7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan
Telephone: +81-3-3454-1111
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Annual Report 2015
Year ended March 31, 2015
0910-0229
NEC will create “an information society friendly to humans and the earth”
Way. A more concrete application of this principle is our declaration of
image of “orchestrating a brighter world,” reflecting the principle to our
NEC serves to society and customers with values contributes to by
security, efficiency and equality through the power of ICT to offer
medium- to long-term development of the NEC Group.
by contributing to customers and society through the practice of the NEC
becoming a “Social Value Innovator.” We have developed a corporate key
business activities.
continuing to present to society or customers values such as safety,
solutions to social problems. We hope that our contribution underpins the
Sustainable Development of Society and the NEC Group through The NEC Way
Global environment
Stakeholders
Stakeholders
Customers/ Shareholders and Other Investors/ Business Partners/
Customers/ Shareholders and Other Investors/ Business Partners/
Customers/ Shareholders and Other Investors/ Business Partners/
Customers/ Shareholders and Other Investors/ Business Partners/
Local Communities/ Employees, etc.
Local Communities/ Employees, etc.
Local Communities/ Employees, etc.
Local Communities/ Employees, etc.
Local Communities/ Employees, etc.
Build trust through
communication
An information society friendly to
humans and the earth
Provide active disclosure
and feedback
NEC Group
Core Values
(What we value
and base our
behavior on)
Daily work
Daily work
Daily work
Daily work
Fiscal year plan
Fiscal year plan
Fiscal year plan
Fiscal year plan
Fiscal year plan
Mid-term growth plan
Mid-term growth plan
Mid-term growth plan
Mid-term growth plan
Mid-term growth plan
NEC Group Vision 2017
NEC Group Vision 2017
NEC Group
Code of
Conduct
(Corporate
ethics and
compliance)
NEC Group Corporate Philosophy
NEC Group Charter of Corporate Behavior
The NEC Way includes the Group Corporate Philosophy, the Group Vision 2017, the Group Core Values,
the Group Charter of Corporate Behavior, and the Group Code of Conduct.
NEC Group Corporate Philosophy: NEC strives through “C&C” to help advance societies worldwide toward deepened mutual understanding
NEC Group Vision 2017:
NEC Group Core Values:
and the fulfillment of human potential
To be a leading global company leveraging the power of innovation to realize an information society
friendly to humans and the earth
Passion for Innovation, Self-help, Collaboration, and Better Products, Better Services
d
NEC Corporation
Annual Report 2015
NEC will create “an information society friendly to humans and the earth”
Way. A more concrete application of this principle is our declaration of
image of “orchestrating a brighter world,” reflecting the principle to our
NEC serves to society and customers with values contributes to by
security, efficiency and equality through the power of ICT to offer
medium- to long-term development of the NEC Group.
by contributing to customers and society through the practice of the NEC
becoming a “Social Value Innovator.” We have developed a corporate key
business activities.
continuing to present to society or customers values such as safety,
solutions to social problems. We hope that our contribution underpins the
Solutions for Society
Value innovation
Value for society
(cid:127) Open innovation
(cid:127) Partnering
(cid:127) Financing
(cid:127) Consulting
(cid:127) Operational
management
services, etc.
Core ICT assets
Big Data
SDN
Cloud platform
Cyber security, etc.
Focusing on
fundamental issues
New values and
market creation
Safety
Ensuring a wide
range of safety, from
individual to country
Security
Serving society and
the earth
Efficiency
Realizing sustainable
growth
Equality
Closing the social
divide and
eliminating inequality
Corporate Key Message: Orchestrating a brighter world
6つのメガトレンド
NEC fuses innovative ICT technology, services and knowledge cultivated over many years to provide social solutions through collaboration
and cooperation with people around the globe and realize a safe, secure, efficient and equal society that brightens people’s lives.
Orchestrating a brighter world includes NEC’s strong determination for the future.
新興国の成長と新たな課題
連鎖する資源・環境問題
成熟社会モデルの模索
人口増加や都市化による水・食糧な
どの消費拡大が、他の資源や環境に
新興国では急激な経済成長で、国力
拡大が進む一方、環境問題や資源不
1
多大なインパクトを与える。 2
足などの新たな課題が発生。 3
先進国では少子高齢化 や設備老 朽
化などの変化が、現在の法制度や社
会システムの変革を迫る。
個の力の向上と影響力拡大
パワーの集中から拡散へ
多様化する脅威と安全安心ニーズ
インターネットの発展で、個の影響力
がグローバルに拡大する一方、サイ
4
バーリスクなど懸念も広がる。 5
新興国や個の影響力の拡 大により、
世界は分散化し、新たなパワーバラ
ンスで再構築される。
6
世界の大きな変化は、現実世界から
サイバー空間まで多様な脅威を発生
させ、安全安心需要が向上する。
NEC Corporation
Annual Report 2015
02
社会価値創造 7つのテーマ
個々人が躍動する豊かで公平な社会
Quality of Life
地球との共生
Sustainable Earth
枠を超えた多様な働き方
Work Style
安全
安心
Real time
Dynamic
Remote
リアルタイム
ダイナミック
リモート
効率
公平
安全・安心な都市・行政基盤
Safer Cities &
Public Services
産業と ICT の新結合
Industry Eco-System
安全・高効率なライフライン
Lifeline
Infrastructure
豊かな社会を支える情報通信
Communication
Contents
Management Policies
04 Message from the President
07 Progress on “Mid-term Management Plan 2015”
11 Message from the CFO
Business Activities for Value Creation
13 Performance Highlights
15 At a Glance
17 Review of Operations
25 Sales Structure in Japan
26 Sales Structure for the International Business
30 Business Activities for Solving Social Issues
30 Contribute to Creating an Equal Society in
Colombia through ICT
31 Contribute to Enhancing Expressway Safety and
Security through the Use of SDN
32 Contribute to Solving Water-Related Social
Problems through ICT
33 Contribute to a More Efficient City through a
Smart City Project in Santander, Spain
34 Infrared Thermography to Prevent
the Spread of Ebola in African Countries
Business Foundation to Support Value Creation
35 Corporate Governance
38 Messages from Outside Director and Audit &
Supervisory Board Member
39 Directors and Audit & Supervisory Board Members
41 Business Execution Structure
43 Stakeholder Engagement
45 Empowering Our People
47 Earning Customer Trust
48 Promoting the NEC Group “Environmental
Management Action Plan 2017/2030” and New
Objectives for Climate Change
49 R&D and Intellectual Property Strategy
51 Compliance and Risk Management
Corporate Data
52 Financial Section
61 Non-Financial Section
62 Corporate Overview
03 NEC Corporation
Annual Report 2015
Editorial Policy
Since 2013, NEC has published an integrated annual report that provides both
financial and non-financial information.
Annual Report 2015 comprises four chapters: I Management Policies; II
Business Activities for Value Creation; III Business Foundation to Support
Value Creation; and IV Corporate Data. The first chapter outlines thoughts
about NEC’s “Mid-term Management Plan 2015” and medium- to long-term
value creation. The second chapter includes an introduction to specific
examples of activities in addition to outlining business structure and social
value creation. The third chapter introduces the management foundation
supporting NEC’s medium- to long-term corporate value enhancement through
such means as corporate governance, directors and members of the Audit &
Supervisory Board and the business execution structure.
By exchanging opinions with the International Integrated Reporting Council
(IIRC), institutional investors and various other stakeholders, and reflecting
their opinions in its reporting, NEC will continue to provide clearer and more
useful information going forward.
Reporting Period
April 1, 2014 to March 31, 2015 (This report also includes information
obtained after this reporting period)
Scope of Report
NEC Corporation and its Consolidated Subsidiaries
Reference Guidelines
• Global Reporting Initiative (GRI) “Sustainability Reporting Guidelines 4.0”
• United Nations Global Compact
• ISO 26000
NEC is a signatory to
the United Nations
Global Compact.
Other Related Information
• Earnings releases/annual securities report
• Corporate Governance Report
• Corporate Social Responsibility (CSR)
• Annual Environmental Report
• Information Security Report
• Social Contribution Activities
Evaluation by External Parties
FTSE4Good Global Index
Euronext Vigeo World 120 Index
ETHIBEL PIONEER
& EXCELLENCE
STOXX
ESG LEADERS
Morningstar Socially Responsible
Investment Index
EcoVadis
MSCI ACWI ESG Index
MSCI World ESG Index
Message from the President
Sustainable Development
At NEC, we ensure continual development of the NEC Group
accountability. The Corporate Governance Code was
and contribute to a sustainable society by implementing
adopted in June, and the NEC Group will continue to bolster
The NEC Way, a cohesive framework that outlines the NEC
initiatives emphasizing dialogue with stakeholders as we
Group’s management practices and operations.
aim to ensure highly-effective corporate governance. We
NEC is working to realize “an information society
are also committed to keeping open communications with
friendly to humans and the earth” as asserted in the NEC
stakeholders to improve our operations and build
Group Vision 2017, based on NEC’s Corporate Philosophy.
relationships of trust.
With belief that enterprises must contribute to the well-
One of the ongoing practices began in 2005, when NEC
being of society, everyone at NEC values moral and is
became a signatory to the United Nations Global Compact
committed to meeting compliance standards in daily
(UNGC). NEC continues to conduct corporate business
business operations and putting into practice the NEC
activities in compliance with the ten principles in the areas
Group Core Values. In doing so, the NEC Group aims to solve
of human rights, labor, the environment, and anti-corruption
social and environmental issues which affect people’s lives.
based on the UNGC framework.
It is also important to maintain proactive disclosure of
NEC is also participating proactively in international
activities and challenges to our stakeholders and fulfill
frameworks such as “Transforming our world: the 2030
04
NEC CorporationAnnual Report 2015Management Policies
Value Creation through Information and Communications Technology
効率
安心
目立たないところ
で地球や社会を支
える
効率
持続可能な成長の
実現
公平
価値創造の手段
社会・お客様の
本質的価値の追求
・ オープン
イノベーション
・ パートナリング
・ ファイナンシング
Agenda for Sustainable Development” that will be adopted
豊かな社会を実現するための
4つの提供価値
安全
国家から個人まで
幅広い安全に対応
by the United Nations this September, and we are striving
a diverse culture where people from different backgrounds
issues. To be an innovative company, it is vital to establish
安全
and different ideas can collaborate. Going forward, NEC will
promote innovation as well as global leaders who will lead
innovation to enhance societal value.
安心
to solve social issues through our “Solutions for Society.”
The concept of innovation takes on a very important
meaning in the context of NEC’s efforts to solve social
・ コンサルティング
・ 運用サービス
など
ICT アセット
ビッグデータ
SDN
クラウド基盤
サイバーセキュリティ
declared our commitment to transforming the NEC Group
など
into a “Social Value Innovator.” Through our “Solutions for
In line with the “Mid-term Management Plan 2015,” we
新たな価値・
市場の創造
Society.”
多様な格差や不公
as well as provide additional clarity for the “Solutions for
平の解消
公平
The NEC Group takes full advantage of Information and
Society,” we are working to provide the values of safety,
Communications Technology, or ICT to provide value, such as
security, efficiency and equality.
6つのメガトレンド
safety, security, efficiency and equality through the
Observing the megatrends in the world, we see some
“Solutions for Society.” We place particular importance on
social problems are emerging, such as resources and
three keywords: “real-time,” “dynamic,” and “remote.” This is
連鎖する資源・環境問題
新興国の成長と新たな課題
成熟社会モデルの模索
人口増加や都市化による水・食糧な
どの消費拡大が、他の資源や環境に
新興国では急激な経済成長で、国力
拡大が進む一方、環境問題や資源不
because these are strengths rooted in the technologies and
先進国では少子高齢化 や設備老 朽
化などの変化が、現在の法制度や社
会システムの変革を迫る。
environmental issues, as well as growth in emerging
1
多大なインパクトを与える。 2
足などの新たな課題が発生。 3
countries. In the fiscal year under review, we have selected
know-how that we have cultivated over the years, and the
the areas in which we can contribute to solving problems,
source of the value the NEC Group provides.
個の力の向上と影響力拡大
パワーの集中から拡散へ
多様化する脅威と安全安心ニーズ
インターネットの発展で、個の影響力
がグローバルに拡大する一方、サイ
新興国や個の影響力の拡 大により、
世界は分散化し、新たなパワーバラ
ンスで再構築される。
世界の大きな変化は、現実世界から
サイバー空間まで多様な脅威を発生
させ、安全安心需要が向上する。
For example, in the field of Big Data utilization, new
and we have established seven themes for social value
4
バーリスクなど懸念も広がる。 5
creation. Formulating these seven themes enables us to
services leveraging ICT are being created. In these services,
6
further clarify the direction the NEC Group should pursue,
massive amounts of data are processed and analyzed in real
Seven Themes for Social Value Creation
Quality of Life
Sustainable Earth
Work Style
Real time
Dynamic
Remote
Safer Cities &
Public Services
Industry Eco-System
Lifeline
Infrastructure
Communication
05 NEC Corporation
Annual Report 2015
time, and the analytics are applied to forecast future events
NEC possesses many powerful technologies and
and create dynamic solutions for our customers. Moreover,
solutions in ICT, including face recognition technology with
these services can be provided to the customers remotely.
the world’s most accuracy, as well as in domains such as
By pursuing the real-time nature of ICT, as well as its
analytic engines, Big Data, SDN, cloud platform and safety.
dynamism and remote properties, we provide social
We will utilize ICT to link these technologies with individual
solutions that contribute to the world through values of
infrastructure systems and continue to contribute to the
safety, security, efficiency and equality.
building of infrastructure that offers new value.
Maximizing Corporate Value
In April 2013, we announced our “Mid-term Management
as its know-how and cooperate with a variety of partners
Plan 2015.” The first year of the plan was positioned as a
to build a social infrastructure in 2020. Furthermore, we
year for preparation, the second set as a year for delivering
will focus on legacy-building achievements while
results, and the third positioned as a year for growth. In the
accelerating the development and expansion of “Solutions
fiscal year ending March 31, 2016 (the upcoming fiscal
for Society” that aims to create a more advanced social
year), as the year of growth, we will focus on initiatives
infrastructure through ICT.
aimed at accelerating our growth strategy and improving
As a social value innovator, NEC is committed to
our profitability.
delivering safety, security, efficiency and equality worldwide
In addition, we believe it is necessary to reform our
to connect to our own growth. We will continue to create
corporate culture to increase corporate value over the long-
new value to achieve our mid-term management plan and
term horizon. At the NEC Group, there is a deeply-rooted
realize our Group vision, together with the sustainable
culture of providing prominent value to each client in a
growth of society and the NEC Group in the future.
customized manner. However, to be competitive on a global
I look forward to your continued understanding and
scale and grow our business, we must build up a single,
support as we endeavor to reach our goals.
common platform that we provide to multiple customers.
Therefore, we will also work on establishing a business
model that will be integrated into our corporate culture.
June 2015
In terms of our initiatives over the medium to long-term
span, we have concluded a partnership agreement with the
Tokyo Organising Committee of the Olympic and Paralympic
Games, and NEC has become a Gold Partner for the Tokyo
2020 Olympic and Paralympic Games (Tokyo 2020). Tokyo
2020 is an opportunity for Japan to evolve into a mature
society, and also represents a chance for NEC to accelerate
its transformation into a social value innovator through
contributions primarily to Tokyo 2020's Specialist Public
Safety Equipment & Software and Network Equipment that
will help create a legacy* for solving social problems.
NEC provides biometric authentication technologies
including the face recognition technology, and the world's
first commercialized SDN-based network solutions. We will
leverage our track record in providing technologies as well
Nobuhiro Endo
President, NEC Corporation
* Legacy: Tangible and intangible assets in sports, society(culture,
education), environment, urban development, and economy
that are built in cities and countries for the hosting of the
Olympics and Paralympic Games
06
NEC CorporationAnnual Report 2015Management Policies
Progress on “Mid-term Management Plan 2015”
The fiscal year ended March 31, 2015 (the fiscal year under review) marked the second year of the “Mid-term Management
Plan 2015,” and during the year we focused on business activities aimed at achieving growth. Having declared our intention to
transform the NEC Group into a Social Value Innovator, we are engaging in businesses based on the three policies of focusing
on “Solutions for Society,” focus on Asia and the promotion of ‘locally-led’ businesses, and stabilizing our financial foundation.
We have positioned the fiscal year ending March 31, 2016 (the upcoming fiscal year), the final year of the mid-term
management plan, as a year for growth. In the upcoming fiscal year, we will grow our businesses and create the launching
point for the next mid-term management plan. In this feature, we introduce the achievements made during the second year of
the mid-term management plan, as well as initiatives we will undertake in the third year.
Main Initiatives and Performance in Fiscal 2015
(1) Focus on “Solutions for Society”
NEC concentrates its management resources in “Solutions for
Society,” and provides advanced social infrastructure using ICT
(information and communications technology). We are transforming
into a Social Value Innovator and aim to contribute to the realization
of an affluent society, a society that ensures safety, security,
efficiency and equality.
Mid-term Management Policy
(1) Focus on Solutions for Society
Transformation into a “Social Value Innovator”
• Focus management resources on businesses that advance social infrastructure
through ICT
• Create new business models with the understanding that social problems
provide an opportunity for growth
(2) Focus on Asia, Promotion of “Locally-led” Businesses
Create a foundation for growth as a company able to compete globally
• Focus on emerging and developing countries, in particular in Asia
• Realize increased sensitivity to local needs, increased business speed
(3) Stabilize Our Financial Foundation
• Enhance cost competitiveness
• Create an earnings structure that generates operating income of ¥150
billion and free cash flows of ¥100 billion
• Use hybrid finance to ensure financial reserve
Achieve an
operating income
ratio of 5% and
an overseas sales
ratio of 25%
In the fiscal year under review, we focused on SDN (Software-Defined
service. The strengths of our service are high cost performance,
Networking), a next-generation network technology that provides
strong performance, and high reliability. Furthermore, we will newly
both efficiency and safety. In Japan, NEC was selected as the partner
build the NEC Kobe Data Center to strengthen the domestic data
vendor for NTT DOCOMO, INC.’s development of network virtualization
center business.
technology. We progressed on preparations for a large-scale trial on a
In Big Data, we delivered a Predictive Monitoring and Diagnostics
commercial network aimed at launching Virtualized Customer Premises
System for large-scale plants to The Chugoku Electric Power Co., Inc.
Equipment (vCPE) solutions for Telefónica Brasil, S.A. Already, NEC has
This system detects abnormalities in equipment at an early stage and
delivered more than 250 systems for a variety of customers, including
provides information on locations of possible abnormalities, allowing
hospitals, transportation systems, municipalities, telecom operators,
time for repairs before a malfunction occurs. In the state of Texas in
and data centers.
the U.S., we worked on a project for a Water Leak Detection Service.
In the cloud business, we utilized the NEC Kanagawa Data
By combining high-precision sensors and the cloud, this service allows
Center to expand sales of the “NEC Cloud IaaS” cloud platform
water utilities to manage water resources at low cost.
07
NEC CorporationAnnual Report 2015 In safety, in June 2014 we began full-scale operations of the Cyber
Security Factory to support the comprehensive information security
of approximately 100 companies. This facility was newly constructed
as a core base for protecting information assets from cyberattacks. On
the other hand, our face recognition technology, which supports a
more secure society, was ranked No. 1 for the third consecutive time
in benchmark testing performed by the U.S. National Institute of
Standards and Technology (NIST). Our fingerprint recognition
technology was also ranked highest in the industry.
Finally, in smart energy, NEC delivered smart meter communication
units for Tokyo Electric Power Company, Incorporated. We also
established NEC Energy Solutions, Inc. in the U.S. as part of our effort
to globally expand the energy storage business.
M
a
n
a
g
e
m
e
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t
P
o
l
i
c
i
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s
Focus on Solutions for Society
l Delivered backbone network using SDN to NEXCO-West,
and the town of Nishihara in Okinawa Prefecture, Japan
l Cooperating with KT Corporation in the SDN field
l Conducted vCPE*1 trail with Telekom Austria
l Selected as NTT DOCOMO, INC.’s partner for
commercializing network virtualization technology
l Established a strong global sales/support force with
NetCracker in SND/NFV*2
l Formed a partnership with the Foxconn Technology
Group for datacenter services
l Telefónica Brasil, S.A. begin a massive trial using
NEC’s vCPE solutions over
the commercial broadband network
SDN
Big Data
Safety/
Security
Energy
l Commenced full-scale operations of the
“Cyber Security Factory”
l Ranked first for facial recognition and
fingerprint recognition in the benchmark
test by NIST
l Applied face recognition technology to a
monitoring system in Tigre, Argentina
l Provided an ID system for concert-goers
using facial recognition technology
l Delivered infrared thermography cameras
as a countermeasure against Ebola
l Built an integrated disaster-prevention
system using the world’s first crowd
behavior analysis technology for Toshima
City Office, Tokyo
l Delivered a Predictive Monitoring and Diagnostics
System to the Shimane Nuclear Power Plant for
Chugoku Electric Power Co., Inc.
l Launched Water Leak Detection Service commercially
for early leakage detection
l Helped to launch smart waste collection service in
Santander, Spain
l Cooperating with Texas State
University in a social
infrastructure project including
water management
l Delivered a remote monitoring and
maintenance system for an IHI
Transport Machinery Co., Ltd.
mechanical multistory parking lot
l Delivered ‘NEC Cloud laaS’ to
Cloud
Sumitomo Life
Insurance Group
and Meiji Fresh
Network Co., Ltd.
etc.
l Established NEC Energy Solutions, Inc. in U.S.A.,
a world leading EMS company
l Commissioned a grid energy storage installation
in the U.K.
l Delivered 125 EV/PHV charging infrastructure to
Tokyo Midtown in Japan
*1 vCPE:virtualized Customer Premises Equipment
*2 NFV:Network Functions Virtualization
(2) Focus on Asia, Promotion of “Locally-led” Businesses
The NEC Group is expanding international business with an aim to
Technology Corp., provided Swisscom AG, a leading Swiss telecom
company for Operational Support System or OSS. We also agreed
establish a foundation for growth in Asia in particular, where there
with Swisscom to discuss further for providing technology for next-
is robust demand for social infrastructure. We are paying close
generation Telecom Operations and Management Solutions
attention to local needs and work to accelerate the development of
(hereafter, TOMS) and Management and Network Orchestration
“locally-led” businesses.
(hereafter, MANO).
During the fiscal year under review, in the telecom carrier
Moreover, in the IT-related business, we began new businesses
business, NEC worked on a number of large projects for submarine
globally in both the IT and social infrastructure fields. During the
cable systems in the Asia-Pacific region. In addition, we received an
fiscal year under review, NEC integrated the public transportation
order for the world’s first submarine cable system crossing the
fare system of Dhaka (Bangladesh) and introduced facial recognition
South Atlantic Ocean as well as an order from Zambia’s Zamtel for a
technology into the urban surveillance system of Tigre (Argentina).
large mobile backhaul project. NEC and its subsidiary, NetCracker
We also participated in a smart waste collection management
NEC Corporation
Annual Report 2015
08
service in Santander (Spain), and provided managed IT service in
Australia. These projects were obtained by offering the NEC Group’s
technologies and expert solutions in a global market, and going
forward, we will develop these as the pillars of our solutions for
further growth.
Main Initiatives in Global Business
Greater China and APAC
l Commenced demonstration tests for energy management system for
mobile phone base stations in India
l Deployed leading face recognition solution at Lemon Tree Hotels for
advanced security
l Provided face recognition technology to Surat City Police
l Cooperating with KT Corporation in SDN field
l Awarded an order to build New Trans-Pacific Cable
System “FASTER”
l Began construction of “SEA-US” (the South-East
Asia-United States ) Cable System
l Awarded an order to build a submarine cable system between Thailand
l Delivered a transit fare system for public transportation in
and Hong Kong
Dhaka, Bangladesh
l Built ICT infrastructure for the Myanmar International
Convention Center
l Implemented solutions for SMRT Corporation to
enhance bus service excellence
l Signed MOU with Singapore Economic Development
Board to collaborate on cyber security, smart energy,
health care and IoT
l Implemented nationwide digital TV transmitters for Thai Public
Broadcasting Service
l Provided cloud service Obbligato for SaaS, to auto part and machine tool
manufacturer in Thailand
l Won a contract for management and provision of Centralised Processing
facilities for the Australian Department of Defence
l Awarded a next generation WiFi and video solution, “iPASOLINK EX” for
public safety purposes from the Liverpool City Council, Australia
l Won TOMS contract from Singtel Optus Pty Limited, an integrated
telecommunications service provider in Australia
EMEA
l Collaborated with Arqiva with the BBC on a series of live trails of
over-the-air 4K Ultra High Definition (UHD) broadcasts
Americas
l Delivered ICT system for a stadium in Natal, Brazil
l Collaborated with Brazil’s largest TV network, for
l Formed a partnership with Ymens to develop trustworthy government
live 4K terrestrial broadcasting trial
cloud services for Romania
l Helped to launch smart waste collection
service in Santander, Spain
l Collaborated with Dacom B.V. on precision
farming solution field tests in Romania
l Awarded a contract for microcell backbone/
access from Zamtel, Zambia
l Delivered infrared thermography cameras as
a countermeasure against Ebola
l Started large-scale trial on a commercial network
aimed at launching vCPE solutions for Telefónica
Brasil, S.A.
l Applied face recognition technology for a
monitoring system in Tigre, Argentina
l Collaborating with the Mexican Space Agency in
satellite development
l Cooperating with Texas State University in a
social infrastructure project
l Built ICT rooms at schools and community
centers in Colombia
(3) Stabilize Our Financial Foundation
In terms of building a stable financial foundation, the NEC Group
To this end, NEC acquired 100% stakes of NEC Fielding, Ltd., in
enhancing efficiency in system integration and services.
aims to secure solid net income and consistently generate 100
Furthermore, we reorganized the domestic hardware and software
billion yen of free cash flows per year by establishing stronger
development and production offices, thereby strengthening
profit structure. Furthermore, NEC hones cost competitiveness to
“Solutions for Society.” We also established NEC Management
accelerate its growth in a global market.
Partner, Ltd. and initiated measures to improve business processes.
09 NEC Corporation
Annual Report 2015
processes and reduce workload of indirect operations by 30%. We
will allocate abundant resources from these initiatives into growth
fields, such as businesses related to the Social Security and Tax
Number System and the Tokyo 2020 Olympic and Paralympic
Games, thereby achieving more efficient business management.
In fiscal 2016, we will set the course of direction that the NEC
Group can follow to achieve future growth, and create the next
medium-term management plan.
Going forward, our goal remains to contribute to realizing a
better society by developing “Solutions for Society.” NEC is
transforming into a “Social Value Innovator” to serve a broader
range of stakeholders.
Carrying Out NEC’s Growth Strategy
In the “Mid-term Management Plan 2015,” the NEC Group has
established “Solutions for Society,” as a focus business for global reach,
and is advancing initiatives to deliver lasting growth. In the two years
after our announcement of the midterm plan, we built stronger business
portfolio with clearer focus areas. In the third and final year of the plan,
we strive to make major contributions to markets.
In looking back at the past two years, the environment has
improved in domestic public infrastructure investment, including
outdoor communications systems, initiatives related to fire
prevention digital technology, and initiatives related to the adoption
of the Social Security and Tax Number System in Japan. On the
other hand, some markets were slower than we initially expected,
namely, the launch of the market for SDN for telecom carriers and
the launch of energy markets, which we had expected would
expand significantly. Furthermore, the weakening of the yen
resulted in higher materials costs, particularly in the system
platform business.
Taking these into consideration, in fiscal 2016, we will focus on
accelerating growth strategies and improving profitability.
With respect to accelerating the growth strategies, we plan to
increase strategic investments in SDN and energy by ¥15 billion
year on year in fiscal 2016, and boost both sales and profits of
these businesses over the medium term. We will also increase the
sales ratio of focus businesses, such as SDN, cloud, Big Data, safety,
and smart energy, from 10% to 15% year on year.
In terms of bolstering initiatives aimed at improving our level of
profitability, we are taking initiatives to streamline business
10
NEC CorporationAnnual Report 2015Management Policies
Message from the CFO
Isamu Kawashima
Executive Vice President, CFO (Chief Financial Officer) and
Member of the Board
Fiscal 2015 Performance
The NEC Group recorded consolidated net sales of ¥2,935.5 billion
for fiscal 2015, a decrease of ¥107.6 billion or 3.5% year on year.
While the Public business saw an increase in sales, there was a
decrease in the System Platform business. Also, sales of Others
declined due to deconsolidation of the Internet service business
and mobile phone sales business. Regarding profitability,
consolidated operating income improved by ¥21.9 billion year on
year, to ¥128.1 billion, mainly due to increased sales in the Public
business and improved mobile phone business.
Dividends and Returns to Shareholders
Consolidated net income was ¥57.3 billion, a year-on-year
improvement of ¥23.6 billion. Despite a decrease in subsidiaries and
affiliates’ stock, there was improvement in operating income as well
as in non-operating income including equity in earnings of affiliates
and foreign exchange gain. In addition, there were minority interests
in income from making NEC Fielding, Ltd. a wholly-owned subsidiary.
As a result, return on equity (ROE) was 7.5%, a 2.7 percentage point
improvement from the previous fiscal year.
NEC intends to adopt a policy that best responds to the rapidly
changing business environment. Thus, the Company considers,
among other factors, the following in determining its cash
dividends: the profits earned in the relevant fiscal year; the financial
outlook for the following fiscal year, the dividend payout ratio, and
the internal demand for funds such as capital expenditures. NEC
attained the target for operating income and net income, and a
dividend of ¥4 per share was issued as promised at the beginning
of the period. For the fiscal year ending March 31, 2016, NEC plans
for an annual dividend of ¥6 per share of common stock while no
interim dividend will be paid.
(Billion ¥)
Net sales
Overseas sales
Overseas sales ratio
Operating income
Operating income ratio
Net income
Return on equity (ROE)
Fiscal 2015 Financial State
FY2014/3
Results
FY2015/3
Initial plan
Results
3,043.1
569.2
18.7%
106.2
3.5%
33.7
4.8%
3,000.0
120.0
4.0%
35.0
2,935.5
586.8
20.0%
128.1
4.4%
57.3
7.5%
Total assets were ¥2,620.7 billion as of March 31, 2015, an increase of
the end of the previous fiscal year to ¥1,576.8 billion, mainly due to an
¥115.3 billion compared with the end of the previous fiscal year. Current
increase in accounts receivable-trade.
assets as of March 31, 2015 increased by ¥73.9 billion compared with
11
NEC CorporationAnnual Report 2015
Noncurrent assets as of March 31, 2015 increased by ¥41.4
As a result, the owner’s equity as of March 31, 2015 was ¥823.7
billion compared with the end of the previous fiscal year to
¥1,043.9 billion, mainly due to increased retirement benefit assets.
Total liabilities as of March 31, 2015 decreased by ¥1.2 billion
compared with the end of the previous fiscal year, to ¥1,736.5
billion. The balance of interest-bearing debt amounted to ¥520.8
billion, a decrease of ¥54.4 billion compared with the end of the
previous fiscal year. The debt-equity ratio as of March 31, 2015
was 0.63, an improvement of 0.20 points compared with the end of
the previous fiscal year. The balance of net interest-bearing debt as
of March 31, 2015, calculated by offsetting the balance of interest-
bearing debt with the balance of cash and cash equivalents,
amounted to ¥339.6 billion, a decrease of ¥28.9 billion compared
with the end of the previous fiscal year. The net debt-equity ratio
as of March 31, 2015 was 0.41, an improvement of 0.12 points
compared with the end of the previous fiscal year.
Total net assets were ¥884.2 billion as of March 31, 2015, an
increase of ¥116.5 billion compared with the end of the previous
fiscal year, mainly due to the recording of net income and an
increase in the remeasurements of defined benefit plans for the
fiscal year ended March 31, 2015.
billion and owner’s equity ratio was 31.4%, an improvement of 3.6
points compared with the end of the previous fiscal year.
Net cash inflows from operating activities for the fiscal year
ended March 31, 2015 were ¥87.9 billion, a worsening of ¥6.2
billion compared with the previous fiscal year, mainly due to
worsened working capital.
Net cash outflows from investing activities for the fiscal year
ended March 31, 2015 were ¥47.5 billion, an increase of ¥8.6 billion
as compared with the previous fiscal year. This was mainly due to
increased outflows for business acquisitions, while in the same
period of the previous fiscal year, the acquisition of trust
beneficiary rights set to land and buildings of the NEC Group’s
Tamagawa business facilities was offset by cash inflows from the
gain on sales of subsidiaries and affiliates’ stocks.
As a result, free cash flows, the sum of cash flows from
operating activities and investing activities for the fiscal year
ended March 31, 2015 totaled a cash inflow of ¥40.4 billion, a
decrease of ¥14.8 billion year on year.
Net Debt-Equity Ratio
Owner’s Equity, Owner’s Equity Ratio
Operating Cash Flows, Investment
Cash Flows, Free Cash Flows
(Billion ¥)
823.7
150.0
143.7
(Billion ¥)
900.0
757.1
0.67
0.62
0.57
0.53
(times)
0.8
0.6
0.4
0.2
710.7
695.9
657.0
0.41
600.0
28.8%
27.5%
27.8%
31.4%
25.7%
300.0
100.0
83.9
94.1
87.9
50.0
33.7
34.2
42.0
55.2
40.4
0
–112.6
–146.2
–49.7
–38.9
–47.5
–101.7
0
2011
2012
2013
2014
2015
(At year-end)
0
2011
2012
2013
2014
Owner’s Equity
Owner’s Equity Ratio
2015
(At year-end)
–200.0
2011
2012
2013
2014
2015
Operating Cash Flows
Free Cash Flows
Investment Cash Flows
Initiatives for Fiscal 2016
NEC has achieved year-beginning targets for operating income and
The NEC Group is preparing for the voluntary adoption of
net income for the past three years consecutively, including the
International Financial Reporting Standards (IFRS) from the fiscal
year under review, and is shaping a structure capably of recording
year ending March 31, 2017, to enhance the international
stable profits in addition to focusing on “Solutions for Society.” The
comparability of its financial information in capital markets.
business plan for the year ending March 31, 2016, the final year of
At NEC, we will continue with our initiatives in establishing a
the “Mid-term Management Plan 2015,” is to accelerate in strategic
strong finance foundation. In doing so, we aim to achieve initial
investments necessary for NEC to enter its growth trajectory. This
targets in the upcoming fiscal year, and to record results in
will enable well-balanced business portfolio centered on sales and
accordance with a year for growth.
earnings growth in target domains or overseas to grow, and achieve
better profitability and improved cash flows.
12
NEC CorporationAnnual Report 2015Management Policies
Performance Highlights
NEC Corporation and Consolidated Subsidiaries
For the years ended or at year-end of March 31,
2010, 2011, 2012, 2013, 2014 and 2015
NEC Electronics
Corporation became an
equity-method affiliate
The consumer PC
business became an
equity-method affiliate
Transferred NEC
Mobiling, Ltd.
3,583.1
Net sales
3,115.4
3,036.8
3,071.6
Sales of the current businesses
2,600.0
2,550.0
50.9
57.8
Operating income
2,730.0
114.6
2,630.0
73.7
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,583,148
¥3,115,424
¥3,036,836
¥3,071,609
2010
2011
2012
Millions of yen
2013
Overseas sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
712,886
Percentage of international sales to consolidated net sales (%) . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures (property, plant and equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (property, plant and equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per share data (in yen and U.S. dollars):
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on equity (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner’s equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt-equity ratio (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CO2 emissions reduction by providing IT solutions (thousand tons) . . . .
Improvement in energy efficiency of products (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.9
50,905
49,429
11,428
134,816
(41,241)
93,575
275,970
83,098
111,167
5.04
4.00
2,937,644
790,904
1.6
26.9
729,548
0.92
310
142,358
1,900
44
479,349
15.4
57,820
41
(12,518)
33,660
(146,244)
(112,584)
176,514
52,850
62,097
481,492
15.9
73,742
42,050
(110,267)
83,857
(49,706)
34,151
161,968
41,980
53,306
(4.82)
0.00
(42.44)
0.00
2,628,931
757,054
—
28.8
675,798
0.89
283
115,840
2,120
53
2,557,570
656,956
—
25.7
692,734
1.05
265
109,102
2,310
66
483,118
15.7
114,647
92,024
30,434
143,748
(101,742)
42,006
151,676
45,614
51,167
11.71
4.00
2,580,966
710,666
4.5
27.5
603,451
0.85
270
102,375
2,980
64
13
2014
2015
¥3,043,114
¥2,935,517
Millions of
U.S. dollars
2015
$24,463
4,890
Percent change
2015/2014
–3.5%
3.1
1,067
934
478
733
(396)
337
1,118
312
404
0.18
0.03
21,839
6,864
20.6
62.1
69.8
–6.6
—
–26.8
-6.0
-62.1
7.4
69.7
0.0
4.6
18.3
520,778
4,340
–9.5
569,172
18.7
106,193
69,152
33,742
94,124
(38,893)
55,231
142,723
98,708
45,167
12.99
4.00
2,505,329
695,949
4.8
27.8
575,151
0.83
258
100,914
2,290
75
586,844
20.0
128,084
112,112
57,302
87,917
(47,510)
40,407
134,205
37,425
48,518
22.05
4.00
2,620,652
823,650
7.5
31.4
0.63
232
98,882
2,540
91
NEC CorporationAnnual Report 2015 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,583,148
¥3,115,424
¥3,036,836
¥3,071,609
Overseas sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
712,886
2010
2011
2012
Millions of yen
2013
Percentage of international sales to consolidated net sales (%) . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures (property, plant and equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (property, plant and equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per share data (in yen and U.S. dollars):
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on equity (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner’s equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt-equity ratio (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CO2 emissions reduction by providing IT solutions (thousand tons) . . . .
Improvement in energy efficiency of products (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.9
50,905
49,429
11,428
134,816
(41,241)
93,575
275,970
83,098
111,167
5.04
4.00
2,937,644
790,904
1.6
26.9
729,548
0.92
310
142,358
1,900
44
479,349
15.4
57,820
41
(12,518)
33,660
(146,244)
(112,584)
176,514
52,850
62,097
2,628,931
757,054
—
28.8
675,798
0.89
283
115,840
2,120
53
481,492
15.9
73,742
42,050
(110,267)
83,857
(49,706)
34,151
161,968
41,980
53,306
2,557,570
656,956
—
25.7
692,734
1.05
265
109,102
2,310
66
483,118
15.7
114,647
92,024
30,434
143,748
(101,742)
42,006
151,676
45,614
51,167
11.71
4.00
2,580,966
710,666
4.5
27.5
603,451
0.85
270
102,375
2,980
64
(4.82)
0.00
(42.44)
0.00
Stopped the
development of new
smartphone models
Divested NEC
BIGLOBE Ltd.
(Billion ¥)
2,935.5
128.1
3,043.1
2,890.0
106.2
2014
2015
¥3,043,114
¥2,935,517
569,172
18.7
106,193
69,152
33,742
94,124
(38,893)
55,231
142,723
98,708
45,167
12.99
4.00
2,505,329
695,949
4.8
27.8
575,151
0.83
258
100,914
2,290
75
586,844
20.0
128,084
112,112
57,302
87,917
(47,510)
40,407
134,205
37,425
48,518
22.05
4.00
2,620,652
823,650
7.5
31.4
520,778
0.63
232
98,882
2,540
91
Key Management Measures
l Measures to restructure business portfolio
n Measures to grow business and strengthen financial foundation
Year ended March 31, 2011
l Made the semiconductor business NEC Electronics Corporation,
currently Renesas Electronics Corporation, into an equity-
method affiliate
Year ended March 31, 2012
l Made the consumer PC business into
an equity-method affiliate
n Acquired Global View S.A., which provides video surveillance
services in Argentina
Year ended March 31, 2013
n Acquired the business support system business of U.S.-based
Convergys Corporation
n Acquired IT service business of Australia-based CSG Limited
l Made NEC TOKIN Corporation into an equity-method affiliate
Year ended March 31, 2014
l Divested the Group’s equity stakes in NEC Mobiling, Ltd.,
currently MX Mobiling, Co., Ltd., a mobile phone business
l Stopped the development of new smartphone models in mobile
phone business
Year ended March 31, 2015
(fiscal year under review)
l Divested the Group’s equity stakes in NEC BIGLOBE Ltd.
currently BIGLOBE, Inc., an Internet Service Provider
in March, 2014
n Made NEC Fielding, Ltd., a network operation and maintenance
service provider, a wholly-owned subsidiary
n Established NEC Solution Innovators, Ltd. in a reorganization of
seven software subsidiaries
n Established NEC Platforms, Ltd. in a reorganization of four
hardware development and manufacturing companies
n Established NEC Management Partner, Ltd. in a reorganization
of four staff service subsidiaries
n Completed acquisition of storage system business to power
companies and established NEC Energy Solutions, Inc. in
North America
Millions of
U.S. dollars
2015
$24,463
4,890
Percent change
2015/2014
–3.5%
3.1
1,067
934
478
733
(396)
337
1,118
312
404
0.18
0.03
21,839
6,864
20.6
62.1
69.8
–6.6
—
–26.8
-6.0
-62.1
7.4
69.7
0.0
4.6
18.3
4,340
–9.5
Notes: 1. U.S. dollar amounts are translated from yen, for convenience
only, at the rate of ¥120 = U.S.$1.
2. Net income (loss) per share is calculated based on the weighted-
average number of shares outstanding during each period.
3. Owner’s equity is the sum of total shareholders’ equity and
total accumulated other comprehensive income.
4. The debt-equity ratio is calculated by dividing interest-bearing
debt by owner’s equity.
5. Improvement in energy efficiency of products is based on a
comparison with the year ended March 31, 2006.
14
NEC CorporationAnnual Report 2015Business Activities for Value Creation
At a Glance
NEC Corporation and Consolidated Subsidiaries
Net sales, operating income and composition of sales are financial results for the year ended March 31, 2015.
Public Business
Net sales
Operating income
Main customers
821.9 billion yen
74.8 billion yen
Government, public, healthcare, finance and media
Major Products and Services
Composition of sales
Systems Integration (Systems Implementation, Consulting),
Maintenance and Support, Outsourcing/Cloud Services,
28%
System Equipment
Examples of Solutions by Business Sector/Industry
Government: Social Security and Tax, Fingerprint
Identification, Air Traffic Control, Satellite Communications/
Earth Observation, Outdoor Communication
Enterprise Business
Net sales
Operating income
Main customers
270.5 billion yen
8.3 billion yen
Manufacturing, retail and services
Telecom Carrier Business
Net sales
Operating income
Main customers
740.2 billion yen
62.0 billion yen
Telecom carriers
System Platform Business
Net sales
Operating income
728.9 billion yen
31.4 billion yen
Others
Net sales
Operating income
374.1 billion yen
4.0 billion yen
Major Products and Services
Composition of sales
Systems Integration (Systems Implementation, Consulting),
Maintenance and Support, Outsourcing/Cloud Services
9%
Composition of sales
Network Infrastructure
Major Products and Services
Core Network, Mobile Phone Base Stations, Submarine
Systems (Submarine Cable Systems, Ocean Observation
Systems), Optical Transmission Systems, Routers/Switches,
Mobile Backhaul (“PASOLINK”)
25%
Composition of sales
Hardware
Major Products and Services
Servers, Mainframes, Supercomputers, Storage, Business PCs,
Tablet Devices, POS, ATMs, Control Equipment, Wireless LAN
25%
Routers, Displays, Projectors
Software
Integrated Operation Management, Application Servers, Security
and Database Software
Composition of sales
Smart Energy
Major Products and Services
(Electrodes/Energy Storage Systems, Energy Management Systems,
EV/PHV Charging Infrastructure, AMI*, Solutions for Utilities)
13%
Mobile Phones
Lighting Equipment
* AMI (Advanced Metering Infrastructure):
A communications unit for smart meters
15
NEC CorporationAnnual Report 2015 Public: Local Government, School/Education, Postal Tracking,
Firefighting Command, Firefighting Emergency Radio Systems, Disaster
Major Consolidated Subsidiaries
NEC Facilities, Ltd.
Prevention, Traffic Control, Railroad Communication, Infrastructure
NEC Engineering, Ltd.
Surveillance/Energy Management
Healthcare: Electronic Medical Record, Regional Healthcare
Information Network
Finance: Banking, Business Branch Systems
Media: TV Program Production/News Production/Transmission
Systems, Digital TV Transmitters
NEC Network and Sensor Systems, Ltd.
NEC Space Technologies, Ltd.
Nippon Avionics Co., Ltd.
Examples of Solutions by Business Sector/Industry
Manufacturing: Global SCM, Product Lifecycle Management, Production
Major Consolidated Subsidiaries
ABeam Consulting Ltd.
Management, Sales Management
Retail and Services: Retail Systems for Stores and Head Offices,
Logistics Management
Services & Management
Telecom Operations & Management Solutions (TOMS),
Services/Solutions
Major Consolidated Subsidiaries
NEC Network Products, Ltd.
NEC Communication Systems, Ltd.
OCC Corporation
NEC Networks & System Integration Corporation
NetCracker Technology Corp.
Enterprise Network Solutions
IP Telephony Systems, WAN/Wireless Access Equipment, LAN
Products
Services
Data Center Infrastructure, Maintenance and Support
Major Consolidated Subsidiaries
NEC Platforms, Ltd.
NEC Fielding, Ltd.
NEC Display Solutions, Ltd.
NEC Embedded Products, Ltd.
Major Consolidated Subsidiaries
NEC Energy Devices, Ltd.
NEC Energy Solutions, Inc.
NEC Mobile Communications, Ltd.
NEC Lighting, Ltd.
NEC Nexsolutions, Ltd.
NEC Management Partner, Ltd.
B
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e
s
s
A
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t
i
v
i
t
i
e
s
f
o
r
V
a
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u
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C
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e
a
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i
o
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NEC Corporation
Annual Report 2015
16
Review of Operations
Public Business
In the public business, we provide safe, secure and efficient social solutions for
domestic and foreign governments, governmental agencies, local governments,
public institutions, financial institutions and other organizations by combining our
distinctive technology assets, including network and sensor technologies and
analysis technology, with a broad expertise in systems integration.
Tomonori Nishimura
Executive Vice President
Fiscal 2015 Performance
In the public business, sales were ¥821.9 billion, an increase of 11.3% year on year, due to large projects for government agencies including a
field communication system, and high demand in wide-area disaster prevention digitization of firefighting emergency radio system.
Operating income improved ¥16.2 billion year on year to ¥74.8 billion, mainly owing to increased sales.
Fiscal 2015 Main Accomplishments
In addition to responding to large projects and special demand, NEC strengthened technologies and productivity in growth areas and developed solutions to
return concrete results.
Strengthening Technical Capabilities and Productivity
Ranked first for facial recognition and fingerprint identification in the benchmark test by the U.S. National Institute of Standards and Technology (NIST)
Began operations at the Satellite Integration Center, where satellites are assembled, assessed and tested among other things
Commenced full-scale operations of the Cyber Security Factory to support the implementation and operation of cyberattack countermeasures to protect
customers’ information assets
Solutions Development
Launched network solutions supporting the Social Security and Tax Number System in preparation of local governments starting their procurements related to the system
Launched the Water Leak Detection Service using cutting-edge technologies from collection and analysis of Big Data to detect leaks in water pipes rapidly and minutely
Launched the NeoFace Monitor security software to prevent illegal access to PCs by requiring facial recognition to log on
Specific Results
Delivered the Predictive Monitoring and Diagnostics System to The Chugoku Electric Power Co., Inc. for use in the No. 2 reactor at the Shimane Nuclear Power Plant
Delivered backbone network using SDN to West Nippon Expressway Company Limited (NEXCO-West)
Provided an ID system for concert-goers using facial recognition technology
Built an integrated disaster-prevention system using the world’s first crowd behavior analysis technology for Toshima City Office, Tokyo
Sales
(Billion ¥)
1,000.0
800.0
600.0
400.0
200.0
Operating Income,
Operating Income Ratio
(Billion ¥)
80.0
60.0
58.658.6
821.9
738.4
738.4
680.7
49.0
7.9%
9.1%
Large-scale space chamber at
the Satellite Integration Center
Cyber Security Factory
40.0
7.2%
20.0
0
2013
2014
2015
0
2013
2014
2015
Operating Income
Operating Income Ratio
NeoFace Monitor, PC security software using
facial recognition
17 NEC Corporation
Annual Report 2015
For Future Growth
OPPORTUNITIES
NEC’S RESPONSE
Activated domestic investments in preparation for the introduction of
the National ID number system and hosting of the Tokyo 2020 Olympic
and Paralympic Games
Expanded investment in urban infrastructure centered on emerging
countries/Measures against degradation of infrastructure
THREAT FACTORS
Loss of opportunities from a shortage of resources
Take a proactive approach to domestic customers by leveraging our
strengths in sensors, networks, IT and other fields
Enter international markets with competitive solutions including
Predictive Monitoring and Diagnostics System, water management
solutions, complete airport solutions, cyber security and biometrics
Effectively leverage resources, including the standardization of devel-
opment processes
Business Environment
ICT investment in Japan is on the road to recovery and there is a
tailwind of support for social infrastructure projects ahead of the
January 2016 implementation of the Social Security and Tax
Number System in which individual numbers will start being used,
and the Tokyo 2020 Olympic and Paralympic Games. In the
international market, meanwhile, demand for constructing new
infrastructures is arising at cities in newly emerging countries,
while in developed countries there are needs for infrastructure
diagnostics and preventative preservation to counter degradation
of existing infrastructures. It is estimated that markets for
transport, water and energy will expand in particular.
NEC's Issues and Responses
Under this business environment, NEC works to expand sales by
responding to demand unique to Japan in the Social Security and Tax
Number System, regional revitalization, national resilience projects,
and the New Basic Plan on Space Policy. In addition, with initiatives
taken in focus businesses in Japan and overseas such as Big Data,
SDN, cloud-based services and safety, we will establish new
businesses that will provide a foothold for growth going forward.
NEC carried out field trials with customers and delivered systems.
Our initiatives include the Predictive Monitoring and Diagnostics
System (PMDS), a safe operation system for large-scale facilities
that detects equipment irregularities at the predictive stage; a
Water Leak Detection Service that inspects and efficiently manages
waterway leaks; and complete airport solutions that support air
traffic control through to service facilities within airports for safe
Medium- to Long-Term Value Creation
and smooth operations. Moreover, we are steadily expanding results
of the Cyber Security Factory, which protects customers’
information assets from cyberattacks. Currently, we are providing
security monitoring services to about 100 companies. Additionally,
NEC holds the world’s most accurate facial and fingerprint
identification technologies, and we are expanding the applications
of the technologies with immigration control and urban surveillance
to applications such as verifying people entering concert halls and
preventing illegal access to PCs.
On the other hand, NEC acknowledges possible risks of losing
business opportunities due to resource shortage in system
integration. In response, NEC is working to standardize development
processes to enhance efficiency.
The public business is largely related to social infrastructure, and the
projects are characteristically long in life cycle. As a result, it is
important to conduct business development with future outlook in
an early state to deliver medium- to long-term growth. To this end,
we initiated the development of a Water Leak Detection Service for
a local government in the state of Texas, U.S.A. which then led to
initiatives such as conducting joint research on social infrastructure
projects with Texas State University in fields other than detection
of water leaks. We will expand growth on a global scale by steadily
commercializing these initiatives and continuing activities that
produce results.
Going forward, NEC will proactively propose solutions
incorporating cutting-edge technology in response to market
opportunities, including the Tokyo 2020 Olympic and Paralympic
Games. Furthermore, we will accelerate the transformation as a
service provider in the ICT field for global development, while focus
on building business models that are competitive in the
international market.
18
NEC CorporationAnnual Report 2015Business Activities for Value Creation
Enterprise Business
NEC provides IT solutions in manufacturing and retail/services in the private sector,
launching new services to help create new value for customers.
In particular, we are accelerating development in the total supply chain
management (SCM) business for manufacturing, retail and logistics worldwide as it
will be a growth field going forward.
Chikara Ishii
Senior Vice President
Fiscal 2015 Performance
In the enterprise business, sales decreased 0.7% year on year to ¥270.5 billion. While sales to the retail and services showed solid growth,
sales to the manufacturing sector decreased.
Operating income improved by ¥1.8 billion year on year to ¥8.3 billion, owing to cost reduction and the improved profitability of system
integration services, despite reduced sales.
Fiscal 2015 Main Accomplishments
NEC provides “NEC Global Enterprise Solutions”, an integrated solution based on our strong track record in Japan and prominent services. In fiscal 2015, NEC
expanded its sales and services globally in addition to Japan.
To Create
Supported Pioneer Corporation for a project to renew the global SCM system
Provided cloud based PLM*1 service "Obbligato for SaaS" for a Thai automotive component and harvesting machinery manufacturer
To Transport
Launched global sales of the Logistics Visualization System software that enables transparent logistics process
Provide Yamato System Development Co., Ltd. with a system to support product inspection, which utilizes image recognition technology
Launched a project to integrate the traffic fare system in Dhaka, Bangladesh
To Sell
Enhancement of chain store solutions for retailers worldwide: Cost-effective touch screen POS and software
Launched cloud service for car dealerships in emerging markets
Renewed the management system for the Universal Express® Pass of Universal Studios Japan®*2
*1 PLM: Product Lifecycle Management
*2 NEC is an official marketing partner of Universal Studios Japan®.
® Universal Studios. CR15-2523
272.3
272.3
270.5
251.6
Sales
(Billion ¥)
300.0
200.0
100.0
0
2013
2014
2015
19 NEC Corporation
Annual Report 2015
Operating Income,
Operating Income Ratio
(Billion ¥)
NEC Global Enterprise Solutions System
10.0
8.0
6.0
4.0
2.0
0
6.56.5
5.5
2.2%
2.4%
3.1%
2013
2014
2015
Operating Income
Operating Income Ratio
Retail
Logistics
Manufacturing
In-Store Operation,
Merchandising, CRM,
Payment
Logistics Visualization
System
ERP/SCM/MES, PLM, M2M,
Electronics Design and
Development Support
Hospitality
Automotive
Cross Industry
Smart Hospitality
Dealer Management
System
ERP, Business Consulting
Services, LCM Service
For Future Growth
OPPORTUNITIES
NEC’S RESPONSE
Recovery in IT investment in Japan as domestic corporate business
performance improves
Japanese business models for convenience stores and retail services to
be further deployed in the international markets
THREAT FACTORS
Cost competition to intensify in Japan
Leverage NEC’s unique technologies to develop value
chain innovations
Expand “NEC Global Enterprise Solutions” that reflect our strengths and
track record in Japan and international market
Reduce costs through further cost management
Business Environment
In Japan, IT investments are expected to improve with recovery in
the performance of domestic companies though some industries
show weaker momentum than others. It is notable that IT
investments that contribute to a customer’s business growth or to
create new business for customers have gained vigor. Furthermore,
markets are projected to expand for enterprise SDN, which has
already entered a period of widespread adoption, and security, in
addition to Big Data utilization and cloud-based services. That said,
the IT market for private-sector demand in Japan is highly
competitive, and slips easily into price competition. As a result,
securing profits remains a challenge in these fields.
Globally, there are opportunities to broaden business with
Japanese companies making inroads to emerging countries, or an
expansion in local markets.
NEC's Issues and Responses
On the basis of this business environment, NEC is responding with
ongoing efforts to reduce costs through cost management to
improve profitability of the Enterprise Business. In addition, we
continue to establish the competitive “Solutions for Society” by
accelerating the value chain innovations of “to create, transport
and to sell” to deliver the “Solutions for Society” closest to
people’s lives and lifestyles. Furthermore, in addition to expanding
SDN solutions to accelerate business development in the SDN
market, NEC is leveraging its unique technologies to focus on
growth areas: security solutions such as measures against
targeted attacks, information leaks and corporate response to the
Social Security and Tax Number System; failure sign monitoring
systems and demand forecasts using Big Data; and cloud services
catered to customers’ needs.
In expanding global business, NEC sets “NEC Global Enterprise
Solutions,” a set of strong solutions with prominent track records
in Japan, as its core solutions. With it, we will move ahead to grow
in Asian market.
Medium- to Long-Term Value Creation
Improving profitability is the key factor for the medium- to long-
term growth of the Enterprise Business. NEC is approaching this by
shifting the business model of the Enterprise Business. This
includes that in addition to increasing the ratio of upstream
processes such as consulting in the systems integration business,
we will move ahead with packaging and toward cloud-based
services centered on growth areas. This will entail converting the
traditional customization model to a business model premised on
horizontal development.
Globally, NEC will further expand “NEC Global Enterprise
Solutions” and strengthen the business by leveraging the expertise
of Regional Business Support Centers (RBSC) in global development.
We aim to broaden target regions and industries, and create new
businesses in the international market.
20
NEC CorporationAnnual Report 2015Business Activities for Value Creation
Telecom Carrier Business
In the telecom carrier business, we supply equipment mainly to telecom carriers for
network implementation, along with network control platform systems and
operating services. NEC’s wealth of experience in large-scale network
implementation and strong technical capabilities contribute to the development of
highly reliable communications networks.
Shunichiro Tejima
Executive Vice President
Fiscal 2015 Performance
In the telecom carrier business, sales were ¥740.2 billion, an increase of 2.0% year on year, thanks to increased international business
through submarine cable systems and mobile backhaul even as Japanese sales were flat.
Operating income improved by ¥1.6 billion year on year, to ¥62.0 billion owing to increased sales and streamlined costs, despite accelerated
investment in growth fields such as software-defined networking (SDN) and Telecom Operations & Management Solutions (TOMS),.
Fiscal 2015 Main Accomplishments
We focused on expanding sales in the international markets and in new growth areas such as TOMS and SDN. We are also ahead of our peers in Japan with our
response to new technologies.
SDN/NFV*
Strengthened the global structure in the SDN/NFV field for telecom carriers with NetCracker Technology Corp.
Worked together with a leading South Korean telecom carrier, KT Corporation in the SDN field
Implemented vCPE trials with the Telekom Austria Group
TOMS
Received an order for an operational support system from major Australian telecom carrier Singtel Optus Pty Limited
Completed an OSS development project for the main service division of Swisscom AG and are jointly exploring further expanding the scope of next-generation TOMS and MANO
Submarine Cable Systems
Won an order for the FASTER submarine cable system linking Japan and the U.S.
Won an order for the SEA-US submarine cable system linking Southeast Asia and the U.S.
Concluded a contract for SACS, the world’s first submarine cable system for the South Atlantic
Japan
Delivered LTE-A base stations
Cooperated with NTT DOCOMO, INC. on 5G testing
* NFV: Network Functions Virtualization
709.3
725.8
725.8
740.2
Sales
(Billion ¥)
800.0
600.0
400.0
200.0
Operating Income,
Operating Income Ratio
(Billion ¥)
71.6
60.360.3
10.1%
8.3%
8.4%
80.0
60.0
40.0
20.0
0
2013
2014
2015
0
2013
2014
2015
Operating Income
Operating Income Ratio
An iPASOLINK established in Thailand’s Nakhon
Sawan Province
21 NEC Corporation
Annual Report 2015
For Future Growth
OPPORTUNITIES
NEC’S RESPONSE
Expansion of global communications infrastructure market in the
emerging nations
Strong need to reduce capital investments and operating costs as
communications infrastructure becomes more complex
THREAT FACTORS
Maturation of the Japanese market and increased competition from
global vendors
Business Environment
Global marketing of solutions such as TOMS and SDN that reduce
capital investments and operating costs for customers
Maintain domestic advantage through prompt response to
advanced technologies
The environment for business targeting telecom carriers is expected
to be severe in Japan by a matured market in which we expect to see
a decrease in investments in network infrastructure. Furthermore,
we expect that competition will intensify as markets become
increasingly borderless.
Globally, however, the market is expected grow particularly in
emerging countries, backed by a steady increase in needs for
network infrastructure. In addition, services such as TOMS, which
contributes to reducing customers’ operating costs, are expected
to grow.
Moreover, while the market launch of SDN/NFV is delaying,
telecom operators are working steadily in commercial application of
the service, which is expected to trigger significant changes in the
telecom carrier business.
NEC's Issues and Responses
Amid such an operating environment, NEC will firmly maintain its
domestic advantage in the intensifying global competition by
promptly providing network devices with advanced technologies to
our customers. In the international market, we will growth in
existing businesses such as submarine cable systems and mobile
backhaul in response to the need for infrastructure expansion.
Furthermore, we have positioned TOMS and SDN/NFV as focus
fields, and we will contribute to our customers in and outside of
Japan in cutting their capital expenditures and operating costs. For
SDN/NFV, in particular, we acknowledge that establishing a
prominent position in the newly commercialized market is important
in expanding our business when the market starts to grow. To this
end, we are investing in development and sales resources to
accelerate business development.
Medium- to Long-Term Value Creation
Medium-to long-term growth in the telecom carrier business relies
on an extension of steady growth in TOMS and the rapid
commercialization of SDN/NFV. We expect to see demand in the
TOMS market to grow in response to advancing network operation
controls going forward. NEC will expand business with its subsidiary
NetCracker Technology Corp.
For telecom carrier SDN/NFV, we believe that obtaining rapid
commercialization results will expand business opportunities
among global telecom carriers. To this end we will actively move
forward with proposal, and field tests for Telefónica Brasil, S.A. and
other global carriers.
Furthermore, in preparation for the full-scale commercialization of
SDN/NFV for telecom carriers going forward, we have collaborated
with NetCracker Technology in strengthening the global sales
expansion network for SDN/NFV solutions. Looking ahead,
NetCracker Technology has been delivering to more than 250
companies in 58 countries, utilizing solution selling methods
cultivated by marketing TOMS to accelerate proposal activities
directed at telecom carriers across the globe.
22
NEC CorporationAnnual Report 2015Business Activities for Value Creation
System Platform Business
In the system platform business, we provide products for business, ranging from
terminals to network and computer equipment, software products and service
platforms, as well as solutions and services based on them. Our solution platforms,
which organically combine these products, solutions and services, reduce labor and
improve efficiency for customers, while at the same time creating new value based
on ICT.
Shinichi Shoji
Executive Vice President
Fiscal 2015 Performance
In the system platform business, sales were ¥728.9 billion, a decrease of 6.6% year on year, due to the special demand for corporate PCs that
occurred in the previous fiscal year and the reduction of enterprise networks.
Operating income was ¥31.4 billion, an increase of ¥0.7 billion year on year due mainly to structural reforms in enterprise networks and
integration of NEC Fielding, Ltd. in spite of the rapid devaluation of the yen.
Fiscal 2015 Main Accomplishments
We strengthened the business in growth areas such as cloud platforms and SDN, as well as bolstered the profit structure.
Reinforcing Profitability
The new company NEC Platforms, Ltd. integrated development and production functions of subsidiaries to strengthen production capabilities
Improved business operations by making NEC Fielding, Ltd. a wholly owned subsidiary
Growth Areas
Began development of the next-generation vector supercomputer aiming for performance more than 10 times greater than existing models
Commenced operations at NEC Cloud IaaS/Kanagawa Data Center
Strengthened SDN strategies for the private sector, government agencies and data center operators (reinforced the “NEC SDN Solutions” system)
Existing Areas
Achieved the leading share in 2014 enterprise telephony equipment market in Japan and the third largest share worldwide*1
The “Express5800 series” PC server lineup achieved the No. 1 share*2 in the Japanese market for the 19th consecutive year
*1 Source: Gartner, "Market Share: Enterprise Telephony Equipment, Worldwide 2014," 17 March 2015 (Seat License Shipment base)
Graph created by NEC, based on research by Gartner
The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and
are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of Annual Report 2015) and the opinions expressed in the Gartner Report(s) are
subject to change without notice.
*2 Source: CY1996-2014 Japan x86 Server Market (Unit, Factory Revenue (Yen))
Source: IDC, Worldwide Quarterly Server Tracker 2015Q1
IDC declares a statistical tie in the server market when there is less than one percent difference in the factory revenues of two or more vendors.
Operating Income,
Operating Income Ratio
(Billion ¥)
Global Share of Enterprise Telephony Equipment
(Worldwide Market Share CY2014)*1
Sales
(Billion ¥)
780.8
780.8
800.0
744.4
728.9
600.0
400.0
200.0
40.0
30.0
20.0
10.0
32.7
30.730.7
Others 49.0%
4.4%
3.9%
4.3%
Company D
6.5%
0
2013
2014
2015
0
2013
2014
2015
Operating Income
Operating Income Ratio
23 NEC Corporation
Annual Report 2015
Company A
14.4%
Company B
11.9%
NEC 10.3%
Company C
7.9%
For Future Growth
OPPORTUNITIES
NEC’S RESPONSE
Popularization and expansion of cloud services and Big Data due to the
uptake of the IoT
Expansion of demand for security
THREAT FACTORS
Price competition to intensify in the general-purpose market
Costs to increases due to weak yen
Accelerate creation of new services in growth areas such as Big Data
and cloud services
Create solution platforms in preparation for the IoT
Maintain cost competitiveness through further cost reductions and
development cost efficiency
Business Environment
The environment encompassing the system platform business has
become increasingly harsh in recent years with customers seeking
lower costs particularly in the general-purpose hardware. Added to
that, costs rose in the latter half of fiscal 2015 due to the rapid yen
depreciation, which is expected to continue through fiscal 2016.
On the other hand, the market is expected to grow in areas that
can strengthen competitiveness and cost reductions for customers.
These include cloud platforms, SDN, Big Data and security, and
advanced information processing platforms supporting the
enormous amounts of digital data generated by the popularization
of the IoT (Internet of Things) going forward.
NEC's Issues and Responses
To provide strong ICT assets as a foundational business and
support business units in promoting the “Solutions for Society”
amid such an operating environment, the System Platform Business
Unit will streamline costs and expenses by standardizing parts used
in various types of hardware. Moreover, we are reforming the
development and production framework to raise cost
competitiveness and maintain our position in the existing market.
Medium- to Long-Term Value Creation
The general-purpose market is expected to become fierce in
competition going forward. For the system platform business to
deliver significant value over the medium- to long-term in this
environment, NEC is reforming its business models from providing
various types of hardware, software and components parts, to
providing the combination of these items as solutions.
In addition, we are creating new solutions in fields such as SDN,
safety and security, Big Data and cloud platforms for further
growth. NEC sees sales expansion in these areas as an immediate
goal and is accelerating business development by investing in the
growth areas.
NEC has proprietary technology and expertise in Big Data
engines with vector supercomputers, virtualized platforms evolving
SDN and edge computing. NEC will leverage these strengths going
forward as we strive to take the lead in the upcoming IoT age.
Furthermore, we will integrating these three strengths and
accelerate creation of solution platforms that provides higher
added-value.
24
NEC CorporationAnnual Report 2015Business Activities for Value Creation
Sales Structure in Japan
Manabu Kinoshita
Executive Vice President
In charge of Corporate Sales and Sales Operations Unit
Providing Solution through Sales Network Nationwide
NEC’s domestic sales network consists of 64 branch offices and
sites nationwide. NEC’s approach is to leverage the entire
capabilities of One NEC, integrating the solution assets of each
business unit and affiliated companies and to present solutions for
realizing advanced social infrastructure utilizing ICT. We provide
these solutions for a wide range of customers including telecom
carriers, governments, government agencies, local governments,
public institutions and private sectors.
Cooperation between sales partners is another key point that
sustains our domestic business. In the sales partner business,
hardware is our core product, but we expect intensified price
competition for general-purpose products. In the future, we need to
expand the business into new area such as cloud-based services and
SDN. NEC views market change as a chance and will co-create new
value with sales partners by providing competitive solutions and
services, as well as an enhancement of support to the sales partners.
NEC’s Branch Network
Spreads Across Japan
NEC Headquarters
Office and Branches (64 locations)
Responding to Customer Needs and Accelerating Growth
NEC’s domestic business accounts for about 80% of its total sales and
underpins the business foundation of the entire Company. To sustain
the growth of domestic business, domestic sales focuses on business
in the areas of SDN, Big Data, cloud services, and cyber security—all
NEC strengths. Furthermore, NEC is facilitating business development
in new markets with significant potential, such as adaptation of the
Social Security and Tax Number System to the private sector, and
dealing with the increasing development of social infrastructure
brought on by the Tokyo 2020 Olympic and Paralympic Games, as well
as increasing tourism to Japan.
Transforming into Social Value Innovative Sales
In NEC’s transformation into a “Social Value Innovator,” a domestic
sales force is taking a role in creating new value to solve essential
issues that society and customers face. To this end, we carefully
examine changes in market and customers’ business issues, and
connecting these with our assets in creating new value for the
customers. Under the theme of “transformation into a Social Value
Innovator,” we are investing sales skill development of each sales force
in improving multi-faceted analytical capabilities on market
environments and customer challenges and in having extensive
knowledge on leading edge technologies and solution assets in the
company. Going forward, domestic business teams will work on
creating new social value as a point of customer contact in the field,
and contributing to the development of a society in which people can
live more prosperous lives.
* Number of NEC branch offices (as of March 31, 2015)
For further details about NEC branch offices and their locations, please visit the
following website:
http://jpn.nec.com/profile/branch.html (Japanese only)
25 NEC Corporation
Annual Report 2015
Sales Structure for the International Business
Takayuki Morita
Executive Vice President
In Charge of Global Business Unit
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Three Keys to Achieving the Mid-term Management Policy
NEC’s mid-term management policy is to create a foundation for growth
globally by focusing on Asia and promoting “locally-led” businesses.
There are three key points to achieving this and expanding “Solutions
for Society” on a global scale. The first point is to create globally
appealing solutions, the second is to enhance our ability to provide
engineering services locally, and the third is to foster relationships of
trust to provide long-term solutions with our customers.
Focus on Safety and Networks that Leverage the Strengths of NEC
Firstly, in terms of creating solutions, it is important that we define
areas that leverage the strengths of NEC in global markets—where
environments and income levels are diverse and geographically
spread out—and develop business on a priority basis. Specifically,
safety and networks are our two areas of focus. In the area of
safety, we have expanded business by leveraging NEC’s world-
leading technologies in facial and fingerprint recognition. Our
safety business is centered on the Global Safety Division (GSD)
established in Singapore in 2013. In fiscal 2015, our achievements
include winning orders in the Middle East, South America and other
new markets.
In the area of networks, NEC leads in the development and
provision of solutions and focuses on the areas of SDN/NFV. In
preparation for commercialization, we are proactively promoting the
new network technologies, and while collaborating with our
subsidiary, NetCracker Technology Corporation in application of its
extensive global experience, NEC will continue to step up its
activities in anticipation of future market expansion.
Strengthening Local Operations
In addition to upgrading and expanding NEC solutions, we are
engaging in partnerships as well as mergers and acquisitions in our
aim to provide services locally. In Australia, in 2012, we acquired the
IT services business of CSG Limited, a company with a well-
services are highly acclaimed by customers. In South America, we
have acquired a video surveillance company and are developing and
providing solutions that incorporate our image recognition and
behavior analysis technologies. In the area of cloud services, NEC
established IT managed services domain for governments. Through
initiated a joint venture with Singapore Technologies Electronics
CSG, we provide many government agencies with ICT integrated
Limited in Singapore and a joint business with the Foxconn
managed services, including our strong networks solutions. Our
Technology Group in Taiwan.
Building Relationships of Trust through Proactive Project Participation
Finally, NEC proactively participates in collaboration and
several projects in improving the operation and management of
demonstration testing with government agencies in earning
social infrastructure. For example, NEC provided solutions for a
trustful relationships. In Singapore, coinciding with the
waste collection system utilizing sensors and Big Data analysis, and
establishment of GSD, we have set up a research laboratory and
established and managed a cloud city operations center in
have expanded collaboration with government agencies including
Santander, Spain. We also participated in a water conservation
the Singapore Economic Development Board and Singapore’s
management project in the U.S. state of Texas.
Agency for Science, Technology and Research. In Chongqing China,
NEC will continue to pursue the steady growth of its global
we have entered into a strategic partnership with the city
business while taking these initiatives to a deeper level and
government and are working on an eco-center project to achieve
energy-efficient operation. In addition, we have participated in
expanding them.
NEC Corporation
Annual Report 2015
26
Sales Structure for the International Business by Regional Headquaters (As of July 1, 2015)
NEC set global revenue growth as an important theme of its “Mid-term Management Plan 2015.” By quickly responding
to the unique needs of each region—North America, Central and South America, EMEA (Europe, the Middle East and
Africa), Greater China region and APAC (the Asia/Pacific region)—NEC will generate locally led businesses.
Note: RHQ is the acronym for Regional Headquarters
Main Initiatives
In 2014, NEC Corporation of America expanded its Unified
Communications (UC) portfolio by integrating both SDN and biometrics
technologies to deliver one of the industries’ most innovative
communication offering. The Retail solution team also enhanced their
portfolio by developing a new point of sale system that integrates
hardware, software and services enabling a full life-cycle management
retail solution. In addition, Cloud solutions were also expanded and now
include UC-as-a-Service and cloud-based contact center solutions. Major
advancements were also made in Federal Government signing contracts
for both Biometrics and UC solutions.
Looking forward to 2015, NEC Corporation of America will continue to
prioritize solutions that provide value to both businesses and individuals.
Shinsuke Takahashi
President & CEO
NEC Corporation of America
Message from the Head of RHQ
NEC Corporation of America provides solutions that improve social
infrastructure while providing safety, security, and operational
efficiency. From foundational solutions like software-defined
networking (SDN) to advanced Biometric security solutions, today’s
portfolio is focused on improving business productivity while
positively impacting society. Complimenting these solutions are
unique Big Data and Analytics capabilities adding value and
predictability across the entire portfolio. Prioritizing social solutions
has already led to new opportunities in Airports, Federal Government
and Local Utilities and in the coming years these solutions will present
significant growth opportunities.
Masazumi Takata
President & CEO
NEC Latin America
Message from the Head of RHQ
There are great examples of how we contribute to improve the quality
Main Initiatives
NEC has achieved business expectations in Latin America region, with a
consistent growth in sales in 2014 and good prospects for 2015.
The positive results come from several projects in which the Company
is applying key ICT solutions, such as the digitalization of Mexican
passport with highly standards for security, facial recognition for the
Brazilian airports to support custom clearance process, virtual classroom
e-learning solution in Argentina, biometrics system for a bank in Chile
and enablement of Colombian rural area with a quick and easy access to
the Internet to narrow the citizen’s digital divide.
Looking forward to 2015, NEC Latin America will continue to expand
of various services of our customers. Our solutions are leveraged by
its business and sales in safety, security and other growing areas to
innovative approach that serves to create real social value. We
strengthen its market presence in Latin America.
collaborate with our customers and partners closely to prepare better
products and services that enable society advancement.
We are very excited with the possibilities NEC will have in near future
to further contribute to Latin America in its tremendous growth
opportunity to a next stage.
27 NEC Corporation
Annual Report 2015
Naoki Iizuka
President & CEO
NEC Europe
Message from the Head of RHQ
As the final year of “Mid-term Management Plan 2015,” and the year to
set the solid basis for the next mid-term management plan, our goal is
to establish NEC’s broader presence in the EMEA region. We will
continue to expand our communication business in SDN, TOMS, and
cloud services for telecom carriers. In addition, we will also promote the
expansion of the enterprise business in emerging countries.
Furthermore, NEC is exploiting biometrics and smart city projects for
public sectors and smart energy business in the EMEA region. As a
“locally rooted NEC,” we will strengthen these business and contribute
to the communities.
Kiyofumi Kusaka
President
NEC (China)
Message from the Head of RHQ
The Greater China region is becoming a key market in the NEC Group. The
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Main Initiatives
In fiscal 2015, while we saw geopolitical risk in some areas, we
fortified the business foundation across the EMEA region. In the
Middle East, we received an order to build a large communications
project in Saudi Arabia, and sales have increased at NEC Africa since
its establishment in 2011. We will further reinforce our business
operations in emerging market.
In Europe and the Middle East, there are global telecom carriers
expanding business in Asia, Central and South America, and Africa. We
are building strong relationship with them by collaborating with Japan
and other RHQs.
Looking ahead, we are actively promoting public safety, smart city
and cyber security as growth drivers for the next mid-term
management plan. We are marketing face recognition solutions to not
only government agencies but to
enterprise arena. Moreover, we
are engaged in tangible smart
city projects in Spain and the U.K.
to improve the sustainability of
cities by utilizing cloud
computing, SDN and other
innovative technologies.
Main Initiatives
In response to interests in security in the Greater China region, we took
steps to fortify the facial recognition business. In Hong Kong, we
received an order for a large-scale IT solution from the government, and
in Taiwan, we delivered an automatic ticket gate system for trains and
cutting-edge kiosk terminals for large convenience stores.
In fiscal 2016, we will continue to boost the security business while
expanding into energy, healthcare, and other fields. Taking advantage of
the relocation of NEC China’s Beijing office closer to the city center, we
installed the most advanced solutions, such as facial recognition and
SDN, thus turning the office into a showroom and creating an
economic growth rate of the Greater China region, compared to the rapid
growth of the past 10 years, has shifted to a “constant speed.” However,
environment where customers
can directly experience these
the size of China’s economy has already surpassed that of Japan’s and
solutions.
China has solidified its position as the world’s second economic
superpower. At the same time, China is rapidly changing its disposition
from having being viewed as the world’s factory to now being seen as a
massive consumer market. NEC China will introduce NEC’s advanced
technologies and products more rapidly to its ever-changing market and
meet diverse and complex customer expectations.
In Taiwan and Hong Kong, we
expect to receive orders for large
projects and aim for steady
business expansion.
NEC Corporation
Annual Report 2015
28
Main Initiatives
In fiscal 2015, we received several orders of large-scale managed
service projects for government agencies and enterprises in Australia
and Singapore. In the area of public safety, we have delivered facial
recognition systems to India, and are taking advantage of our strategic
partnership with INTERPOL in the area of cyber security. Further, in
Singapore, we have developed an inter-agency collaboration system and
have aggressively promoted it to governments in various countries.
In the next fiscal year, we will further expand business in the areas of
safety and security, strategic business fields, as well in healthcare,
smart energy, retail, logistics and transportation, SDN/NFV, and
managed services. As a leading player in the Asia-Pacific region, we are
committed to contribute to the region’s development.
Toshiya Matsuki
CEO
NEC Asia Pacific
Message from the Head of RHQ
NEC Asia Pacific is expanding business within the 10 nations of ASEAN,
as well as in India and Oceania. The Asia-Pacific market shows strong
growth and in addition to ASEAN economic integration, demand for
infrastructure in Indonesia, India, the Philippines, Myanmar, and Vietnam,
which all face a demographic dividend period, is expected to reach about
¥8 trillion by 2020. NEC Asia-Pacific will focus on the “Solutions for
Society” based on ICT and use the advanced technologies of biometrics,
cyber security, SDN, Big Data analysis, and smart energy to contribute
to the realization of a “Safer City.” We will actively promote the
development of solutions tailored to local needs and the creation of
business models, while taking a leading role in the further growth of
NEC’s global business.
Promote Locally-led Safety Businesses Centered on GSD
NEC has selected the “safety business” as a pillar of its global
growth strategy. In this business, the Global Safety Division
Accelerating SDN/NFV Solution Deployment with
NetCracker Technology
In preparation for the full-scale commercial deployment of SDN/
(GSD), established in Singapore in April 2013, is the key to
NFV by telecom carriers, NEC is actively marketing to domestic
achieving growth. GSD is set out for product planning and
and overseas telecom carriers. In fiscal 2015, to further
development, and sales support for the global market. GSD
accelerate this initiative, we strengthened collaboration with our
worked closely with NEC Laboratories Singapore, a research lab
subsidiary NetCracker Technology Corp., in development, sales
established in September 2013, to create and expand locally
and marketing in this area, and built a system for global sales
led businesses.
expansion of SDN and NFV.
In fiscal 2015, GSD launched the NeoFace solution series,
NetCracker Technology has extensive experience with
which was developed and rooted in local needs. We won orders in
Telecom Operations & Management Solutions (TOMS) for global
new markets including the Middle East and South America. In
telecom carriers. It also has development know-how for solutions
fiscal 2016, we will fully expand the safety business by
(MANO) that perform integrated operations of SDN/NFV.
facilitating the success of our inter-agency collaboration system
As a pioneer that provides comprehensive SDN/NFV and
as demonstrated in Singapore in 2014, and by accelerating the
MANO, we will focus on expanding our presence and performance
horizontal deployment of new solutions that leverage our
among global telecom carriers.
partnership with INTERPOL in the area of cyber security.
29 NEC Corporation
Annual Report 2015
Business Activities for Solving Social Issues
Contribute to Creating an Equal Society in Colombia through ICT
In Colombia, South America, raising international competitiveness in
some key social fields such as health care, education, politics, and
agriculture, is an urgent task for economic growth and for improving
the quality of citizens’ lives. Yet, inequitable distribution of benefits
depending on residence is a problem. To eliminate this inequality,
Colombia has taken a number of measures, but among them ICT
shows tremendous potential. However, hampered by a harsh
environment, including rugged mountain terrain and the Amazon
rainforest, the Internet penetration rate in Colombia was only about
18% in 2013 and roughly just 1% in non-urban areas
(in reference to MINTIC site;
http://colombiatic.mintic.gov.co/602/w3-article-5085.html).
Colombia
education, politics, and agriculture.
To further enhance the plan’s effectiveness and to connect to
future development, MINTIC took the lead in interacting closely with
residents and constantly gathering feedback from various regions.
As a result, demand for ICT environments exceeded expectations
and the need for an increase in network connections mounted with
the sharp growth in the number of users of the terminals. In
addition, the need for improved access to education has become
evident with the increased ability of residents to express their
needs. Colombia has begun a study to determine the best steps it
can take based on this feedback.
By uncovering and solving social issues that are closely tied to
the community and customers, NEC will help bring about an
abundant and equal society where individuals can thrive and
everyone can enjoy the benefits of ICT.
Support to “Vive Digital”
Colombia’s Ministry of Information Technologies and Communications
(MINTIC) is promoting the spread of ICT infrastructure throughout
the country under the Plan Vive Digital, a measure aimed at closing
the digital divide and having all citizens enjoy the benefits of ICT,
and a pillar of its policy for economic development.
As part of the Plan Vive Digital, NEC participated in Kiosco Vive
Digital, which aims to create more than 4,200 ICT rooms as Internet
access points throughout Colombia. NEC was selected to participate
as a project member, through the official public bid process in
Colombia, because of its experience setting up Internet connections
in numerous countries, its capability of offering detailed support
locally and for proposing a deployment plan in anticipation of
Colombia’s future.
In this project, NEC built an Internet environment via communication
satellites for approximately 650 community spaces, including schools
and community centers in the areas that are located far from urban
zones and have less than 100 residents, and installed PCs, printers
and IP phones. In this way, places where it had been difficult to obtain
the latest information, such as the Amazon wilderness and
mountainous regions, can now gather information and do business via
the Internet.
Always Keeping Abreast of Residents’ Needs through
Interactive Communication
Through this plan, the Colombian government, which until then had
no means of swift and reliable communication with these remote
villages, was able to communicate and provide information to all
citizens, including background on vital areas such as health care,
30
NEC CorporationAnnual Report 2015Business Activities for Value Creation
Contribute to Enhancing Expressway Safety and Security through the Use of SDN
Driven by its founding motto “100% safety and reliability,” West Nippon
Expressway Company Limited (NEXCO-West), which operates the
expressways of West Japan, has actively promoted road maintenance
and traffic safety measures. Further, NEXCO-West has taken steps to
enhance disaster recovery, raise local collaboration and customer
satisfaction and has contributed to the development of western Japan
based on the Group’s collective efforts. Above all, western Japan is the
area where damage from Tonankai or Nankai earthquakes is expected
and the expressway plays a key social role in delivering relief supplies
and personnel in times of emergency or disaster. With that in mind,
NEXCO-West is improving the earthquake resistant roads, conducting
disaster-preparedness drills in collaboration with local organizations and
reinforcing the functions of the traffic control centers by building a
backup system and a wide area network infrastructure.
Functions of Traffic Control Centers and the Challenges of
Existing Network Configuration
The traffic control centers observe local traffic volumes and weather
patterns using ample information from traffic measurement
facilities, and weather forecast equipment located at regular
intervals on the expressway network. They also function as the
“control towers” that provide guidance concerning on-the-spot
traffic regulations, the handling of accidents and other matters.
NEXCO-West has set up traffic control centers in Kansai, Chugoku,
Shikoku, and Kyushu that operate 24 hours a day, 365 days a year
to support expressway safety.
However, at NEXCO-West, networks that connect the traffic
control centers and roadside equipment such as traffic
measurement facilities and weather forecast equipment are built
separately for each region and only exchange information within
those regions. Therefore, if the traffic control center of one region
ceases operation in the event of a disaster, its monitoring and
control of that region’s expressways become difficult. In order to
solve this problem, a mutual backup system that could compensate
and take over and manage a center’s functions was required.
Achieving Flexible Operational Management through
Centrally-Controlled Software
To solve this problem, NEXCO-West adopted NEC’s SDN solution. NEC
built an SDN network linking multiple routes between 45 traffic
control centers and expressway offices within a 4,000-km-wide area
to create a wide area network that connects multiple traffic control
centers in each region and enables advanced route control.
Since this network’s configuration can be changed instantly
through centrally controlled software in case of an emergency, the
access point of the network’s roadside equipment can be quickly
switched. Therefore, even during a disaster, a mutual backup system
can cover for each region’s center functions and stable expressway
service is maintained.
Future Development
SDN is a technology that revolutionizes existing networks and adds
new value to existing infrastructure. At NEC, SDN is held up as one
key area in the “Solutions for Society.” We will promote a safe and
secure social infrastructure for solving social issues with customers
by providing a wide range of solutions that leverage SDN.
Example of an SDN backup traffic control-framework for traffic control centers
Normal Times
Emergency
Each Traffic control center monitors own area
Control functions taken over by another center
(Example below shows case of disaster in Kyushu)
Kyushu
Traffic control
center
Chugoku
Traffic control
center
Kansai
Traffic control
center
Kyushu
Traffic control
center
Chugoku
Traffic control
center
Kansai
Traffic control
center
Chugoku
Branch Office
Kansai
Branch Office
Chugoku
Branch Office
Kansai
Branch Office
Shikoku
Branch Office
Kyushu
Branch Office
Shikoku
Traffic control
center
Shikoku
Branch Office
Kyushu
Branch Office
Shikoku
Traffic control
center
31
NEC CorporationAnnual Report 2015 Contribute to Solving Water-Related Social Problems through ICT
Early Detection of Water Pipe Leaks with “Water Leak Detection Service” ensuring minimal wastage of water
With the world’s population expected to increase to more than 9
billion in 2050 and due to economic development and urbanization in
emerging nations, world water demand will continue to grow. In
addition, an investigative report by the Intergovernmental Panel on
Climate Change (IPCC) warns that many regions face severe water
shortages due to the effects of climate change caused by global
warming. If this persists, it is predicted that two-thirds of the world’s
population will become “water-stressed” in 2025 and experience the
inconvenience that water shortage has on daily life. Under these
circumstances, it is important to use precious water resource without
wasting it. Unfortunately, there are many cities around the world with
water leak rates exceeding 10% due to aging pipes that are not being
upgraded because of cost issues and other factors. Therefore, water
resources are being wasted.
However, trying to eliminate water leaks while still using old water-
works infrastructure is a global challenge.
The Water Leak Detection Service that NEC launched in September
2014 contributes significantly to the efficient use of precious water
resources minimizing the wastage due to leak. With conventional water
leak detection methods, the most common approach is for a
maintenance specialist is to use a dedicated instrument to listen by ear
from the street level for the sound of water leaking from water pipes
buried in the ground. As a result, extensive checking is required and
timely detection is difficult. In contrast, by simply installing a sensor in a
water pipe valve, NEC’s Water Leak Detection Service can pinpoint a leak
within a range of about one meter by using a large amount of minute
vibration data. Therefore, water leaks that had until now been mostly
left undetected for a long time can be detected at an early stage.
Stopping water leak damage early also contributes to a reduction in
the energy needed for desalination. Moreover, it becomes possible to
provide water tailored to demand. This is achieved with weather
forecasting, demand forecasting based on the analysis of vast
amounts of water usage, and predicting failures by analyzing
equipment operation data. All of this is accomplished with a wide
range of technologies, such as sensing, machine-to-machine
communications (M2M), cloud computing, and Big Data analysis. These
are areas in which NEC is competent.
In addition, the Water Leak Detection Service places no extra load
on aging water pipes and can extend the life of waterworks
infrastructure. Moreover, because it is possible to find signs of broken
and faulty water pipes and equipment‘s resulting in preventive
maintenance “smart water management” becomes a reality, creating a
stable supply of water without waste.
NEC will continue to provide new value through smart water
management, including its
Water Leak Detection
Service, to solve social
problems related to water.
Water leak sensor logger
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NEC Corporation
Annual Report 2015
32
Contribute to a More Efficient City through a Smart City Project in Santander, Spain
Santander has actively participated in the European Union’s Seventh
Framework Programme for Research (FP7)*1, Horizon2020*2. Now,
Santander is also very much engaged in 12 relevant projects in the north of
Spain. In addition, NEC is eagerly promoting the development of a smart city.
NEC, in partnership with a local waste collection service provider, has
been participating in upgrading the city’s waste collection service, and
began developing a “Cloud City Operations Center.” The center is not
only designed to make the entire city’s administrative services visible
but also manages, predicts, and automates those services.
*1 A multi-year research grant program that covers 10 fields, including ICT. FP7 was
carried out over seven years starting in 2007
*2 A seven-year funding program for EU research and innovation that started in 2014,
succeeding FP7
Santander’s Waste Collection Management Service
With a typical waste collection service, the waste collectors simply
establish a specific collection route and times. Then, the waste is
collected from containers installed in each area of the city. In contrast,
NEC’s waste collection management service utilizes M2M sensors
mounted in collection containers. The accumulated amount of waste
is turned into digital data that is transmitted through a network to a
control center. At the center, the collected data is analyzed to
determine the optimum collection time and route and then displayed
on a monitor mounted in each waste collection vehicle.
In this way, the waste collectors can place the highest priority on
collection from containers with the greatest amount of waste. This
enables more efficient waste vehicle operation and reduces
unimportant and useless work. The result is both lower operating
costs and reduced environmental impact that would otherwise
come from unnecessary vehicle exhaust.
Moreover, a smartphone application linked to the waste collection
management service allows users to make reports when the
collection containers are full of waste or when they discover illegal
dumping. This has contributed to a cleaner and more pleasant city
for the residents.
Santander
Startup of Cloud City Operations Center as Base for
Smart City Operations
Santander is promoting the visual display of its administrative
services in all areas of the city, including its waste-collection
management services. Therefore, NEC, in partnership with
Santander, started a Cloud City Operations Center.
The center constantly monitors and analyzes environmental data,
such as air temperature, traffic volume, noise, CO2 levels, and the
brightness of natural light. The data comes from the M2M sensors
installed throughout the city thanks to the FP7 initiative and is
used for a wide range of public services.
As a result, NEC is providing services that enhance the quality of
citizens’ lives through the comprehensive display of the service
operations, the analysis and management of integrated data, and
forecasts and automation based on them. The citizens now enjoy a
more efficient way of using public services in their city lives.
M2M sensor
33
NEC CorporationAnnual Report 2015 Infrared Thermography to Prevent the Spread of Ebola in African Countries
Preventing the spread of deadly diseases such as Ebola is an urgent
task for maintaining a safe and secure society. Key points are how
to suppress the disease when it is spreading and how to prevent its
resurgence after it has ended.
NEC’s Supply of Infrared Thermographic Cameras as an
Important Measure against Ebola
In November 2014, the Japanese government added U.S.$100
million to its aid to combat the Ebola epidemic in West Africa. As part
of this effort, NEC delivered 13 non-contact infrared thermographic
cameras to three African countries (Côte d'Ivoire, Ethiopia, and
Ghana) through the Japan International Cooperation Agency (JICA).
Operation of the cameras began in early February 2015.
NEC plans to expand delivery of the cameras to other African
countries through fiscal 2016.
Because Ebola is accompanied by fever during its onset, the
survival rate of an infected person increases through early fever
detection enabling early isolation, and early treatment. This also
lowers the risk of infection to others.
Performance and Safety of the Cameras
The cameras provided have very similar functions as cameras supplied
to Japanese airports, including Narita International Airport. By not
missing slight temperature changes, even for high fevers, and by
making temperature distribution information visual in real time, the
cameras can detect fever onset and existence with great accuracy,
even in people walking rapidly. Moreover, because the cameras can
measure the body surface temperature of a person passing through
an airport or crossing a border checkpoint without contact in real time,
the safety of personnel performing the measurements is protected.
With its high measurement accuracy and safety, in addition to
helping to greatly curtail the current spread of Ebola, the camera is
an effective measure against the possibility of future resurgence.
Demonstration at the African Union Summit
At the African Union Summit in Ethiopia in January 2015, NEC,
which was the only corporate participant, demonstrated the
cameras with the cooperation of Japan’s Ministry of Foreign Affairs
and the Japanese Embassy in Ethiopia. The demonstration attracted
a tremendous amount of interest from African heads of state
attending the summit. Taking advantage of this opportunity, NEC
called attention to the usefulness of the cameras and made a
strong appeal for contributions to prevent the spread of Ebola.
NEC’s Contributions to Safety and Security
NEC views providing people with safety and security as benefits
that the Company can contribute to society.
Therefore, NEC will continue to leverage its assets to the
maximum extent and help solve the challenges facing the world.
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Infrared thermography camera
InfReC R300SR series
(manufactured by Nippon Avionics Co., Ltd., an NEC subsidiary)
Camera being used at an international airport in Côte d'Ivoire
NEC Corporation
Annual Report 2015
34
Corporate Governance
Basic Policy
In recognition of the fact that reliable corporate governance is essential to the continuous creation of social value and the maximization of
corporate value, NEC is committed to strengthening its corporate governance practices through (1) assurance of transparent and sound
management, (2) realization of prompt decision making and business execution, (3) clarification of accountability and (4) timely, appropriate
and fair disclosure of information.
Main Initiatives for Strengthening Corporate Governance
NEC Group Corporate
Philosophy formulation
2000.4-2003.3
In-house company structure
2003.4-2010.3
Business line structure
NEC Group Charter of
Corporate Behavior/Code of
Conduct formulation
NEC Group Vision 2017/
NEC Group Core Values
formulation
2010.4-2013.3
Structure driven by
products and services
2013.4-Present
Structures driven by
markets and customers
1990
1999
2000
2001
2003
2004
2007
2008
2010
2011
2012
2013
35
Institution of Corporate Officer System
NEC instituted a corporate officer system in April, 2000 and worked to delegate authority
form the Board of Directors to corporate officers in aim to separate management supervision
from business execution and expedite business execution based on prompt decision making.
Reducing the Number of Directors
The number of Directors was reduced to streamline the Board of Directors. The aim is to
ensure even sounder management through greater discussion at meetings of the Board of
Directors and to deliver prompt decision making.
Reduction in the number of Directors
(At the conclusion of the Ordinary General Meeting of Shareholders)
1999
37
2000
17
From 2012 onward
11
Appointing Multiple Outside Directors
NEC added an Outside Director in June 2001 to a total of two Outside Directors in order to
strengthen the supervisory functions of the Board of Directors. The members have increased
and the system of five Outside Directors has continued since its inception in June 2007.
Ratio of Outside Directors to all Directors
(At the conclusion of the Ordinary General Meeting of Shareholders)
1999
2.7%
2010
33.3%
From 2012 onward
45.5%
Shortening Directors’ Terms
In June 2004, the term of Directors was shortened from two years to one year in order to
clarify their responsibility for management.
Establishing a Nomination and Compensation Committee
The committee has been established to ensure the transparency, validity and objectivity of
nomination and remuneration of Directors*. The committee is made up of five members,
including three Outside Directors, one of whom is appointed as the chairperson.
* The Compensation Committee established in 2001 was enhanced to the Nomination and
Compensation Committee in 2010.
http://www.nec.com/en/global/about/executives/committee2.html
Instituting Chief Officer Positions
The chief officer position was instituted in July 2011 for the purpose of developing company-
wide strategy and for leading business units in the promotion of the company’s business,
toward realization of the NEC Group Vision 2017. Corporate Directors are appointed as chief
officers and they function to oversee business execution by each business unit from a
company-wide perspective.
NEC CorporationAnnual Report 2015 Continued Strengthening and Improvement of the System
NEC adopts the company with the Audit & Supervisory Board Members
(KANSAYAKU) (“A&SBMs”) to serve a double-check process: Board of
Directors supervises the business execution and the Audit &
Supervisory Board (KANSAYAKU-KAI) (“A&SB”) audits the legitimacy and
appropriateness of Director's decision-making or activities. We have
established a hybrid structure by a combination of a corporate officer
system, multiple Outside Directors, and a Nomination and Compensation
Committee comprised of Outside Directors as majority. In this way, we
separate management supervision from the business execution while
striving to ensure management transparency and soundness.
NEC believes that its corporate governance is functioning adequately
under the current system described above. However, NEC realizes the
importance of further strengthening its corporate governance in order
to focus on the “Solutions for Society” and strive to create social value
and maximize corporate value.
NEC actively incorporated concrete measures to strengthen its
governance ahead of Japan’s “Corporate Governance Code” that entered
into force in June 2015, and NEC is focusing its efforts on
enhancements and improvements of this system in order to realize more
effective corporate governance.
Independence Criteria for Outside Directors and Audit &
Supervisory Board Members
NEC declares that an Outside Director and an Outside Audit &
Supervisory Board Member (KANSAYAKU) who is not fallen under
any of the following description is independent of NEC.
(1) Presently or at any time within the past three years, any of his or her
relative within the second degree of relationship holds or held a
position equal to or higher than a general manager at NEC or a Group
subsidiary
(2) Presently or at any time within the past three years, the person is or
was a person executing the operations (“executing person”) of a major
business partner*1, or any of his or her relative within the second
degree of relationship is or was an executing person at a major
business partner*1 (if such a person holds or held a position equal to or
higher than a position equivalent of a general manager at NEC)
(3) In any one of the past three fiscal years, the person or any of his or
her relative within the second degree of relationship has received
financial compensation of ¥10 million or more (excluding
remuneration for Directors or A&SBMs ) from NEC
(4) Presently or at any time within the past three years, the person or
any of his or her relative within the second degree of relationship
has belonged to Accounting Auditors of NEC
(5) Presently or at any time within the past three years, the person or
any of his or her relative within the second degree of relationship
has been an executing person of an organization that has received a
significant amount of donation from NEC*2
*1 Major business partner:
1) A business partner with the total amount of transactions with NEC (consideration for
offering products/services and procurements) exceeding 2% of sales of NEC or such
business partner; or, 2) A business partner from which NEC’s annual average outstanding
borrowings exceeding 2% of total assets of NEC in any one of the past three fiscal years
*2 Organization that has received a significant amount of donation from NEC:
An organization that has received from NEC a significant amount of donation exceeding
the greater of ¥10 million, or 2% of the gross income of such organization, in any one of
the past three fiscal years
Enhancing the Effectiveness of the Board of Directors
For Directors and A&SBMs to be able to appropriately fill their
expected roles and responsibilities, NEC has stipulated a policy of
implementing periodical training for Directors and A&SBMs so that
they can acquire the necessary expertise and information regarding
the roles and responsibilities of Directors and A&SBMs (including
legal responsibilities), and the necessary expertise and information
regarding the company’s business. NEC takes steps for Outside
Directors and A&SBMs to deepen understanding of the NEC Group,
including tours of NEC and subsidiary business sites and exhibitions.
We will continue to provide various kinds of support.
Outside Director and A&SBMs on tour
at the OCC Corporation’s Submarine
System Plant in Kitakyushu City,
Fukuoka Prefecture
To enhance deliberations at meetings of the Board of Directors,
Outside Directors and Outside A&SBMs are provided documents in
advance of meetings of the Board of Directors. They are also given
briefings in advance on particularly important items to be included
on the board’s agenda. In addition, the Board of Directors receives
from CFO for shareholders’ opinions obtained through IR activities,
and from CSO for issues or measures related to sustainability, and
it has opportunities to share and discuss such matters. Looking
ahead, we plan to conduct an analysis and assessment of the
effectiveness of the Board of Directors with the objective of
further enhancing their functions.
For further details on the corporate governance of NEC Corporation, please visit the following websites:
http://jpn.nec.com/profile/en/governance.html
36
NEC CorporationAnnual Report 2015Business Foundation to Support Value Creation
Overview of the Corporate Governance Structure
Elect and Dismiss
Elect and Dismiss
Elect and Dismiss
GENERAL MEETING OF SHAREHOLDERS
Audit
Management/Supervision
Accounting
Auditors
Cooperate
AUDIT &
SUPERVISORY BOARD
5 A&SBMs, including
3 Outside A&SBMs
Audit
BOARD OF DIRECTORS
11 Directors
Chairman of the Board
President
4 Chief Officers
5 Outside Directors
Deliberate
and
Report
NOMINATION AND
COMPENSATION COMMITTEE
5 members, including
3 Outside Directors
Cooperate
Supervise
Cooperate
CORPORATE AUDITING
BUREAU
EXECUTIVE COMMITEE
Around 20 corporate officers
BUSINESS PROGRESS COMMITTEE
Corporate officers and general managers
of business units etc.
(Corporate officers)
Business
Execution
Internal audits
Business units/Corporate staff/Affiliate companies
Board of Directors
The Board of Directors holds regular meetings once a month, in principle and
extraordinary meetings as necessary to determine important matters related
to business execution, including business realignment, funding plans and
financing and investment, as well as matters concerning business plans.
Status of Fiscal 2015
Chief officers provided activity reports and management plans and
progress reports for each business segment. The Board of Directors
actively discussed such reports as well as resolution agenda such as
restructuring domestic production bases, operating efficiency and business
reforms. A broad range of advice was given by Outside Directors, in
particular, tapping into their own extensive experience in such roles as
corporate management, and based on their deep insights.
Executive Committee
The Executive Committee discusses important NEC Group management issues
such as policies and strategies. This committee extensively discusses matters
of particular importance prior to putting them forward to the meetings of the
Board of Directors for approval. In doing so, the committee enhances the
deliberations and ensures appropriate decision making.
Business Progress Committee
The Business Progress Committee deliberates and reports on matters
related to the status of the NEC Group's business execution, such as
monitoring progress with respect to meeting budgets approved by the
Board of Directors, with the aim of sharing management information and
promoting execution efficiency.
Nomination and Compensation Committee
The Nomination and Compensation Committee deliberates on (i) nomination of
Directors, Representative Directors and Audit & Supervisory Board Members
(KANSAYAKU) (“A&SBMs”), the chairman of the Board, and the president and (ii)
the structure and the level of remuneration for Directors, representative
Directors and corporate officers from an objective perspective. The committee
reports the results of its deliberations to the Board of Directors.
Audit & Supervisory Board (KANSAYAKU-KAI) (“A&SB”)
A&SB holds regular meetings once a month and extraordinary meetings as
necessary, decides on audit policies, standards, and other matters, and receives
status reports on audits from each A&SBMs and on other matters.
Form of Organization
Company with the Audit & Supervisory Board Members (KANSAYAKU)
Chair of the Board of Directors
Chairman
Directors
No. of Directors
11 (of which Outside Directors: 5)
Term
1 year
Audit & Supervisory Board Members
No. of A&SBMs
5 (of which Outside A&SBMs: 3)
(KANSAYAKU) (“A&SBMs”)
Term
4 years
Independent Directors/Independent A&SBMs
No. of Independent Directors: 4, No. of Independent A&SBMs: 3
Policy regarding incentive payments to Directors
Remuneration and bonuses linked to business results*1
Remuneration*2 (For fiscal 2015)
Directors
A&SBMs
Total amount in
remuneration:
¥354 million for a headcount of 11
(of which, Outside Directors: 5, Total remuneration: ¥60 million)
Total amount in bonus:
¥72 million for a headcount of 6
Total amount in
remuneration:
¥96 million for a headcount of 7
(of which, Outside A&SBMs: 4, Total remuneration: ¥36 million)*3
*1 Director bonuses are linked to the NEC Group’s performance to assure performance incentives. Bonuses are not paid to Outside Directors in order to help ensure their independence.
*2 NEC does not disclose remuneration per individual. For NEC’s basic remuneration policies and systems, please refer to the Business Report in the notice of the 177th Ordinary General Meeting of Shareholders.
*3 The above headcounts include 2 A&SBMs who retired at the close of the 176th Ordinary General Meeting of Shareholders held on June 23, 2014.
37
NEC CorporationAnnual Report 2015 Messages from Outside Director and Audit & Supervisory Board Member
Revitalize Our Board, Increase Our Corporate Value
Three years have passed since I assumed my post as an outside director. Since then, the Company’s
operating performance has improved steadily against the fast-changing business environment. I believe that
it is the fruit of the orchestrated effort by the Board members in guiding the Company through structural
reforms and realignment of business portfolio to implement “scrap and rebuild” of better organization. It is
noteworthy that the board members have had intense discussions to determine how the NEC Group should
contribute to better society for long into the future as an acclaimed corporate citizen.
Looking ahead, I believe that for NEC to accelerate its growth is by incorporating the proprietary
technologies into new business models. For example, in the “Solutions for Society,” we can offer solutions to
a large number of social issues with the technologies that we already have and with new technologies we
will develop. My visits to business sites have confided me that NEC and its technologies have vast
possibilities in various fields, including ICT and energy. It is my role to use my perspective from outside the
Company and assist NEC to turn these possibilities into real business. I am committed to offer my opinions
proactively with respect to internal proposals, thereby further vitalizing the Board of Directors.
With the adoption of the Corporate Governance Code in June, the members of the Board are working to
ensure that the framework properly functions and moreover, it is carried out with high conscience. I cannot
emphasize enough the importance of having a governance system that is best suited for the company’s
future vision for itself. As a member of the Board, I will continue to work in attaining sustainable growth of
the NEC corporate value.
Outside Director
Hitoshi Ogita
Compliance and Corporate Citizenship Form “the Arteries” of a Company
I was appointed to the post of outside Audit & Supervisory Board Member in June 2014. Since then, I have
taken on the responsibility to guide the NEC Group in compliance with laws and regulations. I believe that
establishing and maintaining strong compliance to regulations is of particular importance to NEC, with its
advanced technologies and a global presence as a solution provider to both social infrastructure and
systems utilized in risk management for society.
Often times, corporate scandals do not occur from a lack of understanding of complex laws and regulations.
In many cases, corporate scandals are simply of illegal activities at a fundamental level that goes against
common knowledge. It is my understanding that such activities occur when the reasoning and practices inside
an organization drift away from the common knowledge and an organization loses its flexibility.
In the world of physics and mechanical engineering, the term “compliance” refers to the elasticity or
flexibility of an object. For a company, the spirit of compliance and corporate citizenship is like “an artery” to a
living organism. A living organism cannot survive if its arteries lose their flexibility and blood stops circulating.
Likewise, an organization cannot live no matter how hard it works to improve its operating performance, if the
spirit of compliance and corporate citizenship does not work as “the arteries” in the organization.
All employees of the NEC Group are serious, hard-working, and knowledgeable in their fields. While
continuing to value and protect these strengths, I ask employees to possess a “flexible spirit” and
sensitivities for the common knowledge.
At NEC, all Group companies are taking steps to enhance their compliance systems. As an outside Audit &
Supervisory Board Member, I plan to voice my opinions based on my view from outside the Company. I am
committed to contribute in fostering a healthier and suppler NEC culture.
Outside Audit & Supervisory Board Member (KANSAYAKU)
Kyoko Okumiya
NEC Corporation
Annual Report 2015
38
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Directors and Audit & Supervisory Board Members
(As of June 22, 2015)
Directors
Kaoru Yano
Chairman of the Board
Yano has served as President (Representative
Director) and Chairman of the Board
(Representative Director).
Nobuhiro Endo
President (Representative Director)
After being engaged in the management of
network business and NEC Group’s management
strategies, Endo has since 2010 been President
(Representative Director).
Takashi Niino
Senior Executive Vice President,
CSO (Chief Strategy Officer),
CIO (Chief Information Officer) and
Member of the Board (Representative Director)
After being engaged in the management of the
financial solutions business, Niino is now in charge
of the NEC Group’s management strategies.
Junji Yasui
Senior Executive Vice President,
CSCO (Chief Supply Chain Officer) and
Member of the Board (Representative Director)
After being engaged in the management in a broad
range of fields of IT solutions business and network
business, and Yasui is now in overall charge of the
NEC Group’s supply chain.
Takaaki Shimizu
Executive Vice President,
CMO (Chief Marketing Officer) and
Member of the Board
After being engaged in the management of the
government and public solutions business and IT
solutions business, Shimizu is now in charge of
marketing and business innovation strategies.
Isamu Kawashima
Executive Vice President,
CFO (Chief Financial Officer) and
Member of the Board
After being engaged in the management of
accounting and financial affairs at the business
units and overseas subsidiaries, Kawashima is now
in charge of the NEC Group’s accounting and
financial strategies.
Takeshi Kunibe
Member of the Board
President and Chief Executive Officer,
Sumitomo Mitsui Banking Corporation
Director and Member of the Board of Directors,
Sumitomo Mitsui Financial Group, Inc.
Kunibe has extensive experience and deep insight
as a bank manager.
• Attendance at meetings of the Board of Directors:
12 out of 12
Hitoshi Ogita
Member of the Board
Adviser to the Board, Asahi Group Holdings, Ltd.
Ogita has extensive experience and deep insight
with management of a manufacturing company.
• Attendance at meetings of the Board of Directors:
12 out of 12
Kaori Sasaki
Member of the Board
President and CEO, UNICUL International, Inc.
President and CEO, ewoman, Inc.
Sasaki has wide range of knowledge on marketing
and perspective of consumers.
• Attendance at meetings of the Board of Directors:
11 out of 12
Motoyuki Oka
Member of the Board
Senior Adviser, Sumitomo Corporation
Oka has extensive experience and deep insight with
management of a general trading company, on
including the management of overseas firms.
• Attendance at meetings of the Board of Directors:
10 out of 12
Kunio Noji
Member of the Board
Chairman of the Board, Komatsu Ltd.
Noji has extensive experience and deep insight with
management of a manufacturing company.
• Attendance at meetings of the Board of Directors:
12 out of 12
Notes: 1
NEC has notified the Tokyo Stock Exchange of its four independent Directors and
three independent Audit & Supervisory Board Members (“A&SBMs”).
Independent Directors include; Mr. Hitoshi Ogita, Ms. Kaori Sasaki, Mr. Motoyuki
Oka and Mr. Kunio Noji.
Independent A&SBMs include; Mr. Satoshi Itoh, Ms. Kyoko Okumiya and
Mr. Takeshi Kikuchi.
2. Attendance at meetings: the number of attendance at meetings (meetings of the
Board of Directors or meetings of A&SBMs) out of the number of the meetings held
in the fiscal year ended March 31, 2015
39 NEC Corporation
Annual Report 2015
Audit & Supervisory Board Members (KANSAYAKU)
Board of Directors
Fujio Okada
Audit & Supervisory Board Member (full-time)
Okada has extensive experience in management of
the legal and internal control division.
Tetsuya Fujioka
Audit & Supervisory Board Member (full-time)
Fujioka has accounting experience for many years
and experience as former General Manager of
Corporate Finance Division.
Satoshi Itoh
Audit & Supervisory Board Member
Certified Public Accountant
Itoh has extensive audit experience and specialized
financial and accounting knowledge as a certified
public accountant over many years
• Attendance:
At meetings of the Board of Directors: 11 out of 12
At meetings of the Audit & Supervisory Board:
15 out of 15
Kyoko Okumiya
Audit & Supervisory Board Member
Attorney at Law
Okumiya has extensive knowledge and specialized
experience as an attorney at law.
• Attendance:
At meetings of the Board of Directors: 10 out of 10
At meetings of the Audit & Supervisory Board:
11 out of 11
(Appointed in June 2014)
Takeshi Kikuchi
Audit & Supervisory Board Member
Attorney at Law
Kikuchi has extensive knowledge and specialized
experience as an attorney at law in fields such as IT.
(Appointed in June 2015)
For further details on the Directors and Audit & Supervisory Board Members of NEC
Corporation, please visit the following websites:
Directors
http://www.nec.com/en/global/about/executives/directors.html
Audit & Supervisory Board Members (KANSAYAKU)
http://www.nec.com/en/global/about/executives/auditors.html
Directors 11
Internal Directors 6
Outside Directors 5
(of which 4 are
independent Directors)
The Board of Directors makes important decisions for the Company’s
business execution, starting with deciding on its basic management
policies. It also fulfills the responsibility of overall supervising of business
execution, and therefore requires viewpoints based on broad knowledge,
and the Board of Directors is comprised with consideration given to
diversity in such factors as career background, specialist field and gender.
Chairman of the Board
(Chair of the Board of Directors)
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Internal Directors
Non-Corporate Officer
Corporate Officer
Audit & Supervisory Board (KANSAYAKU-KAI)
Audit & Supervisory Board Members 5
Internal Audit & Supervisory
Board Members 2
Outside Audit & Supervisory
Board Members 3
(All members are independent
Audit & Supervisory Board Members)
NEC appoints of the Audit & Supervisory Board Members with the
personnel who have the knowledge and experience necessary for audits,
such as considerable expertise in finance and accounting or experience
as an attorney at law, and who strengthen the auditing functions of the
Audit & Supervisory Board.
NEC Corporation
Annual Report 2015
40
Business Execution Structure
(As of July 1, 2015)
At NEC, the president, chief officers, corporate officers in charge of business units and other officers interact
actively in exchanging information and discussion to enhance management speed and to execute business
from a companywide perspective.
Takashi Niino
Senior Executive Vice President,
CSO (Chief Strategy Offi cer), CIO (Chief Information Offi cer)
In fi scal 2015 (the year under review) or the second year of the Mid-Term
Management Plan 2015, we were able to achieve some positive results in the
global development of “Solutions for Society”, an area of focus for NEC.
In fi scal 2016(the upcoming fi scal year), we will enhance our business
model and grow these operations as a Social Value Innovator, and further
pursue the NEC Group operational reforms and work on formulating the next
mid-term management plan to be a leading global company.
Hideichi Okada
Senior Executive Vice President
In charge of Global Business Strategy
Expanding the global business is necessary to achieve the NEC Group’s
management targets. I believe it is our mission at NEC to leverage our
information and communications technologies to provide social infrastructure
essential for safe living that people around the world want and for
development in emerging countries, as well as to deliver services that please
our customers. I will work to gain the understanding of top leaders in
countries around the world and carry out with these initiatives quickly.
Tomonori Nishimura
Executive Vice President
In charge of Public Business Unit
The upcoming fi scal year is the fi nal year of the current “Mid-term
Management Plan 2015,” and NEC is committed to making it a year in which
we deliver on the goals of the plan. Currently, the market is looking for NEC to
both grow and become more profi table. To this end, we will boost NEC’s brand
strength as a Social Value Innovator, by making our products and services
globally competitive and widening the scope of our contribution to society
through our business.
In the upcoming fi scal year, the Public Business Unit will evolve into a more
profi table business unit by paving the way for overseas sales growth and by
further improving the business structure.
Junji Yasui
Senior Executive Vice President and CSCO
(Chief Supply Chain Offi cer)
Our eff orts over the past two years have shaped NEC into a company capable
of posting sustainable profi ts. In the fi nal year of “Mid-Term Management
Plan 2015,” we will go a step further and grow. At the same time, as we
expand our global reach, NEC ensures compliance with trade and import/
export management, as well as to further improve the quality of our products
and services.
We have had success in raising the level of customer satisfaction and
improving to resolve quality issues, and now we are ready to make further
improvements, with global growth in our sights. Through activities to make
product quality an integral part of NEC Group’s culture, we will continue to
build the foundation upon which we will become a leading global company.
Manabu Kinoshita
Executive Vice President
In charge of Corporate Sales and Sales Operations Unit
In the upcoming fi scal year as the fi nal year of the current Mid-term
Management Plan, we focus on three key initiatives targeting continuous
growth in the domestic business. First, we enhance sales support functions
related to the domains that NEC is focusing on, such as SDN, Big Data, cloud,
safety/security, and energy, as well as key sectors including local governments,
healthcare, electric power, and broadcasting for further expansion of sales in
Japan. Second, we expand the sales partner business by introducing new
products and services such as the Social Security and Tax Number System,
cloud, and SDN. Finally, we develop salesforce capability in creating new value
for our customers and society. We will grow domestic business through these
initiatives, and to improve the level of customer satisfaction.
Masato Yamamoto
Executive Vice President
In charge of System Integration, Services & Engineering Operations Unit
The “Mid-Term Management Plan 2015,” which was formulated in April 2013,
calls for NEC to focus on “Solutions for Society”. As a part of this, I am
particularly interested in enhancing our ability to create products, services and
solutions that satisfy our customers around the world.
We will continue to integrate the NEC Group’s capabilities, and continue
tirelessly to be better at what we do and to provide the best for our customers.
41 NEC Corporation
Annual Report 2015
Takayuki Morita
Executive Vice President
In charge of Global Business Unit
I believe our mission is to work with our customers, partner companies, and
government bodies around the world to realize a managed service of cutting-
edge solutions for society. We leverage NEC’s technologies ranked No. 1 in the
world, in fi elds such as biometrics-related technology, network and other
virtualization technology, and Big Data-related technology using correlation
analytics, and to continuously provide such managed services globally.
To this end, in addition to providing commercial-base systems, we are
engaged in many fi eld trials throughout the world. NEC will continue to
propose new types of value for society.
Takaaki Shimizu
Executive Vice President and CMO (Chief Marketing Offi cer)
In charge of Business Innovation Unit
NEC has established seven themes of social value innovation, and set these
as areas in which we will contribute to society going forward. IoT is integrated
into all types of industrial fi elds at a rapid pace. Having devoted ourselves to
network and computer technologies for 116 years, NEC will continue to be an
innovator in the fi eld of IoT.
This innovation is supported by our cutting-edge technologies in fi elds
including Big Data, cloud, SDN/NFV, and cybersecurity, as well as our system
integration capabilities to deliver these technologies as solutions to our
customers. Going forward, we will continually refi ne our technologies and
capabilities, and provide new values needed by society.
Isamu Kawashima
Executive Vice President and CFO (Chief Financial Offi cer)
In the fi scal year under review, we worked in building a stable fi nancial
foundation while delivering profi t at the same time.
We have achieved the income targets we set at the beginning of the year
for three consecutive years, and continue to grow our business operations.
In the upcoming fi scal year, the fi nal fi scal year of “Mid-Term Management
Plan 2015,” we aim to provide fi nancial support for the execution of growth
strategies in key areas, including SDN, Big Data, cloud, safety/security, and
energy, and continue to build a foundation for business expansion.
Katsumi Emura
Senior Vice President
In charge of Central Research Laboratories
NEC is continuously working with customers to deliver innovations. Over the
years, we have used our world-leading face recognition technology and
unique Big Data analytics technologies to create a host of powerful solutions,
including integrated surveillance of cities and infrastructure as well as secure
and stable facility operations. We have already begun to roll out these
solutions globally. In the upcoming fi scal year, we will further strengthen our
global research activities to create new solutions for society, and contribute
to NEC’s future growth.
Nobuhiro Odake
Senior Vice President
In charge of Supply Chain Management Unit
Our unit is working to enhance and improve the supply chain optimized for the
NEC Group as a whole. Underlying our activities is the strong belief that we
are always responsible to provide the highest value for our customers. In the
upcoming fi scal year, we will fully apply IoT and the related technologies to
make our supply chain faster and more visible through process innovation. Our
activities for customer satisfaction come before anything else. Taking this
idea to heart, we will raise the level of our procurement, production, delivery
and product quality even higher.
For further details on the corporate officers of NEC Corporation, please visit the following website:
http://www.nec.com/en/global/about/executives/svp.html
Shunichiro Tejima
Executive Vice President
In charge of Telecom Carrier Business Unit
Telecom Carrier Business Unit brings together NEC’s IT and network
technologies to build information and communications platforms and thereby
contribute to the realization of an affl uent society.
In the upcoming fi scal year, we are committing ourselves to serve a wide
range of customers in and outside of Japan in delivering solutions to the
challenges they face. We will achieve further growth on a global scale with
solutions combining SDN, which makes network building easy through
virtualization, and TOMS, which boosts network operating effi ciency.
Shinichi Shoji
Executive Vice President
In charge of System Platform Business Unit
System Platform Business Unit continues to provide strong ICT assets as a
platform to support “Solutions for Society”, as well as sales and system
engineers backing the business. Our strong ICT assets are obtained with cost
competitiveness on a global scale and high quality, with added value that our
competitors cannot imitate. We will take a steadfast approach to evolving
components, and continue to lead the IoT era with a solution platforms that
integrates NEC’s unrivaled strengths in Big Data engines centered on vector
computers; virtualized platforms that evolves SDN; and edge computing.
Takemitsu Kunio
Senior Vice President
In charge of Smart Energy Business Unit
In the global electric utility market, “Distributed Energy” is increasingly
widespread as a new energy source. ICT is used for sophisticated power
control, a great example of the “integration of ICT and energy technology” that
NEC has been proposing over the years. In fi scal 2015, we achieved notable
growth by enhancing our product assets, such as large and small electricity
storage systems and AMI. In the upcoming fi scal year, we will promote the ICT
driven distributed energy, which is expected to become increasingly
widespread in Japan, too. We will establish a business model that better serves
the market and customers, and achieve sustainable business growth.
Susumu Makihara
Senior Vice President
In charge of Personnel and General Aff airs
Increasing the global competitiveness of our work force is essential in order
for NEC to grow. However, Japan is facing demographic issues because of the
aging of society and a declining birthrate. Therefore, in fi scal 2015, NEC took
initiatives to further pursue diversity in its employment in terms of gender
and nationality. Moreover, we have implemented succession planning to
develop our future leaders. In addition, in the upcoming fi scal year, we will
carry out more initiatives to improve our work styles and establish workplaces
more appropriate for a diversifi ed pool of talent.
Chikara Ishii
Senior Vice President
In charge of Enterprise Business Unit
Enterprise Business Unit contributes to the realization of a safe, secure and
affl uent society by providing value to customers in the manufacturing, retail
and service sectors. In the upcoming fi scal year, we will further expand our
business globally by jointly creating value with customers, centered on value
chain innovations linking manufacturing, distribution and sales, and work
tirelessly to make the fi nal year of the “Mid-Term Management Plan 2015” a
year of growth that will lead NEC into the future.
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NEC Corporation
Annual Report 2015
42
Stakeholder Engagement
The NEC Group is carrying out reforms aimed at becoming a social value innovator capable of continuously contributing to
society for over 100 years. To this end, it is important for the Group to be sensitive to societal trends and expectations.
Through communications with various stakeholders, the Group will continue to work with them to find solutions to
social issues.
Customers
Sales activities
Customer satisfaction surveys
NEC Customer
Communication
Center
Shareholders and Investors
Investor relation (IR) meetings,
dialogs with organizations that
evaluate socially
responsible
investing (SRI)
Suppliers
Meetings with suppliers to exchange information,
compliance hotline, CSR-Process
Management Reviews
(CSR-PMR), etc.
Local Communities
NEC Make-a-Difference Drive (employee
volunteering), dialogs and collaboration
with non-profit organizations (NPOs), etc.
NEC Group
Employees
Labor-management councils,
compliance hotline, ONE NEC Survey,
Engagement Survey, etc.
Global Environment
Dialogs with Shareholders and Investors
Shareholders and other investors constitute one of NEC's most important
stakeholder groups. By raising the transparency of management through
timely, appropriate, and fair disclosure, NEC aims to deepen the
investment community's understanding of our corporate value.
Dialogs with shareholders (interviews) are primarily conducted by the
Investor Relations Office (IR Office), the department within the Corporate
Strategy Division responsible for investor relations. The Company
president and CFO also meet with key shareholders. However, before
In addition to individual meetings, members of senior management hold
management briefings and quarterly financial-result briefings for the media,
securities analysts, and institutional investors. Also, executives responsible
for individual businesses have briefings on their businesses, including tours
of facilities and briefings on research progress. During the fiscal year under
review, management conducted financial-result briefings such as:
• the president speaking at briefings in April and October,
• a tour of our Fuchu Plant’s Satellite Integration Center in July,
members of senior management meet with the shareholders, they talk
• an R&D briefing in December, and
with the IR Office, Corporate Communications Division, Accounting
• a seminar on business related to Japan’s upcoming Social Security and
Division, Finance Division, Legal Division, and other relevant internal
Tax Number System in March.
divisions. The reason for these prior meetings is to ensure a shared
Members of senior management also engage in dialog with
understanding of both the management strategies and the overall
shareholders through the General Meeting of Shareholders. Additionally,
operating performance to disclose. This is an effective way of preventing
the IR Office holds briefings for individual investors several times a year
the disclosure of what could be considered “insider information”. In
at branches of securities companies. During the fiscal year under review,
addition, officer(s) from the IR Office always sit in on meetings between
approximately 350 people attended such briefings, which were held in
shareholders and members of senior management, and later report on the
seven cities across Japan.
details of the meeting to relevant NEC managers. In principal, more than
Shareholders’ opinions and
one IR Office officer will attend the meetings with shareholders, thereby
the ideas gained through these
ensuring mutual checks to control the information disclosed. During the
IR activities are regularly
fiscal year under review, the Company held 440 meetings (88 more than
provided as feedback to senior
in the previous fiscal year) with securities analysts and institutional
management. Then, once each
investors inside and outside of Japan. In this way, we engaged in dialog
with more than 800 people representing approximately 700 companies.
quarter, the CFO reports on
shareholders’ opinions and ideas
at a Board of Directors Meeting.
43
NEC CorporationAnnual Report 2015 Identifying Reform Issues through Dialogs with “CSR Review Forum-Japan” (an NPO) to Become a Social Value Innovator
From mid-May to early June 2015, NEC held discussions with CSR
Review Forum-Japan (CRF), which is an alliance of NGOs, NPOs,
consumer groups, and labor groups.
CRF and various individual NEC divisions had talks to review their own
activities about core issues based on ISO 26000, a standard providing
international guidance for social responsibility. This review process has
been ongoing since 2011.
As in the previous year, Senior Executive Vice President Takashi Niino
participated and talked about making changes to become a social value
innovator, as reflected in the Company’s mid-term management policy.
He discussed developments such as the NEC Vision books and the new
brand message “Orchestrating a brighter world,” which were released
during the fiscal year under
review. In this way, there was
meaningful dialog on how to
foster a better corporate culture
as well as on current progress.
After the various discussions,
CRF commented as follows:
• ”We hope that NEC’s “Solutions for Society” is added to the next mid-
term management plan.”
• ”In resolving social issues, we would like Japanese companies to
further leverage their special attributes. Japanese companies are
conscientious, precise, and friendly to the weak, which are qualities
that many non-Japanese companies do not possess as much.”
• ”The social issues that the world faces cannot be solved by one
private-sector company alone. The issues are too large and will take a
long time to solve. Consequently, it is important that a number of
companies form a network to solve them.”
• ”It is important for companies to tell shareholders and investors that
they wish to also be evaluated on their long-term social value creation,
not just on their business results.”
NEC assured CRF that it will continue to deepen discussions about
the importance of linking our businesses to social issues. Among other
approaches, we will also explore more ways to inform the public about
the “Solutions for Society,” selecting assessment indicators to measure
the extent to which social issues are being resolved.
Dialogs on Contributions by Business Sector to the UN’s Millennium Development Goals
many solutions have been implemented over the past 14 years. This has
been done in collaboration with 1,800 public and private sector
organizations from more than 60 countries.
NEC will continue to generate stakeholder dialogs with the UN,
NGOs, and representatives of governments around the world to propose
additional solutions.
In April 2015, “The 15th Infopoverty World Conference” was held at the
United Nations’ headquarters. It was held by the Observatory for
Cultural and Audiovisual Communication (OCCAM), a non-governmental
organization registered with the United Nations Economic and Social
Council and the Department of Public Information. People representing
various countries took part.
Mr. Masahiro Ikeno, vice president of NEC’s Global Business Unit,
represented the Company to share its “Solutions for Society” (such as an
ID system using NEC’s biometric identification technology and a
broadband network system) to promote NEC’s ability to improve safety,
security, efficiency, and social equality with information and
communication technologies.
A participant’s comment: “NEC has such excellent solutions and
successful cases, which I learned about for the first time. We would like
to maintain regular contact with them.”
OCCAM’s comment: “We can develop policy guidelines and give
advice on what the international community should do for governments.
However, we also need the involvement of private companies to
implement practical solutions for each government. We hope NEC can
continue to be involved in these efforts.”
Since the adoption of the UN’s MDGs*, the conference has been held
every year, starting in 2001. A variety of stakeholders such as
* MDGs:
governments, companies, and NGOs have been taking part in the
conference and share innovative solutions with each other. As a result,
Millennium Development Goals. They were adopted at the UN’s headquarters in New York.
They range from halving extreme poverty rates to eradicating poverty and hunger by the
target date of 2015.
44
NEC CorporationAnnual Report 2015Business Foundation to Support Value Creation
Empowering Our People
The NEC Group, to make additional progress with our global business, has established new practices under an “NEC Group Human Rights
Policy” as we strive to further respect human rights. We actively promote women’s success in the workplace, and are strengthening the
training of employees who can excel in a global environment. In addition, we conduct research into employee awareness both
domestically and overseas to promote quality workplaces, and strive to acquire official certification regarding safety and health.
Formulating the “NEC Group Human Rights Policy”
As a global company, NEC supports the following codes of conduct and
guidelines advocated by the United Nations, the International Labor
Organization (ILO), the European Commission, and other organizations.
l The International Bill of Human Rights (United Nations)
l The ILO Declaration on Fundamental Principles and Rights at Work
l The United Nations Global Compact
l Guiding Principles on Business and Human Rights (UNGP)
(United Nations)
l The ICT Sector Guide on Implementing the UN Guiding Principles
on Business and Human Rights (European Commission)
Promoting Women’s Success in the Workplace
NEC appointed and promoted personnel irrespective of gender even before
the enactment of the Equal Employment Opportunity Law in 1985.
NEC’s recruitment of new graduates in recent years has seen the ratio
of women among them grow to around 20% to 25%. In addition, the
percentage of the total number of managers who are women exceeds
5%. In addition, there are 96 management-class female employees who
are ranked in the position of department manager or higher, including
division leaders and branch managers. The percentage of such women is
3.8%. (The figures are as of April 2015.) In addition, NEC is actively
engaged in creating workplaces where women can succeed in line with
the action plan below, which is outlined in the Japan Business Federation
(Keidanren) Action Plan on Women’s Active Participation in the Workforce.
In 2004, NEC added an item expressing respect for human rights to
its “NEC Group Charter of Corporate Behavior” and in April 2015 newly
formulated the NEC Group Human Rights Policy as a commitment to
stakeholders. This policy states that NEC shall engage in dialog and
discussion with stakeholders to develop and implement due diligence on
human rights. It also requires that a similar respect for human rights be
shown not only by NEC Group employees, but also by business partners
in the value chain and by other associates.
of employees who have restrictions on working hours, including shorter
working hours while raising children.
l An interactive event for young and mid-career female employees
In December 2014, NEC held a diversity promotion event called “Think
About Your Career, Your Dreams.” This was an interactive event for female
employees held by SELENE (short for “Scarlet Elegance in NEC”), a
volunteer group of NEC female managers.
The event had two main aims. One was to make women realize there are
many options for their career plans, life plans, and work styles. The other
was to enable the participants to meet many different people from within
the Company. About 80 young and mid-career female employees took part.
l Seminar on support for returning to work while raising children
In February 2015, NEC held a seminar on support for returning to the
Voluntary Action Plan on Promotion of
Women to Managerial and Board Positions
Achieve a percentage of women ranked department manager or higher of 5% by
April 2018
Raise career awareness and form networks of young and mid-career employees
using female managers, mainly those ranked as relatively high business unit
managers
Strengthen the support of employees aiming to be working parents
Promote innovative working styles by utilizing ICT and with a focus on diversity
In line with this action plan, in fiscal 2015 NEC implemented the
workplace for employees who were on leave to raise
children. It was attended by about 50 employees on
such leave. Participants learned about the current
state of the Company, systems supporting working
parents, and self-management techniques. They also
worked in groups to positively reflect on returning to
the workplace.
l Career development events for female sales staff
Since fiscal 2013, networking events such as
following policies and events aimed at providing women with career
national women’s sales staff events and
support and raising employee awareness.
l Business unit manager interviews about employing women at
the position of department manager
women’s leadership training have been held
across the Company for the purpose of
training female sales staff. These events are
NEC conducted interviews to gain opinions and proposals regarding
not limited to employees, but also involve
matters that included the career experience needed for such employment,
fields in which success can be expected, and reviews of the working styles
exchanges with salespeople from different
sectors, helping broaden perspectives through
networking with people from other companies.
45
NEC CorporationAnnual Report 2015 Making Global Professionals More Visible and Training Them
To further support our global growth from the personnel side, in fiscal
2011, the NEC Group began building a framework for training
professionals capable of succeeding in a global organization.
NEC created a global-standard framework on human resources and
skills to provide a common global scale for gauging the capabilities of
human resources. Based on this, NEC developed a Web-based SaaS-
style management tool for human resources and skills to improve the
visibility of the skills of professionals at overseas subsidiaries. Moreover,
in fiscal 2015, NEC carried out skills surveys at overseas subsidiaries
that have yet to introduce such management tools. We were able to
visualize the skills of about 80% of the service personnel, systems
engineers, and software developers.
For employees at overseas subsidiaries who are expected to
become leaders to drive global business, we are implementing global
leader training. Through this
training, we will help them share
what the NEC Group aims to be
and expand personal business
networks by gathering
leadership candidates from
various regions.
Employee Surveys: One NEC Survey and Engagement Survey
The NEC Group conducts One NEC Surveys each year for all employees
of Group affiliates in Japan to better understand employees’ opinions
and thoughts about the Company, workplaces, and jobs. In addition,
since fiscal 2012, NEC has carried out Engagement Surveys for
employees of overseas Group companies every other year. The results
of both surveys are utilized to determine the direction of human
resources initiatives and measures to develop organizations.
One NEC Survey (Japan)
In fiscal 2015, this survey was conducted at NEC Corporation and 33
NEC Group companies in Japan. The purposes were to identify the
factors that motivate each employee to perform better and improve
customer satisfaction. Responses were obtained from 48,857
employees, making the response rate about 84%. More than 70% of the
respondents expressed positive opinions about their high degree of
trust in their co-workers, their desire to contribute to customers, and
their loyalty to NEC. However, only from 40% to 50% of the employees
Tackling Health and Safety
had positive opinions about career opportunities, evaluation systems,
and work processes. Based on these results, NEC will further enhance
and promote career opportunities to provide employees better future
prospects and a greater sense of growth.
Engagement Survey (Overseas Subsidiaries)
In fiscal 2015, this survey was conducted at overseas subsidiaries in 30
countries managed by the Global Business Unit. It was in seven
languages. Responses were obtained from 7,900 employees and the
response rate was 77%. More than 60% of the respondents expressed
positive opinions regarding teamwork and customer-oriented work
execution. In contrast, the positive response rates for career
opportunities, evaluation systems, and work environments were about
35%. This tendency is similar to the responses of employees in Japan.
Based on these trends, NEC will collaborate with each region to develop
the organization further.
A fundamental NEC principle is that "NEC will maintain and enhance
comfortable and supportive workplaces to ensure the health and safety
Efforts to Acquire OHSAS 18001 Certification
The NEC Group has been working since fiscal 2011 to obtain OHSAS
of all people working at its business sites." Based on that, NEC provides
18001 certification by fiscal 2015 for occupational health and safety,
various occupational health and safety and health enhancement
taking into account the characteristics of
activities company-wide, taking into account the characteristics of each
each company and workplace. Certification
company and workplace.
Adoption and Functioning of the NEC Group’s Occupational
Health and Safety Management Regulations
NEC established a company-wide Occupational Health & Safety Policy in
2010. It was used to regulate specific actions in individual situations. In
2012, the NEC Group’s Occupational Health and Safety Management
Regulations were established as part of efforts to enhance the quality
of the activities.
has already been obtained for 11 NEC
Group companies thought to be likely to
have health and safety risks, including the
NEC Kansai Building, sales bases, and
production lines. Looking forward, we are
moving ahead with OHSAS certification or
implementation of a similar program for
other NEC Group companies.
OHSAS certificate
46
NEC CorporationAnnual Report 2015Business Foundation to Support Value Creation
Earning Customer Trust
NEC considers value for customers from a societal perspective, and will continue to work with customers to contribute to solving social
problems. All of our employees discuss how to maximize value for customers, create opportunities to share awareness, and utilize ICT to
contribute to solving social issues where customers are located.
“The NEC Group Values Day:” Aimed at Maximizing Benefits
for Customers and Society
NEC uses July 17, the anniversary of the company’s founding in 1899,
as “NEC Group Values Day,” a day on which all employees reaffirm the
four values of great importance to our company: Better Products, Better
Services; Passion for Innovation; Collaboration; and Self-help. On that
day, employees at each workplace spend time discussing what the
values are so as to better satisfy customers’ expectations. Employees
also discuss what they should do to maximize such values, using it as an
opportunity to foster a mindset of putting ideas into action based on a
sense of ownership.
In 2014, we added a “Values Achievement Award” to our “NEC
Contributors of the Year” event. The event honors employees and teams
that contribute to customers, markets, and/or society and help grow the
NEC Group’s culture by being aware of the value their work provides to
customers. In 2014, there were seven recipients of the award.
Award recipients included a team that helped with “Sports Festival
in Tokyo 2013” by volunteering with operations and cleaning
sidewalks. The team also worked closely with Tokyo’s Koto Ward and
other organizations to develop and provide a smartphone app that
offered information on competition venues during the festival. Another
team provided customers with manufacturing know-how linking sales
and production plants and is working with clients to promote
production innovations.
Local Subsidiary’s Efforts to Support Developing Countries
As part of its social contribution program in the Philippines, NEC Telecom
Software Philippines, Inc., worked with the Japan International
Cooperation Agency (JICA) to support a program that fosters exchanges
between high schools in the Philippines and Japan.
With the aim of improving communication skills that allow people to
enjoy global success, Subangdaku Technical Vocational School in Cebu
(one of Philippines’s model schools for technical education) and Chiba
Prefectural Ichikawa High School of Technology in Japan connected via a
network and discussed differences in the cultures and learning methods
at the two schools.
The students felt a sense of affinity based on the schools’ having
many subjects in common, such as math and physical education. But,
through ICT, they also got a real sense of the differences between the
schools, such as the clothing, accents, the number of class periods for
occupational technology classes and specialized courses, and the
different things they were producing in their classes. Following the
completion of the program, students from both schools said that the
program helped them speak with confidence and that they started to
enjoy communicating in English.
Going forward, NEC will continue to earn the trust of local
communities through locally rooted global social contribution activities
in the communities where we operate.
NEC Contributors of the Year awards ceremony
Network-based exchange program between high school students in Japan and the Philippines
47
NEC CorporationAnnual Report 2015 Progress of NEC Group “Environmental Management Action Plan 2017/2030”
and New Objectives for Climate Change
In fiscal 2011, we established NEC Group “Environmental Management Action Plan 2017/2030,” which defines mid- and long-
term environment management targets. In addition, we have been working on new targets to strengthen our contribution to
combating climate change since last year.
NEC Group Environmental Management Action Plan 2017/2030
includes specific targets based on three key perspectives:
• low carbon emissions
• ecosystem and biodiversity preservation
• resource recycling and conservation.
One of the goals of the low carbon emissions is to contribute to a
reduction in CO2 emissions from customers and society through the
provision of IT solutions. With respect to this goal, we are working to
reduce CO2 emissions by 15 million tons by fiscal 2018. During fiscal
2015, we contributed to reductions of 2.54 million tons. With this, our
cumulative CO2 emission cuts over the five years since fiscal 2011
stood at 11.71 million tons. Therefore, we are making good progress
toward achieving the 15-million-ton goal.
Another low-carbon target is to reduce CO2 emissions during the use
of our products by improving their energy efficiency. In this regard, NEC
aims to achieve an 80% reduction by fiscal 2018 compared with that
for fiscal 2006 products. In fiscal 2015, the reduction was already 91%,
which was significantly higher than the target. This reduction was
primarily due to the growth in shipments of network equipment with
extremely high energy-efficiency improvements.
From the perspective of ecosystem and biodiversity preservation,
over 9,880 employees worldwide have participated in social
contribution activities associated with such preservation. In addition,
NEC added three new solutions utilizing our advanced technologies and
products to contribute to the preservation of biodiversity. These include
a solution that supports the destruction of invasive foreign species and
a cultivation management portal. As a result, we now have a total of
nine solutions for biodiversity preservation.
With respect to resource recycling and conservation, one target is to
expand the application of NEC’s NeCycle® bioplastic. NEC is making
progress with this, including NeCycle® usage in base units for point-of-
sale (POS) terminals.
Last year, NEC began initiatives to increase our contributions to
“adaptation” to climate change in addition to furthering our
contributions to curbing greenhouse gas emissions (or the “mitigation”
of climate change). These include preparing for natural disasters, food
shortages, water shortages, and other problems that are on the rise due
to the impacts of climate change.
With respect to the mitigation, we started measures to reduce the
overall supply chain emissions involving our Tamagawa Plant. To do so,
we integrated the management of energy at the community level,
increased the accuracy of Scope 3 data by strengthening collaboration
with suppliers, and enhanced reliability through third-party verifications.
With respect to the adaptation, we have created a brochure that
explains specifically, and in simple language, how IT can help with
adaptation. We then began to bolster our solutions contributing to
adaptation and started a trial to quantitatively assess the level of
contribution of the solutions. Through these initiatives, NEC is working
toward achieving a new environmental management target for CO2
reductions that is five times greater than that for the overall CO2
emissions from our entire supply chain by fiscal 2020.
Social Value that NEC Contributes for Climate Change
(50.00)
million tons
Preparations for climate change (adaptation)
(cid:127) Water, food, forests, and extending infrastructure life by
preventing and protecting against disasters
(cid:127) Ecosystem (agriculture, fishing), etc.
15.00
million tons
11.71
million tons
Amount of
contribution to
CO2 emissions
reductions
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2017
2020
Supply chain
CO2 emissions
(Scope 1, 2, 3)
9.50
million tons
(10.00)
million tons
CO2 emissions reductions (mitigation)
(cid:127) Equipment energy-saving controls
(cid:127) Reducing paper, lowering transport volume, etc.
Fiscal 2020
Fiscal 2020
5X
NEC Corporation
Annual Report 2015
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R&D and Intellectual Property Strategy
NEC aims to create a “Solutions for Society” and conducts research and development activities in close collaboration with
intellectual property and standardization strategies. Researchers go out to visit customers, work through a variety of
hypotheses until they can identify the exact problem, and then strive to create potential solutions that contribute to business
and maximize value by using NEC’s No. 1 technologies and unique technologies as our sources of competitiveness.
Main Research Domains and R&D Strategy
NEC aims to provide value that will ensure the safety, security,
efficiency and equality in society by promoting the development of
“Solutions for Society” under the “Mid-term Management Plan 2015.”
R&D activities at NEC improve technology that supports current
businesses in providing the solutions. Furthermore, the R&D programs
are designed to create technologies for future businesses that can
provide added value for society. All in all, successful R&D activities
support the sustainable development of the Company.
Regarding research domains, R&D activities are set to make vital
contributions to seven themes related to social value innovation.
These include “data science,” which creates new values from Big Data
using visualization and analyzing technologies, and “platforms” that
are needed to respond to the large-scale, complicated issues actually
facing the world.
NEC possesses many proprietary and highly competitive
technological assets in both these areas. We continue to reinforce NEC’s
strengths in these areas, and furthermore, strengthen sources of value
provision in real-time, dynamic, remote and secure, thereby enhancing
the competitiveness of the “Solutions for Society.”
Contributing to the Creation of Integrated Solutions Based on Seven Themes for Social Value Innovation and
R&D Activities Centered on Data Science and Platforms
D
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Computing
networking
Security
Face recognition
Crowd behavior analysis
Invariant analysis
Heterogeneous mixture
learning
Autonomous and
adaptive control
Many-core parallel
processing technology
SDN
Optical digital coherence
Ultra-small wireless HW
Light weight encryption
Protects system from
unknown attacks
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Real-time
Infrastructure
preventive
maintenance
Secure
distribution
Dynamic
Smart traffic
Optimum
water supply
Remote
Secure
High efficient
system
Securely
operate
infrastructure
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At NEC, we apply a process in determining R&D activities to carry on.
As a result, in fiscal 2015, we contributed to creating the new
The process involves focusing on domains in which NEC can provide
“Solutions for Society,” including through solution with the Predictive
high value; creating core competence after thoroughly refining strong
Monitoring and Diagnostics System for large-scale complex facilities
technologies; and then delivering strong solutions by collaborating
utilizing Invariant Analysis technology* and through the integrated
with partners and customers. We find this process important from the
disaster readiness system using crowd behavior analysis technology.
viewpoint of contributing to business with greater value through R&D.
* Invariant Analysis technology is an analytics-based technology that extracts and models the relationships within large amounts of data to enable the detection of behavior that is anomalous with the
model, thus allowing discovery of potential performance issues.
49 NEC Corporation
Annual Report 2015
By Leveraging the No. 1/Only 1 Technologies We Create “Solutions for Society” in Collaboration with
Partners and Customers
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Customer
challenges
Partners
(Technical cooperation)
Deliver solutions
Core competency
No.1/Only 1
technology
Solution prototype
Verify value with partners
and leading customers
Competitor
analysis, NEC
strategy
Customers
(Knowledge/Verify)
C
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y
”
Moreover, to expand these types of initiatives globally, NEC is
moving ahead with R&D in the five regions globally including North
America, Europe, China, Singapore and Japan. We will leverage their
local advantages and accelerate the creation of new business by
initiating collaborations with these regions.
Through its R&D programs, NEC aims to contribute to
development of “Solutions for Society” as outlined in the “Mid-term
Management Plan 2015,” and to create new value to help realize “an
information society friendly to humans and the earth” described in
the NEC Group Vision 2017.
R&D Achievements in Fiscal 2015
l Developed technology to observe and measure internal deterioration of a structure through video
Developed the world’s first technology capable of measuring and estimating internal deterioration inside structures such as roads or bridges
based on video images of the surface taken by camera. Contributed to early detection of structural deterioration and more efficient repairs, and
reducing the cost of maintenance inspections.
l Developed software technology to integrate different types of networks to expand SDN usage
Developed the world’s first technology to enable service providers and telecommunications carriers to efficiently build and operate wide area
networks through integrated management of multiple types of different networks such as optical or wireless.
l Strengthened heterogeneous mixture learning technologies that automatically discover massive patterns hidden in Big Data
Developed new data analysis techniques to automate NEC’s heterogeneous mixture learning technology. Enabled high-speed, highly accurate
large-scale demand forecasts based on millions of target data, including sales forecasts by product and energy demand forecasts.
l Developed “Fingerprint of Things” recognition technology capable of identifying industrial products and parts through fine surface patterns
Developed the world’s first “Fingerprint of Things” recognition technology that enables instantaneous and highly accurate identification to
identify specific products and their respective manufacturers by using image recognition of fine patterns naturally generated on the surface of
industrial products or parts and matching these with cloud-based data. Application of this technology enables selection of optimum distribution
routes and ensures the authenticity of products without any special device or identification tags.
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Intellectual Property Strategy
The NEC Group owns approximately 65,000 patents worldwide, including
to obtain patents that are strong and used extensively.
some 22,000 patents in Japan as of March 2015. The Company positions
Furthermore, NEC believes that participating in standardization
intellectual property as important management resources for the NEC
initiatives will help create and expand businesses, and will also contribute
Group’s business competitiveness and stability, and is working to
to the stable offering of products and services. In addition to pursuing a
strengthen its intellectual property capability. Specifically, NEC is
business model that utilizes standardization, NEC is engaged strategically
concentrating on establishing a global patent portfolio, to support quickly
in standardization activities by actively participating in standards
achieving an overseas sales ratio of 25% as targeted in “Mid-term
organizations both in Japan and overseas. Also, as part of its external
Management Plan 2015.” In such areas as SDN and energy in particular,
NEC is carrying out Group-wide strategic patent projects on a global basis
engagements with intellectual property, NEC is actively pursuing licensing
activities to reduce business risks and expand business opportunities.
NEC Corporation
Annual Report 2015
50
Compliance and Risk Management
NEC actively promotes thorough compliance activities and the strengthening of its risk management, including within its supply chain.
In these ways, NEC strives to ensure sound business activities for society.
Thorough Internal Compliance and Risk Management
NEC believes that compliance and risk management are essential for a
company to exist within society and to meet society’s expectations and
requirements. Consequently, every year, NEC identifies risks
companywide that it needs to address on a priority basis, and carries out
improvement activities. NEC also conducts web-based training related to
compliance on a continuing basis for NEC Corporation and domestic
subsidiaries. In addition, the Company carries out the following initiatives.
l Compliance with Competition Laws and
Corruption (Bribery) Prevention
NEC and its domestic and overseas subsidiaries are thorough in abiding
by policies regarding competition-law compliance and corruption
prevention. To achieve this, we promote awareness-raising and system
improvement activities by which we conduct business activities that
place compliance as the highest priority in a fiercely competitive world.
In fiscal 2015, about 5,000 people, including officers and employees of
domestic subsidiaries, underwent group training. All the members of the
business units in charge of areas regarded as being at high risk for
bribes were advised to take part. At overseas subsidiaries, training for all
officers and employees was implemented through e-learning.
l Compliance Self-Checks
In fiscal 2015, NEC started new self-check compliance testing for all
general managers of NEC and officers of domestic subsidiaries (except
for listed subsidiaries). The self-checks encourage awareness of
compliance weaknesses in the checker’s own division and promote early
Strengthening Suppliers’ CSR
detection and elimination of problems by giving feedback to each division
in the form of an analysis of the results and advice on best practices.
l Compliance Hotline
The Company established a compliance hotline at NEC Corporation and
a third-party organization as a point of contact for consultation and
reporting in the event an employee for some reason cannot consult a
superior or associated division about actions that are or may be a breach
of the "NEC Group Code of Conduct." In fiscal 2015, there were 65 cases
of consultations or reports, such as doubts about internal systems or
management and claims about the possibility of breaches of ethical
behavior. Details of the matters consulted on or reported were
evaluated by the internal divisions in charge to determine whether the
claims required a follow-up survey. Then, the results of any survey were
given to those who requested consultation.
NEC has been working to implement thorough compliance practices,
including through the above measures. However, in November 2014,
the Fair Trade Commission conducted on-site inspections on suspicion
of NEC’s violation of the Antimonopoly Act of Japan in connection with
transactions concerning radio systems for firefighting. Moreover, in May
2015, there were more such inspections in connection with
transactions concerning telecommunications equipment for electric
power systems. Taking these incidents very seriously, the NEC Group is
cooperating fully with the commission’s investigations.
NEC is engaged in a variety of initiatives to bolster suppliers’ CSR based
that progress had been made. Going forward, we will expand the
on the NEC Group Procurement Policy.
number of assessments carried out and the regions to assess.
One aspect of that has been CSR-Process Management Reviews
(CSR-PMR), which have been conducted since fiscal 2013. The reviews
involve visiting suppliers’ sites and conducting onsite assessments of
human rights, labor, health, and safety. Unlike a regular audit, a feature of
this activity is the concept of joint CSR capability building, which involves
dialog with the supplier to raise the CSR abilities of both parties.
In fiscal 2015, CSR-PMR assessments were conducted in
collaboration with a local NGO on three production contractors in China.
As a result, several problems were found that included employment
conditions, working hours, and health and safety management. We
Assessment at a plant
issued corrective-action recommendations and subsequently confirmed
51
NEC CorporationAnnual Report 2015 Financial Section
53 Consolidated Balance Sheets
Contents
55 Consolidated Statements of Operations
56 Consolidated Statements of Comprehensive Income
57 Consolidated Statements of Changes in Net Assets
59 Consolidated Statements of Cash Flows
Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥120 = U.S.$1.
2. Please refer to the separate publication “Annual Report 2015 (Financials)” for details of “Note XX” on
pages 53 to 60.
52
NEC CorporationAnnual Report 2015Corporate Data
Consolidated Balance Sheets
NEC Corporation and Subsidiaries
March 31, 2014 and 2015
ASSETS
CURRENT ASSETS:
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
2014
2015
2015
Cash and cash equivalents (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 206,637
¥ 181,132
$ 1,509,433
Short-term investments (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade notes and accounts receivable (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets (Notes 19 and 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,322
842,308
214,395
74,431
167,626
(4,810)
1,972
928,367
241,146
65,351
163,968
(5,151)
16,433
7,736,392
2,009,550
544,592
1,366,400
(42,925)
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,502,909
1,576,785
13,139,875
PROPERTY, PLANT AND EQUIPMENT,
NET OF ACCUMULATED DEPRECIATION (Note 8):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,585
175,570
17,878
63,075
26,078
57,787
172,177
20,189
67,643
20,319
481,558
1,434,808
168,242
563,692
169,325
Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
346,186
338,115
2,817,625
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147,170
157,078
1,308,983
Investments in affiliated companies (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net defined benefit asset (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (Notes 19 and 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,293
76,203
98,285
40,123
108,398
10,404
112,897
(15,539)
656,234
90,153
66,985
94,194
39,424
85,114
74,622
102,682
(4,500)
705,752
751,275
558,208
784,950
328,534
709,283
621,850
855,684
(37,500)
5,881,267
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,505,329
¥2,620,652
$21,838,767
See notes to consolidated financial statements.
53
NEC CorporationAnnual Report 2015
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
2014
2015
2015
Short-term borrowings (Notes 8 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 32,415
¥ 28,988
$ 241,567
Current portion of long-term debt (Notes 8 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade notes and accounts payable (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities (Notes 10, 13, 19 and 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM LIABILITIES:
Long-term debt (Notes 8 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net defined benefit liability (Notes 3 and 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities (Notes 11, 19 and 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 18, 20 and 21)
NET ASSETS (Notes 12 and 24):
SHAREHOLDERS’ EQUITY:
Common stock:
Authorized — 7,500,000 thousand shares
66,126
446,494
152,792
287,758
985,585
476,610
220,457
2,213
52,801
752,081
106,267
466,677
169,070
298,546
1,069,548
385,523
228,686
2,410
50,293
666,912
885,558
3,888,975
1,408,917
2,487,883
8,912,900
3,212,692
1,905,717
20,083
419,108
5,557,600
Issued — 2,604,733 thousand shares in 2014 and 2015 . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397,199
148,402
182,570
397,199
148,694
207,021
3,309,992
1,239,116
1,725,175
Treasury stock—at cost:
6,515 thousand shares in 2014 and
5,916 thousand shares in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,976)
725,195
(3,025)
749,889
(25,208)
6,249,075
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Valuation difference on available-for-sale securities . . . . . . . . . . . . . . . . . . . . .
Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . .
MINORITY INTERESTS (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,292
(1,359)
(1,521)
(60,658)
(29,246)
71,714
47,385
(271)
12,795
13,852
73,761
60,542
394,875
(2,258)
106,625
115,433
614,675
504,517
Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
767,663
884,192
7,368,267
TOTAL LIABILITIES AND NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,505,329
¥2,620,652
$21,838,767
54
NEC CorporationAnnual Report 2015Corporate Data
Consolidated Statements of Operations
NEC Corporation and Subsidiaries
Years Ended March 31, 2013, 2014 and 2015
NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,071,609
¥3,043,114
¥2,935,517
$24,462,642
COST OF SALES (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,142,243
929,366
2,128,457
914,657
2,039,499
896,018
16,995,825
7,466,817
2013
Millions of Yen
2014
Thousands of
U.S. Dollars (Note 1)
2015
2015
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Notes 9 and 14) . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-OPERATING INCOME:
Interest and dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidy income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-OPERATING EXPENSES:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement benefit expenses (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SPECIAL GAINS (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SPECIAL LOSSES (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME TAXES (Note 13):
814,719
114,647
808,464
106,193
767,934
128,084
6,399,450
1,067,367
5,247
409
446
535
8,940
15,577
5,979
11,631
1,327
19,263
38,200
92,024
16,780
39,525
6,251
2,719
593
2,165
6,507
5,658
8,126
4,468
2,361
5,879
47,150
67,717
37,233
19,675
48,992
18,235
26,492
220,767
10,036
11,325
11,452
22,463
55,276
69,152
58,341
43,532
10,066
10,357
5,872
16,169
42,464
112,112
7,801
23,176
83,883
86,308
48,934
134,742
353,867
934,267
65,008
193,133
69,279
83,961
96,737
806,142
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,724
(198)
30,526
38,753
33,558
8,808
42,366
41,595
31,868
8,944
40,812
55,925
265,567
74,533
340,100
466,042
MINORITY INTERESTS IN
NET INCOME (LOSS) OF SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,319
7,853
(1,377)
(11,475)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 30,434
¥ 33,742
¥ 57,302
$ 477,517
PER SHARE OF COMMON STOCK (Note 23):
Basic net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
2013
¥11.71
—
4.00
Yen
2014
U.S. Dollars (Note 1)
2015
2015
¥12.99
¥22.05
—
4.00
—
4.00
$0.18
—
0.03
55
NEC CorporationAnnual Report 2015
Consolidated Statements of Comprehensive Income
NEC Corporation and Subsidiaries
Years Ended March 31, 2013, 2014 and 2015
2013
Millions of Yen
2014
Thousands of
U.S. Dollars (Note 1)
2015
2015
INCOME BEFORE MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥38,753
¥41,595
¥ 55,925
$ 466,042
OTHER COMPREHENSIVE INCOME (Note 16):
Valuation difference on available-for-sale securities . . . . . . . . . . . . . . . . . .
Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of other comprehensive income of
associates accounted for using equity method . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to
owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,096
(845)
16,724
—
5,690
23,665
¥62,418
¥53,468
8,950
15,858
(253)
4,450
—
1,239
21,294
¥62,889
¥54,917
7,972
12,028
674
11,218
78,611
4,150
106,681
¥162,606
100,233
5,617
93,483
655,092
34,583
889,008
$1,355,050
¥160,309
$1,335,908
2,297
19,142
56
NEC CorporationAnnual Report 2015Corporate Data
Consolidated Statements of Changes in Net Assets
NEC Corporation and Subsidiaries
Years Ended March 31, 2013, 2014 and 2015
Thousands
Outstanding
number of shares
of common stock
Shareholders’ equity
Accumulated other comprehensive income
Millions of Yen
Common stock
Capital surplus
Retained earnings
Treasury stock
Total
Valuation difference
on available-for-sale
securities
Deferred gains or
losses on hedges
Foreign currency
Remeasurements
translation
adjustments
of defined
benefit plans
Total
rights
Minority interests
Stock subscription
Total
net assets
BALANCE, MARCH 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
¥397,199
¥192,834
¥ 82,659
¥ (2,939)
¥669,753
¥16,273
¥ (142)
¥ (28,928)
¥ —
¥ (12,797)
¥ 24
¥120,634
¥777,614
Deficit disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
(44,426)
(3)
BALANCE, MARCH 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
397,199
148,405
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, ¥4 per share . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
(2)
44,426
30,434
252
157,771
33,742
(10,394)
1,451
(11)
4
(2,946)
(35)
5
—
30,434
(11)
1
252
—
700,429
33,742
(10,394)
(35)
3
1,451
—
BALANCE, MARCH 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
397,199
148,402
182,570
(2,976)
725,195
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restated balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397,199
148,402
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, ¥4 per share . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
(2)
294
(22,458)
160,112
57,302
(10,393)
(2,976)
(54)
5
(22,458)
702,737
57,302
(10,393)
(54)
3
294
—
BALANCE, MARCH 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
¥397,199
¥148,694
¥ 207,021
¥ (3,025)
¥749,889
2,060
18,333
(934)
(1,076)
21,908
(7,020)
—
—
23,034
10,237
(24)
—
4,847
125,481
15,959
34,292
(283)
(1,359)
5,499
(1,521)
(60,658)
(60,658)
(39,483)
(29,246)
34,292
(1,359)
(1,521)
(60,658)
(29,246)
—
—
—
—
(53,767)
71,714
(1,608)
70,106
13,093
¥47,385
1,088
¥ (271)
14,316
¥ 12,795
74,510
¥ 13,852
103,007
¥ 73,761
—
¥ —
(9,564)
93,443
¥ 60,542
¥884,192
Shareholders’ equity
Accumulated other comprehensive income
Thousands of U.S. Dollars (Note 1)
Common stock
Capital surplus
Retained earnings
Treasury stock
Total
Valuation difference
on available-for-sale
securities
Deferred gains or
losses on hedges
Foreign currency
Remeasurements
translation
adjustments
of defined
benefit plans
Total
rights
Minority interests
Stock subscription
Total
net assets
BALANCE, MARCH 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,309,992
$1,236,683
$1,521,416
$ (24,800)
$6,043,291
$285,767
$(11,325)
$ (12,675)
$(505,484)
$(243,717)
$ —
$597,617
$6,397,191
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(187,150)
(187,150)
Restated balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,309,992
1,236,683
1,334,266
(24,800)
5,856,141
285,767
(11,325)
(12,675)
(505,484)
(243,717)
—
—
(13,400)
584,217
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, $0.03 per share . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
477,517
(86,608)
(450)
42
(17)
2,450
477,517
(86,608)
(450)
25
2,450
—
BALANCE, MARCH 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,309,992
$1,239,116
$1,725,175
$ (25,208)
$6,249,075
Conforming to separate financial statements, total translated amounts seem to be inconsistent with calculation in some cases.
See notes to consolidated financial statements.
57
109,108
$394,875
9,067
119,300
620,917
858,392
$ (2,258)
$106,625
$115,433
$614,675
—
$ —
(79,700)
778,692
$504,517
$7,368,267
—
30,434
(11)
1
252
27,857
836,147
33,742
(10,394)
(35)
3
1,451
(93,250)
767,663
(24,066)
743,597
57,302
(10,393)
(54)
3
294
(200,550)
6,196,641
477,517
(86,608)
(450)
25
2,450
NEC CorporationAnnual Report 2015
Deficit disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, ¥4 per share . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, ¥4 per share . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid, $0.03 per share . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of equity method . . . . . . . . . . . . . . . .
Net changes in items other than
shareholders’ equity during the year . . . . . . . . . . . .
(44,426)
(3)
(2)
(2)
294
44,426
30,434
252
157,771
33,742
(10,394)
1,451
(22,458)
160,112
57,302
(10,393)
(187,150)
477,517
(86,608)
(17)
2,450
(450)
42
(11)
4
(35)
5
(54)
5
—
30,434
(11)
1
252
—
700,429
33,742
(10,394)
(35)
3
1,451
—
(22,458)
702,737
57,302
(10,393)
(54)
3
294
—
(187,150)
477,517
(86,608)
(450)
25
2,450
—
Thousands
Outstanding
number of shares
of common stock
Shareholders’ equity
Accumulated other comprehensive income
Millions of Yen
Common stock
Capital surplus
Retained earnings
Treasury stock
Total
Valuation difference
on available-for-sale
securities
Deferred gains or
losses on hedges
Foreign currency
translation
adjustments
Remeasurements
of defined
benefit plans
Total
Stock subscription
rights
Minority interests
Total
net assets
BALANCE, MARCH 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
¥397,199
¥192,834
¥ 82,659
¥ (2,939)
¥669,753
¥16,273
¥ (142)
¥ (28,928)
¥ —
¥ (12,797)
¥ 24
¥120,634
¥777,614
BALANCE, MARCH 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
397,199
148,405
(2,946)
2,060
18,333
(934)
(1,076)
21,908
(7,020)
—
—
23,034
10,237
(24)
—
4,847
125,481
BALANCE, MARCH 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
397,199
148,402
182,570
(2,976)
725,195
15,959
34,292
(283)
(1,359)
5,499
(1,521)
(60,658)
(60,658)
(39,483)
(29,246)
Restated balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397,199
148,402
(2,976)
34,292
(1,359)
(1,521)
(60,658)
(29,246)
—
—
—
—
(53,767)
71,714
(1,608)
70,106
—
30,434
(11)
1
252
27,857
836,147
33,742
(10,394)
(35)
3
1,451
(93,250)
767,663
(24,066)
743,597
57,302
(10,393)
(54)
3
294
BALANCE, MARCH 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,604,733
¥397,199
¥148,694
¥ 207,021
¥ (3,025)
¥749,889
13,093
¥47,385
1,088
¥ (271)
14,316
¥ 12,795
74,510
¥ 13,852
103,007
¥ 73,761
—
¥ —
(9,564)
93,443
¥ 60,542
¥884,192
BALANCE, MARCH 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,309,992
$1,236,683
$1,521,416
$ (24,800)
$6,043,291
$285,767
$(11,325)
$ (12,675)
$(505,484)
$(243,717)
$ —
$597,617
$6,397,191
Shareholders’ equity
Accumulated other comprehensive income
Thousands of U.S. Dollars (Note 1)
Common stock
Capital surplus
Retained earnings
Treasury stock
Total
Valuation difference
on available-for-sale
securities
Deferred gains or
losses on hedges
Foreign currency
translation
adjustments
Remeasurements
of defined
benefit plans
Total
Stock subscription
rights
Minority interests
Total
net assets
Restated balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,309,992
1,236,683
1,334,266
(24,800)
5,856,141
285,767
(11,325)
(12,675)
(505,484)
(243,717)
—
—
(13,400)
584,217
(200,550)
6,196,641
477,517
(86,608)
(450)
25
2,450
BALANCE, MARCH 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,309,992
$1,239,116
$1,725,175
$ (25,208)
$6,249,075
Conforming to separate financial statements, total translated amounts seem to be inconsistent with calculation in some cases.
See notes to consolidated financial statements.
109,108
$394,875
9,067
119,300
620,917
858,392
$ (2,258)
$106,625
$115,433
$614,675
—
$ —
(79,700)
778,692
$504,517
$7,368,267
58
NEC CorporationAnnual Report 2015Corporate Data
Consolidated Statements of Cash Flows
NEC Corporation and Subsidiaries
Years Ended March 31, 2013, 2014 and 2015
2013
Millions of Yen
2014
Thousands of
U.S. Dollars (Note 1)
2015
2015
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . .
¥ 69,279
¥ 83,961
¥ 96,737
$ 806,142
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of long-term prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses on property, plant and equipment,
and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in allowance for doubtful accounts . . . . . . . . . . . . .
Decrease in product warranty liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in provision for loss on
83,612
6,748
21,949
15,428
591
(1,183)
76,977
4,972
15,934
17,085
(4,163)
(1,220)
78,717
5,126
8,932
16,814
(11,030)
(979)
655,975
42,717
74,433
140,117
(91,917)
(8,158)
construction contracts and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,987
(6,634)
(5,763)
(48,025)
Increase (decrease) in provision for
business structure improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in provision for contingent loss . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in provision for loss on
repurchase of computers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on change in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on retirement of property, plant and equipment . . . . . . . . . . . . . . . . .
Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of investments in affiliated companies . . . . . . . . . . . . . . . . .
Loss on sales of investments in affiliated companies . . . . . . . . . . . . . . . . .
Loss on contribution of securities to retirement benefit trust . .
Gain on insurance claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in trade notes and accounts receivable . . . . . . . . . . . . . . . . . .
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in accounts receivable, other . . . . . . . . . . . . . . . .
Increase (decrease) in trade notes and accounts payable .
Others—net (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from insurance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(22,644)
(3,575)
(1,143)
(5,247)
5,979
(409)
(2,657)
(1,569)
636
(9,057)
2
804
(1,728)
880
5,898
(1,625)
(9,600)
5,496
(2,792)
(8,548)
18,328
171,840
4,481
(5,928)
(28,653)
2,008
9,086
10,476
1,583
(6,251)
10,036
(2,719)
(365)
(368)
—
(2,698)
23
1,738
(53,923)
64
—
—
(22,680)
24,327
3,380
(4,034)
(26,937)
127,650
6,216
(8,914)
(30,828)
—
392
787
(464)
(5,658)
10,066
(8,126)
—
(3,276)
—
(2,216)
10
1,044
(1,706)
—
—
—
(74,822)
(21,830)
5,665
16,668
21,635
126,723
5,721
(10,132)
(34,395)
—
3,267
6,558
(3,867)
(47,150)
83,883
(67,717)
—
(27,300)
—
(18,466)
83
8,700
(14,217)
—
—
—
(623,516)
(181,917)
47,208
138,900
180,292
1,056,025
47,675
(84,433)
(286,625)
—
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥143,748
¥ 94,124
¥ 87,917
$ 732,642
See notes to consolidated financial statements.
59
NEC CorporationAnnual Report 2015
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (46,012)
¥ (89,458)
¥ (42,461)
$ (353,842)
2013
Millions of Yen
2014
Thousands of
U.S. Dollars (Note 1)
2015
2015
Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . .
Acquisitions of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disbursements for acquisitions of shares of
5,208
(14,556)
(1,159)
27,601
newly consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(58,072)
Proceeds from acquisitions of shares of
newly consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of shares of
subsidiaries being excluded from the consolidation . . . . . . . . . . . . . . . . . .
Disbursements for sales of shares of
subsidiaries being excluded from the consolidation . . . . . . . . . . . . . . . . . .
Purchases of investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investments in affiliated companies . . . . .
(Increase) decrease in short-term loans receivable, net . . . . . . . . . . . . . .
Disbursements for loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collection of loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to minority shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR . .
DECREASE IN CASH AND CASH EQUIVALENTS RESULTING
FROM CHANGE OF SCOPE OF CONSOLIDATION . . . . . . . . . . . . . .
—
553
(524)
(582)
1,151
187
(17,543)
195
1,811
(101,742)
(70,289)
58,456
(82,996)
—
(4)
(3,949)
(25)
(98,807)
5,440
(12,327)
(995)
14,907
(806)
116
42,504
—
(27,693)
26,515
(50)
(169)
247
2,876
(38,893)
(26,745)
138,630
(76,239)
(70,000)
(10,378)
(5,218)
(33)
(49,983)
13,790
(8,974)
(1,367)
8,729
114,917
(74,783)
(11,392)
72,742
(10,518)
(87,650)
—
33
(3,378)
(7,127)
—
63
(155)
907
2,948
—
275
(28,150)
(59,392)
—
525
(1,292)
7,558
24,567
(47,510)
(395,917)
(2,275)
9,875
(46,933)
(20,000)
(10,358)
(2,579)
243
(72,027)
(18,958)
82,292
(391,108)
(166,667)
(86,317)
(21,492)
2,025
(600,225)
6,200
4,257
6,115
50,958
(50,601)
251,843
9,505
197,132
(25,505)
206,637
(212,542)
1,721,975
(4,110)
—
—
—
CASH AND CASH EQUIVALENTS, AT END OF YEAR . . . . . . . . . .
¥197,132
¥206,637
¥181,132
$1,509,433
NON-CASH INVESTING AND FINANCING ACTIVITIES
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution of securities to retirement benefit trust . . . . . . .
¥1,670
26,437
¥1,326
—
¥781
—
$6,508
—
60
NEC CorporationAnnual Report 2015Corporate Data
Non-Financial Section
NEC Corporation and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2015
Number of employees by region Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,914
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79,504
2014
Greater China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio of outside directors to all directors*1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Female managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio of female managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Response rate of employees’ survey (Domestic) *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Response rate of employees’ survey (Overseas) *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor accidents and disasters*4
Frequency rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severity rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CO2 emissions reduction by providing IT solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Improvement in energy efficiency of products*5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greenhouse gas emissions*6
Scope 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scope 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,706
7,025
3,507
3,144
2,028
45.5
390
5.1
82
—
0.09
0.00
2,290
75
60
295
Units
People
People
People
People
People
People
People
%
People
%
%
%
2015
98,882
78,056
4,882
6,926
4,540
2,502
1,976
45.5
386
5.2
84
77
0.09
0.00
2,540
Thousand tons
91
%
58
337
Thousand tons
Thousand tons
Scope 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,206
9,098
Thousand tons
Energy usage
Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel (heavy oil and kerosene) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
669
21
3.0
628
21
2.7
Million kWh
Million m3
Thousand kl
Water usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,645
2,375
Thousand m3
Industrial waste
Emission volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resource reuse rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
76.0
25.6
81.4
Thousand tons
%
*1 Scope: NEC Corporation
*2 Scope: NEC Corporation and 33 domestic consolidated subsidiaries
*3 Scope: Overseas subsidiaries in 30 countries overseen by the Global Business Unit
*4 Scope: NEC Corporation and domestic consolidated subsidiaries
Frequency rate: Number of deaths and injuries due to industrial accidents divided by total working hours times one million
Severity rate: Number of lost working days divided by total working hours times one thousand
*5 Compared with fiscal 2006
*6 Greenhouse gas refers to CO2 (carbon dioxide), CH4 (methane), N2O (nitrous oxide), HFCs (hydrofluorocarbons), PFCs (perfluorocarbons), SF6
(sulphur hexafluoride), and NF3 (nitrogen trifluoride). Greenhouse gas emissions are calculated based on the following categories stated by the
Greenhouse Gas Protocol (GHG Protocol).
Scope 1: Direct GHG emissions occur from sources that are owned or controlled by the Company
Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam
Scope 3: Other indirect emissions covering corporate upstream and downstream processes not included in Scope 2
61
NEC CorporationAnnual Report 2015
Corporate Overview
Company Name
NEC Corporation
Organization Chart
Address
7-1, Shiba 5-chome, Minato-ku,
Tokyo 108-8001, Japan
Established
July 17, 1899
Number of Employees
98,882
(NEC Corporation and consolidated subsidiaries)
(As of March 31, 2015)
Shares of Common Stock Issued
2,604,732,635 shares (As of March 31, 2015)
President
Board
Business Innovation Unit
System Integration, Services & Engineering Operations Unit
Supply Chain Management Unit
Stock Exchange Listing
Tokyo (Stock Code: 6701)
Corporate Sales and Sales Operations Unit
Transfer Agent for Common Stock
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Composition of Shareholders (Percentage of shares)
(As of March 31, 2015)
Japanese Individuals and Others
31.90%
National and Local Governments
0.00%
Number of
Shareholders:
211,835
Foreign Investors
36.02%
Financial Institutions
26.31%
Securities Companies
2.41%
Other Corporations
3.36%
Major Shareholders (Top 10) (As of March 31, 2015)
Branch Offices
Global Business Unit
Regional Headquarters (RHQs)
Public Business Unit
Enterprise Business Unit
Telecom Carrier Business Unit
Smart Energy Business Unit
System Platform Business Unit
Central Research Laboratories
Corporate Staff
Name of Shareholders
Number of Shares Held
(Thousands of shares)
Shareholding Ratio
(%)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
NEC Employee Shareholding Association
The Chase Manhattan Bank 385036
Nippon Life Insurance Company
Sumitomo Life Insurance Company
The Bank of New York Mellon SA/NV 10
Credit Suisse Securities (USA) LLC SPCL. For EXCL.BEN
Japan Trustee Services Bank, Ltd. (Trust Account No. 4)
State Street Bank West Client – Treaty 505234
Note: The shareholding ratio is calculated by excluding the number of treasury stock (5,852,991 shares).
129,161
105,848
51,816
47,660
41,977
41,000
36,570
32,679
32,476
32,078
4.97
4.07
1.99
1.83
1.62
1.58
1.41
1.26
1.25
1.23
62
NEC CorporationAnnual Report 2015Corporate Data
CAUTIONARY STATEMENTS:
This annual report 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 financial instruments 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 safe-harbors for for-
ward-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 (ix) 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 annual report 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 annual report are not an offer of marketable securities for sale. Marketable 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.
Trademarks
• NEC is a registered trademark of NEC Corporation in Japan and other countries.
• All other names may be trademarks of their respective owners.
63
NEC CorporationAnnual Report 2015 NEC will create “an information society friendly to humans and the earth”
Way. A more concrete application of this principle is our declaration of
image of “orchestrating a brighter world,” reflecting the principle to our
NEC serves to society and customers with values contributes to by
security, efficiency and equality through the power of ICT to offer
medium- to long-term development of the NEC Group.
The information contained in Annual Report 2015 is also available on NEC’s website.
NEC home page
http://www.nec.com
by contributing to customers and society through the practice of the NEC
becoming a “Social Value Innovator.” We have developed a corporate key
business activities.
continuing to present to society or customers values such as safety,
solutions to social problems. We hope that our contribution underpins the
Corporate Social Responsibility
http://www.nec.com/en/global/csr
NEC constantly strives to enhance the corporate social responsibility (CSR)
information available on its website.
Division in Charge
CSR Promotion and Social Contributions Office,
Corporate Communications Division
Investor Relations
http://www.nec.com/en/global/ir
Posted on the NEC Investor Relations (IR) website are IR presentation materials
and other documents, NEC’s financial position and business results, stock and bond
information, and much more. NEC constantly strives to enhance the disclosure on
this website.
Division in Charge
Investor Relations Office, Corporate Strategy Division
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Annual Report 2015
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7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan
Telephone: +81-3-3454-1111
7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan
Telephone: +81-3-3454-1111
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Annual Report 2015
Annual Report 2015
Year ended March 31, 2015
Year ended March 31, 2015
0910-0229
0910-0229