in shipment and enhanced development costs FY12/3 Q1 © NEC Corporation 2011 Q1 Results Net Loss Change (Year on Year) (Billions of Yen) FY11/3 Q1 -43.1 Carrier Network +7.8 Personal Solutions +1.7 Platform -1.0 IT Services -1.7 Eliminations/unclassifiable expenses -3.7 Equity in losses of affiliates Foreign exchange gain and losses FY12/3 Q1 -29.7 Improvement in non-operating income/loss +7.0 Improvement in operating income/loss +3.8 Page 14 +7.2 +1.6 © NEC Corporation 2011 Others +2.6 Loss on change in equity (Recorded last fiscal year) +6.0 Business structure improvement expenses +2.2 Income taxes -6.0 II. Summary of Financial Forecasts for 1H, FY12/3 1H Forecasts Summary of Financial Forecasts (Billions of Yen) 1st Half (Apr-Sep) FY11/3 FY12/3 Actual Forecasts Full Year YoY FY11/3 FY12/3 Actual Forecasts YoY 1,469.2 1,490.0 1.4% 3,115.4 3,300.0 5.9% Operating Income/Loss 1.1 0.0 -1.1 57.8 90.0 32.2 % to Net Sales 0.1% 0.0% 1.9% 2.7% -22.3 -20.0 0.0 55.0 - - 0.0% 1.7% -27.0 -15.0 -12.5 15.0 - - - 0.5% -10.42 -5.77 -4.82 5.77 10.59 -112.6 0.0 112.6 Net Sales Ordinary Income/Loss % to Net Sales Net Income/Loss % to Net Sales Net Income/Loss per Share(yen) 2.3 12.0 4.65 Free Cash Flow 55.0 27.5 Note: Assumed exchange rates for FY12/3 1$=¥80, 1€=¥110 * Forecasts as of July 28, 2011 (Note: Unchanged from full year forecasts announced on May 10) Page 16 © NEC Corporation 2011 1H Forecasts Financial Forecasts for 1H, FY12/3 by Segment (Billions of Yen) Net Sales Operating Income/Loss -37.7 1,653.7 1,469.2 IT Services 377.3 308.6 Social Infrastructure 129.7 Personal Solutions 362.3 Others 370.0 166.2 Carrier Network 176.8 185.0 1.1 Social Infrastructure 12.4 2.7 8.2 3.5 7.0 4.0 Personal Solutions -13.5 2.9 -1.5 0.0 4.0 1.5 12.0 3.0 -17.8 Platform 271.0 3.0 4.0 2.0 -26.5 305.0 137.9 140.0 392.1 370.0 Others Eliminations/ Unclassifiable expenses 309.6 FY10/3 1H 9.6 Carrier Network 371.0 Platform 1,490.0 IT Services 120.5 120.0 FY11/3 1H FY12/3 1H Forecasts(*) -37.6 -19.5 FY10/3 1H FY11/3 1H FY12/3 1H Forecasts(*) *Forecasts as of July 28, 2011 Page 17 © NEC Corporation 2011 1H Forecasts Sales Change (Year on Year) Increase in social systems, while aerospace and defense systems remain tough Steady increase supported by solid investment trends Carrier Network +34.0 (+12.6%) Increase from cloudrelated business for data center services and energy saving solutions FY11/3 1H (Billions of Yen) Social Infrastructure Personal Solutions +2.1 (+1.6 %) -22.1 (-5.6%) Deconsolidation of consumer PC business, despite increase in mobile terminals business FY12/3 1H Forecast(*) 1,490.0 Platform +8.2 (+4.7%) Others -0.5 1,469.2 Deconsolidation of LCD module business, despite increase in battery business IT Services -1.0 (-0.3%) Solid business in governments, medical services and manufacturing *Forecasts as of July 28, 2011 Page 18 © NEC Corporation 2011 1H Forecasts Operating Income Change (Year on Year) Higher profits overcoming impact from strong yen and incremental investments for future business expansion Higher profits in mobile terminal business, offset by heavier investments for new devices Personal Solutions +0.1 Carrier Network +5.0 Others -1.0 Social Infrastructure ±0.0 Sales increase and cost reduction efforts Platform +3.0 Sales increase and cost efficiency (Billions of Yen) Increase in investments for new business development Eliminations/ Unclassifiable expenses -8.7 FY12/3 1H Forecast(*) FY11/3 1H 1.1 0.0 IT Services +0.5 Flat by improving cost structure and implementing cost reductions etc. *Forecast as of July 28, 2011 Page 19 © NEC Corporation 2011 1H Forecasts Key Points of 1H, FY12/3 Forecasts by Segment (Year on Year) IT Services l Secure steady sales from solid business in central and local governments, medical services and manufacturing l Remain flat by improving cost structure and implementing cost reductions Platform l Increase cloud-related services for data centers and energy saving solutions l Higher profits from sale increase and cost efficiency Carrier Network l Steady increase supported by solid telecom carrier investment trends l Higher profits overcoming impact from strong yen and incremental investments for future business expansion Social Infrastructure Personal Solutions Others l Secure steady sales from increase in social systems, while aerospace and defense remain tough l Aim for higher profits with sales increase and cost efficiency l l Decrease due to deconsolidation of consumer PC business, despite increase in mobile terminal business Remain flat from higher profits for mobile terminal business, offset by heavier investments for new devices l Remain flat due to deconsolidation of LCD module business, despite increase in battery business l Remain flat from the previous fiscal year Note: First bullets refer to changes in sales, second bullets refer to changes in operating income/loss Page 20 © NEC Corporation 2011 1H Forecasts IT Services Business ▐ Outlook for IT investments in Japan Quarterly sales trend 1.3% YoY 0.0% - 2.3% - 3.8% r Stable in local and central governments, medical services and manufacturing sectors - 13.0% Sales 262.2 209.7 161.2 ▐ Measures for expanding sales 212.5 171.0 w Pick up from 2nd half and full-recovery from next fiscal year ▐ Order situation - 8.8% (Billions of Yen) r Less stagnant than expected, even with an extensive impact from the earthquake 157.5 r Cloud services/Outsourcing • • Established a new data center in Kansai Launched “Contents Delivery Cloud Services” r Global Business • Q1 Q2 Q3 Q4 Q1 Q2 (Forecast) FY11/3 Page 21 FY12/3 © NEC Corporation 2011 • Reinforce business structure in Greater China and Asia Pacific with a strategic approach to Japanese originated company Start to provide cloud services in China from JV with Neusoft Corporation *Forecasts as of Jul 28, 2011 1H Forecasts Carrier Network Business Sales (Billions of Yen) YoY ▐ Telecom Carrier Investment Trends in Japan r Solid investments responsive to hikes in data traffic due to explosive spread of smartphones Wireless Overseas Approx. +30% Fixed Line Overseas Approx. +60% FY12/3 1H (Forecast) 305.0 +12.6% ▐ LTE Business r Projects in Japan are in progress accordingly to beginning-of-year schedule ▐ Submarine Cable System Business r Projected increase in sales from solid execution of large projects FY11/3 1H 271.0 ▐ Mobile Backhaul (PASOLINK) Business Wireless in Japan Approx. +5% Fixed Line in Japan Approx. +5% Page 22 r Sales expansion in Russia, Middle East and Latin America *Forecast as of Jul 28, 2011 © NEC Corporation 2011 1H Forecast Personal Solutions Business Sales Mobile Terminals (Billions of Yen) ▐ PCs and Others YoY （exclude consumer PCs） Mobile Terminals r Full-scale deployment of smartphones in Japan and overseas utilizing thin, lightweight and toughness technologies l NTT DOCOMO FY11/3 1H 392.1 MEDIAS N-04C +13.3% l Deconsolidation of consumer PCs (Released on March 15th) Verizon Wireless CASIO G’z One COMMANDO™ (Released on April 28th) l NTT DOCOMO MEDIAS WP N-06C FY12/3 1H (Forecast) 370.0 l (Released on June 24th) KDDI, Okinawa Cellular G’z One IS11CA (Released on July 14th) ▐ PCs and Others s Decrease due to the deconsolidation of consumer PCs -5.6% ▐ Operating Income r Same level as the previous year due to improvement in earnings of Mobile Terminals, despite increase development costs for new devices *Forecast as of July 28, 2011 Page 23 © NEC Corporation 2011 1H Forecasts Net Loss Change (Year on Year) (Billions of Yen) FY12/3 1H Forecast(*) FY11/3 1H -27.0 -15.0 Eliminations/unclassifiable expenses -8.7 IT Services +0.5 Platform +3.0 Carrier Network +5.0 Others +9.7 Thinner operating income -1.1 Narrower equity in losses of affiliates etc. Improvement in non-operating income/loss +3.4 Page 24 Narrower extraordinary loss © NEC Corporation 2011 *Forecast as of July 28, 2011 Summary ▐ FY12/3 Q1 Financial Results l Steady sales (+0.2% year on year) • Increase in sales of Carrier Network, despite sales decrease in Personal Solutions and IT Services l Improved Operating Profitability (+3.8 billion yen year on year) • Retained profits in Carrier Network and Personal Solutions l In line with the Company estimates ▐ FY12/3 First Half Financial Forecasts l Aim to expand sales and profits towards the full-scale recovery in the second half of the fiscal year Accelerate speedy operation and achieve first half and full year financial targets Page 25 © NEC Corporation 2011 Page 26 © NEC Corporation 2011 Financial Results for Q1, FY12/3 (Appendix) Summary of Financial Results for Q1 by Segment Q1 Results (Billions of Yen) Net Sales Operating Income/Loss IT Services Others Carrier Network 23% 9% 1.8 IT Services -7.4 Personal Solutions Personal Solutions 27% 1.3 Social Infrastructure Sales for Q1 FY12/3 0.4 ¥669.1 Billion Others -0.5 Platform -5.4 Platform 12% Social Infrastructure 9% Page 28 Carrier Network 20% © NEC Corporation 2011 Operating Loss for Q1, FY12/3 ¥ -19.4 Billion Summary of Financial Results for Q1 by Segment (Billions of Yen) Net Sales IT Services Operating Loss Q1 <Apr-Jun> FY11/3 FY12/3 Actual Actual 161.2 157.5 -5.7 -7.4 % to Net Sales Net Sales Platform Operating Loss - 80.0 -4.4 % to Net Sales Carrier Network Social Infrastructure Personal Solutions Net Sales Operating Income/Loss Net Sales Operating Income % to Net Sales Net Sales Operating Income/Loss Operating Loss 58.4 0.3 Operating Loss Net Sales Total Operating Loss % to Net Sales Page 29 © NEC Corporation 2011 - 12.9% 7.8 1.4% 58.8 0.4 0.6% 193.5 -0.4 0.7% 0.1 0.7% 183.5 1.3 - 57.6 -1.1 % to Net Sales Eliminations/ Unclas sifiable expenses -0.2% -1.0 131.9 1.8 - % to Net Sales Net Sales Others - % to Net Sales -2.3% -1.7 - 79.9 -5.4 116.8 -6.0 YoY -5.2% 1.7 0.7% 57.6 -0.5 - 0.0% 0.6 - -6.0 -9.7 -3.7 667.5 -23.2 669.1 -19.4 0.2% 3.8 - - Q1 Results Q1 Results Overseas Sales (Billions of Yen) Q1 <Apr-Jun> FY11/3 FY12/3 Actual Actual Asia Europe Others Total Net Sales 38.2 31.0 To consolidated total sales （％） 5.7% 4.6% Net Sales 24.0 24.3 To consolidated total sales （％） 3.6% 3.6% Net Sales 52.0 59.8 To consolidated total sales （％） 7.8% 8.9% 114.2 115.1 17.1% 17.2% Net Sales To consolidated total sales （％） YoY -18.8% 1.1% 15.0% Major countries and regions China,Chinese Taipei,India, Singapore and Indonesia UK,France,Netherlands, Germany,Italy and Spain U.S.A 0.8% * Sales, based on customer locations, are classified by country or region Page 30 © NEC Corporation 2011 Q1 Results Financial Positions (Billions of Yen) End of Mar End of Jun 2011 2011 End of Jun 2010 2,628.9 2,465.7 -163.2 2,510.8 Net Assets 875.4 843.7 -31.7 843.3 Interest-bearing debt 675.8 646.1 -29.7 623.1 Shareholder's Equity 757.1 726.3 -30.8 725.6 Equity ratio(%) 28.8% 29.5% 0.7pt 28.9% D/E ratio 0.89 0.89 0.00pt 0.86 Net D/E ratio 0.62 0.63 -0.01pt 0.55 203.9 188.1 -15.8 227.1 Total Assets Balance of cash and cash equivalents Page 31 Difference from Mar 2011 © NEC Corporation 2011 Q1 Results <Ref.> Balance Sheets (At end of June, 2011) <Compared to end of March, 2011> Total Assets 2,465.7 Billion Yen (-163.2 Billion yen) Compared with balance sheets at end of March, 2011 Current Assets Liabilities 1,295.1 Billion Yen 1,622.0 Billion Yen -147.5 -131.5 Collecting accounts receivable Noncurrent Assets 1,170.6 Billion Yen Net Assets -15.7 843.7 Billion Yen Decrease in property, plant and equipment and decrease in stocks of subsidiaries and affiliates Page 32 Decrease in accounts payable and accrued expenses, despite the issuance of bonds -31.7 Recording net loss for FY12/3 Q1 © NEC Corporation 2011 <Ref.> Cloud C&C Cloud Strategy ▐ New SaaS cloud services for the Amata Industrial Estate, Thailand ▐ Acquired Jicoux Datasystems Inc ▐ Developed M2M service platform ▐ Accounting cloud services for Cookpad, ▐ Financial accounting cloud services Inc. for 11 cities in Kanagawa Prefecture, ▐ Launched “Contents Delivery Cloud Japan Services” ▐ Developed prototype systems for ▐ Established a joint venture with Neusoft Corporation to expand cloud service business in China ▐ Established Kansai Daini Data Center as a core center in the Kansai region of Japan ▐ Entered collaboration with Mitsubishi Electronic Corporation in cloud service business for manufacturing management systems Page 33 “C&C Cloud Work-style” for a safe, secure virtual office environment any place, any devices ▐ SaaS-based electric medical records system, “MegaOakSR for Saas” for Tamashima Daiichi Hospital in Kurashiki City, Okayama Prefecture, Japan © NEC Corporation 2011 <Ref.> Global Business Expansion Global ▐ New SaaS cloud services for the Amata Industrial Estate, Thailand ▐ Provides Swiss Post with the latest mail processing systems ▐ TWINPOS G5 selected by Alfamart, one of Indonesia’s leading retailers ▐ Selected by Kuwait’s leading telecom carrier for femtocell systems ▐ Established a joint venture with Neusoft ▐ Entered collaboration with Royal Philips Electronics in digital Corporation to expand cloud service pathology systems business in China ▐ Deployed advanced postal automation system in Malaysia ▐ Selected for a supplier in the submarine cable systems project , SJC, connecting South East Asia and Japan ▐ Won contract to supply Maldives' domestic submarine cable system ▐ Established NEC Latin America S.A., as a new regional headquarters Page 34 © NEC Corporation 2011 <Ref.> New Business Development ▐ Launched new smartphones ▐ Began shipment of a dual-screen Cloud Communicator LT-W New Business ▐ Launched power storage systems for homes ▐ Co-established the HEMS (Home Energy Management System) alliance ▐ Participated in smart city development in Brazil ▐ Selected with Meidensha Corporation and Sharp Corporation by METI (Ministry of Economy, Trade and Industry) Japan for a global smart community related project ▐ Entered collaboration with Enel Distribuzione on next-generation smart grid and smart cities Page 35 © NEC Corporation 2011 Financial Forecasts for 1H, FY12/3 (Appendix) 1H Forecasts Summary of Financial Forecasts for 1H (Billions of Yen) Q2 <Jul-Sep> Net Sales Operating Income/Loss % to Net Sales Ordinary Income/Loss % to Net Sales Net Income/Loss % to Net Sales FY11/3 FY12/3 Actual Forecasts 1st Half <Apr-Sep> YoY FY12/3 Actual Forecasts YoY 801.6 820.9 2.4% 1,469.2 1,490.0 1.4% 24.3 19.4 -4.9 1.1 0.0 -1.1 3.0% 2.4% 0.1% 0.0% 18.2 9.6 -22.3 -20.0 2.3% 1.2% - - 16.1 14.7 -27.0 -15.0 2.0% 1.8% - - -10.42 -5.77 -8.5 -1.4 Net Loss per Share(yen) Note: Assumed exchange rates for FY12/3 1$=¥80, 1€=¥110 Page 37 FY11/3 © NEC Corporation 2011 2.3 12.0 4.65 *Forecasts as of Jul 28, 2011 1H Forecasts Summary of Financial Forecasts by Segment (Billions of Yen) Net Sales IT Services Platform Carrier Network Social Infrastructure Operating Income Q2 <Jul-Sep> FY11/3 FY12/3 Actual Forecasts 209.7 212.5 9.2 11.4 % to Net Sales 4.4% 5.4% Net Sales Operating Income/Loss 96.7 2.9 105.1 6.9 % to Net Sales 3.0% 6.6% 154.2 13.0 173.1 10.2 % to Net Sales 8.4% 5.9% Net Sales Operating Income 79.5 3.7 81.2 3.6 % to Net Sales 4.6% 4.4% 198.5 3.3 186.5 1.7 % to Net Sales 1.6% 0.9% Net Sales Net Sales Operating Income Net Sales YoY 1.3% 2.1 8.7% 4.1 12.3% -2.8 2.2% -0.1 -6.1% -1.6 1st Half <Apr-Sep> FY11/3 FY12/3 YoY Actual Forecasts 371.0 370.0 -0.3% 3.5 4.0 0.5 1.0% 1.1% 176.8 -1.5 185.0 1.5 - 0.8% 271.0 7.0 305.0 12.0 2.6% 3.9% 137.9 4.0 140.0 4.0 2.9% 2.9% 392.1 2.9 370.0 3.0 0.7% 0.8% 120.5 3.0 120.0 2.0 2.5% 1.7% 4.7% 3.0 12.6% 5.0 1.6% 0.0 -5.6% 0.1 Personal Solutions Operating Income Others Operating Income 63.0 4.2 62.5 2.5 % to Net Sales 6.6% 4.0% Operating Loss -11.9 -16.8 -4.9 -17.8 -26.5 -8.7 Net Sales 801.6 24.3 820.9 19.4 2.4% -4.9 1,469.2 1.1 1,490.0 0.0 1.4% -1.1 3.0% 2.4% 0.1% 0.0% Eliminations/ Unclass ifiable expenses Total Operating Income % to Net Sales -0.8% -1.7 -0.4% -1.0 *Forecasts as of Jul 28, 2011 Page 38 © NEC Corporation 2011 1H Forecasts IT Services Business (Billions of Yen) YoY 371.0 370.0 -1.7% -0.3% Operating margin ratio 2.5% 1.0% 370.0 1.1% Operating Income 9.6 r Focus on disaster recovery solutions and global business, in addition to proposals to expand customers’ sales and raise business efficiency ▐ Operating Income 4.0 3.5 FY10/3 1H Page 39 FY11/3 1H (-0.3%) w Aim to increase in Q2 and secure 1st half sales year on year, in local and central governments, medical services and manufacturing, where orders are stable Sales 377.3 ▐ Sales 4.0 (+0.5) r Aim to maintain profit by improving cost structure and implementing cost reduction FY12/3 1H (Forecasts) © NEC Corporation 2011 *Forecasts as of Jul 28, 2011 1H Forecasts Platform Business ▐ Sales (Billions of Yen) YoY Sales 185.0 176.8 166.2 +6.4% +4.7% 0.8% Operating margin ratio - 0.9% - 8.1% Operating Income/Loss -13.5 -1.5 1.5 185.0 r Software : Expect to increase sales of virtualization and cloud computing platform for data centers, including BCP solutions r Hardware : Aim to increase sales by responding to continual demand for data centers and focusing on energy saving products r Enterprise Network : Aim to increase sales by deploying office solutions worldwide, which contribute to energy saving and innovative work styles for customers ▐ Operating Income 1.5 FY10/3 1H Page 40 FY11/3 1H FY12/3 1H (Forecasts) (+4.7%) (+3.0) r Expect to improve through sales increase and enhanced cost efficiency *Forecasts as of July 28, 2011 © NEC Corporation 2011 1H Forecasts Carrier Network Business (Billions of Yen) YoY Sales 308.6 305.0 271.0 305.0 (+12.6%) r Focus on sales expansion of LTE and service platform in Japan r Execute large projects for submarine cable systems and sales expansion for mobile backhaul (PASOLINK) overseas +12.6% Operating Margin Ratio ▐ Sales -12.2% 4.0% 3.9% 2.6% Operating Income 12.4 12.0 7.0 FY10/3 1H Page 41 FY11/3 1H ▐ Operating Income 12.0 (+5.0) r Aim to increase by securing business opportunities arising from data traffic upsurge and sales increase from submarine cable systems, despite strong yen FY12/3 1H (Forecasts) © NEC Corporation 2011 *Forecasts as of Jul 28, 2011 1H Forecast Social Infrastructure Business (Billions of Yen) YoY Sales 140.0 137.9 129.7 +1.6％ +6.3％ Operating Margin Ratio 2.1% Operating Income ▐ Sales 140.0 r Expect to maintain flat due to an increase in social systems such as broadcasting, fire and disaster prevention, offset by decrease in aerospace and defense systems ▐ Operating Income 4.0 2.9% 2.9% 4.0 4.0 (+1.6%) (±0.0) r Aim to increase by sales expansion and cost reductions 2.7 FY10/3 1H FY11/3 1H FY12/3 1H (Forecasts) *Forecasts as of July 28, 2011 Page 42 © NEC Corporation 2011 1H Forecast Personal Solutions Business (Billions of Yen) YoY +8.2% Sales 370.0 362.3 -1.1% Mobile 157.1 Terminals 155.4 176.0 2.3% 0.8% 0.7% Operating Income PCs and 205.2 Others 8.2 ▐ Operating Income 3.0 (+0.1) +15.4% -18.0% 236.7 194.0 2.9 FY10/3 1H (-5.6%) s PCs and Others : Expect to decrease due to the deconsolidation of consumer PCs +13.3% Operating Margin Ratio 370.0 r Mobile Terminals : Expect to increase due to an increase in shipments of smartphones worldwide -5.6% 392.1 ▐ Sales FY11/3 1H 3.0 r Expect to remain flat due to profit improvement in Mobile Terminals by shipment increase, offset by increase in development costs to enrich lineup of new devices FY12/3 1H (Forecasts) *Forecasts as of July 28, 2011 Page 43 © NEC Corporation 2011 Capital Expenditure, Depreciation and R&D expenses Full Year Forecasts (Billions of Yen) FY11/3 FY12/3 Actual Forecasts YoY Capial Expenditure 52.9 80.0 51.4% Depreciation 62.1 65.0 4.7% 176.5 185.0 4.8% 5.7% 5.6% R&D expenses To consolidated total sales （％） Note: Unchanged from full year forecasts announced on May 10 Page 44 © NEC Corporation 2011 Reference (Financial data) Net Sales, Operating Income/Loss (Billions of yen) 8.7% Operating margin ratio 7.6% 3.0% 0.3% -0.9% -5.1% Net Sales -22.3% 778.5 Overseas Sales 1,104.1 -13.0% 875.2 186.9 -16.2% 186.8 -12.7% （16.9％） 825.4 -14.2% 667.5 （21.2%） （Overseas Sales Ratio） （21.1%） 128.8 （16.1%） +0.2% 118.8 720.7 (12.8%) 669.1 117.5 115.1 （16.3%） （17.2%） 70.2 24.3 2.3 -7.5 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> -23.2 Q4 Q1 <Jan-Mar> <Apr-Jun> -13.5 -19.4 Q2 Q3 Q4 Q1 <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 46 925.5 （17.1%） Operating Income/ Loss -40.0 801.6 114.2 96.1 Sales in Japan -2.9% -8.4% 175.2 （21.4%） 163.9 -1.9% -3.5% -3.1% -22.3% YoY FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (IT Services) (Billions of yen) 13.3% 9.3% Operating margin ratio 4.8% 4.4% 1.8% -0.4% 301.5 -3.5% -7.7% 209.8 Sales -3.9% 209.7 -10.8% 40.2 -1.4% -7.7% 171.0 161.2 -8.8% -2.3% -7.4 -6.6 -5.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 47 24.5 9.2 3.4 -0.6 -4.7% 157.5 0.0% -3.8% Operating Income/ 10.2 Loss 262.2 -13.0% 187.6 167.6 YoY FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (Platform) 10.0% Operating margin ratio (Billions of yen) 10.7% YoY 3.0% 0.7% - 0.3% - 2.4% - 5.5% - 6.8% 120.6 116.5 - 19.1% 92.3 Sales 96.7 -8.5% 87.0 80.0 73.9 -19.8% -5.1% +8.3% -34.1% -14.1 -0.2% 12.4 12.1 0.7 Q1 Q2 <Apr-Jun> <Jul-Sep> -0.3 Q3 2.9 -4.4 Q4 <Oct-Dec> <Jan-Mar> -5.4 -2.0 Q1 Q2 Q3 Q4 Q1 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 48 79.9 +4.8% -21.0% Operating Income/ Loss -3.4% 82.5 FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (Carrier Network) (Billions of yen) 14.8% Operating margin ratio YoY 9.6% 8.4% 7.1% 4.0% 1.4% 0.4% Sales 142.9 -25.9% 154.2 145.7 -7.6% +12.9% 27.9 -17.6% 16.9 2.0 0.5 131.9 +2.0% -19.8% Operating Income/ 11.8 Loss +7.3% -24.4% 116.8 -17.1% 188.7 - 5.1% 175.9 166.9 141.7 13.0 5.8 1.8 -6.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 49 1.4% FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (Social Infrastructure) (Billions of yen) 15.1% Operating margin ratio YoY 8.8% 4.7% 4.6% 0.7% 0.9% -1.2% 122.2 0.6% 0.7% 114.3 -2.0% Sales -6.4% 79.5 72.4 64.7 57.2 18.4 -18.1% 66.6 58.4 +3.0% -4.1％ -4.3% +2.0% Operating Income/ 3.4 Loss Q2 <Apr-Jun> <Jul-Sep> 10.1 0.6 Q3 Q4 <Oct-Dec> <Jan-Mar> Q1 0.4 0.4 0.3 Q2 Q3 Q4 Q1 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 50 +0.7% 3.7 -0.7 Q1 58.8 +9.7% FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (Personal Solutions) (Billions of yen) Operating margin ratio YoY 4.6% 2.0% 3.6% -0.2% -0.4% 1.6% -0.8% 0.7% -1.8% Sales +4.6% -17.1% 194.9 -13.4% -23.6% PCs and Others 198.7 66.1 93.2 Operating Income/ Loss 8.9 117.4 103.5 132.6 7.2 3.4 -0.7 Q1 198.5 Q2 <Apr-Jun> <Jul-Sep> 122.3 114.4 3.3 -5.2% 181.5 183.5 80.3 67.8 79.5 112.7 113.7 104.0 -1.6 -0.4 Q3 Q4 <Oct-Dec> <Jan-Mar> Q1 Q2 Q3 -3.2 Q4 1.3 Q1 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> FY10/3 Page 51 -8.7% 193.0 76.3 79.1 59.3 63.9 101.7 193.5 +9.2% 176.7 167.4 Mobile Terminals +18.6% -0.7% FY11/3 © NEC Corporation 2011 FY12/3 Sales, Operating Income/Loss (Others) 6.6% Operating margin ratio (Billions of yen) 4.7% 0.2% YoY 2.1% -7.8% -0.9% -2.0% -4.6% -17.2% 185.2 Sales 166.5 166.5 -31.2% -16.7% 143.1 +38.6% -40.7% -59.8% Operating Income/ Loss -24.7 57.6 -12.9 Q1 Q2 <Apr-Jun> <Jul-Sep> -7.7 Q3 Q4 <Oct-Dec> <Jan-Mar> FY10/3 Page 52 0.4 -62.2% -62.8% -66.3% 0.0% 63.0 61.9 62.3 57.6 4.2 -1.1 Q1 Q2 <Apr-Jun> <Jul-Sep> 1.3 Q3 Q4 <Oct-Dec> <Jan-Mar> FY11/3 © NEC Corporation 2011 2.9 -0.5 Q1 <Apr-Jun> FY12/3 Exchange Rate (Yen) 125 Euro/Yen Exchange rate(Actual) Assumed Exchange rate 120 115 Average exchange rate ¥116.90 110 105 90 Dollar/Yen Exchange rate(Actual) Assumed Exchange rate 85 Average exchange rate ¥82.16 80 75 4/1 Page 53 4/28 5/31 © NEC Corporation 2011 6/30 Stock Price (Yen) 10,500 185 Apr 11:NEC IR Day (Personal Solutions) May 10:FY11/3 Earnings 180 Jun 22:Ordinary General Meeting of Shareholders 10,000 175 170 9,500 165 160 NEC the Nikkei Stock Average 9,000 155 4/1 Page 54 4/11 5/10 © NEC Corporation 2011 6/22 6/30 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"). Written forward-looking statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the Director of the Kanto Finance Bureau, and in reports to shareholders and other communications. NEC is relying on certain safeharbors for forward-looking statements in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates," "targets," "aims," or "anticipates," or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them. You should not place undue reliance on forward-looking statements, which reflect NEC’s analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements include (i) global economic conditions and general economic conditions in NEC’s markets, (ii) fluctuating demand for, and competitive pricing pressure on, NEC’s products and services, (iii) NEC’s ability to continue to win acceptance of NEC’s products and services in highly competitive markets, (iv) NEC’s ability to expand into foreign markets, such as China, (v) regulatory change 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, (viii) the impact of unfavorable conditions or developments, including share price declines, in the equity markets which may result in losses from devaluation of listed securities held by NEC, and (iv) impact of any regulatory action or legal proceeding against NEC. Any forward-looking statements speak only as of the date on which they are made. 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 NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise. The management targets included in this material are not projections, and do not represent management’s current estimates of future performance. Rather, they represent targets that management will strive to achieve through the successful implementation of NEC’s business strategies. Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. Securities may not be offered or sold in any jurisdiction in which required registration is absent or an exemption from registration under the applicable securities laws is not granted.