Submission of NEC’s Semiannual Report for Fiscal Year Ending
March 31, 2007, and Corrections to Financial Results for First Half
and Full Fiscal Year Ended March 31, 2006 and for First Half of
Fiscal Year Ending March 31, 2007
In accordance with regulation 24-5 of the Securities and
Exchange Law of Japan, NEC Corporation (“NEC”) has submitted its
semiannual report on its financial results for the first half of
the fiscal year ending March 31, 2007 to the Kanto Local Financial
Bureau, Japan.
NEC made a decision to change its accounting principles for
preparing its consolidated financial statements required under the
Securities and Exchange Law of Japan and the Company Law of Japan
from accounting principles generally accepted in the U.S., or U.S.
GAAP, to accounting principles generally accepted in Japan, or
Japan GAAP, as of the first half of the fiscal year ending March
31, 2007. These first half results were announced on November 21,
2006. Following this, reconfirmation of our financial statements,
creation of notes and auditing by NEC’s auditor progressed with the
aim of submitting the semiannual report. However, during this
process it was determined that certain figures required
correction.
When NEC disclosed its results for the first half of the fiscal
year ending March 31, 2007 in accordance with Japan GAAP on
November 21, 2006, it presented figures for financial results for
the first half and full fiscal year ended March 31, 2006 under
Japan GAAP for comparison purposes. The correction of some of the
figures disclosed under Japan GAAP is attributable to some errors,
in addition to revisions to periods for recording sales, when Japan
GAAP was applied, following NEC’s swift adoption of Japan GAAP in
the latter half of October this year.
NEC will strive to prevent future corrections of its financial
results by strengthening its internal management structure. The
main corrections are outlined below.
Outline of Corrections
1. Content of main corrections (Please refer to the attachment
for the revised figures by contributing factors. The below numbers
are coherent with the attachment)
(1) Errors during application of Japan GAAP i) Expenses
recognized in the process of asset evaluation during restructuring
were recorded as operating expenses. These expenses have been
reclassified as extraordinary loss. ii) The effects of the return
of the government portion of benefit pension plans, established
under the Japanese Welfare Pension Insurance Law, of a subsidiary
were recorded as nonoperating income. These effects have been
reclassified as extraordinary income. iii) There were errors in
entries peculiar to consolidated accounting during the creation of
consolidated financial statements. These entries have been
corrected (such as tax effects of subsidiaries and gain on charge
of equity during reorganization). iv) Elimination of unrealized
profit and loss related to internal transactions has been allocated
to individual business segments from the “Eliminations / Corporate”
segment.
(2) Corrections related to periods for recording sales As of the
first half of the fiscal year ending March 31, 2007, NEC began
applying the “Practical Solution on Revenue Recognition of
Software” (ASBJ PITF No. 17). Transactions that were judged not to
meet sales requirements of the inspection breakdown required by the
standard, or transactions where proprietary rights were transferred
as a result of shipments, for which payments were not received due
to incomplete local adjustment, have been corrected.
* For further details please see the attached PDF files.
About NEC Corporation -------------------------------
NEC Corporation (NASDAQ: NIPNY) is one of the world's leading
providers of Internet, broadband network and enterprise business
solutions dedicated to meeting the specialized needs of its diverse
and global base of customers. NEC delivers tailored solutions in
the key fields of computer, networking and electron devices, by
integrating its technical strengths in IT and Networks, and by
providing advanced semiconductor solutions through NEC Electronics
Corporation. The NEC Group employs more than 150,000 people
worldwide. For additional information, please visit the NEC home
page at: http://www.nec.com *
Newsroom: http://www.nec.co.jp/press/en/