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Submission of NEC's Semiannual Report for Fiscal Year Ending March 31, 2007, and Corrections to Financial Results for First Half and Full Fiscal Year Ended March 31, 2006 and for First Half of Fiscal Year Ending March 31, 2007

*****For immediate use December 22, 2006

Tokyo, December 22, 2006 --- In accordance with regulation 24-5 of the Securities and Exchange Law of Japan, NEC Corporation ("NEC") has submitted its semiannual report on its financial results for the first half of the fiscal year ending March 31, 2007 to the Kanto Local Financial Bureau, Japan.

NEC made a decision to change its accounting principles for preparing its consolidated financial statements required under the Securities and Exchange Law of Japan and the Company Law of Japan from accounting principles generally accepted in the U.S., or U.S. GAAP, to accounting principles generally accepted in Japan, or Japan GAAP, as of the first half of the fiscal year ending March 31, 2007. These first half results were announced on November 21, 2006. Following this, reconfirmation of our financial statements, creation of notes and auditing by NEC's auditor progressed with the aim of submitting the semiannual report. However, during this process it was determined that certain figures required correction.

When NEC disclosed its results for the first half of the fiscal year ending March 31, 2007 in accordance with Japan GAAP on November 21, 2006, it presented figures for financial results for the first half and full fiscal year ended March 31, 2006 under Japan GAAP for comparison purposes. The correction of some of the figures disclosed under Japan GAAP is attributable to some errors, in addition to revisions to periods for recording sales, when Japan GAAP was applied, following NEC's swift adoption of Japan GAAP in the latter half of October this year.

NEC will strive to prevent future corrections of its financial results by strengthening its internal management structure. The main corrections are outlined below.

Outline of Corrections

1. Content of main corrections (Please refer to the attachment for the revised figures by contributing factors. The below numbers are coherent with the attachment)

(1) Errors during application of Japan GAAP

  i) Expenses recognized in the process of asset evaluation during restructuring were recorded as operating expenses. These expenses have been reclassified as extraordinary loss.
  ii) The effects of the return of the government portion of benefit pension plans, established under the Japanese Welfare Pension Insurance Law, of a subsidiary were recorded as nonoperating income. These effects have been reclassified as extraordinary income.
  iii) There were errors in entries peculiar to consolidated accounting during the creation of consolidated financial statements. These entries have been corrected (such as tax effects of subsidiaries and gain on charge of equity during reorganization).
  iv) Elimination of unrealized profit and loss related to internal transactions has been allocated to individual business segments from the "Eliminations / Corporate" segment.

(2) Corrections related to periods for recording sales

  As of the first half of the fiscal year ending March 31, 2007, NEC began applying the "Practical Solution on Revenue Recognition of Software" (ASBJ PITF No. 17). Transactions that were judged not to meet sales requirements of the inspection breakdown required by the standard, or transactions where proprietary rights were transferred as a result of shipments, for which payments were not received due to incomplete local adjustment, have been corrected.

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NEC Press Contacts

Diane Foley
NEC Corporation
Makoto Miyakawa
NEC Corporation

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