FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of February, 2007
Commission File Number: 000-12713
NEC CORPORATION
(Translation of registrant’s name into English)
7-1, Shiba 5-chome, Minato-ku, Tokyo, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-Fx Form 40-F¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes¨ Nox
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEC Corporation | ||
(Registrant) | ||
By | /S/ FUJIO OKADA | |
Fujio Okada | ||
Associate Senior Vice President |
Date: February 6, 2007
February 6, 2007
Consolidated Financial Results for the Third Quarter of the
Fiscal Year Ending March 31, 2007 and for the Nine Months Ended
December 31, 2006
I. Consolidated Financial Results
Three Months Ended December 31, 2006 | Three Months Ended December 31, 2005 | Change | |||||
In billions of yen | In billions of yen | % | |||||
Net sales | 1,096.1 | 1,179.8 | -7.1 | ||||
Operating income | 35.0 | 23.9 | +46.6 | ||||
Ordinary income | 22.9 | 23.3 | -1.8 | ||||
Net income | 2.6 | 11.8 | -77.8 | ||||
Yen | Yen | Yen | |||||
Net income per share: | |||||||
Basic | 1.21 | 5.92 | -4.71 | ||||
Diluted | 1.15 | 5.53 | -4.38 | ||||
Nine Months Ended December 31, | Nine Months Ended December 31, | Change | |||||
In billions of yen | In billions of yen | % | |||||
Net sales | 3,317.7 | 3,463.6 | -4.2 | ||||
Operating income | 42.5 | 28.9 | +47.2 | ||||
Ordinary income | 11.1 | 4.0 | +178.3 | ||||
Net income (loss) | (7.3 | ) | 11.5 | — | |||
Yen | Yen | Yen | |||||
Net income (loss) per share: | |||||||
Basic | (3.73 | ) | 5.81 | -9.54 | |||
Diluted | — | 5.55 | — | ||||
As of December 31, 2006 | As of March 31, 2006 | Change | |||||
In billions of yen | In billions of yen | % | |||||
Total assets | 3,743.4 | 3,802.8 | -1.6 | ||||
Net assets | 1,245.6 | 1,242.7 | +0.2 | ||||
As of December 31, 2006 | As of March 31, 2006 | As of December 31, 2005 | |||||
Consolidated subsidiaries | 346 | 356 | 335 | ||||
Affiliated companies accounted for by the equity method | 69 | 68 | 67 |
II. Business Results
<1>Business results for the third quarter of the fiscal year ending March 31, 2007 (three months ended December 31, 2006)
(1) Overview and condition of profit and loss
For the three months ended December 31, 2006, the global economy showed overall steady growth, spurred on by brisk growth in the American economy due mainly to capital investment, continued high economic growth in China and India, and steady growth in the economies of Asia and Europe.
Although there was a slight slowdown in personal consumption, the Japanese economy experienced continued moderate growth, with a sustained increase in capital investment amid an improvement in business results.
Amid this business environment, NEC posted third quarter consolidated net sales of 1,096.1 billion yen, a decrease of 83.7 billion yen (7.1%) year on year, mainly as a result of the sale of its personal computer (“PC”) business in Europe.
NEC recorded operating income of 35.0 billion yen, an increase of 11.1 billion yen year on year, mainly as a result of improved profitability in the area of Mobile Terminals due to overseas business downsizing.
Ordinary income amounted to 22.9 billion yen, a decrease of 0.4 billion yen year on year. This was due to a worsening in non-operating income and expenses of 11.5 billion yen, mainly owing to a worsening of equity in earnings and losses of affiliated companies and a decrease in foreign exchange income, despite an increase in operating income of 11.1 billion yen.
Income before income taxes totaled 23.1 billion yen, a decrease of 6.1 billion yen year on year as a result of a decrease in ordinary income by 0.4 billion yen and a worsening of extraordinary gains and losses by 5.7 billion yen. The fall in extraordinary gains and losses was mostly due to a decrease in gain on sale of stock of affiliated companies and restructuring charges recorded in accordance with the downsizing of overseas business in the area of Mobile Terminals.
Net income amounted to 2.6 billion yen as a result of the recording of valuation allowance for deferred tax assets of several subsidiaries.
(2) Results by business segment (including inter-segment transactions and profit/loss figures)
Sales and segment profit of NEC’s main segments were as follows (figures in brackets denote increases or decreases year on year):
IT/Network Solutions Business
Sales: | 621.1 billion yen | (+4.9 %) | ||
Segment profit: | 49.6 billion yen | (-0.3 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Three Months Ended December 31, 2006 | Three Months Ended December 31, 2005 | Change | |||
In billions of yen | In billions of yen | % | ||||
IT Services/System Integration | 173.3 | 162.3 | +6.8 | |||
IT Platforms | 131.3 | 150.4 | -12.7 | |||
Network Systems | 257.2 | 218.1 | +17.9 | |||
Social Infrastructure | 59.3 | 61.0 | -2.8 | |||
Total | 621.1 | 591.8 | +4.9 | |||
Sales of the IT/Network Solutions business for the three months ended December 31, 2006 amounted to 621.1 billion yen, an increase of 4.9% year on year, due to sustained growth in sales in the area of Network Systems and IT Services/System Integration.
Net sales by products and services were as follows:
In the area of IT Services/System Integration, sales amounted to 173.3 billion yen, an increase of 6.8% year on year. This was due to steady sales in almost every industry sector. In the area of Network Systems, sales totaled 257.2 billion yen, an increase of 17.9% year on year. This was mainly due to a rise in sales of the wireless system “Pasolink” overseas and sales to telecom carriers in Japan, such as in SIP servers, in addition to brisk sales of mobile communication base stations in Japan, carrying on from the first half of the fiscal year ending March 31, 2007. Meanwhile, in the area of IT Platforms, sales were 131.3 billion yen, a fall of 12.7% year on year, owing to the effect of orders for large-scale systems in the previous fiscal year and a decrease in sales in the optical disc drive business. In the area of Social Infrastructure, a decrease in investment in digital terrestrial broadcasting systems in the Japanese market led to a decrease in sales of 2.8% year on year, to 59.3 billion yen.
Segment profit amounted to 49.6 billion yen, an amount in line with that of the corresponding period of the previous fiscal year. This was mainly due to a decrease in sales in the area of IT Platforms, despite an increase in sales in the area of IT Services/System Integration.
Mobile/Personal Solutions Business
Sales: | 226.6 billion yen | (-33.5%) | ||
Segment profit: | 2.4 billion yen | (An improvement of 17.2 billion yen) |
Sales by subsegment (including inter-segment transactions)
Subsegment | Three Months Ended December 31, 2006 | Three Months Ended December 31, 2005 | Change | |||
In billions of yen | In billions of yen | % | ||||
Mobile Terminals | 96.6 | 131.2 | -26.4 | |||
Personal Solutions | 130.0 | 209.4 | -37.9 | |||
Total | 226.6 | 340.6 | -33.5 | |||
Sales for the Mobile/Personal Solutions business for the three months ended December 31, 2006 amounted to 226.6 billion yen, a decrease of 33.5% year on year.
Net sales by products and services were as follows:
In the area of Mobile Terminals, sales amounted to 96.6 billion yen, a decrease of 26.4% as compared with the corresponding period of the previous fiscal year. This was due to additional downsizing of overseas business and a decrease in units shipped in Japan. In the Personal Solutions business, sales fell by 37.9% year on year, to 130.0 billion yen. This was due to the sale of the PC business in Europe and stagnant growth in the Japanese PC market.
Segment profit totaled 2.4 billion yen, an improvement of 17.2 billion yen year on year, as a result of improvement in the Mobile Terminals business accompanying downsizing of overseas business.
Electron Devices Business
Sales: | 222.2 billion yen | (+6.8%) | ||
Segment loss: | 1.9 billion yen | (An improvement of 2.6 billion yen) |
Sales by subsegment (including inter-segment transaction)
Subsegment | Three Months Ended December 31, 2006 | Three Months Ended December 31, 2005 | Change | |||
In billions of yen | In billions of yen | % | ||||
Semiconductors | 177.9 | 162.7 | +9.3 | |||
Electronic Components & Others | 44.3 | 45.3 | -2.2 | |||
Total | 222.2 | 208.0 | +6.8 | |||
Sales of the Electron Devices business for the three months ended December 31, 2006 amounted to 222.2 billion yen, an increase of 6.8% year on year.
Net sales by products and services were as follows:
In the area of Semiconductors, NEC recorded sales of 177.9 billion yen, an increase of 9.3% year on year, resulting from a significant rise in sales of semiconductors for game consoles, and increased sales in general purpose microcontrollers and semiconductors for automobiles. Sales in the area of Electronic Components and Others totaled 44.3 billion yen, a decrease of 2.2% year on year, owing to the impact of a decrease in large-scale orders of small-sized liquid crystal displays in the previous year.
Segment loss was 1.9 billion yen, an improvement of 2.6 billion yen year on year. The improvement was mainly due to an increase in sales in the area of Semiconductors.
(Note)
The results for the area of Semiconductors are the official public figures of NEC Electronics Corporation, which are prepared in accordance with U.S. GAAP. The difference that arises as a result of the adjustment to Japan GAAP is included in Electronic Components and Others.
(3) Cash flow condition
Net cash used in operating activities for the three months ended December 31, 2006 was 20.0 billion yen, an amount in line with that of the corresponding period of the previous fiscal year.
Net cash used in investing activities was 67.8 billion yen, a worsening of 54.0 billion yen as compared with the corresponding period of the previous fiscal year. This was mainly due to an increase in cash used for acquisition of tangible fixed assets and a decrease in cash provided by sale of tangible fixed assets. As a result, free cash flows (the sum of cash flows from operating activities and investing activities) were cash outflows of 87.8 billion yen, a worsening of 55.9 billion yen as compared with the corresponding period of the previous fiscal year.
Net cash provided by financing activities was 68.8 billion yen, due mainly to the issuance of commercial paper, despite the payment of cash dividends. As a result, cash and cash equivalents amounted to 423.6 billion yen, a decrease of 16.2 billion yen as compared with the end of the three months ended September 30, 2006.
The balance of interest-bearing debt amounted to 965.4 billion yen, a reduction of 143.2 billion yen as compared with the end of the corresponding period of the previous fiscal year. Debt-equity ratio was 0.93 (an improvement of 0.13 points as compared with the end of the corresponding period of the previous fiscal year).
In addition, the balance of interest-bearing debt (net), obtained by deleting the balance of cash and cash equivalents from the balance of interest-bearing debt, amounted to 541.8 billion yen, a decrease of 106.3 billion yen as compared with the end of the corresponding period of the previous fiscal year. Net debt-equity ratio was 0.52 (an improvement of 0.1 points as compared with the end of the corresponding period of the previous fiscal year).
<2>Business results for the nine months ended December 31, 2006
(1) Condition of profit and loss
NEC recorded net sales of 3,317.7 billion yen for the nine months ended December 31, 2006, a decrease of 145.9 billion yen (4.2%) year on year, mainly owing to a decline in mobile handset sales and the sale of the PC business in Europe, despite an increase in sales of mobile communications systems and semiconductors.
Operating income amounted to 42.5 billion yen, an increase of 13.6 billion yen year on year, primarily due to improved profitability company-wide, despite the accrual of estimated warranty costs for products already sold.
Ordinary income totaled 11.1 billion yen, an increase of 7.1 billion yen year on year, as a result of a 13.6 billion yen increase in operating income, despite a worsening of 6.5 billion yen in non-operating income and expenses mainly owing to a worsening of equity in earnings and losses of affiliated companies.
Income before income taxes was 24.8 billion yen, a 12.2 billion yen decrease year on year, as a result of a worsening of 19.3 billion yen in extraordinary gains and losses year on year, despite an increase in ordinary income of 7.1 billion yen. The worsening of extraordinary gains and losses was due to a decrease in gain on sale of stock of affiliated companies and the recording of restructuring charges, even though an increase in gain on change in equity of subsidiaries and gain on transfer of marketable securities to the pension trust were recorded.
NEC posted a net loss of 7.3 billion yen as a result of the recording of valuation allowance for deferred tax assets of some subsidiaries.
(2) Cash flow condition
Net cash provided by operating activities for the nine months ended December 31, 2006 was 86.1 billion yen, an increase of 62.9 billion yen as compared with the corresponding period of the previous fiscal year. This was mainly due to increased working capital efficiencies.
Net cash used in investing activities was 132.8 billion yen, a worsening of 83.3 billion yen as compared with the corresponding period of the previous fiscal year. This was mainly due to an increase in cash used for acquisition of tangible fixed assets and a decrease in cash provided by sale of tangible fixed assets, as well as cash provided by the sale of stock of Elpida Memory, Inc. in the previous fiscal year. As a result, free cash flows (the sum of cash flows from operating activities and investing activities) were cash outflows of 46.7 billion yen, a worsening of 20.4 billion yen as compared with the corresponding period of the previous fiscal year.
Net cash provided by financing activities was 12.8 billion yen, due mainly to the issuance of commercial paper. As a result, cash and cash equivalents amounted to 423.6 billion yen, a decrease of 28.8 billion yen as compared with the end of the previous fiscal year (March 31, 2006).
The balance of interest-bearing debt increased 30.3 billion yen as compared with the end of the previous fiscal year, and debt-equity ratio worsened by 0.02 points as compared with the end of the previous fiscal year.
In addition, the balance of interest-bearing debt (net) increased 59.1 billion yen as compared with the end of the previous fiscal year, and net debt-equity ratio worsened by 0.05 points as compared with the end of the previous fiscal year.
<3> Financial forecast
There is no change to the consolidated and non-consolidated financial forecasts for the fiscal year ending March 31, 2007, from those announced on December 22, 2006.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In millions of yen, millions of U.S. dollars)
Three months ended December 31 | 2006 | (% of net sales) | 2005 | (% of net sales) | Increase (Decrease) | 2006 | ||||||||||||||
Net sales | JPY | 1,096,138 | (100.0 | ) | JPY | 1,179,841 | (100.0 | ) | JPY | (83,703 | ) | $ | 9,211 | |||||||
Cost of sales | 744,835 | (68.0 | ) | 838,694 | (71.1 | ) | (93,859 | ) | 6,259 | |||||||||||
Gross profit on sales | 351,303 | (32.0 | ) | 341,147 | (28.9 | ) | 10,156 | 2,952 | ||||||||||||
Selling, general and administrative expenses | 316,268 | (28.8 | ) | 317,247 | (26.9 | ) | (979 | ) | 2,658 | |||||||||||
Operating income | 35,035 | (3.2 | ) | 23,900 | (2.0 | ) | 11,135 | 294 | ||||||||||||
Non-operating income | 6,918 | (0.6 | ) | 12,952 | (1.1 | ) | (6,034 | ) | 58 | |||||||||||
Interest income | 1,940 | 1,743 | 197 | 16 | ||||||||||||||||
Dividend income | 700 | 386 | 314 | 6 | ||||||||||||||||
Equity in earnings of affiliated companies | — | 1,823 | (1,823 | ) | — | |||||||||||||||
Foreign exchange income | 759 | 2,635 | (1,876 | ) | 6 | |||||||||||||||
Other | 3,519 | 6,365 | (2,846 | ) | 30 | |||||||||||||||
Non-operating expenses | 19,025 | (1.7 | ) | 13,514 | (1.1 | ) | 5,511 | 159 | ||||||||||||
Interest expense | 4,031 | 4,317 | (286 | ) | 34 | |||||||||||||||
Equity in losses of affiliated companies | 3,065 | — | 3,065 | 25 | ||||||||||||||||
Other | 11,929 | 9,197 | 2,732 | 100 | ||||||||||||||||
Ordinary income | 22,928 | (2.1 | ) | 23,338 | (2.0 | ) | (410 | ) | 193 | |||||||||||
Extraordinary gains | 3,539 | (0.3 | ) | 6,620 | (0.6 | ) | (3,081 | ) | 29 | |||||||||||
Gain on sale of investment in securities | 2,721 | 1,295 | 1,426 | 22 | ||||||||||||||||
Gain on change of equity | — | 1,769 | (1,769 | ) | — | |||||||||||||||
Gain on sale of fixed assets | 816 | 1,016 | (200 | ) | 7 | |||||||||||||||
Gain on sale of stock of affiliated companies | — | 2,540 | (2,540 | ) | — | |||||||||||||||
Gain on lapse of share subscription rights | 2 | — | 2 | 0 | ||||||||||||||||
Extraordinary losses | 3,346 | (0.3 | ) | 758 | (0.1 | ) | 2,588 | 28 | ||||||||||||
Restructuring charges | 2,809 | — | 2,809 | 24 | ||||||||||||||||
Loss due to devaluation of investment in securities | 530 | 637 | (107 | ) | 4 | |||||||||||||||
Pension and severance costs | 7 | 121 | (114 | ) | 0 | |||||||||||||||
Income before income taxes | 23,121 | (2.1 | ) | 29,200 | (2.5 | ) | (6,079 | ) | 194 | |||||||||||
Provision for income taxes | 20,152 | (1.9 | ) | 18,265 | (1.6 | ) | 1,887 | 169 | ||||||||||||
Minority interest in income of consolidated subsidiaries | 354 | (0.0 | ) | (849 | ) | (-0.1 | ) | 1,203 | 3 | |||||||||||
Net income | JPY | 2,615 | (0.2 | ) | JPY | 11,784 | (1.0 | ) | JPY | (9,169 | ) | $ | 22 | |||||||
(Note)
* | US dollar amounts are translated from yen, for convenience only, at the rate of US$1 = 119 yen. |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions of yen, millions of U.S.dollars)
December 31, 2006 | December 31, 2005 | Increase (Decrease) | March 31, 2006 | Increase (Decrease) | December 31, 2006 | |||||||||||||||||||
Current assets | JPY | 2,040,220 | JPY | 2,188,585 | JPY | (148,365 | ) | JPY | 2,099,343 | JPY | (59,123 | ) | $ | 17,144 | ||||||||||
Cash and deposit | 327,106 | 422,196 | (95,090 | ) | 404,303 | (77,197 | ) | 2,749 | ||||||||||||||||
Notes and accounts receivable, trade | 729,449 | 783,029 | (53,580 | ) | 858,328 | (128,879 | ) | 6,130 | ||||||||||||||||
Current marketable securities | 97,135 | 39,031 | 58,104 | 49,242 | 47,893 | 816 | ||||||||||||||||||
Inventories | 621,032 | 642,501 | (21,469 | ) | 492,414 | 128,618 | 5,219 | |||||||||||||||||
Deferred tax assets | 101,050 | 108,220 | (7,170 | ) | 106,243 | (5,193 | ) | 849 | ||||||||||||||||
Other current assets | 173,558 | 210,729 | (37,171 | ) | 198,430 | (24,872 | ) | 1,458 | ||||||||||||||||
Allowance for doubtful notes and accounts | (9,110 | ) | (17,121 | ) | 8,011 | (9,617 | ) | 507 | (77 | ) | ||||||||||||||
Long-term assets | 1,703,211 | 1,739,035 | (35,824 | ) | 1,703,432 | (221 | ) | 14,313 | ||||||||||||||||
Property, plant and equipment | 681,839 | 675,810 | 6,029 | 677,269 | 4,570 | 5,730 | ||||||||||||||||||
Buildings | 239,098 | 247,134 | (8,036 | ) | 244,534 | (5,436 | ) | 2,009 | ||||||||||||||||
Machinery and equipment | 217,515 | 198,440 | 19,075 | 197,839 | 19,676 | 1,828 | ||||||||||||||||||
Tools and other equipment | 101,122 | 108,456 | (7,334 | ) | 104,861 | (3,739 | ) | 850 | ||||||||||||||||
Other Property | 124,104 | 121,780 | 2,324 | 130,035 | (5,931 | ) | 1,043 | |||||||||||||||||
Intangible assets | 231,396 | 241,890 | (10,494 | ) | 236,345 | (4,949 | ) | 1,945 | ||||||||||||||||
Goodwill | 91,035 | 74,641 | 16,394 | 79,397 | 11,638 | 765 | ||||||||||||||||||
Other intangible assets | 140,361 | 167,249 | (26,888 | ) | 156,948 | (16,587 | ) | 1,180 | ||||||||||||||||
Investments and other assets | 789,976 | 821,335 | (31,359 | ) | 789,818 | 158 | 6,638 | |||||||||||||||||
Investment securities | 272,355 | 271,286 | 1,069 | 266,040 | 6,315 | 2,289 | ||||||||||||||||||
Stock of affiliated companies | 105,726 | 100,343 | 5,383 | 110,319 | (4,593 | ) | 888 | |||||||||||||||||
Deferred tax assets | 216,548 | 241,719 | (25,171 | ) | 214,525 | 2,023 | 1,820 | |||||||||||||||||
Other | 218,201 | 230,414 | (12,213 | ) | 229,845 | (11,644 | ) | 1,833 | ||||||||||||||||
Allowance for doubtful notes and accounts | (22,854 | ) | (22,427 | ) | (427 | ) | (30,911 | ) | 8,057 | (192 | ) | |||||||||||||
Total assets | JPY | 3,743,431 | JPY | 3,927,620 | JPY | (184,189 | ) | JPY | 3,802,775 | JPY | (59,344 | ) | $ | 31,457 | ||||||||||
Current liabilities | JPY | 1,672,360 | JPY | 1,681,015 | JPY | (8,655 | ) | JPY | 1,675,308 | JPY | (2,948 | ) | $ | 14,053 | ||||||||||
Notes and accounts payable, trade | 731,127 | 820,356 | (89,229 | ) | 826,335 | (95,208 | ) | 6,144 | ||||||||||||||||
Short-term borrowings | 136,704 | 135,967 | 737 | 136,756 | (52 | ) | 1,149 | |||||||||||||||||
Commercial Paper | 110,000 | 196,000 | (86,000 | ) | 35,000 | 75,000 | 924 | |||||||||||||||||
Bonds payable (within one year) | 156,568 | 29,270 | 127,298 | 129,268 | 27,300 | 1,316 | ||||||||||||||||||
Accounts payable, other and accrued expenses | 241,178 | 221,964 | 19,214 | 284,502 | (43,324 | ) | 2,027 | |||||||||||||||||
Reserve for bonus to directors | 187 | — | 187 | — | 187 | 2 | ||||||||||||||||||
Current product warranty liabilities | 26,659 | 3,575 | 23,084 | 11,229 | 15,430 | 224 | ||||||||||||||||||
Other current liabilities | 269,937 | 273,883 | (3,946 | ) | 252,218 | 17,719 | 2,267 | |||||||||||||||||
Long-term liabilities | 825,477 | 981,829 | (156,352 | ) | 884,817 | (59,340 | ) | 6,937 | ||||||||||||||||
Bonds payable | 463,319 | 619,989 | (156,670 | ) | 519,791 | (56,472 | ) | 3,893 | ||||||||||||||||
Long-term borrowings | 58,225 | 90,590 | (32,365 | ) | 76,268 | (18,043 | ) | 489 | ||||||||||||||||
Accrued pension and severance costs | 209,365 | 194,619 | 14,746 | 197,434 | 11,931 | 1,759 | ||||||||||||||||||
Provision for loss on repurchase of computers | 17,838 | 22,584 | (4,746 | ) | 19,532 | (1,694 | ) | 150 | ||||||||||||||||
Long-term product warranty liabilities | 1,280 | 623 | 657 | 840 | 440 | 11 | ||||||||||||||||||
Provision for recycling expenses of personal computers | 5,347 | 5,702 | (355 | ) | 6,137 | (790 | ) | 45 | ||||||||||||||||
Long-term deferred tax liabilities | 14,530 | 199 | 14,331 | 9,661 | 4,869 | 122 | ||||||||||||||||||
Other | 55,573 | 47,523 | 8,050 | 55,154 | 419 | 468 | ||||||||||||||||||
Total liabilities | JPY | 2,497,837 | JPY | 2,662,844 | JPY | (165,007 | ) | JPY | 2,560,125 | JPY | (62,288 | ) | $ | 20,990 | ||||||||||
Shareholders’ equity | 956,251 | 971,599 | (15,348 | ) | 949,915 | 6,336 | 8,036 | |||||||||||||||||
Common stock | 337,822 | 337,821 | 1 | 337,821 | 1 | 2,839 | ||||||||||||||||||
Additional paid-in capital | 464,877 | 441,268 | 23,609 | 441,155 | 23,722 | 3,906 | ||||||||||||||||||
Retained earnings | 156,549 | 195,322 | (38,773 | ) | 173,808 | (17,259 | ) | 1,316 | ||||||||||||||||
Treasury stock | (2,997 | ) | (2,812 | ) | (185 | ) | (2,869 | ) | (128 | ) | (25 | ) | ||||||||||||
Valuation and translation adjustments | 82,320 | 71,681 | 10,639 | 79,892 | 2,428 | 692 | ||||||||||||||||||
Unrealized gains (losses) on marketable securities | 73,206 | 75,609 | (2,403 | ) | 78,128 | (4,922 | ) | 615 | ||||||||||||||||
Unrealized gains (losses) on hedging | 272 | — | 272 | — | 272 | 2 | ||||||||||||||||||
Foreign currency translation adjustments | 8,842 | (3,928 | ) | 12,770 | 1,764 | 7,078 | 75 | |||||||||||||||||
Share subscription rights | 73 | — | 73 | — | 73 | 1 | ||||||||||||||||||
Minority interests | 206,950 | 221,496 | (14,546 | ) | 212,843 | (5,893 | ) | 1,738 | ||||||||||||||||
Total net assets | JPY | 1,245,594 | JPY | 1,264,776 | JPY | (19,182 | ) | JPY | 1,242,650 | JPY | 2,944 | $ | 10,467 | |||||||||||
Total liabilities and net assets | JPY | 3,743,431 | JPY | 3,927,620 | JPY | (184,189 | ) | JPY | 3,802,775 | JPY | (59,344 | ) | $ | 31,457 | ||||||||||
Cash and cash equivalents in CONSOLIDATED STATEMENTS OF CASH FLOWS are calculated as follows. |
| |||||||||||||||||||||||
Cash and deposit | JPY | 327,106 | JPY | 422,196 | JPY | (95,090 | ) | JPY | 404,303 | JPY | (77,197 | ) | $ | 2,749 | ||||||||||
Current marketable securities | 97,135 | 39,031 | 58,104 | 49,242 | 47,893 | 816 | ||||||||||||||||||
Time deposit and Current marketable securities with maturity of more than three months | (662 | ) | (731 | ) | 69 | (1,175 | ) | 513 | (6 | ) | ||||||||||||||
Cash and cash equivalents | JPY | 423,579 | JPY | 460,496 | JPY | (36,917 | ) | JPY | 452,370 | JPY | (28,791 | ) | $ | 3,559 | ||||||||||
Interest-bearing debt | JPY | 965,423 | JPY | 1,108,643 | JPY | (143,220 | ) | JPY | 935,103 | JPY | 30,320 | $ | 8,113 | |||||||||||
Net interest-bearing debt (*1) | 541,844 | 648,147 | (106,303 | ) | 482,733 | 59,111 | 4,553 | |||||||||||||||||
Owner’s equity (*2) | 1,038,571 | 1,043,280 | (4,709 | ) | 1,029,807 | 8,764 | 8,727 | |||||||||||||||||
Owner’s equity ratio (%) (*3) | 27.7 | 26.6 | 1.1 | 27.1 | 0.6 | |||||||||||||||||||
Shareholders’ equity ratio (%) (*3) | 25.5 | 24.7 | 0.8 | 25.0 | 0.5 | |||||||||||||||||||
Debt-equity ratio (times) (*4) | 0.93 | 1.06 | (0.13 | ) | 0.91 | 0.02 | ||||||||||||||||||
Net debt-equity ratio (times) (*4) | 0.52 | 0.62 | (0.10 | ) | 0.47 | 0.05 |
(Notes)
*1 | Net interest-bearing debt is interest-bearing debt less cash and cash equivalents. |
*2 | Owner’s equity is total net assets less share subscription rights, minority interests. |
*3 | Owner’s equity ratio is owner’s equity divided by total assets. Shareholders’ equity ratio is shareholders’ equity divided by total assets. |
*4 | Debt-equity ratio and net debt-equity ratio are interest-bearing debt and net interest-bearing debt divided by owner’s equity, respectively. |
CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)
(In millions of yen)
Shareholders’ equity | ||||||||||||||
Common stock | Additional paid-in capital | Retained earnings | Treasury stock | Total | ||||||||||
Balance as of September 30,2006 | 337,822 | 464,924 | 162,050 | D | 2,960 | 961,836 | ||||||||
Changes in three months ended December 31 | ||||||||||||||
Bonus to directors | D | 14 | D | 14 | ||||||||||
Dividends | D | 8,102 | D | 8,102 | ||||||||||
Net income | 2,615 | 2,615 | ||||||||||||
Disposal and purchase of treasury stock, net | D | 47 | D | 37 | D | 84 | ||||||||
Others | — | |||||||||||||
Net changes in items other than those in shareholder’s equity | — | |||||||||||||
Total changes in three months ended December 31 | — | D | 47 | D | 5,501 | D | 37 | D | 5,585 | |||||
Balance as of December 31,2006 | 337,822 | 464,877 | 156,549 | D | 2,997 | 956,251 | ||||||||
Valuation and translation adjustments | Share subscription rights | Minority interests | Total net assets | ||||||||||
Unrealized gains (losses) on marketable securities | Unrealized gains (losses) on hedging | Foreign currency translation adjustments | |||||||||||
Balance as of September 30,2006 | 66,461 | 9 | 4,865 | 66 | 205,493 | 1,238,730 | |||||||
Changes in three months ended December 31 | |||||||||||||
Bonus to directors | D | 14 | |||||||||||
Dividends | D | 8,102 | |||||||||||
Net income | 2,615 | ||||||||||||
Disposal and purchase of treasury stock, net | D | 84 | |||||||||||
Others | — | ||||||||||||
Net changes in items other than those in shareholder’s equity | 6,745 | 263 | 3,977 | 7 | 1,457 | 12,449 | |||||||
Total changes in three months ended December 31 | 6,745 | 263 | 3,977 | 7 | 1,457 | 6,864 | |||||||
Balance as of December 31,2006 | 73,206 | 272 | 8,842 | 73 | 206,950 | 1,245,594 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In millions of yen, millions of U.S. dollars)
Three months ended December 31 | 2006 | 2005 | Increase (Decrease) | 2006 | ||||||||||||
I. Cash flows from operating activities: | ||||||||||||||||
Income before income taxes and minority interests | JPY | 23,121 | JPY | 29,200 | JPY | (6,079 | ) | $ | 194 | |||||||
Adjustments to reconcile income before income taxes and minority interests to net cash used in operating activities: | ||||||||||||||||
Depreciation | 51,337 | 43,591 | 7,746 | 431 | ||||||||||||
Equity in (earnings) losses of affiliated companies | 3,065 | (1,823 | ) | 4,888 | 26 | |||||||||||
Gain on change of equity | — | (1,769 | ) | 1,769 | — | |||||||||||
Decrease (increase) in notes and accounts receivable | 9,659 | (80,968 | ) | 90,627 | 81 | |||||||||||
Increase in inventories | (68,017 | ) | (76,969 | ) | 8,952 | (572 | ) | |||||||||
Increase (decrease) in notes and accounts payable | (32,617 | ) | 96,527 | (129,144 | ) | (274 | ) | |||||||||
Income taxes paid | (8,400 | ) | (7,252 | ) | (1,148 | ) | (71 | ) | ||||||||
Other, net | 1,854 | (18,622 | ) | 20,476 | 17 | |||||||||||
Net cash used in operating activities | (19,998 | ) | (18,085 | ) | (1,913 | ) | (168 | ) | ||||||||
II. Cash flows from investing activities: | ||||||||||||||||
Acquisitions of property, plant and equipment, net | (53,675 | ) | (4,349 | ) | (49,326 | ) | (451 | ) | ||||||||
Acquisitions of intangible assets | (13,292 | ) | (8,437 | ) | (4,855 | ) | (112 | ) | ||||||||
Proceeds from sales of investments, net | (4,766 | ) | 1,254 | (6,020 | ) | (40 | ) | |||||||||
Other, net | 3,910 | (2,285 | ) | 6,195 | 33 | |||||||||||
Net cash used in investing activities | (67,823 | ) | (13,817 | ) | (54,006 | ) | (570 | ) | ||||||||
Free cash flows (I + II) | (87,821 | ) | (31,902 | ) | (55,919 | ) | (738 | ) | ||||||||
III. Cash flows from financing activities: | ||||||||||||||||
Net proceeds from bonds and borrowings | 77,775 | 75,725 | 2,050 | 654 | ||||||||||||
Dividends paid | (7,652 | ) | (5,846 | ) | (1,806 | ) | (64 | ) | ||||||||
Other, net | (1,326 | ) | (899 | ) | (427 | ) | (12 | ) | ||||||||
Net cash provided by financing activities | 68,797 | 68,980 | (183 | ) | 578 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 2,811 | 4,342 | (1,531 | ) | 23 | |||||||||||
Net increase in cash and cash equivalents | (16,213 | ) | 41,420 | (57,633 | ) | (137 | ) | |||||||||
Cash and cash equivalents at beginning of period | 439,792 | 419,076 | 20,716 | 3,696 | ||||||||||||
Cash and cash equivalents at end of period | JPY | 423,579 | JPY | 460,496 | JPY | (36,917 | ) | $ | 3,559 | |||||||
SEGMENT INFORMATION (UNAUDITED)
1. Business segment information
Three months ended December 31, 2006 | (In millions of Yen) |
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Unaffiliated customers | 604,589 | 189,660 | 211,400 | 90,489 | 1,096,138 | — | 1,096,138 | |||||||||||
2. Intersegment | 16,501 | 36,901 | 10,831 | 42,160 | 106,393 | (106,393 | ) | — | ||||||||||
Total sales | 621,090 | 226,561 | 222,231 | 132,649 | 1,202,531 | (106,393 | ) | 1,096,138 | ||||||||||
Operating expenses | 571,466 | 224,204 | 224,150 | 132,728 | 1,152,548 | (91,445 | ) | 1,061,103 | ||||||||||
Operating Income (loss) | 49,624 | 2,357 | (1,919 | ) | (79 | ) | 49,983 | (14,948 | ) | 35,035 | ||||||||
Three months ended December 31, 2006 | (In millions of U.S. dollars) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Unaffiliated customers | 5,081 | 1,594 | 1,776 | 760 | 9,211 | — | 9,211 | |||||||||||
2. Intersegment | 139 | 310 | 91 | 354 | 894 | (894 | ) | — | ||||||||||
Total sales | 5,220 | 1,904 | 1,867 | 1,114 | 10,105 | (894 | ) | 9,211 | ||||||||||
Operating expenses | 4,803 | 1,884 | 1,883 | 1,115 | 9,685 | (768 | ) | 8,917 | ||||||||||
Operating Income (loss) | 417 | 20 | (16 | ) | (1 | ) | 420 | (126 | ) | 294 | ||||||||
Three months ended December 31, 2005 | (In millions of Yen) | |||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||||
Sales | ||||||||||||||||||
1. Unaffiliated customers | 575,537 | 305,123 | 196,327 | 102,854 | 1,179,841 | — | 1,179,841 | |||||||||||
2. Intersegment | 16,296 | 35,497 | 11,707 | 41,322 | 104,822 | (104,822 | ) | — | ||||||||||
Total sales | 591,833 | 340,620 | 208,034 | 144,176 | 1,284,663 | (104,822 | ) | 1,179,841 | ||||||||||
Operating expenses | 541,861 | 355,444 | 212,540 | 140,751 | 1,250,596 | (94,655 | ) | 1,155,941 | ||||||||||
Operating Income (loss) | 49,972 | (14,824 | ) | (4,506 | ) | 3,425 | 34,067 | (10,167 | ) | 23,900 | ||||||||
(Notes)
* | The business segments are classified on their proximity in terms of the type, nature and markets of their products and services. |
* | Major businesses of each segment are as follows: |
IT/Network Solutions Business | System Construction, Consulting, Outsourcing, Support (Maintenance), Servers, Storage products, Professional workstations, Business PCs, Computer software, Enterprise network systems, Network systems for telecommunications carriers, Broadcast video systems, Control systems, Aerospace/Defense systems | |
Mobile/Personal Solutions Business | Mobile handsets, Personal computers, Personal communication devices, BIGLOBE | |
Electron Devices Business | System LSI and other semiconductors, Electronic components, LCD modules etc |
* | Unallocable operating expenses included in “Eliminations / Corporate” for three months ended December 31, 2006, 2005 were ¥11,743 million($99 million), ¥10,443 million, respectively. Corporate expenses include general corporate expenses and research and development expenses at NEC Corporation. |
2. Geographic segment information
Three months ended December 31, 2006 | (In millions of Yen) |
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 860,677 | 87,514 | 147,947 | 1,096,138 | — | 1,096,138 | |||||||||
2. Intersegment | 106,886 | 2,706 | 53,171 | 162,763 | (162,763 | ) | — | ||||||||
Total sales | 967,563 | 90,220 | 201,118 | 1,258,901 | (162,763 | ) | 1,096,138 | ||||||||
Operating expenses | 928,908 | 90,914 | 202,371 | 1,222,193 | (161,090 | ) | 1,061,103 | ||||||||
Operating Income (loss) | 38,655 | (694 | ) | (1,253 | ) | 36,708 | (1,673 | ) | 35,035 | ||||||
Three months ended December 31, 2006 | (In millions of U.S. dollars) | ||||||||||||||
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 7,233 | 735 | 1,243 | 9,211 | — | 9,211 | |||||||||
2. Intersegment | 898 | 23 | 447 | 1,368 | (1,368 | ) | — | ||||||||
Total sales | 8,131 | 758 | 1,690 | 10,579 | (1,368 | ) | 9,211 | ||||||||
Operating expenses | 7,806 | 764 | 1,701 | 10,271 | (1,354 | ) | 8,917 | ||||||||
Operating Income (loss) | 325 | (6 | ) | (11 | ) | 308 | (14 | ) | 294 | ||||||
Three months ended December 31, 2005 | (In millions of Yen) | ||||||||||||||
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 856,531 | 159,562 | 163,748 | 1,179,841 | — | 1,179,841 | |||||||||
2. Intersegment | 118,575 | 3,731 | 65,393 | 187,699 | (187,699 | ) | — | ||||||||
Total sales | 975,106 | 163,293 | 229,141 | 1,367,540 | (187,699 | ) | 1,179,841 | ||||||||
Operating expenses | 952,900 | 160,099 | 228,412 | 1,341,411 | (185,470 | ) | 1,155,941 | ||||||||
Operating Income (loss) | 22,206 | 3,194 | 729 | 26,129 | (2,229 | ) | 23,900 | ||||||||
(Notes)
* | Segmenting nations and areas is based on their geographical proximity. |
* | Major nations and areas other than Japan |
Europe ... U.K. Britain, France, the Netherlands, Germany, Italy, Spain.
3. Overseas sales
Three months ended December 31, 2006 | (In millions of Yen) | ||||||||
Europe | Others | Total | |||||||
Overseas sales | 112,137 | 186,890 | 299,027 | ||||||
Consolidated sales | — | — | 1,096,138 | ||||||
Percentage of overseas sales to consolidated sales | 10.2 | % | 17.1 | % | 27.3 | % | |||
Three months ended December 31, 2006 | (In millions of U.S. dollars) | ||||||||
Europe | Others | Total | |||||||
Overseas sales | 942 | 1,571 | 2,513 | ||||||
Consolidated sales | — | — | 9,211 | ||||||
Three months ended December 31, 2005 | (In millions of Yen) | ||||||||
Europe | Others | Total | |||||||
Overseas sales | 176,324 | 210,546 | 386,870 | ||||||
Consolidated sales | — | — | 1,179,841 | ||||||
Percentage of overseas sales to consolidated sales | 14.9 | % | 17.9 | % | 32.8 | % |
(Notes)
* | Segmenting nations and areas is based on their geographical proximity. |
* | Major nations and areas other than Japan |
Europe ... U.K. Britain, France, the Netherlands, Germany, Italy, Spain.
* | Overseas sales refer to sales by the consolidated subsidiaries of the Company outside Japan. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In millions of yen, millions of U.S. dollars) | |||||||||||||||||||||
Nine months ended December 31 | 2006 | (% of net sales) | 2005 | (% of net sales) | Increase (Decrease) | 2006 | |||||||||||||||
Net sales | JPY | 3,317,742 | (100.0 | ) | JPY | 3,463,620 | (100.0 | ) | JPY | (145,878 | ) | $ | 27,880 | ||||||||
Cost of sales | 2,294,078 | (69.1 | ) | 2,472,323 | (71.4 | ) | (178,245 | ) | 19,278 | ||||||||||||
Gross profit on sales | 1,023,664 | (30.9 | ) | 991,297 | (28.6 | ) | 32,367 | 8,602 | |||||||||||||
Selling, general and administrative expenses | 981,125 | (29.6 | ) | 962,395 | (27.8 | ) | 18,730 | 8,245 | |||||||||||||
Operating income | 42,539 | (1.3 | ) | 28,902 | (0.8 | ) | 13,637 | 357 | |||||||||||||
Non-operating income | 20,001 | (0.6 | ) | 25,224 | (0.7 | ) | (5,223 | ) | 168 | ||||||||||||
Interest income | 6,324 | 4,707 | 1,617 | 53 | |||||||||||||||||
Dividend income | 2,480 | 2,755 | (275 | ) | 21 | ||||||||||||||||
Equity in earnings of affiliated companies | — | 2,305 | (2,305 | ) | — | ||||||||||||||||
Foreign exchange income | — | 2,515 | (2,515 | ) | — | ||||||||||||||||
Other | 11,197 | 12,942 | (1,745 | ) | 94 | ||||||||||||||||
Non-operating expenses | 51,431 | (1.6 | ) | 50,134 | (1.4 | ) | 1,297 | 432 | |||||||||||||
Interest expense | 11,472 | 12,814 | (1,342 | ) | 96 | ||||||||||||||||
Equity in losses of affiliated companies | 2,510 | — | 2,510 | 21 | |||||||||||||||||
Foreign exchange loss | 1,656 | — | 1,656 | 14 | |||||||||||||||||
Other | 35,793 | 37,320 | (1,527 | ) | 301 | ||||||||||||||||
Ordinary income | 11,109 | (0.3 | ) | 3,992 | (0.1 | ) | 7,117 | 93 | |||||||||||||
Extraordinary gains | 31,585 | (1.0 | ) | 40,105 | (1.2 | ) | (8,520 | ) | 265 | ||||||||||||
Gain on sale of investment in securities | 13,691 | 10,420 | 3,271 | 115 | |||||||||||||||||
Gain on change of equity | 8,630 | 2,392 | 6,238 | 72 | |||||||||||||||||
Gain on transfer of marketable securities to the pension trust | 6,534 | — | 6,534 | 55 | |||||||||||||||||
Reversal of provision for recycleing expenses of personal computers | 1,805 | 687 | 1,118 | 15 | |||||||||||||||||
Gain on sale of fixed assets | 923 | 3,385 | (2,462 | ) | 8 | ||||||||||||||||
Gain on sale of stock of affiliated companies | — | 23,221 | (23,221 | ) | — | ||||||||||||||||
Gain on lapse of share subscription rights | 2 | — | 2 | 0 | |||||||||||||||||
Extraordinary losses | 17,929 | (0.6 | ) | 7,140 | (0.2 | ) | 10,789 | 150 | |||||||||||||
Restructuring charges | 13,586 | — | 13,586 | 114 | |||||||||||||||||
Loss due to devaluation of investment in securities | 2,075 | 6,268 | (4,193 | ) | 17 | ||||||||||||||||
Impairment loss on fixed assets | 1,283 | 482 | 801 | 11 | |||||||||||||||||
Pension and severance costs | 985 | 390 | 595 | 8 | |||||||||||||||||
Income before income taxes | 24,765 | (0.7 | ) | 36,957 | (1.1 | ) | (12,192 | ) | 208 | ||||||||||||
Provision for income taxes | 31,370 | (0.9 | ) | 25,313 | (0.8 | ) | 6,057 | 264 | |||||||||||||
Minority interest in income of consolidated subsidiaries | 707 | (0.0 | ) | 191 | (0.0 | ) | 516 | 6 | |||||||||||||
Net income (loss) | JPY | (7,312 | ) | (-0.2 | ) | JPY | 11,453 | (0.3 | ) | JPY | (18,765 | ) | $ | (62 | ) | ||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)
(In millions of yen)
Shareholders’ equity | ||||||||||||||
Common stock | Additional paid-in capital | Retained earnings | Treasury stock | Total | ||||||||||
Balance as of March 31,2006 | 337,821 | 441,155 | 173,808 | D | 2,869 | 949,915 | ||||||||
Changes in nine months ended December 31 | ||||||||||||||
Increase by stock-for-stock exchange | 24,382 | 24,382 | ||||||||||||
Conversion of convertible debt and other | 1 | 1 | 2 | |||||||||||
Bonus to directors | D | 214 | D | 214 | ||||||||||
Dividends | D | 14,081 | D | 14,081 | ||||||||||
Net loss | D | 7,312 | D | 7,312 | ||||||||||
Disposal and purchase of treasury stock, net | D | 114 | D | 128 | D | 242 | ||||||||
Changes in the scope of equity method | 4,348 | 4,348 | ||||||||||||
Others | D | 547 | D | 547 | ||||||||||
Net changes in items other than those in shareholder’s equity | — | |||||||||||||
Total changes in nine months ended December 31 | 1 | 23,722 | D | 17,259 | D | 128 | 6,336 | |||||||
Balance as of December 31, 2006 | 337,822 | 464,877 | 156,549 | D | 2,997 | 956,251 | ||||||||
Valuation and translation adjustments | Share subscription rights | Minority interests | Total net assets | ||||||||||||
Unrealized gains (losses) on marketable securities | Unrealized gains (losses) on hedging | Foreign currency translation adjustments | |||||||||||||
Balance as of March 31, 2006 | 78,128 | — | 1,764 | — | 212,843 | 1,242,650 | |||||||||
Changes in nine months ended December 31 | |||||||||||||||
Increase by stock-for-stock exchange | 24,382 | ||||||||||||||
Conversion of convertible debt and other | 2 | ||||||||||||||
Bonus to directors | D | 214 | |||||||||||||
Dividends | D | 14,081 | |||||||||||||
Net loss | D | 7,312 | |||||||||||||
Disposal and purchase of treasury stock, net | D | 242 | |||||||||||||
Changes in the scope of equity method | 4,348 | ||||||||||||||
Others | D | 547 | |||||||||||||
Net changes in items other than those in shareholder’s equity | D | 4,922 | 272 | 7,078 | 73 | D | 5,893 | D | 3,392 | ||||||
Total changes in nine months ended December 31 | D | 4,922 | 272 | 7,078 | 73 | D | 5,893 | 2,944 | |||||||
Balance as of December 31, 2006 | 73,206 | 272 | 8,842 | 73 | 206,950 | 1,245,594 | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In millions of yen, millions of U.S. dollars)
Nine months ended December 31 | 2006 | 2005 | Increase (Decrease) | 2006 | ||||||||||||
I. Cash flows from operating activities: | ||||||||||||||||
Income before income taxes and minority interests | JPY | 24,765 | JPY | 36,957 | JPY | (12,192 | ) | $ | 208 | |||||||
Adjustments to reconcile income before income taxes and minority interests to net cash provided by operating activities: | ||||||||||||||||
Depreciation | 144,348 | 138,627 | 5,721 | 1,213 | ||||||||||||
Equity in (earnings) losses of affiliated companies | 2,510 | (2,305 | ) | 4,815 | 21 | |||||||||||
Gain on change of equity | (8,630 | ) | (2,392 | ) | (6,238 | ) | (73 | ) | ||||||||
Decrease (increase) in notes and accounts receivable | 145,411 | (4,401 | ) | 149,812 | 1,222 | |||||||||||
Increase in inventories | (122,724 | ) | (115,819 | ) | (6,905 | ) | (1,031 | ) | ||||||||
Increase (decrease) in notes and accounts payable | (99,345 | ) | 11,673 | (111,018 | ) | (835 | ) | |||||||||
Income taxes paid | (24,183 | ) | (26,235 | ) | 2,052 | (203 | ) | |||||||||
Other, net | 23,929 | (12,887 | ) | 36,816 | 201 | |||||||||||
Net cash provided by operating activities | 86,081 | 23,218 | 62,863 | 723 | ||||||||||||
II. Cash flows from investing activities: | ||||||||||||||||
Acquisitions of property, plant and equipment, net | (102,776 | ) | (57,193 | ) | (45,583 | ) | (864 | ) | ||||||||
Acquisitions of intangible assets | (32,052 | ) | (30,250 | ) | (1,802 | ) | (269 | ) | ||||||||
Proceeds from sales of investments, net | (3,584 | ) | 45,847 | (49,431 | ) | (30 | ) | |||||||||
Other, net | 5,652 | (7,901 | ) | 13,553 | 47 | |||||||||||
Net cash used in investing activities | (132,760 | ) | (49,497 | ) | (83,263 | ) | (1,116 | ) | ||||||||
Free cash flows (I + II) | (46,679 | ) | (26,279 | ) | (20,400 | ) | (393 | ) | ||||||||
III. Cash flows from financing activities: | ||||||||||||||||
Net proceeds from (repayment of) bonds and borrowings | 14,593 | (9,137 | ) | 23,730 | 123 | |||||||||||
Dividends paid | (13,613 | ) | (11,617 | ) | (1,996 | ) | (114 | ) | ||||||||
Other, net | 11,845 | (2,654 | ) | 14,499 | 99 | |||||||||||
Net cash provided by (used in) financing activities | 12,825 | (23,408 | ) | 36,233 | 108 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 5,063 | 8,681 | (3,618 | ) | 43 | |||||||||||
Net decrease in cash and cash equivalents | (28,791 | ) | (41,006 | ) | 12,215 | (242 | ) | |||||||||
Cash and cash equivalents at beginning of period | 452,370 | 501,502 | (49,132 | ) | 3,801 | |||||||||||
Cash and cash equivalents at end of period | JPY | 423,579 | JPY | 460,496 | JPY | (36,917 | ) | $ | 3,559 | |||||||
SEGMENT INFORMATION (UNAUDITED)
1. Business segment information
Nine months ended December 31, 2006 | (In millions of Yen) |
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Unaffiliated customers | 1,811,139 | 609,355 | 620,033 | 277,215 | 3,317,742 | — | 3,317,742 | ||||||||||
2. Intersegment | 74,424 | 116,220 | 29,243 | 129,335 | 349,222 | (349,222 | ) | — | |||||||||
Total sales | 1,885,563 | 725,575 | 649,276 | 406,550 | 3,666,964 | (349,222 | ) | 3,317,742 | |||||||||
Operating expenses | 1,780,379 | 760,560 | 655,441 | 391,318 | 3,587,698 | (312,495 | ) | 3,275,203 | |||||||||
Operating Income(loss) | 105,184 | (34,985 | ) | (6,165 | ) | 15,232 | 79,266 | (36,727 | ) | 42,539 | |||||||
Nine months ended December 31, 2006 |
| (In millions of U.S. dollars) | |||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Unaffiliated customers | 15,220 | 5,121 | 5,210 | 2,329 | 27,880 | — | 27,880 | ||||||||||
2. Intersegment | 625 | 976 | 246 | 1,087 | 2,934 | (2,934 | ) | — | |||||||||
Total sales | 15,845 | 6,097 | 5,456 | 3,416 | 30,814 | (2,934 | ) | 27,880 | |||||||||
Operating expenses | 14,961 | 6,391 | 5,508 | 3,288 | 30,148 | (2,625 | ) | 27,523 | |||||||||
Operating Income(loss) | 884 | (294 | ) | (52 | ) | 128 | 666 | (309 | ) | 357 | |||||||
Nine months ended December 31, 2005 | (In millions of Yen) | ||||||||||||||||
IT/Network Solutions Business | Mobile/ Personal Solutions Business | Electron Devices Business | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | |||||||||||
Sales | |||||||||||||||||
1. Unaffiliated customers | 1,763,406 | 802,417 | 574,070 | 323,727 | 3,463,620 | — | 3,463,620 | ||||||||||
2. Intersegment | 69,509 | 118,237 | 32,392 | 122,131 | 342,269 | (342,269 | ) | — | |||||||||
Total sales | 1,832,915 | 920,654 | 606,462 | 445,858 | 3,805,889 | (342,269 | ) | 3,463,620 | |||||||||
Operating expenses | 1,731,052 | 951,188 | 621,304 | 437,023 | 3,740,567 | (305,849 | ) | 3,434,718 | |||||||||
Operating Income(loss) | 101,863 | (30,534 | ) | (14,842 | ) | 8,835 | 65,322 | (36,420 | ) | 28,902 | |||||||
(Notes)
* | The business segments are classified on their proximity in terms of the type, nature and markets of their products and services. |
* | Major businesses of each segment are as follows: |
IT/Network Solutions Business | System Construction, Consulting, Outsourcing, Support(Maintenance), Servers, Storage products, Professional workstations, Business PCs, Computer software, Enterprise network systems, Network systems for telecommunications carriers, Broadcast video systems, Control systems, Aerospace/Defense systems | |
Mobile/Personal Solutions Business | Mobile handsets, Personal computers, Personal communication devices, BIGLOBE | |
Electron Devices Business | System LSI and other semiconductors, Electronic components, LCD modules etc |
* | Unallocable operating expenses included in “Eliminations / Corporate” for nine months ended December 31, 2006, 2005 were ¥34,598 million($291 million), ¥35,424 million, respectively. Corporate expenses include general corporate expenses and research and development expenses at NEC Corporation. |
2. Geographic segment information
Nine months ended December 31, 2006 | (In millions of Yen) |
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 2,573,674 | 302,723 | 441,345 | 3,317,742 | — | 3,317,742 | |||||||||
2. Intersegment | 322,600 | 12,566 | 150,884 | 486,050 | (486,050 | ) | — | ||||||||
Total sales | 2,896,274 | 315,289 | 592,229 | 3,803,792 | (486,050 | ) | 3,317,742 | ||||||||
Operating expenses | 2,848,151 | 316,548 | 593,125 | 3,757,824 | (482,621 | ) | 3,275,203 | ||||||||
Operating Income(loss) | 48,123 | (1,259 | ) | (896 | ) | 45,968 | (3,429 | ) | 42,539 | ||||||
Nine months ended December 31, 2006 |
| (In millions of U.S. dollars) | |||||||||||||
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 21,628 | 2,544 | 3,708 | 27,880 | — | 27,880 | |||||||||
2. Intersegment | 2,710 | 105 | 1,269 | 4,084 | (4,084 | ) | — | ||||||||
Total sales | 24,338 | 2,649 | 4,977 | 31,964 | (4,084 | ) | 27,880 | ||||||||
Operating expenses | 23,934 | 2,660 | 4,985 | 31,579 | (4,056 | ) | 27,523 | ||||||||
Operating Income(loss) | 404 | (11 | ) | (8 | ) | 385 | (28 | ) | 357 | ||||||
Nine months ended December 31, 2005 | (In millions of Yen) | ||||||||||||||
Japan | Europe | Others | Total before eliminations | Eliminations/ Corporate | Consolidated total | ||||||||||
Sales | |||||||||||||||
1. Unaffiliated customers | 2,636,739 | 377,272 | 449,609 | 3,463,620 | — | 3,463,620 | |||||||||
2. Intersegment | 331,606 | 11,720 | 178,488 | 521,814 | (521,814 | ) | — | ||||||||
Total sales | 2,968,345 | 388,992 | 628,097 | 3,985,434 | (521,814 | ) | 3,463,620 | ||||||||
Operating expenses | 2,944,371 | 386,311 | 623,353 | 3,954,035 | (519,317 | ) | 3,434,718 | ||||||||
Operating Income(loss) | 23,974 | 2,681 | 4,744 | 31,399 | (2,497 | ) | 28,902 | ||||||||
(Notes)
* | Segmenting nations and areas is based on their geographical proximity. |
* | Major nations and areas other than Japan |
Europe ... U.K. Britain, France, the Netherlands, Germany, Italy, Spain.
3. Overseas sales
Nine months ended December 31, 2006 | (In millions of Yen) |
Europe | Others | Total | |||||||
Overseas sales | 345,927 | 576,295 | 922,222 | ||||||
Consolidated sales | — | — | 3,317,742 | ||||||
Percentage of overseas sales to consolidated sales | 10.4 | % | 17.4 | % | 27.8 | % | |||
Nine months ended December 31, 2006 | (In millions of U.S. dollars) | ||||||||
Europe | Others | Total | |||||||
Overseas sales | 2,907 | 4,843 | 7,750 | ||||||
Consolidated sales | — | — | 27,880 | ||||||
Nine months ended December 31, 2005 | (In millions of Yen) | ||||||||
Europe | Others | Total | |||||||
Overseas sales | 428,374 | 573,806 | 1,002,180 | ||||||
Consolidated sales | — | — | 3,463,620 | ||||||
Percentage of overseas sales to consolidated sales | 12.4 | % | 16.5 | % | 28.9 | % |
(Notes)
* | Segmenting nations and areas is based on their geographical proximity. |
* | Major nations and areas other than Japan |
Europe ... U.K. Britain, France, the Netherlands, Germany, Italy, Spain.
* | Overseas sales refer to sales by the consolidated subsidiaries of the Company outside Japan. |
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 U.S. Securities and Exchange Commission, and in reports to shareholders and other communications. The U.S. Private Securities Litigation Reform Act of 1995 contains, and other applicable laws may contain, a safe-harbor for forward-looking statements, on which NEC relies 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, and (vii) movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar. 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. The securities may not be offered or sold in any jurisdiction in which registration is required absent registration or an exemption from registration under the applicable securities laws. For example, any public offering of securities to be made in the United States must be registered under the U.S. Securities Act of 1933 and made by means of an English language prospectus that contains detailed information about NEC and management, as well as NEC’s financial statements.
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Contacts: Diane Foley/Makoto Miyakawa
Corporate Communications Division
NEC Corporation
+81-3-3798-6511