Revision of NEC Corporation's Financial Forecast for Fiscal Year Ended March 31, 2006.
1. Revised consolidated financial forecast for the fiscal year ended March 31, 2006 (April 1, 2005 to March 31, 2006)
(In billions of yen) Net sales Pre-tax income Net income Forecast as of April 21, 2006 (A) 4,800.0 80.0 13.0 Forecast as of October 27, 2005 (B) 4,930.0 90.0 60.0 Difference (A - B) - 130.0 - 10.0 - 47.0
Note: As announced on March 22, 2006, NEC is planning to restate its consolidated financial results for past fiscal years as a result of revisions relating to fictitious transactions carried out at an NEC subsidiary and other revisions based on U.S. generally accepted accounting principles "U.S. GAAP". However, as exact figures have yet to be determined, NEC has not set forth the restated results for the fiscal year ended March 31, 2005, but will disclose such information as soon as possible.
2. Revised non-consolidated financial forecast for the fiscal year ended March 31, 2006 (April 1, 2005 to March 31, 2006)
(In billions of yen) Net sales Ordinary income Net income Forecast as of April 21, 2006 (A) 2,370.0 30.0 45.0 Forecast as of October 27, 2005 (B) 2,400.0 40.0 55.0 Difference (A - B) - 30.0 - 10.0 - 10.0 Results for the fiscal year ended 2,426.8 40.2 24.2 March 31, 2005
3. Revision of financial forecasts
1) Consolidated results
Despite continued steady sales in mobile infrastructure equipment as compared with the time of the previous announcement, the net sales forecast for the fiscal year ended March 31, 2006 has been revised downward by 130.0 billion yen due to decreases in broadband sales and IT solutions sales and the impact of discontinued operations relating to sales of businesses that were completed after the previous forecast was announced.
Although the decrease in sales will have an effect on operating income, operating income is forecasted to be 100.0 billion yen, with no change from the previously announced forecast, due to a positive impact relating to certain restatements based on U.S. GAAP. The forecast for income before income taxes has been revised downward by 10.0 billion yen from the previous announcement, due to the impact of discontinued operations of businesses that were sold after the previous forecast was announced.
The forecast for net income has been revised downward by 47.0 billion yen from the previous announcement. This is mainly due to a valuation allowance expected to be taken for deferred tax assets by NEC Electronics Corporation.
2) Non-consolidated results
Despite continued steady sales in mobile infrastructure equipment as compared with the time of the previous announcement, the net sales forecast for the fiscal year ended March 31, 2006 has been revised downward by 30.0 billion yen due to decreases in broadband sales and IT solutions sales.
The forecast for ordinary income has been revised downward by 10.0 billion yen from the previous announcement due to the decrease in forecasted net sales.
The forecast for net income has been revised downward by 10.0 billion yen from the previous announcement due to the decrease in forecasted ordinary income.
4. Year-end dividend for the fiscal year ended March 31, 2006
NEC expects to pay a year-end dividend of 3 yen per common share for the year ended March 31, 2006 (which would result in an annual dividend of 6 yen per common share, including the interim dividend paid in December 2005).
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," "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.
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 140,000 people worldwide and had net sales of 4,855 billion yen (approx. $45.4 billion) in the fiscal year ended March 2005.
For additional information, please visit the NEC home page at: http://www.nec.com
Source: NEC Corporation
In Japan: Diane Foley NEC Corporation firstname.lastname@example.org +81-3-3798-6511
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