The following is an English translation of the Annual Securities Report ("Yukashoken Hokokusho") of NEC Corporation ("the Company") which was filed to the Chief of the Kanto Local Finance Bureau of the Ministry of Finance of Japan on June 21, 2007, EXCEPT for the translation of the information relating to non-consolidated financial statements. The Company provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise. Annual Securities Report ("Yukashoken Hokokusho") For the Fiscal year ended March 31, 2007 NEC Corporation Table of Contents Annual Securities Repot ("Yukashoken Hokokusyo") [Cover] Part 1. Information on the Company Item 1. Overview of the Company 1. Changes of Selected Financial Data 2. History 3. Review of the Company's Business 4. Affiliated Companies 5. Employees Item 2. Business Overview 1. Overview of Business Results 2. Production, Orders Received and Sales 3. Challenges to be Addressed by the NEC Group 4. Risk Factors 5. Material Contracts for Technology License 6. Research and Development 7. Analysis of Financial Condition and Business Results Item 3. Facilities 1. Overview of Capital Expenditures 2. Major Facilities 3. Plans for Additional or Disposal of Facilities Item 4. Company Information 1. Information on the Company's Shares 2. Acquisition of Treasury Stock 3. Dividend Policy 4. Changes in the Market Price of the Company's Shares 5. Directors and Corporate Auditors 6. Corporate Governance Item 5. Financial Information 1. Consolidated Financial Statements and Other Item 6. Information on Transfer of the Company's Stock Item 7. Reference Information on the Company 1. Information on the Parent Company 2. Other Reference Information Part 2. Information of the guarantors for the Company REPORT OF INDEPENDENT AUDITORS Fiscal year ended March 31, 2006 (Consolidated) Fiscal year ended March 31, 2007 (Consolidated) [Cover] [Document Submitted] Annual Securities Report ("Yukashoken Houkokusho") [Article of the Applicable Law Requiring Paragraph 1, Article 24 of the Securities and Exchange Law of Submittal of this Document] Japan [Filed to] The Chief of the Kanto Local Finance Bureau of the Ministry of Finance of Japan [Date of Submission] June 21, 2007 [Business Period] The 169th Business Period (From April 1, 2006 to March 31, 2007) [Company Name] Nippon Denki Kabushiki-Kaisha [Company Name (in English)] NEC Corporation [Title and Name of Representative] Kaoru Yano, President [Head Office] 7-1, Shiba 5-chome, Minato-ku, Tokyo, Japan [Telephone Number] +81-3-3454-1111 [Contact Person] Haruhiko Ueda, Senior Manager, Legal Division [Place where available for Public Tokyo Stock Exchange, Inc. Inspection] 2-1, Nihonbashi Kabuto-cho, Chuo-ku, Tokyo, Japan Osaka Securities Exchange, Inc. 8-16, Kitahama 1-chome, Chuo-ku, Osaka-shi Nagoya Stock Exchange, Inc. 3-17, Sakae 3-chome, Naka-ku, Nagoya-shi Fukuoka Stock Exchange 14-2, Tenjin 2-chome, Chuo-ku, Hukuoka-shi Sapporo Securities Exchange 14-1, MinamiIchijo-Nishi 5-chome, Chuo-ku, Sapporo-shi Part 1. Information on the Company Item 1. Overview of the Company 1. Changes of Selected Financial Data (1) Summary of Consolidated Financial Results <U.S. GAAP Financial Information> Fiscal Year ended March Fiscal Year ended March Fiscal Year ended March 31, 2003 31, 2004 31, 2005 Sales 4,663,194 4,860,546 4,801,715 (In millions of yen) Net income from continuing operations before income tax 62,742 141,202 145,103 (In millions of yen) Net income (loss) (In millions of yen) (12,332) 10,024 77,215 Net assets (In millions of yen) 319,633 646,349 736,956 Total assets (In millions of yen) 4,178,947 4,086,772 3,982,545 Net assets per share (yen) 193.41 335.49 382.60 Basic net income (loss) per share (7.46) 5.78 39.62 (yen) Diluted net income per share (yen) － 5.49 36.37 Shareholder's equity ratio (%) 7.6 15.8 18.5 Return on earning ratio (%) － 2.1 11.2 Price earnings ratio － 148.1 16.36 Cash flows from operating activities 276,083 341,713 164,290 (In millions of yen) Cash flows from investing activities (17,306) (78,032) (134,319) (In millions of yen) Cash flows from financing activities (284,973) (104,936) (42,262) (In millions of yen) Cash and cash equivalents at the end of the fiscal year 354,750 509,140 502,629 (In millions of yen) Number of employees 150,976 148,804 154,001 Notes: 1. NEC Corporation ("the Company") has prepared the information contained in this Annual Securities Report (“Yukashoken Hokokusho”) in accordance with the Securities and Exchange Law of Japan and ordinances and regulations promulgated thereunder. However, some of the information contained in this Annual Securities Report is based on consolidated information under accounting principles generally accepted in the U.S. ("U.S. GAAP"), including consolidated financial information for the fiscal years ended March 31, 2003, 2004 and 2005 (the "U.S. GAAP Financial Information") set forth above, which is derived from previously announced U.S. GAAP consolidated financial information for such periods. The Company changed, starting with the fiscal year ended March 31, 2007, its accounting principles to prepare consolidated financial statements to be disclosed under Japanese law from U.S. GAAP to accounting principles generally accepted in Japan ("Japan GAAP"), but has not prepared consolidated financial information under Japan GAAP for such periods. The Company included the U.S. GAAP Financial Information in this Annual Securities Report because the presentation of consolidated financial information for such periods is required under Japanese laws and regulations. There are significant differences between Japan GAAP and U.S. GAAP. Your assessment of the financial information set forth above might be significantly affected if a reconciliation to Japan GAAP is presented. 2. The Company is reviewing its historical U.S. GAAP consolidated financial statements, including a further analysis to support its recognition of revenue mainly included in multiple element arrangements, because the audits relating to the Company’s annual report to be filed with the U.S. Securities and Exchange Commission ("SEC") for the fiscal year ended March 31, 2006 have not been completed under U.S. Public Company Accounting Oversight Board ("PCAOB") standards. Most notably, the Company is gathering the data necessary with respect to the vendor specific objective evidence of the relative fair value of maintenance and support services. This compilation and analysis must be completed in order for the Company's outside auditor to complete the audit under PCAOB standards. The Company may be required to restate the financial information set forth above and take additional actions, depending on the results of the analyses currently underway. 3. "Net income from continuing operations before income tax" is presented excluding net income from operations that were discontinued during the fiscal year ended March 31, 2006. 4. "Net income per share" is calculated in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." "Net income per share" means "Basic earnings per share" in SFAS No. 128, and it is calculated based on the weighted-average number of shares outstanding during each period. "Diluted net income per share" means "Diluted earnings per share" in SFAS No. 128, and it is calculated considering effect of dilutive securities. <Japan GAAP Financial Information> Fiscal year ended March 31, Fiscal year ended March 31, 2006 2007 Sales (In millions of yen) 4,929,970 4,652,649 Ordinary income (In millions of yen) 14,955 16,347 Net income (loss) (In millions of yen) (10,062) 9,128 Net assets (In millions of yen) 1,029,807 1,240,123 Total assets (In millions of yen) 3,802,775 3,731,669 Net assets per share (yen) 516.62 512.99 Basic net income (loss) per share (yen) (5.26) 4.43 Diluted net income per share (yen) ― 4.23 Shareholders' equity (%) 27.1 27.8 Return on equity (%) ─ 0.9 Price earnings ratio (%) ─ 142.66 Cash flows from operating activities (In millions of yen) 225,804 238,318 Cash flows form investing activities (In millions of yen) (84,687) (169,676) Cash flows from financing activities (In millions of yen) (200,199) (103,739) Cash and cash equivalents, at end of year 452,370 423,369 (In millions of yen) Number of employees 154,180 154,786 Notes: 1. The Company’s consolidated financial statements were prepared in the past in accordance with U.S. GAAP pursuant to the provisions of Article 93 of the “Regulations Concerning Terminology, Forms, and Method for Preparing Consolidated Financial Statements” (1976 Ministry of Finance Ordinance No. 28; hereinafter the “Regulations Concerning Consolidated Financial Statements”). However, the Company has elected, starting with the fiscal year ended March 31, 2007, to prepare and disclose its consolidated financial statements required by the Securities and Exchange Law of Japan in accordance with Japan GAAP. The Company changed its accounting principles because the Company has not been able to prepare its consolidated financial statements under U.S. GAAP for the fiscal year ended March 31, 2006, as the audits relating to the Company’s annual report to be filed with the SEC have not been completed under PCAOB audit standards. In relation to the change above, the Company has prepared the consolidated financial statements for the fiscal year ended March 31, 2006 included in this Annual Securities Report based on Japan GAAP pursuant to “Regulations Concerning Consolidated Financial Statements” (however, in the same way as other companies which adopt Japan GAAP, this refers to the Regulations Concerning Consolidated Financial Statements prior to revision enforced on May 1, 2006 hereinafter referred to as the “Regulations Concerning Consolidated Financial Statements Prior to Revision”) in order to be comparative with the consolidated financial statements for the fiscal year ended March 31, 2007.