Beginning of this page
Jump to content


Beginning of content
Current position

Home > News Room > Text

Restatement of Consolidated Financial Statements of NEC Corporation

*****For immediate use May 11, 2006

May 11, 2006 --- NEC Corporation (hereinafter referred to as the "Company") is now in the process of preparing restatements of its consolidated financial statements for past fiscal years (hereinafter referred to as the "Restatement"). The Company is planning to file amendments to the Annual Securities Reports under Japanese law ("Yukashoken Hokokusho"), amendments to its press releases of financial results and amendments to certain other documents under Japanese listing rules as well as amendments to its Annual Report on Form 20-F filed under U.S. securities laws as soon as the Restatement is completed. The following is a summary of the status of the Restatement.

1. Background

On March 22, 2006, the Company announced the results of its investigation of false transactions by an employee at NEC Engineering, Ltd., one of the Company's subsidiaries. The Company also announced that it is planning to restate its consolidated financial statements for past fiscal years to adjust for the false transactions. In evaluating the effect of what occurred at NEC Engineering, Ltd., the Company identified other necessary adjustments based on U.S. generally accepted accounting principles ("U.S. GAAP"). In addition, the Company plans to restate certain historical consolidated financial information to reflect the dispositions of NEC Machinery Corporation and Anelva Corporation during the fiscal year ended March 31, 2006 (which are considered discontinued operations under U.S. GAAP).

2.Outline of the Restatement

The Company plans to restate its consolidated financial statements for fiscal years ended March 31, 2005, 2004 and 2003 (hereinafter collectively referred to as "the past three fiscal years"). In addition, the Company plans to restate its selected financial data for the fiscal years ended March 31, 2002 and 2001. Significant restatement items identified to date are as follows:

  1) Adjustments of financial statements of past fiscal years as a result of the false transactions by an employee at NEC Engineering, Ltd.
  2) Other U.S. GAAP restatement adjustments
  a) Scope of consolidation
Among the Company's subsidiaries and affiliates, certain subsidiaries were not consolidated and certain affiliates were not accounted for under the equity method of accounting in the past fiscal years because they were considered immaterial. Such subsidiaries have been consolidated and the affiliates have been accounted for under the equity method of accounting in the proper periods in the restated financial statements; and
  b) Research and development expenses
Some of the Company's research and development expenses that were capitalized and recorded as assets in the past financial statements have been adjusted as expenses when incurred because we review our judgment depending on whether we establish technical feasibilities according to the accounting standards.

In addition, there are other adjustments for restatement of the Company's historical financial statements under U.S. GAAP.
  3) Adjustments for discontinued operations
As a result of the dispositions of NEC Machinery Corporation and Anelva Corporation, profit from the operations of the two companies, and the gain on sale of the two companies is presented separately as "discontinued operations" for the fiscal year ended March 31, 2006. In line with this presentation, financial statements for previous fiscal years are restated.

3.Current Status of Restatement and Plans for Amendment Reports

The independent auditor is currently performing its audit procedures of the restated financial statements for the past three fiscal years. After the audit by the independent auditor is completed, the Company is planning to immediately prepare the documentation and file the amendments to the reports concerning the past three fiscal years. The amendments include: (a) amendments to Annual Securities Reports ("Yukashoken Hokokusho") under the Securities and Exchange Law of Japan, (b) press releases relating to financial results stipulated by the timely disclosure rules of the Tokyo Stock Exchange, and (c) amendment report to Annual Report on Form 20-F filed under the U.S. Securities and Exchange Act of 1934. The Company's current expectation is to file such reports in June 2006.

This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services, and business performance of NEC Corporation and its consolidated subsidiaries (collectively "NEC"). Written forward-looking statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the U.S. Securities and Exchange Commission, and in reports to shareholders and other communications. The U.S. Private Securities Litigation Reform Act of 1995 contains, and other applicable laws may contain, a safe-harbor for forward-looking statements, on which NEC relies in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates," "aims," or "anticipates," or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them. You should not place undue reliance on forward-looking statements, which reflect NEC's analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements include (i) global economic conditions and general economic conditions in NEC's markets, (ii) fluctuating demand for, and competitive pricing pressure on, NEC's products and services, (iii) NEC's ability to continue to win acceptance of NEC's products and services in highly competitive markets, (iv) NEC's ability to expand into foreign markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC's business and operations, (vi) NEC's ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, and (vii) movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar. Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise.
The management targets included in this material are not projections, and do not represent management's current estimates of future performance. Rather, they represent targets that management will strive to achieve through the successful implementation of NEC's business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. The securities may not be offered or sold in any jurisdiction in which registration is required absent registration or an exemption from registration under the applicable securities laws. For example, any public offering of securities to be made in the United States must be registered under the U.S. Securities Act of 1933 and made by means of an English language prospectus that contains detailed information about NEC and management, as well as NEC's financial statements.


NEC Press Contacts

In Japan
Diane Foley
NEC Corporation

Readers are advised that the press releases and other information posted on this site are current only on their original publication date. Please note that such press releases and other information may now be outdated or rendered inaccurate due to passage of time or subsequent material changes in facts and circumstance.

End of content
End of this page
Top of this page