Slide 1: FY07/3 Financial Results and FY08/3 Outlook
FY07/3 Financial Results and FY08/3 Outlook Toshio Nakajima President and CEO NEC Electronics Corporation May 14, 2007 http://www.necel.com/ir/en 1
Slide 2: Agenda
Agenda I. FY07/3 Financial Results 9 Sales and profits/losses in line with previous forecasts announced on February 22, 2007 II. FY08/3 Forecasts 9 Must achieve full-year operating profits committed to by management (Achieve by reducing fixed costs, and increasing sales slightly) III. Measures to Im
Slide 3: I. FY07/3 Financial Results: Summary
I. FY07/3 Financial Results Summary Q4 Results Full-Year Results II. FY08/3 Forecasts III. Measures to Improve Performance 3
Slide 4: Financial Snapshot
Financial Snapshot FY06/3 FY07/3 Full Year Q4 Full Year Compared to Actual Actual YoY Actual YoY Feb. 22 (B Yen) Forecasts Net Sales 646.0 171.4 +1.1 692.3 +46.3 +2.3 Semiconductor Sales 619.1 160.8 -1.3 659.7 +40.6 -0.3 Operating Income (Loss) -35.7 -17.8 -1.3 -28.6 +7.1 +1.4 Income (Loss) -42.4 -2
Slide 5: Q4 Results
I. FY07/3 Financial Results Summary Q4 Results Full-Year Results II. FY08/3 Forecasts III. Measures to Improve Performance 5
Slide 6: Trends in Quarterly Results
Trends in Quarterly Results (B yen) Net Sales 191.2 185.6 177.8 177.9 171.4 166.8 170.3 165.3 165.9 162.7 165.2 169.7 171.1 Semicon. 146.1 160.8 181.2 160.0 Sales 179.1 156.8 162.0 160.7 158.7 140.3 158.1 Op. Margin 8.2% 8.1% 15.2 Expensed Op. Income 15.5 Tech. (Loss) Assets Structural Reform Costs
Slide 7: Q4 Semiconductor Sales by Platform (YoY)
Q4 Semiconductor Sales by Platform (YoY) 200 (B Yen) Q4 Q4 YoY YoY -1% 162.0 160.8 160 +/- Factors SoC -3% SoC (+) Shipping LSIs for game consoles 64.4 62.4 (-) LSIs for DVD drives; digital baseband 120 LSIs and system memory for mobile phones MCU MCU +8% 80 40.8 44.0 (+) Automotive (+) All Flash™ m
Slide 8: Q4 Semiconductor Sales by Platform (QoQ)
Q4 Semiconductor Sales by Platform (QoQ) 200 (B yen) Q4 Q4 QoQ QoQ 171.1 -6% 160.8 160 +/- Factors SoC -11% SoC 70.4 (-) Seasonal adjustments for consumer 62.4 electronics and PC peripherals 120 MCU MCU +3% 80 42.5 (+) Growth in automotive, and slight 44.0 growth in multi-purpose MCUs Components Com
Slide 9: Semiconductor Sales by Application
Semiconductor Sales by Application Q4 Q4 YoY YoY Q4 Q4 QoQ QoQ (B yen) (B yen) 171.1 162.0 160.8 160.8 Communications Communications - 3% - 25% 23.6 Decrease in LCD driver ICs 30.6 Decline in LSIs and system 22.9 for small panels 22.9 memory for mobile handsets Computing & Peripherals Computing & Pe
Slide 10: Factors in Operating Loss
Factors in Operating Loss Q4 Q4 YoY YoY Q4 Q4 QoQ QoQ (B yen) (B yen) 171.1 Semiconductor 160.8 Approx.- Sales Approx. -1.5 160.8 1 0.5 162.0 Deterioration of gross margin due to lower Mainly due to fab utilization rates sales decline Op. Loss -3.8 -7.6 -8.8 Approx. -8.8 Total:16.5 Approx. -1.5 Tota
Slide 11: Full-Year Results
I. FY07/3 Financial Results Summary Q4 Results Full-Year Results II. FY08/3 Forecasts III. Measures to Improve Performance 11
Slide 12: Semiconductor Sales by Platform (YoY)
Semiconductor Sales by Platform (YoY) (B yen) 800 YoY +7% 659.7 619.1 +/- Factors 600 SoC SoC 259.2 (+) New embedded DRAM business 245.6 +6% (+) EMMA series for digital AV applications (-) Price decline and market shrink for mobile 400 phone memory (PSRAM) MCU MCU +8% 168.4 (+) Growth of All Flash m
Slide 13: Semiconductor Sales by Application (YoY)
Semiconductor Sales by Application (YoY) YoY YoY Factors 659.7 (B yen) +7% • Significant decrease in system memory for 619.1 mobile phones (PSRAM) Communications 99.6 • Increase in companion chips and small -8% 108.0 LCD driver ICs for mobile phones • Increase in share of LCD driver ICs for -2% 123.
Slide 14: Factors in Operating Loss
Factors in Operating Loss YoY 659.7 (B yen) 619.1 Semiconductor +40.6 Sales Fixed mfg. costs Power usage, repairs etc. Operating Loss Approx. -7.5 Increased SG&A Information systems etc. +Approx. 30.0 Approx. -3.5 Improved profits from - 19.6 - 26.7 Increased R&D higher sales and Approx.-12.0 expens
Slide 15: Structural Reform Costs
Structural Reform Costs Restructuring Restructuringexecuted executedas asplanned planned(from (fromFeb. Feb.22). 22). Recorded Recordedapprox. approx.15 15BByen yenin inrelated relatedcosts. costs. Item Amount Description COGS Approx. ・Reduction of Inventories 5.0 B yen (Q4) R&D Expenses Approx. ・Co
Slide 16: Balance Sheet
Balance Sheet (B yen) 06/3 06/12 07/3 Cash and Cash Equivalents 211.1 212.6 185.4 Accounts Receivable 113.9 105.1 99.5 Inventories 72.5 89.0 82.6 PP&E 302.1 305.7 292.8 Other Assets 45.7 39.3 35.6 Total Assets 745.3 751.7 695.9 Accounts Payable 122.9 150.7 132.5 Debt Payable 148.3 144.7 136.0 Other
Slide 17: Cash Flows
Cash Flows FY06/3 FY07/3 (B yen) Q4 Full Year Q3 Q4 Full Year Cash Flows from Operating Activities -0.5 49.9 19.5 12.7 66.7 Cash Flows from Investing Activities -19.2 -54.7 -27.1 -30.3 -78.5 Free Cash Flows -19.7 -4.8 -7.6 -17.6 -11.8 17
Slide 18: II. FY08/3 Forecasts
I. FY07/3 Financial Results Summary Q4 Results Full-Year Results II. FY08/3 Forecasts III. Measures to Improve Performance 18
Slide 19: Forecast for FY08/3 Semiconductor Market
Forecast for FY08/3 Semiconductor Market Market Marketfor forNEC NECElectronics’ Electronics’Products ProductsExpected Expectedto toGrow Grow22to to8% 8%YoY YoY (NEC Electronics’ forecast, excluding DRAM, FLASH, and MPU) YoY Market Situation In Q1, inventory adjustments will ease and 1H 0 to +2％ ord
Slide 20: Order Backlog and Amount of Orders
Order Backlog and Amount of Orders Order Orderbacklog backlogand andamount amountof oforders orderspoint pointto tosigns signsof ofrecovery recovery Order OrderBacklog Backlog Amount Amountofof Orders Orders Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2006 2007 20
Slide 21: FY08/3 Forecasts
FY08/3 Forecasts Financial Financialforecasts forecastswere wereestablished establishedbased basedononthe thelowest lowestend endof ofthe the 22to to8% 8%growth growthrate ratepredicted predictedfor forthe thesemiconductor semiconductormarket market FY07/3 FY08/3 Half Year Full Year Half Year Full Y
Slide 22: Analysis of Forecast for Operating Profits
Analysis of Forecast for Operating Profits Semiconductor Sales 670.0 (B yen) 659.7 ＋Approx.10.0 Forecast Forecastfor forsemiconductor semiconductorsales salesbased basedonon10.0 10.0BB yen yen(+1.5%) (+1.5%)YoY YoYincrease increaseand andapprox. approx.6.0 6.0BByen yeninin various variousrisks risks
Slide 23: Semiconductor Sales by Platform (Forecast)
Semiconductor Sales by Platform (Forecast) (B yen) 800 Anticipate Anticipatesemiconductor semiconductorsales saleswill willgrow grow1.5% 1.5%year yearon onyear year + 1.5% 670.0 659.7 +/- Factors (+) Growth of embedded DRAM for consumer 600 SoC electronics (+) EMMA digital AV platform Flat (-) Digit
Slide 24: CAPEX, Depreciation and Lease
CAPEX, Depreciation and Lease ••FY08/3 FY08/3CAPEX CAPEXrestricted restrictedto to70.0 70.0billion billionyen yen ••Focus Focusinvestment investmenton onvalue-added value-addedproducts productssuch suchas as automotive automotiveMCUs, MCUs,and and55nm 55nmprocess processtechnology technology CAPEX D
Slide 25: III. Measures to Improve Performance
I. FY07/3 Financial Results Summary Q4 Results Full-Year Results II. FY08/3 Forecasts III. Measures to Improve Performance 25
Slide 26: Progress of New Management Policies (Announced Feb. 22, 2007)
Progress of New Management Policies (Announced Feb. 22, 2007) Launched Launched Projects Projects to to Execute Execute New New Management Management Policies Policies (Progress as of May 14, 2007) Goal Primary Measures Status Improve competitiveness Reduce technology outsourcing costs roughly Compl
Slide 27: Summary
Summary Management will achieve, at a minimum, operating profits for the fiscal year. This is our commitment. We will push operating profits even higher by improving the efficiency of our operations. 27
Slide 28: Cautionary Statements
Cautionary Statements The statements in this presentation with respect to the plans, strategies and forecasts of NEC Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. We caution you in advance that actual results could
Slide 29: Appendix: Business Highlights
Appendix: Business Highlights 29
Slide 30: Highlight: SoC
Highlight: SoC MP201 MP201application applicationchip chipfor formobile mobilephones phones applied appliedto todigital digitalconsumer consumerdevices devices 9 Application processor with low power consumption optimized for QVGA video and audio playback 9 Compatible with platformOViA software platf
Slide 31: Highlight: Microcomputers
Highlight: Microcomputers Aggressive Aggressiveefforts effortsto toexpand expandsales salesof ofAll AllFlash Flashmicrocontrollers microcontrollers Demo Systems, Evaluation Boards Website Seminars Literature Shipments Shipmentsof ofAll AllFlash Flashmicrocontrollers microcontrollers Rapid growth fro
Slide 32: Highlight: Components
Highlight: Components Developed DevelopedLCD LCDbacklight backlightcontrol controltechnology technologyfor formobile mobileapplications applications Extremely Extremelylow lowpower powerconsumption consumptionfeatures featureslead leadto tonew newvalue-added value-addedbusiness business Conventional
Slide 33: Highlight: Next-Generation Technology
Highlight: Next-Generation Technology IMAPCAR IMAPCARparallel parallelprocessor processorfor forimage imagerecognition recognition Joint Jointdevelopment developmentwith withToyota, Toyota,Denso, Denso,and andNEC NEC 9 128 processing elements and performance of 100 billion operations per second enab