Annual Report 2009
Year Ended March 31, 2009

Further Enhancing Profitability andSetting the Stage for GrowthPROFILE
NEC Networks & System Integration Corporation (“the Company”) was established in
1953 as a builder of communication network infrastructure. Today, the Company isworking to expand its business realm and increase shareholder value as a system
integrator with its principal segments of Network Integration/Support Services andTelecommunications Engineering.
The NEC Networks & System Integration Group (“the Group”) is made up of corecompanies in the network solutions business of the NEC Group. As such, the Group will
work in unison to fulfill its corporate philosophy and management guidelines. Whilestrengthening its capabilities in national sales development, system creation, construction
technology and support services, the Group will promote further corporate innovation,amid a rapidly changing operating environment.

Foundation

Business Expansion

Being a Network System Integrator(1953~1957)(1958~1979)(1980~2000)

Installation ofswitchingequipment and its
maintenance

Data communications
Software development

24 hours a day, 365 days a year
nationwide maintenance service in Japan

Full-scale overseas operations

Focus on communication business
LAN/WAN business

Began business of outsourced
software development
Established as
Nippon ElectricInstallation Co., Ltd.
Name changed to NEC
System Integration &Construction, Ltd.
Net sales surpassed￥100 billion
Began overseas
operations3
4
195 195

8
195

Listed on the Tokyo
Stock Exchange,
First Section

Listed on the Tokyo
Stock Exchange,
Second Section

Began data communications
construction

7
197

0
198

3
198

9
198

2
199

CONTENTS

NEC Networks & System Integration GroupManagement Guidelines●

Aim to increase the corporate value of our customers.

●

Contribute to shareholders, customers and communities
through sound management.

●

Maintain a commitment to the highest levels of quality
and safety.

●

Act as a good, environmentally conscious corporate citizen.

●

Aim to create a workplace in which employees can fully
exercise their capabilities.

Further Business Expansion(2001~)
Network and IT solutions businessOutsourcing services
M&A

Name changed to NEC Networks &System Integration Corporation● TNSi1 became a Group company●

NTWX2
becamea Groupcompany(Merged in
April 2007)

Business Overview

2

To Our Shareholders

4Interview with the President

6

Review of Operations

8

Topics11

Corporate Governance14

Corporate Social Responsibility (CSR) 19
Six-Year Summary of
Selected Financial Data

20

Six-Year Summary of
Selected Financial Data by
Segment and Customer

22

Independent Auditors’ Report

25

Consolidated Balance Sheets

26

Consolidated Statementsof Income28

Consolidated Statements of
Changes in Net Assets

29

Consolidated Statements ofCash Flows30

Notes to Consolidated
Financial Statements

32

Global Network

48

Investor Information

49

Nichiwa Co., Ltd.
became a Group
company

Cautionary Statement with Respect
to Forward-Looking Statements

Net sales surpassed￥200 billion

6

5

20 0

8
20 0

20 0

7
199

This annual report contains forward-looking
statements concerning NEC Networks &System Integration Corporation and its consolidated subsidiaries’ current plans, projections,strategies and performance. These forwardlooking statements are not historical facts.
Rather, they represent the assumptions andbeliefs of NEC Networks & System Integration
Corporation management based on information
currently available. NEC Networks & System
Integration Corporation therefore wishes tocaution readers that actual results may differ
materially from expectations, and that forwardlooking statements are subject to a number ofrisks or uncertainties.

Notes: 1. TNSi: Toyo Networks & System Integration Co., Ltd.
2. NTWX: NEC Telenetworx, Ltd.
NEC Networks & System Integration Corporation

1

BUSINESS OVERVIEWNEC Networks & System Integration Corporation provides
leading-edge, high-quality network integration andsupport services that meet the diverse network systemneeds of customers in Japan and overseas.

NEC Networks & System Integration Corporation was established in 1953 primarily as abuilder of communications infrastructure. Today, as a top-class system integrator inJapan’s network business field, the Company conducts business not only domestically but
globally, in regions such as Southeast Asia, South America and the Middle East.
The Company provides leading-edge, high-quality network integration and support
services for customers of various industries in Japan and overseas, as well as
telecommunications engineering including building large-scale communications
infrastructure and related facilities. As one of very few comprehensive system integrators
in Japan, it is in a very unique position.
In addition, the Company sets itself apart by providing one-stop services encompassing
planning, consulting, design, construction, maintenance, network operation andmonitoring, and outsourcing for every network system it supplies to customers.
These services enable the Company to respond to customers’ diverse network systemneeds and are a factor behind the deep trust it has established with them.

Consolidated Net Sales by Customer (Year ended March 31, 2009)
Overseas

7%

NEC Group (Communication
system development, etc.)

19%¥ 249.1
billionEnterprises

35%

Government

18%
Telecommunications carriers

21%

2

NEC Networks & System Integration Corporation

Enterprises

Telecommunications Carriers

Government

Overseas

Customers

We offer a wide rangeof network systems tovarious customers,
including IP telephony,thin client and
NGN-related systems.

Telecommunications
Engineering

Network Integration
Planning/Consulting

Designing

We build network
infrastructure and installelectrical and air
conditioning systems.

Proposal
System Design

Procurement
Installation
Implementation

System Integration

Project Management

One-stop Support
Operation/Maintenance/Outsourcing

Support Services

We provide quick,reliable, one-stop
customer support
services, 24 hours aday, 365 days a year.

NEC Networks & System Integration Corporation

3

TO OUR SHAREHOLDERS

Masahiko Yamamoto
President

NEC Networks & System Integration achieved record profit ina challenging operating environment by boldly implementing
management innovation activities.

4

NEC Networks & System Integration Corporation

In the year ended March 31, 2009, the NEC Networks & System Integration Group achieved record profit by further
promoting work process and other comprehensive management innovation activities. Operating income was ¥10,968
million, a 2.1 percent increase compared with the previous fiscal year, and net income was ¥5,154 million, a 16.8 percent
increase.
Net sales, however, decreased 3.5 percent to ¥249,070 million. Centered on the Product Sales segment, the decrease
was due to restraint or postponement of investment in information technology (IT) by enterprises amid a challenging
operating environment caused by significant economic deterioration in Japan and around the world from the second
half of the year, triggered by the financial crisis. On the other hand, sales increased in our current focal areas of network
integration and support services, which encompass maintenance and support for constructed networks. Initiatives
behind this increase included enhanced proposals that meet changing needs for cost reduction and extending the lifeof existing systems. In addition, to increase management efficiency, we carried out support service infrastructure
upgrades including the establishment of Network Total Operation Centers (nTOCs), which handle the operating andmonitoring of customer networks, and the Parts Delivery Operation Center (pDOC), which integrates the deployment
and delivery of maintenance parts throughout Japan.
Given these conditions, we have increased our annual dividend for the year ended March 2009 to ¥22 per share.
The operating environment is expected to remain challenging in the year ending March 31, 2010. The NEC Networks& System Integration Group is working to enhance its ability to offer proposals that meet customer needs while
reinforcing its capabilities in regional information networks of local governments and other solid business areas.
Moreover, we will build a resilient business structure and work to achieve growth over the medium term by further
accelerating management innovation activities.
September 2009
Masahiko Yamamoto
President

Financial Highlights
Net Sales by Customer

Operating Income andOperating Income to Net Sales(Millions of yen)

(Millions of yen / %)254,641 258,212 249,070

250,000
200,000

4.2

213,6724.0
2.8

100,000

10,743

2.0

7,849

2,500

05

06

07

08

09

0

4,812

05

1.0

6,056

06

147,462

3.0

5,000

50,000154,171

134,911
123,935

2.4

100,000

148,797

150,000

10,9683.1

7,500

200,000

4.4

10,000150,000

0(Millions of yen)

5.0

12,500300,000

198,625

Total Assets and Total Net Assets

07

08

09

(Years ended March 31)(Years ended March 31)■ Overseas■ Government■ Telecommunications carriers■ NEC Group■ Enterprises■ Operating income (left scale)0

Operating income to net sales(right scale)

50,000051,704*54,62505

06

62,201

66,132

69,34007

08

09(As of March 31)■ Total assets■ Total net assets* Shareholders’ equity

NEC Networks & System Integration Corporation

5

INTERVIEW WITH THE PRESIDENT

Further enhancing profitability
and setting the stage for growthby promoting corporate strength

Masahiko Yamamoto
President

What were the factors
behind the Company's
strong performance in thisonce-in-a-century
economic crisis?

Q

Our diverse customers include the national and local governments andtelecommunications carriers in addition to enterprises. As such, the impact of
the crisis was relatively small compared with that felt by companies doing
business with individuals.
In addition, we saw a steady flow of results from Company-wide management
innovation activities that we implemented early on in anticipation of challenging
economic conditions.
For example, we previously conducted equipment configuration and otherwork at the customer’s workplace. Concentrating work at one location, the Total
SI Center, enabled us to steadily revise work processes and come up with new
ideas. This dedicated, Company-wide drive helped improve profitability.
In our support services business, which maintains and operates customer
networks, we made infrastructure upgrades that demonstrated our ability toensure safety and security. For example, we established the nTOC 1 facilities tosupervise networks 24 hours a day and the pDOC 2 facility to smoothly distribute
maintenance parts. These facilities significantly contributed to performance.

How will you respond tothe challenging economic
environment?

Q

In this economic crisis, I believe it is important to be critically aware of current
conditions, reliably set firm, realistic targets and move to achieve them. We will
work to produce results that meet shareholders’ expectations regardless of theoperating environment by reducing waste and building a robust corporate
structure.
To increase sales, we will develop business in closer contact with customers
with an eye on medium-to-long-term growth. In particular, we will make stronger
proposals that effectively address customer needs, including solutions centered

6

NEC Networks & System Integration Corporation

Right: EmpoweredOfficeon site at the head office
Below: nTOC

on EmpoweredOffice 3 that make the office environment more dynamic, andsolutions that reduce CO2 emissions through energy-saving and reduced paper
usage. Moreover, we will steadily expand business by offering solutions thattie in the support services business of maintenance and operation for establishednetworks, as well as proposing solutions that utilize know-how gained throughoperational support.
Meanwhile, local governments continue to upgrade regional information
networks. In order to meet their needs and contribute to the creation of safe
and secure communities, we will reinforce our project execution systemthroughout Japan while working to strengthen engineer recruitment andemployee training.
Notes:
1. nTOCs: Two of the largest total network operation centers in Japan, these facilities concentrate theCompany’s support service functions such as monitoring, operation and maintenance of network
systems.
2. pDOC: A parts distribution center that stores maintenance parts and integrates control to provide
immediate parts delivery 24 hours a day, 365 days a year.
3. EmpoweredOffice: An office reform solution that we provide. It fuses our strengths in Information
and Communication Technology (ICT) and facility installation to reform office work processes
toward knowledge-building work styles and propose ideas for changing ways of working and theworkplace environment to fulfill social responsibilities such as stronger security and environmental
responsiveness.

NEC Networks & System Integration Corporation

7

REVIEW OF OPERATIONS
Network Integration/Support Services

Percentage of Net Sales(Year ended March 31, 2009)

Network Integration: Planning and consulting, software development and construction for
network systems to strengthen the operating efficiency and competitiveness of customers, andsupply of originally developed products and systems
Support Services: Operation and maintenance of network systems, and outsourcing services

66.2%

Results of the Fiscal Year

Segment Sales(Millions of yen)

200,000
161,473 163,418 164,996

150,000
116,997

100,000

85,78650,000
0
05

06

07

08

09

(Years ended March 31)

8

Principal Businesses

NEC Networks & System Integration Corporation

In the year ended March 31, 2009, sales in the Network Integration (NI)/Support Services(SS) segment increased 1.0 percent year-on-year to ¥164,996 million. Sales in the NI businessincreased 0.3 percent to ¥87,169 million, basically unchanged from the previous fiscal year ina challenging operating environment of significantly reduced IT and network investment byfinancial companies and manufacturers due to the rapid deterioration of the economy
following the bankruptcy of Lehman Brothers in 2008. Sales in the SS business increased
1.8 percent to ¥77,827 million. Factors behind the increase included strengthening of thenationwide support system for NGN, terrestrial digital broadcasting and other networks,
and increased enterprise business due to strong proposals for operation, monitoring andoutsourcing services that help ease the burden placed on customers in ways such as reducing
operating costs and reinforcing security.
Gross profit was ¥26,540 million, which improved the gross profit margin 1.1 percentage
points, and operating income was ¥12,960 million, which increased the ratio of operating income
to sales 1.2 percentage points. Factors included the increase in sales of the SS business and thestrengthening of ongoing management innovation activities.

The year ended March 31, 2009 was challenging for the NI/SS segment due to factors
including restrained investment centered on enterprises. As projects decreased in scale, theCompany worked to expand the number of projects by actively conducting customer-centeredmarketing, including proposing solutions addressing strong customer needs for cost reduction
and improved operating efficiency. In addition, we worked to expand our range of proposals by
utilizing our strengths in facility construction to propose EmpoweredOffice total office reform
solutions that center on advanced Information and Communication Technology (ICT) andintegrate office space design as well as air conditioning and electrical systems. In April 2008, we
acquired Nichiwa Co., Ltd. in order to strengthen area coverage. With the expansion of the
NGN service area, we steadily increased related business with telecommunications carriers.
Business infrastructure upgrades also progressed in the NI/SS segment. (See “Topics,” page12.) In these ways, we are working to improve operating efficiency while enhancing service
quality and strengthening high-value-added businesses.

Outlook for the Year Ending March 31, 2010
Investment in network integration among financial companies and other enterprises is
expected to be weak, but we will build up orders by proposing solutions that meet customer
needs.
In the NI business, we will focus on EmpoweredOffice, leveraging the results and knowhow from adopting it in our own company to provide customers with stronger solutions thatmeet their needs, such as to reduce costs and increase operating efficiency. In the SS business,
we will step up our efforts to provide total services over the entire system life cycle, fromproposing and installing ICT systems to operating, monitoring and outsourcing services, as wellas subsequent system upgrades. We will do this by further expanding our range of solutions thatcombine the system installation and other flow businesses centered on EmpoweredOffice with
nTOC and data center support service infrastructure. Evolving our value chain in the solutions
business in this way will strengthen our market competitiveness.

NEC Networks & System Integration Corporation

9

REVIEW OF OPERATIONS

Telecommunications Engineering
Percentage of Net Sales(Year ended March 31, 2009)

Construction of network infrastructure andinstallation of electrical and air conditioning systems

Results of the Fiscal Year

27.5%

Segment Sales(Millions of yen)

100,000
80,000Principal Businesses

70,404

63,765 67,085

70,339 68,397

05

06

08

60,00040,000In the year ended March 31, 2009, sales in the Telecommunications Engineering segment
decreased 2.8 percent year-on-year to ¥68,397 million. Construction of mobile base stations
decreased due to a peak-out in investment by mobile communications carriers, and thecompletion of major projects for municipal governments in the previous fiscal year. Gross profit
was ¥7,848 million, which decreased the gross profit margin 1.8 percentage points, andoperating income was ¥3,206 million, which decreased the ratio of operating income to sales
1.3 percentage points. The decreases resulted from delayed response to the sharp decline
in specialized mobile base station construction orders from some mobile communications
carriers and the peak-out of highly profitable projects, including construction of facilities for adigital broadcasting studio.

20,000

Outlook for the Year Ending March 31, 2010

0
07

09

(Years ended March 31)

Solid investment is expected in fields such as expansion of terrestrial digital broadcast
reception areas, elimination of the digital divide, and measures to establish wider area firefighting
and disaster prevention networks. We will expand related businesses by working to further
strengthen our agile operational structure, including shifting sales and technical personnel
resources to these solid fields.

Product Sales
Percentage of Net Sales(Year ended March 31, 2009)

Principal Businesses
Sales of data communication products, etc.

6.3%

Results of the Fiscal YearIn the year ended March 31, 2009, sales in the Product Sales segment decreased 35.9 percent
year-on-year to ¥15,676 million. Factors included a reduction in sales of terminals for branch
offices of financial companies resulting from restrained investment.
Gross profit was ¥1,081 million, which decreased the gross profit margin 0.1 percentage
points. Despite the significant decrease in sales, operating income was ¥586 million, which
increased the ratio of operating income to sales 0.1 percentage points, due to our emphasis on
profitability in project selection.

Segment Sales(Millions of yen)

50,00042,43440,00032,90930,00026,082

Outlook for the Year Ending March 31, 2010

24,45420,00015,676

10,000
0
05

06

07

08

09

(Years ended March 31)

10

NEC Networks & System Integration Corporation

In the business environment of the Product Sales segment, the restraint in investment
centered on enterprises that began in the previous fiscal year is expected to continue. Accordingly,
we will continue to emphasize and improve operating profitability.

TOPICS

New Total SI Center Increases Efficiency andProtects the Environment
Enhancing system

NEC Networks & System Integration previously conducted system configuration at thecustomer’s workplace when delivering IP telephony equipment. Establishing the Total SI

quality and construction

Center to concentrate technical functions there has enabled us to reduce on-site work days

speed by streamlining

to one-fourth of those previously necessary and deliver quality systems.
The Total SI Center has improved efficiency through stronger supply chain management

on-site work

while optimizing the shipment of equipment from factories to the Total SI Center and to
customer workplaces. In addition, based on employee suggestions we switched from
corrugated boxes to reusable containers for shipping IP telephony equipment. This has
reduced industrial waste by 90 percent and significantly contributed to lowering CO2
emissions. Green supply chain management (SCM) introduced at the Total SI Center is being
strengthened. While working to further improve efficiency and enhance quality, we willcontinue to promote environmental measures including CO2 reduction and energy saving.

Previously: Site-by-site work and response generated excessive labor

Operational
check

Functional
testing

KittingOn-siteconfiguration

Personnel dispatch

Data input

NEC Networks & System Integration

Systemstartup

Customer’s
workplace

Installation

Manufacturer

On-site work
EquipmentdeliveryEquipment delivery

Production Innovation: SI Process Reform
Total SI Center (Central control)
Total SI Center

Equipment delivery

Remote configuration and testing

Manufacturer
NEC Networks & System Integration

Customer’s
workplace

Delivery of configured equipment
Operationalcheck

On-siteconfiguration

Installation

EquipmentdeliveryEquipment
shipment

Decision toship

Configuration

Data input

Kitting

Equipment
receipt

Only minimal site-specific work

Higher Efficiency and Quality through Concentration
Establishment of Green Supply Chain Management
NEC factories

Reusable
containers

Total SI Center

Reusable
containers

Technical Work
Quality assurance through standardized processes

Customer’s
workplace
On-Site Work
Site-specific construction

NEC Networks & System Integration Corporation

11

Enhance the value chain by combining system integration (SI) and support services to expand businessChange to NEXT VALUE System Integrator
Customers

Total Office Creation

Service Infrastructure

Support Services
Integration

SI Infrastructure
Total SI Center
Next-generation SI center

Reinforcing the Infrastructure of the Support Services Business
Enhancing customer
satisfaction throughhigher-quality services
and faster response
while reducing costs andIn the support services area, where customer needs are increasing, we worked tostrengthen our capabilities by reinforcing our service infrastructure, including providing moresophisticated services and faster recovery from system failure.
In April 2008, we opened nTOCs in Tokyo and Osaka to concentrate network monitoring,
operation and call center functions. Moreover, in November we established pDOC tointegrate control of parts deployment and delivery at over 300 centers throughout Japan.
This has optimized the deployment of repair parts and shortened delivery time. Together

promoting Life Cycle

with existing data centers, these infrastructure upgrades enable unified response with ourManagement* businesscomplete lineup of support services, thereby making our work more efficient and reducing
distribution costs, in addition to enhancing service quality and accelerating response tosystem failure.
Moving forward, we will work to more aggressively promote total services that match
system life cycles. We will further expand solutions that combine the construction of systems
centered on EmpoweredOffice with nTOC support service infrastructure and data centers,from proposing and introducing ICT systems to providing operation, monitoring andoutsourcing, as well as ensuing system updates. In this way, we will further evolve our value
chain, strengthening our market competitiveness and expanding our business.

* Life Cycle Management: A service that helps customers reduce complicated administration with support for
optimal operation at every stage, from IT device and network system introduction to operation and maintenance, disposal, software updates, anti-virus measures, etc.

12

NEC Networks & System Integration Corporation

TOPICS

Strengthening the Local Government Communications
Infrastructure Construction BusinessContributing to theestablishment ofLocal governments in Japan are upgrading fiber-to-the-home, cable television and otherbroadband networks to rectify interregional information gaps and promote the establishmentof flexible and efficient ICT infrastructure. As a result, higher-speed, higher-quality network

broadband communica-

services will become available. Dramatic improvement in convenience for regional residents

tions networks thatand enterprises is expected, including the introduction of digital terrestrial broadcastingeliminate the regional
digital divide

reception and the expansion of public services provided by local governments. Constructionof public networks involves broadcasting and network system integration in addition to laying
fiber-optic cable of over 200 to 300 kilometers. NEC Networks & System Integration helps
local governments cross the digital divide by leveraging its traditional strengths in laying
networks and its wealth of achievements and experience in upgrading communications
infrastructure, including broadcasting facilities.
Revitalizing local economies is a key policy of Japan’s national government, and upgrades
to broadband networks by local governments are expected to gain speed through stronger
government support. In order to enhance our ability to undertake projects throughout thecountry, we have changed to a fortified area management structure of large regions thatencompass bases formerly managed separately. We will expand related businesses byworking to further strengthen our agile operational structure, including shifting sales andtechnical personnel resources.

Market Size
(Billions of yen)

Expansion due tosupplementary budget

Elimination of digital divide,
transition to digital terrestrial
broadcasting, upgrade of disasterprevention networks, etc.

200

Local info
networks,
CATV

Investments
in ICTfor safety andsecurity

Firefighting
networks

Disasterprevention
networks0

2009

2010 (est.)

2011 (est.)

2012 (est.)(Years ended/ending March 31)(NEC Networks & System Integration forecasts based on government reports, etc.)

NEC Networks & System Integration Corporation

13

CORPORATE GOVERNANCE

I. Basic Corporate Governance Policy(As of June 30, 2009)
The Company believes that the cornerstone of corporate
governance is ensuring management soundness and transparency by establishing a management system that enables
quick decision-making to respond promptly to changes in theoperating environment, and by practicing timely, appropriate
disclosure.
The Company has adopted the form of a “company withcorporate auditors” in order to build a proper corporate governance system, centered on the Board of Directors and corporate auditors.

II. Management Organization and Other
Corporate Governance Systems for DecisionMaking, Execution and Supervision
1. Organizational Structure and Operation, Business
Execution, Auditing and Supervision, and Election
Board of Directors
The Board of Directors is composed of eight directors,
including two outside directors. In addition to maintaining thenumber of directors at an optimum level for quick decisionmaking, the Company has reduced the terms of directors
from two years to one year in order to clarify the management responsibility of directors and strengthen its management structure.
Principal Activities of Outside Directors
The outside directors attend regular monthly meetings ofthe Board of Directors, as well as extraordinary Board meetings when necessary. As members of the Board of Directors,
the outside directors apply their ample experience and knowledge to the Company’s operations in ways such as providing
necessary input to discussions on important matters concerning management. At the same time, they provide advice andmake decisions from an external perspective.
Executive Committee and Business Execution Committee
The Company has adopted an executive officer system toclearly separate supervision and business execution functions. Moving to enhance management functions, the14

NEC Networks & System Integration Corporation

Company also formed the Executive Committee, consistingof executive officers at the managing director level and higher
and corporate auditors, to discuss policies pertaining to key
management and operating issues, and the Business
Execution Committee, which consists primarily of executive
officers and division managers, to monitor the progress of andreport on significant matters concerning business execution.
Board of Corporate Auditors
The Board of Corporate Auditors consists of four corporate auditors, including three outside auditors. It decides audit
policies and related matters, and reports on the status ofaudits performed by each auditor. Corporate auditors also
attend Board of Directors meetings and other important
meetings, examine significant documents related to final
decisions, and listen to directors and employees on performance of their duties, thus contributing to a system for sufficiently scrutinizing directors’ performance of their duties.
Principal Activities of Outside Auditors
The outside auditors attend regular monthly meetings ofthe Board of Directors, extraordinary Board meetings whennecessary, and meetings of the Board of Corporate Auditors.
They utilize their individual knowledge in meeting discussions
and other situations while auditing directors’ performance of
their duties from a fair and objective point of view.
Internal Auditing Division
The Internal Auditing Division, consisting of 10 members,
has been established to conduct internal audits. It examines
whether business execution is being conducted legally andproperly according to relevant laws, regulations and Company
rules.
Cooperation between the Corporate Auditors and theInternal Auditing Division
The Internal Auditing Division mutually cooperates withthe corporate auditors, including making annual reports tothem on the results of audits based on the audit plan for the
fiscal year and exchanging opinions as necessary.
The corporate auditors, Internal Auditing Division andindependent auditors also engage in mutual cooperation by
regularly exchanging opinions as necessary in statutory
audits.

Independent Auditors
The Company has an audit contract with KPMG AZSA &Co. as its independent auditors to audit its accounts for theyear ended March 31, 2009.
Cooperation between the Corporate Auditors andIndependent Auditors
The corporate auditors and independent auditors also
engage in mutual cooperation by regularly exchanging opinions as necessary in statutory audits.
2. Special Factors with a Significant Effect on
Corporate Governance(1) The Company’s parent company is NEC Corporation,
which held 25.5 million shares, or 51.45 percent, of theCompany’s voting shares as of March 31, 2009.
Calculation of the actual ratio of voting rights of NEC
Corporation includes 6.4 million shares contributed by
NEC Corporation as a retirement benefit trust to theJapan Trustee Services Bank, Ltd. (The Sumitomo Trustand Banking Company, Limited beneficiary trust account,
NEC Corporation retirement benefit trust account).
(2) In order to strengthen cooperation with the parent company
in management activities and promote sharing of information, at the Company’s request one outside director andone outside auditor are appointed from the parent company.
As the number of outside directors from the parent
company does not constitute a majority on the Board of
Directors and decisions on key management issues are
made after sufficient discussion, independent management judgment is maintained.

III. Internal Control Systems and Exclusion ofAntisocial Factions■ Basic Stance on and Status of Internal Control Systems

The Company established the following basic policy concerning internal control systems per resolution of the Boardof Directors.
In addition to regularly evaluating the internal control systems and implementing reform measures under the basic
policy, the Company revises the policy in response to factors

including changes in the management environment andworks to make the systems more effective.
1. Systems for Ensuring Compliance with Laws and theCompany's Articles of Incorporation in the
Performance of Duties by Directors and Employees(1) Directors and executive officers shall take the lead in practicing the NEC Networks & System Integration Group
Charter of Corporate Behavior, (the “Charter of Corporate
Behavior”) and the NEC Networks & System Integration
Group Code of Conduct (the “Code of Conduct”) thatwere adopted to establish business ethics standards for
NEC Networks & System Integration Corporation and its
subsidiaries (the “Group”), and to ensure compliance bydirectors and employees with laws and the Company’s
Articles of Incorporation and rules, and promote their thorough understanding by way of repeatedly transmitting
information about the importance of complying withthem.
(2) The CSR Promotion Division shall encourage understanding
and implementation of the Charter of Corporate Behavior
and Code of Conduct, and the Internal Auditing Division
shall conduct internal audits of compliance with laws andthe Company's Articles of Incorporation at each division.
(3) The CSR Promotion Division shall promote the use of theInternal Reporting and Consultation Office, a corporate
ethics hotline, for reporting violation or suspected violationof laws, the Charter of Corporate Behavior or Code of
Conduct, and work to detect such violations at an earlystage.
(4) A director shall immediately report to corporate auditors
on discovery of any material violation of laws or Company
rules, and shall also report to the Board of Directors without delay and take corrective measures.
(5) The Management Quality Improvement Committee shallinvestigate the cause of misconduct within the Group andformulate and implement concrete preventative measures.
(6) The Company shall maintain no relationship whatsoever
with antisocial factions or groups which threaten theorder and safety of civil society, and shall respond to illegitimate demands in an uncompromising manner.

NEC Networks & System Integration Corporation15

2. System for the Retention and Management ofInformation Relating to the Performance of Duties byDirectors
Directors and employees shall appropriately create, retain
and manage documents relating to the performance of duties
by directors and employees pursuant to laws and Company
rules including the Regulations on Document Organization.
Appropriate retention and management of information shallbe carried out in accordance with rules including the Basic
Rules on Information Security, the Rules for Trade SecretManagement, and the Rules of Protection and Managementof Personal Information.
3. Rules and Other Systems for Risk Management(1) The Company shall implement risk management effectively
and comprehensively in accordance with the Basic Rules
on Risk Management, and receive the advice of lawyers,
public accountants and other outside professionals asnecessary.
(2) The Management Quality Improvement Committee shalldeliberate on important matters related to risk management, and promote implementation of concreteCompany-wide risk management measures.
(3) The Executive Committee shall deliberate fully on important matters from the perspective of risk management,such as strategies to control material management risks,and report matters of particular importance to the Boardof Directors.
(4) The Internal Auditing Division shall conduct audits of theenterprise risk management system and the status of
implementation of risk management.
4. Systems for Ensuring the Efficient Performance ofDuties by Directors(1) The Board of Directors shall meet once a month and holdextraordinary meetings as necessary to make decisions ina timely manner.
(2) The performance of duties by directors and executive officers shall be properly reported to the Board of Directors.
(3) The Board of Directors shall delegate significant authority to
the executive officers in order to carry out timely decision-

16

NEC Networks & System Integration Corporation

making regarding business operations. The executive officers will perform their duties in an agile and efficient manner based on the responsibilities set by the Board of
Directors.
(4) The Company shall work to strengthen management functions through the Executive Committee, which consists ofexecutive officers at the managing director level and higher and corporate auditors and discusses policies pertaining to key management and operating issues, and theBusiness Execution Committee, which consists primarilyof executive officers and division managers and monitors
the progress of and reports on significant matters concerning business execution.
(5) Executive officers and other employees shall exercise
their authority competently and efficiently in accordancewith the Rules of Authority and other Company rules.
5. Systems for Ensuring the Proper Operation of the Group(1) The Company shall cooperate with its parent company
NEC Corporation as necessary with respect to matters
including the establishment of systems for ensuring corporate ethics and compliance with laws, the Company’s
Articles of Incorporation and rules, and fairness of business operations.
(2) The Company shall guide and assist its subsidiaries inestablishing systems for ensuring corporate ethics, compliance with laws, the Company’s Articles of Incorporation
and rules, and fairness of business operations, in accordance with the Charter of Corporate Behavior and theCode of Conduct.
(3) In addition to dispatching directors and corporate auditors
to subsidiaries, the Company shall, at the Executive
Committee, discuss important operational matters of subsidiaries and submit issues for consideration to the Boardof Directors, and cooperate with NEC as necessary, in
accordance with the Rules on Control of AffiliatedCompanies.
(4) The Company and its subsidiaries shall prepare financial
statements in accordance with laws and Company rules
and cooperate with the independent auditors in performing audits, in addition to evaluating, maintaining andimproving internal control over financial reporting in accordance with laws.

CORPORATE GOVERNANCE(3) The CSR Promotion Division shall regularly report to thecorporate auditors regarding the status of operations of
the Internal Reporting and Consultation Office, a corporate ethics hotline.

(5) The Internal Auditing Division shall conduct audits to confirm the appropriateness of business operations at subsidiaries.
(6) The corporate auditors shall ensure the appropriateness ofbusiness operations at the Company and its subsidiaries
through operational audits.

(4) Documents evidencing approval of important matters shallbe submitted to corporate auditors for their review.

6. Matters Regarding Employees Assisting
Corporate Auditors

8. Systems for Ensuring Effective Audits by
Corporate Auditors

The Company shall assign employees to assist corporate
auditors in performing their duties. Corporate auditors may
express an opinion on matters regarding such employees
including their transfer.

(1) Corporate auditors shall attend meetings of the Board of
Directors and other important meetings as they deem
necessary.
(2) Corporate auditors shall exchange information and consult
with each other on the status of audits at meetings of theBoard of Corporate Auditors. In addition, the corporate
auditors shall cooperate with the independent auditors in
the performance of their duties, regularly receive reports
on accounting audits and exchange opinions with them,and cooperate with the Internal Auditing Division toensure audit duties are conducted effectively.

7. Systems of Reporting to Corporate Auditors by
Directors and Employees and Other Systems
Regarding Reporting to Corporate Auditors(1) Directors and employees shall report to corporate auditorson the status of the performance of their duties, as
required by the corporate auditors.
(2) The Internal Auditing Division and other divisions shallreport regularly to the corporate auditors depending on
their business contents.

Corporate Governance Structure
General Meeting of Shareholders
Elect/Dismiss

Elect/Dismiss

Elect/Dismiss

Management/Supervision
Board of Directors(Directors)

Audit

Board of Corporate Auditors(Corporate Auditors)

Supervise

Cooperate

Audit
Cooperate

Business Execution
Executive Committee

Executive Officers

Business Execution Committee

Internal Auditing Division

Independent
Auditors

Cooperate

Management Quality
Improvement Committee
Audit

Staff, Management Units and Business Units
Corporate Ethics and Thorough Compliance

Cooperate Group Companies
Internal Reporting and Consultation Office(Corporate Ethics Hotline)

Business Behavior Committee

NEC Networks & System Integration Corporation

17

CORPORATE GOVERNANCE■ Basic Stance on and Status of Measures for the

Exclusion of Antisocial Factions
1. Basic Stance on the Exclusion of Antisocial Factions
The Company shall maintain no relationship whatsoever
with antisocial factions or groups which threaten the order andsafety of civil society, and respond to illegitimate demands inan uncompromising manner, as stipulated above in the Basic
Stance on and Status of Internal Control Systems.
2. Status of Measures for the Exclusion of Antisocial Factions(1) The Code of Conduct stipulates that all officers andemployees of Group companies take decisive action toensure no relationship whatsoever with antisocial factions
or groups that threaten the order and safety of civil society
and not engage in actions that support their activities.
(2) The Company has established a division to counter antisocial factions by gathering and uniformly managing information on such factions.
(3) The Company cooperates closely with local police stations, lawyers and outside professional organizations
regarding the exclusion of antisocial factions.
(4) The Company works to familiarize officers and employeeswith the exclusion of antisocial factions in ways such asproviding regular educational opportunities.

IV. Other■ Other Matters Concerning Corporate GovernanceFollowing is the status of implementation of measuresconcerning corporate governance. The Company will further
strengthen corporate governance through ongoing review of
optimal management systems in response to changes in thesocial and operating environments.
(1) In January 2008, the Company established theManagement Quality Improvement Committee tostrengthen internal controls throughout the Group and toreview, examine and share information regarding compliance and risk management measures throughout theCompany.

18

NEC Networks & System Integration Corporation(2) To implement effective and comprehensive risk management, in April 2008 the Company established the Basic
Rules on Risk Management to be observed by officers
and employees.
(3) In July 2008, the Company established the CSR Promotion
Division to further strengthen its CSR initiatives.

Directors and Corporate Auditors (As of June 23, 2009)

Directors
President

Masahiko Yamamoto
Senior Vice Presidents and Members of the Board

Tooru Rokusha
Koshiro Konno
Yasuo Iijima
Atsushi Fujita
Akinori Kanehako
Members of the Board

Takayuki Matsui 1
Noboru Wakita 1
Corporate Auditors
Masayuki Komura 2 (full-time)
Tetsuiku Okada (full-time)
Harutame Umezawa 2
Yasuo Totsuka 2

Notes:
1. Outside director as defined in Item 15 of Article 2 of the Corporation Law
of Japan
2. Outside auditor as defined in Item 16 of Article 2 of the Corporation Law
of JapanCORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR Policy
NEC Networks & System Integration Corporation builds
trusting relationships with its stakeholders by putting compliance first, working to solve social issues through business activities, and soundly improving and returning profits to society.

Seven CSR Initiatives
We identified the most relevant and significant issues andthemes for stakeholders and society as a whole and selected
seven CSR initiatives.
Establish a CSR Platform

Initiatives for Customers

Strengthen Risk Management
and Compliance

Include Everyone
in Systems and Services

Earn Customer Trust

Build Reliable Information
and Communications Infrastructure

Address Global Warming andEnvironmental Preservation

Provide Multifaceted Security

Improve Working Conditions and Develop Human Resources Globally

Through these initiatives, we will fulfill our responsibilities
to society, as expected.
Another important social responsibility is accountability,
which the Company fulfills by disclosing the details andresults of CSR initiatives to stakeholders.

Quality Initiatives, Environmental Activities,
Information Security and Protecting
Personal Information
Toward Greater Customer Satisfaction andSustainable Development
Quality Initiatives
NEC Networks & System Integration Corporation constantly pursues the highest levels of quality and safety
through measures such as customer satisfaction and quality
management activities, including activities based on ISO 9001
certification. The Company provides customers with highquality, safe and secure systems with the latest technology.

1999, the Company received ISO 14001 certification for environmental management. Since then it has worked to reduce waste
disposal volume, achieved 100 percent use of recycled paper forcopy paper in the year ended March 31, 2002, improved therecycling rate, changed to small lots for lead soldering foron-site use, and introduced low-pollution vehicles. Moreover,in recent years, the Company has implemented green
procurement to meet chemical substance regulations (theEuropean RoHS directive and others), and conducted energy
conservation and emissions trading aimed at preventing
global warming.
Information Security and Protecting Personal Information
NEC Networks & System Integration Corporation has
established a personal information protection policy. Moreover,
the Company understands that personal information is an
important information asset, and maintains a compliance program (a personal information management system) that conforms to JIS Q 15001: 2006. In this way, every employee
works to properly protect personal information. In addition, theCompany established the Basic Policy on Information Security
and the Basic Rules on Information Security, and conducts
activities to maintain and enhance information security. Basedon the policy and rules, the Company strengthens security
measures for internal information systems and promotes educational activities for Group employees and others, while strictly
controlling security at data centers and other locations that handle important customer information, through operations basedon ISO/IEC 27001, an international standard for information
security systems.
ISO 9001: 2000
• Certificate Number: JQA-0471
ISO 14001: 2004
• Certificate Number: JQA-EM0640
ISO/IEC 27001: 2005
• Certificate Number: IC03J0025• Organization: SI & Services Operations Unit Office Solutions Division• Certificate Number: JQA-IMO190• Organization: SI & Services Operations Unit Outsourcing Service Division• Certificate Number: JQA-IMO351• Organization: SI & Services Operations Unit Customer Engineering Division

Environmental Activities• Certificate Number: JQA-IMO514• Organization: SI & Services Operations Unit Service Infrastructure Division

NEC Networks & System Integration Corporation statesin its Charter of Corporate Behavior that it will “contribute tosociety as an environment-conscious corporate citizen.” In

Privacy Mark• Certificate Number: 21000053(02)NEC Networks & System Integration Corporation

19

SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATANEC Networks & System Integration Corporation and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars1

Millions of yen

2009

2008

2007

2006

2005

2004

2009

For the year:
Orders ................................................................... ¥ 245,257 ¥ 254,512 ¥ 253,577 ¥ 223,383 ¥ 207,460 ¥ 196,123$2,496,763

Net sales ...............................................................

249,070258,212

254,641

213,672

198,625

194,0122,535,580

Selling, general and administrative expenses ....

24,501

24,82425,41320,502

16,921

17,263

249,425

Operating income ...............................................

10,968

10,743

7,849

6,056

4,812

4,419

111,656

Net income ..........................................................

5,154

4,412

3,476

2,609

1,222

500

52,469

Capital expenditures ..........................................

2,529

2,611

2,371

1,804

2,829

1,120

25,746

Depreciation and amortization .........................

2,270

2,130

2,203

1,966

1,712

1,455

23,109Research and development costs ....................

290

419

595

455

428

290

2,952

Total assets .......................................................... ¥ 147,462 ¥154,171 ¥148,797 ¥134,911 ¥ 123,935 ¥ 118,416$1,501,191

At year-end:
Shareholders’ equity ..........................................

69,33465,251

61,69254,01751,70450,971

705,833

Total net assets ....................................................

69,34066,132

62,201

54,625——705,894

Interest-bearing debt .........................................

5,121

5,652

5,531

8,800

8,163

5,624

52,13388.67 ¥

70.72 ¥

60.56 ¥

28.24 ¥

10.87

Per share of common stock (yen and U.S. dollars) :Net income .......................................................... ¥ 103.61 ¥

$

1.05

Net assets (BPS) ..................................................

1,381.92

1,311.71

1,233.52

1,285.92

1,231.28

1,213.62

14.07

Cash flow (CFPS) ................................................

147.8

130.1

114.8

108.2

69.0

45.0

1.50

Cash dividends applicable to the year .............

22.00

20.00

14.00

14.00

12.00

10.00

0.22

Operating income to net sales (%) ..................

4.4

4.2

3.1

2.8

2.4

2.3

Return on assets (ROA) (%) 2 .............................

7.4

6.9

5.5

4.6

3.9

3.7

Return on equity (ROE) (%) .............................

7.7

7.0

6.0

4.9

2.4

1.0

Shareholders’ equity (Net worth) ratio (%) ....

46.6

42.3

41.3

40.0

41.7

43.0

Current ratio (times) 4 .........................................

2.18

1.97

1.93

1.86

1.77

1.79

Interest coverage ratio (times) ........................

169.09123.63106.00

65.39

52.87

37.06

Debt to equity ratio (times) 6 ..............................

0.07

0.09

0.09

0.16

0.16

0.11

Number of employees .......................................

5,906

5,817

6,407

4,897

4,199

4,281

Ratios and return indicators:

3

5

Net sales per employee (thousands of yen) 7 ........ ¥ 42,493 ¥ 42,247 ¥ 45,053 ¥ 46,982 ¥ 46,864 ¥ 45,056
Net income per employee (thousands of yen) ...
8

879

722

615

574

288

116

$ 432,587
8,948

Notes:
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥98.23 = U.S.$1.00, the approximate Tokyo foreign exchange
market rate as of March 31, 2009.
2. Return on assets: Ordinary income / Average total assets during the term
3. Return on equity: Net income / Average net assets during the term
4. Current ratio: Current assets / Current liabilities
5. Interest coverage ratio: (Operating income + Interest income + Dividend income) / Interest expenses
6. Debt to equity ratio: Interest-bearing debt / Net assets
7. Net sales per employee: Net sales / Average number of employees during the term
8. Net income per employee: Net income / Average number of employees during the term

20

NEC Networks & System Integration Corporation

Net Sales

Operating Income(Millions of yen)

(Millions of yen)

300,000

12,000254,641 258,212 249,070

250,000

10,743 10,968

10,000213,672

200,000

198,625

7,849

8,000

150,000

6,056

6,000
4,812

100,000

4,000

50,000

2,000

0

0
05

06

07

08

09

05

06

(Years ended March 31)

07

08

09

(Years ended March 31)

Net Income

Total Assets andTotal Net Assets(Millions of yen)

6,000(Millions of yen)

200,000
5,154

5,000
4,412

4,000

154,171

147,462

134,911
123,935

3,476

3,000

148,797

150,000

100,000

2,609

2,000
50,0001,222

51,704*54,62505

06

62,201

66,132

69,340

07

08

09

1,000
0

0
05

06

07

08

09

(Years ended March 31)■ Total assets■ Total net assets(As of March 31)* Shareholders’ equity

Operating Income
to Net Sales

ROE and ROA
(%)

(%)

5.0

7.7

8.0
4.2

4.4

7.0

7.4
6.0

4.0

6.9

6.0
4.9

3.1

3.0

5.5

2.8
2.4

4.0

3.9

4.6

2.0
2.0

1.0

0
05

06

07

08

(Years ended March 31)

09

ROE(Return on equity)
ROA(Return on assets)

2.4

0
05

06

07

08

09

(Years ended March 31)

All graphs are presented on a consolidated basis.

NEC Networks & System Integration Corporation

21

SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA BY
SEGMENT AND CUSTOMERNEC Networks & System Integration Corporation and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars

Millions of yen

2009

2008

2007

2006

2005

2004

Orders by business segment ...................... ¥ 245,257 ¥ 254,512 ¥ 253,577 ¥ 223,383 ¥ 207,460 ¥ 196,123

22

2009

$2,496,763

Network integration/Support services ............

164,451

164,765

164,634

118,41090,08083,063

1,674,142

Telecommunications engineering ...................

66,904

68,846

65,192

68,46275,70372,145681,095

Product sales .......................................................

13,90020,90023,75036,51041,67640,914

141,505

Net sales by business segment .................

249,070258,212

254,641

213,672

198,625

194,0122,535,580

Network integration/Support services ............

164,996

163,418

161,473

116,997

85,786

79,285

1,679,691

Telecommunications engineering ...................

68,39770,33967,08563,76570,40479,853696,294

Product sales .......................................................

15,67624,45426,08232,90942,43434,873

159,585

Operating income by business segment ...

10,968

10,743

7,849

6,056

4,812

4,419

111,656

Network integration/Support services ............

12,96011,002

10,964

6,684

5,785

5,644

131,935

Telecommunications engineering ...................

3,206

4,197

3,139

3,510

3,434

2,826

32,638

Product sales .......................................................

586

892

140

35

(96)

659

5,966

Eliminations or corporate ............................

(5,785)(5,348)(6,394)(4,173)(4,312)(4,710)(58,892)

Orders by customer .......................................

245,257

254,512

253,577

223,383

207,460

196,123

2,496,763

Government .........................................................

40,97442,87339,14031,14229,891

38,251

417,123

Telecommunications carriers ...........................

54,34854,74957,17250,19843,53432,398553,273

NEC Group ...........................................................

47,702

53,187

51,83536,486

33,77333,032

485,615

Enterprises ...........................................................

88,36486,52289,15989,46084,38876,984

899,562

Overseas ...............................................................

13,867

17,177

16,267

16,096

15,873

15,457141,169

Net sales by customer ..................................

249,070258,212

254,641

213,672

198,625

194,0122,535,580

Government .........................................................

44,10541,76537,46828,71130,89035,805448,997

Telecommunications carriers ...........................

52,47856,47960,23647,70638,70732,641

534,236

NEC Group ...........................................................

48,632

51,19552,65035,69734,01531,475495,083

Enterprises ...........................................................

87,52892,34188,64583,44481,45880,082891,052

Overseas ...............................................................

16,325

16,42915,64018,114

13,55414,008

166,192

Net sales via NEC ............................................

91,212

97,046

90,79758,22056,51054,640928,555

Ratio of net sales via NEC
to total net sales (%) ...................................

36.6

37.6

35.7

27.2

28.5

28.2

NEC Networks & System Integration CorporationOrders by
Business Segment

Net Sales by
Business Segment(Millions of yen)

300,000(Millions of yen)

300,000
253,577 254,512 245,257

250,000

254,641 258,212 249,070

250,000

223,383

213,672

207,460■ Network integration/

Support services■ Telecommunications
engineering■ Product sales

200,000

200,000

150,000

150,000

100,000

100,000

50,00050,000■ Network integration/

0
05

06

07

08

09

(Years ended March 31)

Orders by Customer

198,625

Support services■ Telecommunications
engineering■ Product sales

0
05

06

07

08

09

(Years ended March 31)

Net Sales by Customer(Millions of yen)

(Millions of yen)

300,000

300,000
253,577 254,512

250,000

245,257

213,672

207,460

200,000

200,000

150,000

150,000

100,000

100,000

50,000■ Overseas■ Government■ Telecommunications carriers
0■ NEC Group■ Enterprises

50,000■ Overseas■ Government■ Telecommunications carriers
0■ NEC Group■ Enterprises

05

06

07

08

09

(Years ended March 31)

Net Sales via NEC

Ratio of Net Sales via
NEC to Total Net Sales(Millions of yen)

97,046

100,000

91,212

90,79780,00060,000254,641 258,212 249,070

250,000

223,383

198,625

05

06

07

08

09

(Years ended March 31)

(%)

40
35.7

30

37.6

36.6

08

09

28.5
27.2

56,510 58,220

20
40,00010

20,000

0

0
05

06

07

08

(Years ended March 31)

09

05

06

07

(Years ended March 31)

All graphs are presented on a consolidated basis.

NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEC Networks & System Integration Corporation

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NEC Networks & System Integration Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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NEC Networks & System Integration Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEC Networks & System Integration Corporation

47

GLOBAL NETWORK(As of April 1, 2009)

Head Office
1-39-9 Higashishinagawa, Shinagawa-ku, Tokyo 140-8620, Japan
Tel: +81-3-5463-1111
Fax: +81-3-5463-7781

Major Domestic Regional Offices
Higashinihon, Nakanihon, Kansai, Nishinihon
Hokkaido, Tohoku, Shin-etsu, Kitakanto, Kanagawa, Chubu,
Shizuoka, Hokuriku, Keiji, Kobe, Chugoku, Shikoku, Kyushu

Subsidiaries and Affiliates
Toyo Networks & System
Integration Co., Ltd.
Head office: Kanagawa, Japan
Established: May 2005
Capitalization: ¥400 million
Voting rights: 100.00%
NEC Networks & System Integration
Engineering, Ltd.
Head office: Tokyo, Japan
Established: October 1992
Capitalization: ¥50 million
Voting rights: 100.00%
NEC Networks & System Integration
Services, Ltd.
Head office: Tokyo, Japan
Established: July 1988
Capitalization: ¥60 million
Voting rights: 100.00%
NESIC Ascerent, Ltd.
Head office: Tokyo, Japan
Established: September 1995
Capitalization: ¥20 million
Voting rights: 100.00%

TOYO ALPHANET CO., LTD.
Head office: Kanagawa, Japan
Established: April 1981
Capitalization: ¥20 million
Voting rights*: 100.00% (100.00%)

Nichiwa Co., Ltd.
Head office: Hyogo, Japan
Established: January 1953
Capitalization: ¥50 million
Voting rights: 100.00%

NESIC BRASIL S/A
Head office: São Paulo, Brazil
Established: November 1976
Capitalization: ¥1,325 million
Voting rights: 87.44%

NESIC (Thailand) Ltd.
Head office: Bangkok, Thailand
Established: March 1991
Capitalization: ¥79 million
Voting rights: 49.00%

NESIC (GUANGZHOU) CO., LTD.
Head office: Guangzhou, China
Established: August 1998
Capitalization: ¥115 million
Voting rights: 100.00%

Networks & System Integration
Saudi Arabia Co., Ltd.
Head office: Al-Khobar, Saudi Arabia
Established: April 2006
Capitalization: ¥56 million
Voting rights: 100.00%
TNSi Europe GmbH
Head office: Köln, Germany
Established: October 2005
Capitalization: ¥6 million
Voting rights*: 100.00% (100.00%)

NESIC PHILIPPINES, INC.
Head office: Manila, The Philippines
Established: April 1991
Capitalization: ¥167 million
Voting rights: 100.00%

P. T. NESIC BUKAKAHead office: Jakarta, Indonesia
Established: May 1993
Capitalization: ¥86 million
Voting rights: 80.00%* Figures in parentheses after the percentage of voting rights held represent percentages inclusive of indirectly held shares.

48

NEC Networks & System Integration Corporation

INVESTOR INFORMATION(As of March 31, 2009)

Corporate Name:
NEC Networks & System Integration
Corporation
Established:
November 26, 1953
Number of Employees:
4,154 (Non-consolidated)
5,906 (Consolidated)
URL:
http://www.nesic.co.jp/english/index.html
Listing:
The Tokyo Stock Exchange, First Section
Ticker Code:1973
Fiscal Year:
April 1 ー March 31
Annual meeting held in June
Common Stock Authorized:
100,000,000 shares
Issued:49,773,807 shares

Major Shareholders:Name of Shareholder

Number of
Shares Held(Thousands)

Percentage
of Total Shares
Outstanding

NEC Corporation

19,10638.39%

Japan Trustee Services Bank, Ltd. (Trust account)

7,385

14.84

Japan Trustee Services Bank, Ltd.*(The Sumitomo Trust and Banking Company, Limited beneficiary
trust account, NEC Corporation retirement benefit trust account)

6,400

12.86

The Master Trust Bank of Japan, Ltd. (Trust account)

1,645

3.31

Japan Trustee Services Bank, Ltd. (Trust account 4G)

1,496

3.01

Sumitomo Realty & Development Co., Ltd.

1,200

2.41

Employees’ Stock Ownership Plan

740

1.49

The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account

417

0.84

CBNY Principal Life Insurance Company

256

0.51

Goldman Sachs International

251

0.51

*Shares held by Japan Trustee Services Bank, Ltd. (The Sumitomo Trust and Banking Company,
Limited beneficiary trust account, NEC Corporation retirement benefit trust account) give NEC
Corporation material voting rights because NEC Corporation has contributed shares of theCompany to its retirement benefit trust. The percentage of material voting rights held by NEC
Corporation as of March 31, 2009 was 51.45%.

Composition of Shareholders:Number of Shareholders:
11,291
Transfer Agent:
The Sumitomo Trust and Banking Company,
Limited3 -1, Yaesu 2- chome, Chuo- ku,
Tokyo 104- 0028, Japan
Independent Auditors:
KPMG AZSA & Co.

Individuals and others

12.37%
Foreign investors, etc.

Financial institutions

9.09%

36.73%
Securities companies

Other domestic companies

0.65%

41.16%

Monthly Stock Data (Tokyo Stock Exchange)
(Yen)
2,000

Monthly Stock Price Range

1,500
1,000
High

500

High

Opening

Closing

Closing

Opening

Low

Blue : Opening Price > Closing PriceWhite : Closing Price > Opening Price

Low

0(Thousands of Shares)
12,000Monthly Trading Volume

10,000
8,000
6,000
4,000
2,000
0
2005

2006

2007

2008

2009

NEC Networks & System Integration Corporation49

1-39-9 Higashishinagawa, Shinagawa-ku, Tokyo 140-8620, Japan
http://www.nesic.co.jp