INDUSTRY

TOKYO, JAPAN -- NEC’s consolidated net sales for the fiscal year ended March 31, 2002 decreased by Y308.7 billion, or 6%, to Y5,101.0 billion, over net sales for the previous year due mainly to overall sluggish conditions for electronic devices. Adding to the slump in electronic devices market, the sudden deterioration in the second half of this fiscal year in the network infrastructure market resulted in an operating loss of Y55.5 billion, a decrease of Y240.7 billion compared to the previous year. NEC recorded loss before income taxes of Y461.1 billion, a decrease of Y553.5 billion compared to the previous year due to accumulated business restructuring expenses. For segment profit, NEC Electron Devices posted a large decrease of operating profit due to an extended price fall for memory and LCD displays that resulted from a slow-down in the PC market. NEC Networks also posted a decrease in segment profit that stemmed from a tightening on network infrastructure related investment. NEC Solutions recorded a decrease in segment profit resulting mainly from a reduction in sales for PC. For net income, NEC's equity in losses of affiliated companies, Y23.8 billion, a decrease of Y45.7 billion and the cumulative effect of accounting change from application of new accounting standards regarding derivatives and hedge activities (*Note) resulted in NEC's net loss of Y312.0 billion, a decrease of Y368.6 billion. Outlook for the Fiscal Year Ending March 31, 2003 In the fiscal year ending March 31, 2003, although severe market conditions for the telecommunications market including infrastructure and mobile terminals are expected to continue, with both the domestic IT investment projected to hold firm and the electronic device market showing the first real signs of recovery, NEC forecasts consolidated net sales of Y5,100.0 billion. Although sales were crawling along sideways, because of the full effectiveness of company-wide restructuring that was carried out in the fiscal year ended March 31, 2001, NEC expects to achieve operating income of Y5.0 billion for the semi-annual period ending September 30, 2002, and operating income of Y80.0 billion for fiscal year ending March 31, 2003. For net income/loss, although NEC forecasts net loss of Y15.0 billion for the semi-annual period ending September 30, 2002, Y10.0 billion net income is planned for the fiscal year ending March 31, 2003.