Report of Foreign Issuer (6-k)

Scheduled date of Quarterly Report

filing

July 31, 2020 Scheduled date of dividend payments

Supplementary materials

for financial results

Financial results briefing

Yes (for institutional investors and analysts)

(Million JPY, rounded to the nearest million JPY)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2020

Commission File Number 000-12713

NEC Corporation

(Translation of registrant’s name into English)

7-1, Shiba 5-chome

Minato-ku, Tokyo 108-8001

Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date:		July 31, 2020

NEC Corporation

By:		/s/ Tetsuo Mukunoki
Name:		Tetsuo Mukunoki
Title:		General Manager, Legal Division

LOGO

Press Release - Media Contacts: press@news.jp.nec.com

***** For immediate use July 31, 2020

Consolidated Financial Results

for the three-month period ended

June 30, 2020

Summary of Consolidated Financial Results for the three-month period ended June 30, 2020 [IFRS]


				July 31, 2020
Company name	NEC Corporation		Stock exchange listing: Tokyo
Code number	6701	URL https://www.nec.com/
Representative	Takashi Niino, President and CEO


Contact		Akiko Shikimori, General Manager of the Corporate Communications Division				TEL +81-3-3798-6511

1. Consolidated Financial Results for the three-month period ended June 30, 2020 (April 1,2020 – June 30, 2020)


(1) Consolidated Operating Results		(Percentage figures represent year-on-year changes)


	Revenue					Operating profit					Profit before income taxes					Net profit					Net profit attributable to owners of the parent					Total comprehensive income

Three-month period ended	JPY (millions)		%			JPY (millions)			%		JPY (millions)			%		JPY (millions)			%		JPY (millions)			%		JPY (millions)			%
June 30, 2020		587,729		(10.1	)		(10,274	)		—		(9,616	)		—		(6,380	)		—		(5,002	)		—		12,140			—
June 30, 2019		653,855		6.7			3,382			—		3,745			—		2,592			—		3,265			—		(12,711	)		—


	Adjusted operating profit					Adjusted net profit attributable to owners of the parent					Basic earnings per share			Diluted earnings per share			Adjusted basic earnings per share
Three-month period ended	JPY (millions)			%		JPY (millions)			%		JPY			JPY			JPY
June 30, 2020		(5,802	)		—		(2,253	)		—		(19.27	)		(19.27	)		(8.68	)
June 30, 2019		7,605			—		5,881			—		12.57			12.57			22.64

(2) Consolidated Financial Position


	Total assets		Total equity		Equity attributable to owners of the parent		Ratio of equity attributable to owners of the parent to total assets

As of	JPY (millions)		JPY (millions)		JPY (millions)		%
June 30, 2020		2,969,658		1,112,205		912,343		30.7
March 31, 2020		3,123,254		1,114,523		910,674		29.2

2. Dividends


	Annual dividends

	End of first quarter		End of second quarter		End of third quarter		Fiscal year-end		Total

Years ended	JPY		JPY		JPY		JPY		JPY
March 31, 2020		—		30.00		—		40.00		70.00
March 31, 2021		—
March 31, 2021 (forecast)				40.00		—		40.00		80.00

*Notes-Revision in the dividends forecast from latest announcement: None

3. Consolidated Financial Results Forecast for the Year Ending March 31, 2021 (April 1, 2020 – March 31, 2021)

(Percentage figures represent year-on-year changes)



	Revenue					Operating profit					Net profit attributable to owners of the parent					Basic earnings per share

	JPY (millions)		%			JPY (millions)		%			JPY (millions)		%			JPY
Year ending March 31, 2021		3,030,000		(2.1	)		150,000		17.5			90,000		(10.0	)		335.07

	Adjusted operating profit					Adjusted net profit attributable to owners of the parent					Adjusted basic earnings per share

	JPY (millions)		%			JPY (millions)		%			JPY
Year ending March 31, 2021		165,000		13.2			99,000		(11.0	)		368.57

*Notes-Revision in forecast of consolidated operating results from latest announcement: Yes

In conjunction with the payment for the issuance of new shares and disposal of treasury shares by way of third-party allotment on July 10, 2020, “Basic earnings per share” and “Adjusted basic earnings per share” are recalculated by estimating the average number of shares based on the most recent number of shares.

*Notes

(1) Changes in significant subsidiaries during the period

(Changes in specified subsidiaries resulting in the change in consolidation scope): None


Newly included	: —	—	(Name of the company)
Excluded	: —	—	(Name of the company)

(2) Changes in accounting policies and changes in accounting estimates


1) Changes in accounting policies required by IFRS		: None
2) Changes in accounting policies other than 1)		: None
3) Changes in accounting estimates		: None

(3) Number of shares outstanding (common stock)

1) Number of shares outstanding at the end of period (including treasury stock)

June 30, 2020

260,473,263 shares

March 31, 2020

260,473,263 shares

2) Number of treasury stock at the end of period

June 30, 2020

1,005,867 shares

March 31, 2020

885,719 shares

3) Average number of shares during the period

June 30, 2020

259,527,577 shares

June 30, 2019

259,709,208 shares

*This summary of consolidated financial results falls outside the scope of quarterly review procedures to be performed by certified public accountants or an audit firm.

*Explanation concerning the appropriate use of the financial results forecast and other special matters

(Adjusted profit (loss))

For definitions of “Adjusted operating profit (loss)” and “adjusted net profit (loss) attributable to owners of the parent,” please refer to “1.Overview of Business Results” on page 2.

(Settlement of the provisional accounting treatment)

As the provisional accounting treatment for KMD Holding ApS (“KMD”) acquired in the year ended March 31, 2019 is settled during the 2^nd quarter of the fiscal year ended March 31, 2020, the corresponding figures in the fiscal year ended March 31, 2020 have been retrospectively adjusted.

(Cautionary statement with respect to forward-looking statements)

The forward-looking statements such as operating results forecast contained in this statements summary are based on the information currently available to NEC Corporation (“the Company”) and certain assumptions considered reasonable. Actual operating results may differ significantly from these forecasts due to various factors. For details, please refer to “3. Cautionary Statement with Respect to Forward-Looking Statements” on page 21.

(How to obtain supplementary financial materials and information on the financial results briefing)

On July 31, 2020, the Company will hold a financial results briefing for the institutional investors and analysts. Presentation materials will be posted on the company website after the release of financial results, and the presentation video and Q&A summary will be also posted on the company website promptly after the financial results briefing.

In addition to the above, the Company periodically holds briefings on business and operating results for the individual investors. Presentation materials and Q&A summary will be posted on the company website promptly after the briefing. For the schedule and details, please check the company website.

Table of Contents of Attachment


1.	Overview of Business Results			2

	(1	)	Overview of Operating Results	2
	(2	)	Overview of Financial Position	6
	(3	)	Outlook for the Fiscal Year Ending March 31, 2021	7

2.	Condensed Interim Consolidated Financial Statements and Notes to Condensed Interim Consolidated Financial Statements			8

	(1	)	Condensed Interim Consolidated Statements of Financial Position	8
	(2	)	Condensed Interim Consolidated Statements of Profit or Loss and Comprehensive Income	10
	(3	)	Condensed Interim Consolidated Statements of Changes in Equity	12
	(4	)	Condensed Interim Consolidated Statements of Cash Flows	13
	(5	)	Notes to Condensed Interim Consolidated Financial Statements	15
			1. Going Concern Assumptions	15
			2. Significant Accounting Policies	15
			3. Segment Information	16
			4. Equity	19
			5. Finance income and Finance costs	19
			6. Subsequent Events	20

3.	Cautionary Statement with Respect to Forward-Looking Statements			21

-1-

1.	Overview of Business Results

As stated in the July 21, 2020 announcement, “NEC to Revise Operating Segments”, starting from this first quarter of the consolidated financial results for the fiscal year ending March 31, 2021. NEC announced operating results using revised segments. Figures for the corresponding period of the previous fiscal year have been restated to conform to the new segments.

“Adjusted operating profit (loss)” is an indicator for measuring underlying profitability in order to clarify the contribution of acquired companies to NEC’s overall earnings. It is measured by deducting amortization of intangible assets recognized as a result of M&A and expenses for acquisition of companies (financial advisory fees, etc.) from operating profit (loss). Also, “Adjusted net profit (loss) attributable to owners of the parent” is an indicator for measuring underlying profitability attributable to owners of the parent. It is measured by deducting adjustment items of operating profit (loss) and corresponding amount of tax and non-controlling interests from net profit (loss) attributable to owners of the parent.

(1) Overview of Operating Results

i) Overview of the three-month period ended June 30, 2020

The world economy and the Japanese economy both deteriorated significantly during the first quarter of the current consolidated period due to the effects of restrictions on personal movement and suspension of sales and production activities due to the global pandemic of new coronavirus (COVID-19).

Under this business environment, the NEC Group recorded consolidated revenue of 587.7 billion JPY for the three-month period ended June 30, 2020, a decrease of 66.1 billion JPY (10.1%) year-on-year. This decrease was mainly due to decreased revenue in the Enterprise business, the Global business and the Public Solutions business.

Regarding profitability, operating profit (loss) worsened by 13.7 billion JPY year-on-year, to an operating loss of 10.3 billion JPY, mainly due to decreased revenue, despite improvement in selling, general and administrative expenses from the efficiency on expenditure, in addition to improvement in other operating income from gain on the sales of subsidiaries. Adjusted operating profit (loss) worsened by 13.4 billion JPY year-on-year, to an adjusted operating loss of 5.8 billion JPY.

Income (loss) before income taxes was a loss of 9.6 billion JPY, a year-on-year worsening of 13.4 billion JPY, mainly due to worsened operating profit (loss).

Net profit (loss) attributable to owners of the parent for the three-month period ended June 30, 2020 was a loss of 5.0 billion JPY, a worsening of 8.3 billion JPY year-on-year. This was primarily due to worsened income (loss) before income taxes. Adjusted net profit (loss) attributable to owners of the parent worsened by 8.1 billion JPY year-on-year, to an adjusted net loss attributable to owners of the parent of 2.3 billion JPY.

-2-

ii) Results by main segment

Revenue by segment (revenue from customers):



Segments	Three-month period ended June 30, 2019			Three-month period ended June 30, 2020			Change
	JPY (billions)			JPY (billions)			%
Public Solutions		87.2			74.8			(14.2	)
Public Infrastructure		130.5			122.7			(6.0	)
Enterprise		137.6			115.0			(16.4	)
Network Services		94.8			99.0			4.5
Global		114.2			97.0			(15.1	)
Others		89.5			79.1			(11.6	)
Total		653.9			587.7			(10.1	)
Adjusted operating profit (loss) by segment:
Segments	Three-month period ended June 30, 2019			Three-month period ended June 30, 2020			Change
	JPY (billions)			JPY (billions)			JPY (billions)
Public Solutions		(0.3	)		(3.3	)		(2.9	)
Public Infrastructure		7.6			1.8			(5.7	)
Enterprise		8.2			2.7			(5.6	)
Network Services		(0.1	)		(2.1	)		(2.0	)
Global		(0.6	)		(3.0	)		(2.5	)
Others		4.9			4.3			(0.6	)
Reconciling items		(12.1	)		(6.2	)		5.9
Total		7.6			(5.8	)		(13.4	)

Notes:

Amounts in this section ii) “Results by main segment” are rounded to 0.1 billion JPY. Amounts in millions of JPY are shown in Note 3 “Segment information” in Note (5) “Notes to the Condensed Interim Consolidated Financial Statements”.

-3-

(Business segment figures in brackets below denote increases or decreases as compared with the corresponding period of the previous fiscal year.)

Public Solutions Business


Revenue:	74.8 billion JPY	(-14.2%)
Adjusted Operating Profit (Loss):	-3.3 billion JPY	(-2.9 billion JPY)

In the Public Solutions business, revenue was 74.8 billion JPY, a decrease of 12.4 billion JPY (-14.2%) year-on-year, mainly due to decreased sales in sectors that include public and healthcare, as well as reduced renewal demand for business PCs.

Adjusted operating profit (loss) worsened by 2.9 billion JPY year-on-year, to an adjusted operating loss of 3.3 billion JPY, mainly due to decreased sales.

Public Infrastructure Business


Revenue:	122.7 billion JPY	(-6.0%)
Adjusted Operating Profit (Loss):	1.8 billion JPY	(-5.7 billion JPY)

In the Public Infrastructure business, revenue was 122.7 billion JPY, a decrease of 7.8 billion JPY (-6.0%) year-on-year, mainly due to decreased sales in sectors that include aerospace and defense, as well as decreased sales at consolidated subsidiaries.

Adjusted operating profit (loss) worsened by 5.7 billion JPY year-on-year, to an adjusted operating profit of 1.8 billion JPY, mainly due to decreased profit at consolidated subsidiaries.

Enterprise Business


Revenue:	115.0 billion JPY	(-16.4%)
Adjusted Operating Profit (Loss):	2.7 billion JPY	(-5.6 billion JPY)

In the Enterprise business, revenue was 115.0 billion JPY, a decrease of 22.6 billion JPY (-16.4%) year-on-year, mainly due to sales of large-scale projects for the retail, service and finance industries declining from the same period of the previous year, as well as reduced renewal demand for business PCs.

Adjusted operating profit (loss) worsened by 5.6 billion JPY year-on-year, to an adjusted operating profit of 2.7 billion JPY, mainly due to decreased sales.

Network Services Business


Revenue:	99.0 billion JPY	(+4.5%)
Adjusted Operating Profit (Loss):	-2.1 billion JPY	(-2.0 billion JPY)

In the Network Services business, revenue was 99.0 billion JPY, an increase of 4.2 billion JPY (+4.5%) year-on-year, mainly due to increased sales at consolidated subsidiaries.

Adjusted operating profit (loss) worsened by 2.0 billion JPY year-on-year, to an adjusted operating loss of 2.1 billion JPY, mainly due to growing 5G investment, despite increased sales.

-4-

Global Business


Revenue:	97.0 billion JPY	(-15.1%)
Adjusted Operating Profit (Loss):	-3.0 billion JPY	(-2.5 billion JPY)

In the Global business, revenue was 97.0 billion JPY, a decrease of 17.2 billion JPY (-15.1%) year-on-year, mainly due to decreased sales in the display and wireless backhaul, in addition to the termination of part of KMD’s business, which was expected from the time of its acquisition, despite increased sales of submarine systems.

Adjusted operating profit (loss) worsened by 2.5 billion JPY year-on-year, to an adjusted operating loss of 3.0 billion JPY, mainly due to decreased sales.

Others


Revenue:	79.1 billion JPY	(-11.6%)
Adjusted Operating Profit (Loss):	4.3 billion JPY	(-0.6 billion JPY)

In the Others, revenue was 79.1 billion JPY, a decrease of 10.3 billion JPY (-11.6%) year-on-year.

Adjusted operating profit (loss) worsened by 0.6 billion JPY year-on-year, to an adjusted operating profit of 4.3 billion JPY.

-5-

(2) Overview of Financial Position

Analysis of the condition of assets, liabilities, equity, and cash flows

Total assets were 2,969.7 billion JPY as of June 30, 2020, a decrease of 153.6 billion JPY as compared with the end of the previous fiscal year. Current assets as of June 30, 2020 decreased by 180.6 billion JPY compared with the end of the previous fiscal year to 1,518.3 billion JPY, mainly due to the collection of trade and other receivables, despite increased inventories. Non-current assets as of June 30, 2020 increased by 27.0 billion JPY compared with the end of the previous fiscal year to 1,451.4 billion JPY. This was mainly due to an increase in other financial assets resulting from the rising market value of equity securities.

Total liabilities as of June 30, 2020 decreased by 151.3 billion JPY compared with the end of the previous fiscal year to 1,857.5 billion JPY. This was mainly due to a decrease in trade and other payables from the payment of materials cost and a decrease in accruals from bonus payments. The balance of interest-bearing debt amounted to 663.1 billion JPY, a decrease of 12.3 billion JPY as compared with the end of the previous fiscal year. The debt-equity ratio as of June 30, 2020 was 0.73 (an improvement of 0.01 points as compared with the end of the previous fiscal year). The balance of net interest-bearing debt as of June 30, 2020, calculated by offsetting the balance of interest-bearing debt with the balance of cash and cash equivalents, amounted to 257.5 billion JPY, a decrease of 58.6 billion JPY as compared with the end of the previous fiscal year. The net debt-equity ratio as of June 30, 2020 was 0.28 (an improvement of 0.07 points as compared with the end of the previous fiscal year).

Total equity was 1,112.2 billion JPY as of June 30, 2020, a decrease of 2.3 billion JPY as compared with the end of the previous fiscal year, mainly due to the payment of dividends and recognition of net loss for the three-month period ended June 30, 2020, despite an increase in other components of equity resulting from the rising market value of equity securities.

As a result, total equity attributable to owners of the parent (total equity less non-controlling interests) as of June 30, 2020 was 912.3 billion JPY, and the ratio of equity attributable to owners of the parent was 30.7% (an improvement of 1.6 points as compared with the end of the previous fiscal year).

Net cash inflows from operating activities for the three-month period ended June 30, 2020 were 98.9 billion JPY, remaining almost flat year-on-year, mainly due to improved working capital and worsened profit (loss) before income taxes.

Net cash outflows from investing activities for the three-month period ended June 30, 2020 were 14.7 billion JPY, remaining almost flat year-on-year.

As a result, free cash flows (the sum of cash flows from operating activities and investing activities) for the three-month period ended June 30, 2020 totaled a cash inflow of 84.2 billion JPY, remaining almost flat year-on-year.

Net cash flows from financing activities for the three-month period ended June 30, 2020 totaled a cash outflow of 39.7 billion JPY, mainly due to redemption of bonds, dividends paid and repayments of lease liabilities, despite issuance of bonds.

As a result, cash and cash equivalents as of June 30, 2020 amounted to 405.6 billion JPY, an increase of 46.3 billion JPY as compared with the end of the previous fiscal year.

-6-

(3) Outlook for the Fiscal Year Ending March 31, 2021

In conjunction with the payment for the issuance of new shares and disposal of treasury shares by way of third-party allotment on July 10, 2020, “basic earnings per share” and “adjusted basic earnings per share” are recalculated by estimating the average number of shares based on the most recent number of shares.

There is no change to “revenue”, “operating profit”, “net profit attributable to owners of the parent”, “adjusted operating profit”, and “adjusted net profit attributable to owners of the parent “, as previously disclosed on May 12, 2020.

-7-

2.	Condensed Interim Consolidated Financial Statements and Notes to Condensed Interim Consolidated Financial Statements

(1) Condensed Interim Consolidated Statements of Financial Position


				JPY (millions)
	Notes	As of March 31, 2020		As of June 30, 2020
Assets

Current Assets

Cash and cash equivalents			359,252		405,552

Trade and other receivables			737,484		441,610

Contract assets			247,625		254,691

Inventories			199,326		240,140

Other financial assets			5,584		5,278

Other current assets			108,436		136,604


Subtotal			1,657,707		1,483,875

Assets held for sale			41,210		34,408


Total current assets			1,698,917		1,518,283

Non-current assets

Property, plant and equipment, net			558,077		565,279

Goodwill			182,334		183,933

Intangible assets, net			199,093		198,376

Investments accounted for using the equity method			74,092		73,974

Other financial assets			219,326		242,873

Deferred tax assets			165,183		161,883

Other non-current assets			26,232		25,057


Total non-current assets			1,424,337		1,451,375


Total assets			3,123,254		2,969,658

-8-

Condensed Interim Consolidated Statements of Financial Position (Continued)


					JPY (millions)
	Notes		As of March 31, 2020		As of June 30, 2020
Liabilities and equity

Liabilities

Current liabilities

Trade and other payables				460,881		371,226

Contract liabilities				195,152		214,724

Bonds and borrowings				154,992		95,286

Accruals				191,440		148,101

Lease liabilities				47,085		49,249

Other financial liabilities				14,995		17,072

Accrued income taxes				12,624		7,355

Provisions				59,412		56,027

Other current liabilities				55,153		49,379


Subtotal				1,191,734		1,008,419

Liabilities directly associated with assets held for sale				30,133		24,411


Total current liabilities				1,221,867		1,032,830

Non-current liabilities

Bonds and borrowings				364,828		409,718

Lease liabilities				108,514		108,844

Other financial liabilities				42,402		34,596

Net defined benefit liabilities				224,469		227,737

Provisions				12,369		11,106

Other non-current liabilities				34,282		32,622


Total non-current liabilities				786,864		824,623


Total liabilities				2,008,731		1,857,453

Equity

Share capital				397,199		397,199

Share premium				139,735		139,734

Retained earnings				436,361		420,966

Treasury shares				(4,157)		(4,751)

Other components of equity		4		(58,464)		(40,805)


Total equity attributable to owners of the parent				910,674		912,343

Non-controlling interests				203,849		199,862


Total equity				1,114,523		1,112,205


Total liabilities and equity				3,123,254		2,969,658

-9-

(2) Condensed Interim Consolidated Statements of Profit or Loss and Comprehensive Income

Condensed Interim Consolidated Statements of Profit or Loss

JPY (millions)



Three-month period ended June 30	Notes		2019		2020
Revenue				653,855		587,729

Cost of sales				473,083		437,811


Gross profit				180,772		149,918

Selling, general and administrative expenses				175,612		169,790

Other operating income (expenses)				(1,778)		9,598


Operating profit (loss)				3,382		(10,274)

Finance income		5		3,280		2,872

Finance costs		5		4,191		2,666

Share of profit of entities accounted for using the equity method				1,274		452


Profit (loss) before income taxes				3,745		(9,616)

Income taxes				1,153		(3,236)

Net profit (loss)				2,592		(6,380)


Net profit (loss) attributable to

Owners of the parent				3,265		(5,002)

Non-controlling interests				(673)		(1,378)


Total				2,592		(6,380)


Earnings per share attributable to owners of the parent

Basic earnings per share (JPY)				12.57		(19.27)

Diluted earnings per share (JPY)				12.57		(19.27)

-10-

Condensed Interim Consolidated Statements of Comprehensive Income

JPY (millions)



Three-month period ended June 30	Notes	2019		2020
Net profit (loss)			2,592		(6,380)

Other comprehensive income, net of tax

Items that will not be reclassified to profit or loss

Equity instruments designated as measured at fair value through other comprehensive income			(6,827)		15,326

Remeasurements of defined benefit plans			—		—

Share of other comprehensive income of entities accounted for using the equity method			(22)		306

Total items that will not be reclassified to profit or loss			(6,849)		15,632

Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations			(8,350)		2,884

Cash flow hedges			(8)		(33)

Share of other comprehensive income of entities accounted for using the equity method			(96)		37

Total items that may be reclassified subsequently to profit or loss			(8,454)		2,888

Total other comprehensive income, net of tax			(15,303)		18,520

Total comprehensive income			(12,711)		12,140


Total comprehensive income attributable to

Owners of the parent			(10,553)		12,657

Non-controlling interests			(2,158)		(517)

Total			(12,711)		12,140

-11-

(3) Condensed Interim Consolidated Statements of Changes in Equity


(Three-month period ended June 30, 2019)

JPY (millions)
		Equity attributable to owners of the parent																	Non- controlling interests			Total equity
	Notes	Share capital		Share premium			Retained earnings			Treasury shares			Other components of equity			Total			Non- controlling interests			Total equity
As of April 1, 2019			397,199		138,824			354,582			(3,547	)		(28,119	)		858,939			200,742			1,059,681

Net profit			—		—			3,265			—			—			3,265			(673	)		2,592
Other comprehensive income			—		—			—			—			(13,818	)		(13,818	)		(1,485	)		(15,303	)

Comprehensive income			—		—			3,265			—			(13,818	)		(10,553	)		(2,158	)		(12,711	)
Purchase of treasury shares			—		—			—			(8	)		—			(8	)		—			(8	)
Disposal of treasury shares			—		—			—			—			—			—			—			—
Cash dividends			—		—			(10,393	)		—			—			(10,393	)		(2,552	)		(12,945	)
Changes in interests in subsidiaries			—		(10	)		—			—			—			(10	)		281			271

Total transactions with owners			—		(10	)		(10,393	)		(8	)		—			(10,411	)		(2,271	)		(12,682	)

As of June 30, 2019			397,199		138,814			347,454			(3,555	)		(41,937	)		837,975			196,313			1,034,288


(Three-month period ended June 30, 2020)

JPY (millions)
		Equity attributable to owners of the parent																	Non- controlling interests			Total equity
	Notes	Share capital		Share premium			Retained earnings			Treasury shares			Other components of equity			Total			Non- controlling interests			Total equity
As of April 1, 2020			397,199		139,735			436,361			(4,157	)		(58,464	)		910,674			203,849			1,114,523

Net profit (loss)			—		—			(5,002	)		—			—			(5,002	)		(1,378	)		(6,380	)
Other comprehensive income			—		—			—			—			17,659			17,659			861			18,520

Comprehensive income			—		—			(5,002	)		—			17,659			12,657			(517	)		12,140
Purchase of treasury shares			—		—			—			(594	)		—			(594	)		—			(594	)
Disposal of treasury shares			—		(0	)		—			0			—			0			—			0
Cash dividends			—		—			(10,393	)		—			—			(10,393	)		(3,069	)		(13,462	)
Changes in interests in subsidiaries			—		—			—			—			—			—			(401	)		(401	)

Total transactions with owners			—		(0	)		(10,393	)		(593	)		—			(10,986	)		(3,470	)		(14,456	)

As of June 30, 2020			397,199		139,734			420,966			(4,751	)		(40,805	)		912,343			199,862			1,112,205

-12-

(4) Condensed Interim Consolidated Statements of Cash Flows


					JPY (millions)
Three-month period ended June 30	Notes		2019		2020
Cash flows from operating activities
Profit (loss) before income taxes				3,745		(9,616)
Depreciation and amortization				40,316		40,263
Impairment loss				1,979		99
(Decrease) in provisions				(7,760)		(5,195)
Finance income		5		(3,280)		(2,872)
Finance costs		5		4,191		2,666
Share of profit of entities accounted for using the equity method				(1,274)		(452)
Decrease in trade and other receivables				229,431		300,835
(Increase) in inventories				(57,567)		(44,720)
(Decrease) in trade and other payables				(34,828)		(85,303)
Others, net				(71,825)		(90,089)

Subtotal				103,128		105,616
Interest and dividends received				3,804		3,222
Interest paid				(2,442)		(2,386)
Income taxes paid				(4,774)		(7,551)

Net cash provided by operating activities				99,716		98,901
Cash flows from investing activities
Purchases of property, plant and equipment				(12,608)		(17,177)
Proceeds from sales of property, plant and equipment				545		1,215
Acquisitions of intangible assets				(4,575)		(3,157)
Purchase of equity instruments designated as measured at fair value through other comprehensive income				(41)		(1,311)
Proceeds from sales of equity instruments designated as measured at fair value through other comprehensive income				6,586		499
Purchase of shares of newly consolidated subsidiaries				(1,279)		—
Increase in cash flows resulting in change in scope of consolidation, net of consideration transferred				49		—
Proceeds from sales of subsidiaries				—		6,153
Proceeds from sales of investments in associates or joint ventures				3		60
Others, net				(5,256)		(1,030)

Net cash used in investing activities				(16,576)		(14,748)

-13-

Condensed Interim Consolidated Statements of Cash Flows (Continued)


				JPY (millions)
Three-month period ended June 30	Notes	2019		2020
Cash flows from financing activities
(Decrease) in short-term borrowings, net			(22,746)		(31,638)
Proceeds from long-term borrowings			145		10,000
Repayments of long-term borrowings			(238)		(79)
Proceeds from issuance of bonds			—		35,000
Redemption of bonds			—		(25,000)
Repayments of lease liabilities			(13,443)		(14,107)
Dividends paid			(10,174)		(10,181)
Dividends paid to non-controlling interests			(2,552)		(3,059)
Others, net			2		(588)

Net cash used in financing activities			(49,006)		(39,652)

Effect of exchange rate changes on cash and cash equivalents			(2,139)		181

Net increase in cash and cash equivalents			31,995		44,682

Cash and cash equivalents, at the beginning of period			278,314		359,252

Increase in cash and cash equivalents resulting from transfer to assets held for sale			3,502		1,618

Cash and cash equivalents, at the end of period			313,811		405,552

-14-

(5) Notes to the Condensed Interim Consolidated Financial Statements

1. Going Concern Assumptions

Not applicable.

2. Significant accounting policies

Significant accounting policies adopted for the first quarter of the fiscal year ending March 31, 2021 are consistent from those applied for the previous fiscal year.

Income taxes for the first quarter are calculated using reasonably estimated annual effective tax rate.

-15-

3. Segment Information

(1) General information about reportable segments

The reportable segments of NEC Group ( “the Company” or “NEC” ) are determined from operating segments that are identified in terms of similarity of products, services and markets based on business, and are the businesses for which the Company is able to obtain respective financial information separately, and the businesses are investigated periodically in order for the Board of Directors to conduct periodic investigation to determine distribution of management resources and evaluate their business results. The Company has five reportable segments, which are Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global businesses.

Descriptions of each reportable segment are as follows:

Public Solutions business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Public, Healthcare, and Regional industries in Japan.

Public Infrastructure business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Government, and Media in Japan.

Enterprise business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Manufacturing, Retail, Services and Finance.

Network Services business mainly provides Network Infrastructure (Core Network, Mobile Phone Base Stations, Optical Transmission Systems, Routers / Switches) and Systems Integration (Systems Implementation, and Consulting), and Services & Management (OSS/BSS, Service Solutions), for telecom market in Japan.

Global business mainly provides Safer Cities (Public Safety, Digital Government), Software Services for Service Providers (OSS/BSS), Network Infrastructure (Submarine Systems, Wireless Backhaul), System Devices (Displays, Projectors), and Energy Storage System.

Notes:

OSS: Operation Support System, BSS: Business Support System

(2) Basis of measurement for reportable segment revenue and segment profit or loss

Segment profit (loss) is measured by deducting amortization of intangible assets recognized as a result of M&A and expenses for acquisition of companies (financial advisory fees, etc.) from operating profit (loss).

Intersegment revenues are made at amount that approximates arm’s-length prices.

-16-

(3) Information about revenue, profit or loss by reportable segment

(Three-month period ended June 30, 2019)


																						JPY (millions)
	Reportable Segments																Others (Note 1)		Reconciling items (Note 2)			Consolidated Total
	Public Solutions			Public Infrastructure		Enterprise		Network Services			Global			Total			Others (Note 1)		Reconciling items (Note 2)			Consolidated Total
Revenue
External customers		87,179			130,528		137,606		94,817			114,234			564,364			89,491		—			653,855
Intersegment		2,958			853		11,380		2,057			92			17,340			2,659		(19,999	)		—
Total		90,137			131,381		148,986		96,874			114,326			581,704			92,150		(19,999	)		653,855
Segment profit (loss)		(341	)		7,569		8,236		(110	)		(570	)		14,784			4,913		(12,092	)		7,605
Acquisition-related amortization of intangible assets																							(4,231	)
Expenses for M&A																							8
Operating profit																							3,382
Financial income																							3,280
Financial costs																							(4,191	)
Share of profit of entities accounted for using the equity method																							1,274
Profit before income taxes																							3,745

(Three-month period ended June 30, 2020)
																			JPY (millions)
	Reportable Segments																Others (Note 1)		Reconciling items (Note 2)			Consolidated Total
	Public Solutions			Public Infrastructure		Enterprise		Network Services			Global			Total			Others (Note 1)		Reconciling items (Note 2)			Consolidated Total
Revenue
External customers		74,818			122,733		114,986		99,041			97,009			508,587			79,142		—			587,729
Intersegment		2,004			510		10,431		2,083			142			15,170			1,967		(17,137	)		—
Total		76,822			123,243		125,417		101,124			97,151			523,757			81,109		(17,137	)		587,729
Segment profit (loss)		(3,266	)		1,825		2,651		(2,068	)		(3,046	)		(3,904	)		4,322		(6,220	)		(5,802	)
Acquisition-related amortization of intangible assets																							(4,472	)
Expenses for M&A																							—
Operating profit (loss)																							(10,274	)
Financial income																							2,872
Financial costs																							(2,666	)
Share of profit of entities accounted for using the equity method																							452
Profit (loss) before income taxes																							(9,616	)

-17-

Notes:

1.	“Others” mainly includes businesses such as business consulting and package solution services in the previous fiscal year and this fiscal year.

“Reconciling items” in segment profit (loss) includes amounts not allocated to each reportable segment that consist principally of corporate expenses of 8,310 million JPY and 7,498 million JPY for the three-month period ended June 30, 2019 and 2020, respectively. Corporate expenses are mainly general and administrative expenses and research and development expenses incurred at the headquarters of NEC.

(4) Information about revising reportable segments

From this first quarter of the fiscal year ending March 31, 2021, the Company’s descriptions of the reportable segments have been revised based on a new performance management system and a new organization structure effective as of April 1, 2020.

Under the former organization structure, among the products and services provided by each business unit to customers, products and services managed by other business units were recorded as revenue in the segment to which the business unit managing the products and services belonged. However, sales revenue of products and services are now recorded in the business unit providing products and services to customers.

Along with this, the “System Platform” segment is no longer an operating segment, and, excluding revenue recorded in other operating segments, revenue previously recorded in the “System Platform” segment, is now included in “Others”.

NEC also made segment changes due to organizational reforms and changes in the management system of subsidiaries that have been implemented to accelerate business development related to digital transformation (DX) and strengthen business execution capabilities by integrating businesses with compatibility.

In connection with this revision, segment information for the three-month period ended June 30, 2019 has been reclassified to conform to the presentation of the revised segments for the fiscal year ending March 31, 2021.

(5) Information about geographic areas

Revenue from customers


			JPY (millions)
	Three-month period ended June 30, 2019		Three-month period ended June 30, 2020
Japan		484,282		438,553
North America and Latin America		40,148		27,503
Europe, Middle East, and Africa		55,910		49,655
China, East Asia, and Asia Pacific		73,515		72,018
Total		653,855		587,729

-18-

4. Equity

A breakdown of other components of equity as of March 31 and June 30, 2020, is as follows:


	JPY (millions)
	As of March 31, 2020			As of June 30, 2020
Remeasurements of defined benefit plans		(35,326	)		(35,326	)
Exchange differences on translating foreign operations		(32,415	)		(30,347	)
Cash flow hedges		(609	)		(609	)
Equity instruments designated as measured at fair value through other comprehensive income		9,886			25,477
Total		(58,464	)		(40,805	)

5. Finance income and Finance costs


	JPY (millions)
	Three-month period ended June 30, 2019		Three-month period ended June 30, 2020
Finance income
Interest income		399		218
Dividend income		2,695		2,313
Foreign exchange gains, net		—		263
Other		186		78
Total		3,280		2,872


	JPY (millions)
	Three-month period ended June 30, 2019		Three-month period ended June 30, 2020
Finance costs
Interest expenses		2,377		2,183
Foreign exchange losses, net		1,357		—
Other		457		483
Total		4,191		2,666

Interest income arises from financial assets measured at amortized cost. Dividend income arises from equity instruments designated as measured at fair value through other comprehensive income. In addition, interest expenses arise from financial liabilities measured at amortized cost and lease liabilities.

-19-

6. Subsequent Events

Payment for the Issuance of New Shares and Disposal of Treasury Shares by Way of Third-Party Allotment

The board of directors of the Company passed a resolution as of June 25, 2020, to issue 12,376,600 new shares and dispose of 647,000 treasury shares (a total of 13,023,600 shares) at a price of 4,950 JPY per share, or 64,467 million JPY in total, to Nippon Telegraph and Telephone Corporation (“NTT“) by way of third-party allotment. The board of directors also passed a resolution as of the same date, to execute a capital and business alliance agreement with NTT, and executed the agreement on the same date. The payment for the shares has completed on July 10, 2020.

-20-

3. Cautionary Statement with Respect to Forward-Looking Statements

This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial conditions and other overall management of the NEC Group (the “forward-looking statements”). The forward-looking statements are made based on information currently available to NEC and certain assumptions considered reasonable as of the date of this material. These determinations and assumptions are inherently subjective and uncertain. These forward-looking statements are not guarantees of future performance, and actual operating results may differ substantially due to a number of factors.

The factors that may influence the operating results include, but are not limited to, the following:

•

adverse economic conditions in Japan or internationally;

•

foreign currency exchange and interest rate risks;

•

changes in the markets in which the NEC Group operates;

•

the recent outbreak of the novel coronavirus;

•

potential inability to achieve the goals in the NEC Group’s medium-term management plan;

•

fluctuations in the NEC Group’s revenue and profitability from period to period;

•

difficulty achieving the benefits expected from acquisitions, business combinations and reorganizations;

•

potential deterioration in the NEC Group’s relationships with strategic partners or problems relating to their products or services;

•

difficulty achieving the NEC Group’s growth strategies outside Japan;

•

potential inability to keep pace with rapid technological advancements in the NEC Group’s industry and to commercialize new technologies;

•

intense competition in the markets in which the NEC Group operates;

•

risks relating to the NEC Group’s concentrated customer base;

•

difficulties with respect to new businesses;

•

potential failures in the products and services the NEC Group provides;

•

potential failure to procure components, equipment or other supplies;

•

difficulties protecting the NEC Group’s intellectual property rights;

•

potential inability to obtain certain intellectual property licenses;

•

the NEC Group’s customers may encounter financial difficulties;

•

difficulty attracting, hiring and retaining skilled personnel;

•

difficulty obtaining additional financing to meet the NEC Group’s funding needs;

•

potential failure of internal controls;

•

potentially costly and time-consuming legal proceedings;

•

risks related to regulatory change and uncertainty;

•

risks related to environmental laws and regulations;

•

information security and data protection concerns and restrictions;

•

potential changes in effective tax rates or deferred tax assets, or adverse tax examinations;

•

risks related to corporate governance and social responsibility requirements;

•

risks related to natural disasters, public health issues, armed hostilities and terrorism;

•

risks related to the NEC Group’s pension assets and defined benefit obligations; and

•

risks related to impairment losses with regard to goodwill.

-21-

The forward-looking statements contained in this material are based on information that NEC possesses as of the date hereof. 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 the NEC Group. NEC does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

***

-22-

NEC (PK) (USOTC:NIPNF)
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