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NEC Announces Recognition of Gains on the Return of Retirement Benefit Trust Assets (extraordinary income)

Tokyo, January 24, 2025 – NEC Corporation ("NEC") has contributed shares of common stock of NEC Networks & System Integration Corporation ("NESIC") to a retirement benefit trust with the aim of preparing for future retirement benefits (Hereafter, the shares of common stock of NESIC contributed to a retirement benefit trust shall be referred to as the "Shares").

In the tender offer for the shares of common stock of NESIC (the "Tender Offer") that NEC commenced from October 30, 2024 under the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended), NEC planned to promptly receive all of the Shares without compensation if the Tender Offer was completed. As the Tender Offer was completed on January 10, 2025, the return of the Shares (receiving the Shares without compensation) to NEC is now complete. As a result, gains on the return of retirement benefit trust assets are expected to arise.

  1. Date of return
    January 20, 2025
  2. Amount of the Shares that have been returned
    63,552 million yen
  3. Impact on profit and loss
    It is expected that NEC will record gains of 40,735 million yen on the return of retirement benefit trust assets as an extraordinary income in its non-consolidated financial results for the fiscal year ending March 31, 2025.

    NEC's consolidated financial results are prepared in conformity with International Financial Reporting Standards (IFRS), and the relevant shares are classified as "remeasurements of the net defined benefit liability (asset) recognized in other comprehensive income" as stipulated in International Accounting Standards (IAS) 19 "Employee Benefits," so there is no impact on consolidated financial results.
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 the Company 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;
  • impact from the outbreak of infections;
  • 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, reorganizations and business withdrawals;
  • 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.

The forward-looking statements contained in this material are based on information that the Company possesses as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect the NEC Group. The Company does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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About NEC Corporation
NEC Corporation has established itself as a leader in the integration of IT and network technologies while promoting the brand statement of “Orchestrating a brighter world.” NEC enables businesses and communities to adapt to rapid changes taking place in both society and the market as it provides for the social values of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential. For more information, visit NEC at https://www.nec.com.

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