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NEC Sumisei Bldg, 29-11, Shiba 5-chome, Minatoku, Tokyo 108-0014, JapanTel. +81 (0)3-5476-5625

www.necap.co.jp ANNUAL REPORT 2009 Year ended March 31, 2009

Cert no. SA-COC-1442

005_7014401372108.indd 1 2009/08/14 9:44:55

NEC Leasing, Ltd. was established in 1978 as a leasing company providing sales finance on behalf of NEC

Corporation. Since then, it has played a role in ushering in the information and communications technolo-

gies (ICT) age through financing, especially leases.

With a changing operating environment, including new accounting standards for lease transactions and

amendments to the tax system, NEC Leasing decided to transform its leasing-centered business structure to

create a path for continued growth. To provide solutions that fully respond to our customers’ capital needs,

we aim to become a boutique offering specialized solutions.

NEC Leasing changed its name to NEC Capital Solutions, which better reflects this goal, on November 30,

2008, the 30th anniversary of its founding. We take this opportunity to redouble our focus on achieving

continued growth.

On November 30, 2008, NEC Leasing, Ltd. changed its name to NEC Capital Solutions Limited.

Nov. 1978

Mar. 1996

Founded as NEC Leasing, Ltd., an NEC sales finance company

Performing assets (based on purchase prices) exceed 1 trillion yen

History

Contents

3 Financial Highlights

4 Message from the President

5 Interview with the President

7 Business at a Glance

8 Progress of the Third Medium-Term Business Plan

13 Corporate Social Responsibility

1

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Feb. 2005

Mar. 2006

Nov. 2008

Listed on the Second Section of the Tokyo Stock Exchange

Listed on the First Section of the Tokyo Stock Exchange

Changed name to NEC Capital Solutions Limited

The statements in this annual report with respect to the Company’s cur-rent plans, strategies and decisions are forward-looking statements. Such forward-looking statements are based on management’s assumptions and decisions in the light of information currently available. Since these forward-looking statements involve risks and uncertainties, actual results could differ materially from them. Therefore, we caution that you should not place undue reliance on them.

Forward-Looking Statements

Redefinition of the business domains

Prioritybusiness fields

The Finance Solutions domain employs asset finance methods and develops structured finance related to large projects in the NEC

Group’s supply chain from a non-bank standpoint.

The Asset Solutions domain delivers an array of asset solutions that leverage our manufacturer-affiliated advantage, centering on

the core ICT asset remarketing and services associated with ICT equipment operation.

The Vendor Solutions domain pursues maximum efficiency and promotes conversion of existing business models in the sales

finance business in collaboration with vendors centering on the NEC Group’s sales finance.

Finance Solutions Domain

Asset Solutions Domain

Vendor Solutions Domain

16 Introduction of Officers: Directors and Corporate Auditors

17 Financial Section

38 Corporate Information / Stock Information

2

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In the fiscal year ended March 31, 2009, consolidated revenues declined to 261.0 billion yen, while operating

income fell to 3.6 billion yen. The Company recorded a net loss of 3.8 billion yen. The decline in operating

income was primarily attributable to recording of a loss on the write-down of securities. Another factor con-

tributing to the decline in operating income was a fall in lease transactions associated with the change in the

accounting standard for lease transactions and tax system amendments applied from April 2008 onward, as

well as a decrease in capital spending prompted by the business downturn. A significant increase in the bad-

debt loss also contributed to the decline in operating income. The Company recorded a net loss because a loss

on the write-down of securities amounting to 9.5 billion yen was recorded as an extraordinary loss.

Note: From the fiscal year ended March 31, 2008, the Company has prepared consolidated financial statements. Therefore, the above, figures prior to the fiscal year ended March 31, 2008 are non-consolidated financial results.

Financial Highlights

0 50,000 100,000 150,000 200,000 250,000 300,000

(million yen)

262,247

265,310

265,739

264,116

260,995

06

05

07

08

09

-4,000 -2,000 0 2,000 4,000 6,000

(million yen)

06

05

07

08

09 △3,806

4,888

5,302

4,074

3,946

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

(million yen)

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

(million yen)

06

05

07

08

09

8,419

9,048

7,032

3,615

06

05

07

08

09

8,4188,3869,0489,0267,0317,0325,9835,9133,6153,360

5,983

Revenues

Net income (loss)

Operating income

260,995 million yen (1.2% decrease year on year)

3,615 million yen (39.6% decrease year on year)

3,806 million yen (net income 3,946 million yen in the fiscal year ended March 31, 2008)

176.75 yen

44.00 yen

Revenues

NEC Capital Solutions Year ended March 31, 2009

Operating income

Net loss

Net loss per share

Cash dividends per share

1.2%

decrease year on year

1.4%

Operating income to net sales

3

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Message from the President

Hidetaka Itahashi, President

I became president of NEC Capital Solutions on April 1. As the new representative

of the Company, I will report our financial results for the fiscal year under review

to our shareholders, before setting out my goals and describing my management

policy as the new president.

As stated above, the Company posted a net loss. However, we regard the loss as

a temporary phenomenon and will pay an annual dividend of 44 yen, as in the

previous fiscal year. To improve corporate performance and return profits to share-

holders as soon as possible, we will focus on increasing profits steadily.

We look forward to the continued support of our shareholders.

The fiscal year started under unfavorable conditions for the Company, with the

application of the new accounting standard for lease transactions in April 2008,

followed by a sharp business downturn triggered by the subprime mortgage cri-

sis. Despite these difficult conditions, the Company came close to achieving its ini-

tial targets in the first half of the fiscal year.

However, with the sharp downturn in the economy following the financial crisis

in September, the operating environment for the Company worsened rapidly from

October onward. The Company’s performance was subsequently influenced, as

bad debts rose up beyond expectations and lease transactions declined with rapid

cutbacks in capital expenditure. We regret to report the posting of a substantial

net loss, reflecting the loss from the write-down of securities in addition to the

challenges described above.

Despite the difficult situation, we executed the initiatives that we believe have

important implications for future growth in our Finance Solutions and Asset

Solutions businesses. These are the core areas of focus under the Third Medium-

Term Business Plan.

In the Asset Solutions domain, the Company established Reboot Technology

Services Limited, which primarily engages in the export of used ICT equipment,

jointly with Macquarie Asset Finance Japan Limited, the Japanese arm of a leading

Australian financial institution. Reboot Technology Services launched operations

last November. Although it started in difficult circumstances in view of the busi-

ness downturn and the appreciation of the yen, it is making steady progress as

the linchpin of the Asset Solutions domain.

In the Finance Solutions business, we began to develop asset-based lending

and other finance operations unique to the Company. We formed a business and

capital alliance with RISA Partners, Inc., a Tokyo Stock Exchange listed company

specializing in corporate turnaround and investment operations, to help acceler-

ate the finance business.

We will continue to pursue the above initiatives in the fiscal year ending March

31, 2010, so that we will be able to report specific results.

Message from the New President

Report on Shareholder Returns

Overview of the Fiscal Year Ended March 31, 2009

Hidetaka Itahashi, former director & executive officer, became president on April 1, 2009. Under his new leadership, the Company will aim to achieve sustainable growth in its operations.

4

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You became president of the Company after working for Sumitomo Bank and Mazda Auto Leasing. What are your impressions of NEC Capital Solutions?

A: My first impression was that NEC Capital Solutions is a

leasing company in the NEC Group that promotes sales for

the Group and that it has strength in vendor leasing, and

has been developed based on the traditions of the NEC

Group. Indeed, leasing sales account for 92% of its total

revenues. However, the Company has been diversifying its

businesses in recent years. Since listing in 2005, the

Company has expanded its portfolio to improve sharehold-

er value. We can say that NEC Capital Solutions is a new

company pursuing progressive initiatives for growth that

reflect changes in the business environment, including a

new lease accounting standard and amendments to the

tax system. The direction of the Company is made clear in

the Third Medium-Term Business Plan that we developed in

March 2008.

I have worked for a bank and leasing companies and

have had extensive experience both in Japan and abroad,

including experience in the development and planning of

new products, the launching of new companies, adminis-

tration, and management. I look forward to calling on this

expertise and knowledge in managing NEC Capital

Solutions.

Interview with the President

Q1

Aiming to develop a company with growth potential,primarily through the initiatives in the Medium-Term Business Plan that are designed to enable a period of rapid growth

Hidetaka Itahashi, President

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A: With the sharp business downturn from September

2008, the operating environment has changed markedly

from the time when the Third Medium-Term Business Plan

was developed. We may therefore review the timing for

achieving the plan and the numerical targets, but the goals

of the plan—reforming the business structure and improv-

ing profitability—will remain unchanged.

Specifically, we will step up cooperation with RISA

Partners, Inc., based on the alliance we formed in February

2009, in the Finance Solutions domain. We will use RISA

Partners’ network of regional banks and expertise in

investing in companies and credits, combining these with

our own strong customer base and expertise in finance, to

create growth for both companies. To develop specific ini-

tiatives from the business alliance, we have set up the

Cooperation Promotion Committee. I hope we will be able

to report results at a relatively early stage.

In the Asset Solutions domain, we will pursue our busi-

ness with Reboot Technology Services, established last year,

as the core component, taking into account the service

focus of the NEC Group.

In the Vendor Solutions domain, we will improve effi-

ciency and will apply the expertise that has been cultivated

in Finance Solutions and Asset Solutions.

A: The Third Medium-Term Business Plan has a clear con-

cept. We will assess the Company’s identity and strengths,

and based on this assessment, we will redefine its business

domains and will provide customers with solutions incor-

porating specialized functions in these redefined domains.

I have inherited this approach. My role is to steer the

Company toward the goals set out in the plan. As it grows,

the Company will be able to make an even greater contri-

bution to the overall NEC Group in terms of both revenue

and operations.

One year after the development of the plan, and follow-

ing the change in corporate name on November 30, 2008,

the awareness of the Company by officers and employees

has changed, along with the way the Company is evaluat-

ed. We have taken steps toward our goals over the past

year through M&A and human resources management. In

years to go, we will break down the roadmap to achieving

our goals and will develop specific plans. In doing so, I

believe that each officer and employee will be able to be

more clearly aware of the steps toward the goals, and this

in turn will lead to total rather than partial optimization.

To ensure the goals are achieved, we need to consider

further M&A and alliances with other companies as the

quickest way to plug any functional gaps.

A: I expect that our business will continue to face difficult

circumstances in the fiscal year ending March 31, 2010, as

it did in the fiscal year ended March 31, 2009. Despite

these conditions, however, we will strive to build a compa-

ny with growth potential, seeking rapid progress so that

we can meet the expectations of our shareholders.

Aiming to develop a company with growth potential,primarily through the initiatives in the Medium-Term Business Plan that are designed to enable a period of rapid growth

What is your management policy?Q2

Finally, could you share your goals with our shareholders?Q4

What is your policy for the fiscal year ending March 31, 2010, in the course of the Third Medium-Term Business Plan?

Q3

6

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Business at a Glance For the year ended March 31, 2009

Revenues of our other business include fees for structured

finance, sales of off-lease equipment in our leasing business,

and the collection of maintenance fees and accounts

receivable management on behalf of clients to meet their

needs for operational efficiency and outsourcing.

Our loan business consists of installment sales and business

loans.

* Installment sales

Our installment sales business involves purchasing equipment

on behalf of customers who require funds for capital expen-

ditures and equipment acquisition, and then selling the

equipment to them on installment plans. This business com-

plements our Leasing Business.

* Business loans

We extend business loans principally to NEC Group compa-

nies and their business partners for the purpose of providing

programs to liquidate receivables. We also provide customers

with loans through structured finance for capital investment.

Our leasing business is a core operation of the Company. It

consists of leasing and small ticket leasing.

* Leasing

We lease equipment to customers who require funds for

capital expenditures under a long-term lease contract.

We lease a broad range of equipment. Since promoting

NEC sales is central to our mission as a financing company,

ICT products account for a high percentage of our leases.

NEC capital Solutions offers leases that combine ICT

equipment and related services, including maintenance

lease and vendor-collaborating programs. To diversify the

lineup of our business, we are also emphasizing non-ICT

equipment leases.

* Small ticket leasing

Small ticket leasing is a business that provides distributors,

who conclude a sales promotion agreement with NEC

Capital Solutions, with programs to provide finance of up

to five million yen per user under a lease agreement.

Segment sales declined 3.6%, to ¥16.5

billion, reflecting the sale of a large amount

of equipment whose lease term expired and

the setup of structured finance in the previous

fiscal year. Gross profit fell 29.7%, to ¥2.6

billion, attributable to the posting of a loss

from the write-down of securities.

Loan business contracts executed rose 0.5%,

to ¥311.3 billion. While contracts executed

for installment sales declined 20.3%, partly in

reaction to large items in the previous fiscal

year, business loans rose 1.7%.

As a result of the steady expansion of the

business portfolio, including corporate financ-

ing, segment sales increased 22.2%, to ¥3.4

billion, and gross profit climbed 24.8%, to

¥2.6 billion.

Leasing business contracts executed declined

9.4% year on year, to ¥208.0 billion. This

result reflected a 19.3% contraction in the

private sector, strongly influenced by the

change in the lease accounting standard and

the business downturn, which offset a 4.7%

rise in operations for the public sector attrib-

utable to large contracts.

Segment sales fell 1.3% year on year, to

¥241.1 billion, because of a decline in con-

tracts executed. However, gross profit jumped

15.8%, to ¥15.1 billion, thanks to a rise in re-

leasing and the effect of the change in the

lease accounting standard.

Other Business

Loan Business

Leasing Business

Business in brief

Business in brief

Business in briefConsolidated Revenue Composition

Consolidated Revenue Composition

Consolidated Revenue Composition Operating review

Operating review

Operating review

92%

1%

7%

92%

1%

7%

92%

1%

7%

7

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Progress of the Third Medium-Term Business Plan

The Company announced the Third Medium-Term Business Plan (for the year ended March 31, 2009 through the year ending March 31, 2011) in March 2008. The plan is designed to transform the Company through structural reforms into a unique enterprise embodying the NEC brand more appropriately, proposing solutions to customer needs for business resources (such as their capital requirements).To this end, the plan first reviews the Company’s identity and strengths and redefines its business domains.

Redefinition of the business domains

Priority business fields

The Finance Solutions domain employs asset finance methods and develops structured finance related to large projects in the

NEC Group’s supply chain from a non-bank standpoint.

The Asset Solutions domain delivers an array of asset solutions that leverage our manufacturer-affiliated advantage, centering on the

core ICT asset remarketing and services associated with ICT equip-ment operation.

The Vendor Solutions domain pursues maximum efficiency and promotes conversion of existing business models in the sales finance business in

collaboration with vendors centering on the NEC Group’s sales finance.

Finance Solutions Domain

Asset Solutions Domain

Vendor Solutions Domain

Management Strategy Three-year target values:

Business Portfolio Strategy

Strategy for Strengthening Management Functions

Initiatives to Bolster Governance and CSR

We will develop operations in three business domains, add-

ing Finance Solutions and Asset Solutions to the existing

Vendor Solutions.

We will strengthen management functions, making them

the basis for effectively pursuing our business portfolio

strategy.

We will bolster corporate governance and corporate social

responsibility (CSR), as essential components of corporate

activities.

Consolidated ROE

Consolidated ROA

Ordinary income ratio in key business areas

The year ended

March 20086.5% 0.8% 38%

The year ending

March 2011

12% or

higher

1.6% or

higher

50% or

higher

8

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Business Portfolio Strategy

Initiatives to Bolster Governance and CSR

Strategy for Strengthening Management Functions

In the Finance Solutions domain, we became fully involved in the finance business, including ABL. In

promoting ABL, we went through a process of trial and error in the initial phase. Thanks to this pro-

cess, however, we were able to accumulate expertise and experience in every step, from financing

through collection. We believe that was a key step to expanding the business.

To accelerate growth in the Finance Solutions domain, we formed a capital and business alliance

with RISA Partners, Inc.

In the Asset Solutions domain, we established Reboot Technology Services Limited, which has

launched operations with a focus on the export of used ICT equipment. With the commencement of

operations at Reboot Technology Services, we have been able to refine the way we set the residual

values of ICT equipment at the end of the lease term. We are considering taking the next step in the

fiscal year ending March 2010 by offering an outsourcing service combining rental and ICT equip-

ment-related services.

To bolster governance, we are dealing with operational risks that are not covered by the Japanese

version of the SOX Act, in addition to compliance with the act. We are identifying operational risks,

preparing a risk map, and discussing our response to the risks at the Compliance & RM (Risk

Management) Committee. In the Waku-waku Children’s Pond Project (a voluntary project supported

by the Company, where biotopes are built in elementary schools and associated education is provid-

ed there primarily by employees of the Company), we built biotopes in five schools in Tokyo and

Kitakyushu in the fiscal year under review in close cooperation with local governments. We integrat-

ed the Environmental Management Division into the Corporate Social Responsibility Promotion

Division on April 2, 2009 to unify and bolster CSR activities.

As part of Company-wide business process reengineering, we have launched a project for a full-

scale rebuilding of the mission-critical system. The new system will move away from the conven-

tional program structure centered on leasing and will deal with a wide range of operations,

including those in new domains—Finance Solutions and Asset Solutions—that are set out in the

Third Medium-Term Business Plan. We intend to improve operational efficiency, including opera-

bility, and aim to bolster business administration functions. The project progressed steadily in the

fiscal year under review. We are now moving on from the requirements definition phase to the

next phase. We will continue the development, considering also compliance with International

Financial Reporting Standards (IFRS). To bolster human resources, we established the Human

Resource Division, tasked with developing a more sophisticated and specialized workforce, on

April 2, 2009.

The following is a report on the progress of each strategy in the fiscal year under review:

9

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Reboot Technology Services Limited, which sells used ICT equipment and provides related services, was

established jointly with Macquarie Asset Finance Japan Limited, an affiliate of the Macquarie Group, a

major Australian financial institution, on April 28, 2008. Reboot Technology Services commenced

operations last November, after completing preparations including staff training and system

development. It has begun exporting used ICT equipment to India and Singapore.

Reboot Technology Services combines the expertise and network of customers of Macquarie, which

has already developed similar operations overseas, and the Company’s strong flow of ICT equipment

expired lease periods.

Since ICT equipment tends to become obsolete quickly and there is no established market for used

ICT equipment in Japan, equipment returned after the expiry of the lease term has often been discarded.

However, the joint venture has enabled us to refine the way in which we set residual values for ICT

equipment after the expiry of the lease term. We can also deal with environmental issues and the legal

matters more appropriately by handling used equipment within the Group.

We regard the joint venture as the lynchpin of the development of operations in the Asset Solutions

domain. We will examine our strategies in this field, looking at expanding purchases of used ICT

equipment and outsourcing all ICT equipment-related services, including rental. Since Reboot

Technology Services has only recently been established, it did not contribute to results for the fiscal year

under review. We are, however, committed to building its operations so that it contributes to the

Company’s earnings in the near future.

Establishment of Reboot Technology Services

Progress of the Third Medium-Term Business Plan

10

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Finance Solutions Domain

Assets Solutions Domain

Vendor Solutions Domain

Business domains of NEC Capital Solutions Business domains of RISA Partners

Segments

Domains

Principal Investment

Business

Corporateinvestment

Loan assetinvestment

Real estateinvestment

Solutions fund

Regional corporaterevitalization funds

Real estateco-investment

Corporateadvisory

Loan assetadvisory

Real estateadvisory

Fund Business

Corporate

Loan asset

Real estate

Investment BankingBusiness

Business domains of RISA in which the Company can collaborateBolstering financial

functions

Through cross-selling in which the companies make their respective functions available to each other’s networks, they will expand business opportunities and will bolster their operating bases.

NEC Capital Solutions

Function Debt (lending) functions Equity (capital contribution) functions

The supply chain of NEC involving government offices,

major companies, and the IT industry

A network of partner financial institutions nationwide

Network

RISA Partners

The Company formed a business and capital alliance with RISA Partners, Inc. (hereinafter “RISA Partners”) in

February 2009. The purpose of the alliance is to accelerate and strengthen the development of the Finance

Solutions domain, which is positioned as a key area of focus in the Third Medium-Term Business Plan. RISA

Partners and the Company will jointly develop a broad array of businesses.

The two companies will combine their complementary networks and functions and strive to build a new,

competitive business model in the market of finance solutions for companies.

Purpose of Business and Capital Alliance with RISA Partners

Business domains

Complementary relationship based on functions and networks

11

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In the capital alliance, the Company underwrote the entire capi-

tal increase through a private placement by RISA Partners (total

of 4 billion yen) in the form of preferred shares with rights to

convert them into shares of common stock. The Company com-

pleted the payment on March 23, 2009. If the Company exer-

cises the conversion rights, it will acquire about 26% of the vot-

ing rights of RISA Partners, and RISA Partners will become an

equity method affiliate of the Company. Both companies will

consider the timing for converting the preferred shares into

shares of common stock, while assessing the progress of coop-

eration between them.

The alliance, we believe, enables the two companies—which

have quite different corporate cultures—to grow further. That’s

because RISA Partners, which has entrepreneurial qualities and

strengths in corporate turnaround and investment, and the

Company, which has been built in the tradition of the NEC

Group and has an established supply chain, inspire each other

and possess complementary strengths. To preserve the strengths

of RISA Partners, we are not looking to increase the equity stake

held by the Company.

The two companies set up a joint Cooperation Promotion

Committee of officers and employees on March 31, 2009. The

committee has begun discussing specific issues. We are not

considering cooperation in real estate, since the two companies’

businesses in that sector are unlikely to yield synergies. The

Company believes that RISA Partners’ expertise and ability to

structure investment in companies and loan assets which are its

principal strengths, will be helpful in bolstering the Company’s

financing function.

We have sought to appropriately control risks associated with

the investment. We carried out extensive due diligence prior to

making the investment. In addition, the preferred shares have

put options allowing us to sell the preferred shares to RISA

Partners at the acquisition price irrespective of changes in the

market value of RISA Partners’ stock.

What type of company is RISA Partners?

RISA Partners is an entrepreneurial company

established in 1998. It was listed on Tokyo

Stock Exchange Mothers in 2004 and on the

First Section of the Tokyo Stock Exchange

in 2005. RISA Partners has developed a

unique business model consisting of three

business segments—Principal Investment

Business, Fund Business, and Investment

Banking Business—and three business

domains—corporate, loan asset, and real

estate. RISA Partners is building a business

model as a Japanese-style investment bank.

In that sense, we think RISA Partners is an

ideal partner for the Company, which does

not seek to be a comprehensive finance

company but rather aspires to turn itself into

a boutique focusing on specialized functions.

We also view the two companies as partners

that can help each other achieve long-term

growth.

Progress of the Third Medium-Term Business Plan

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Corporate Social Responsibility

The greatest burden placed on the environment by the leas-

ing industry is the disposal of waste associated with off-lease

equipment. NEC Capital Solutions minimizes this waste

through re-leasing or disposal for value. Waste equipment

unsuitable for disposal for value is discarded in accordance

with the 3R (reduce, reuse, recycle) system to achieve the

zero landfill target.

As financial markets around the world are confronting a

crisis of a severity not seen in decades, Green New Deal poli-

cies, in which environment and energy policies are pillars of

economic stimulus measures, have emerged as a global

trend.

Initiatives to build a low-carbon and recycling-oriented sys-

tem are accelerating in Japan. NEC Capital Solutions is focus-

ing on activities such as eco-finance (financing for operations

associated with the environment and energy) and the effec-

tive use of off-lease equipment (re-leasing and the reuse of

personal computers) with customers and society to build a

low-carbon, recycling-oriented social system.

We have adopted a unique environmental accounting system

that focuses on “Eco Finance,” one of our businesses, while

complying with the guidelines set out by the Ministry of the

Environment. Among our activities, we check the economic

benefits of our businesses to the environment and corporate

profit to clarify the costs and benefits of environmental pro-

tection.

Donating off-lease PCs to elementary, junior high and

high schools

NEC Capital Solutions has been donating a portion of the

off-lease personal computers returned from customers to the

Used PC Donation Program established by the ICT Education

Consortium to encourage the reuse of PCs in schools. NEC

Capital Solutions believes that by effectively reusing its off-

lease equipment under the program, it can help reduce the

burden on the environment and build a recycling society.

Support for the Waku-waku Children’s Pond Project

In cooperation with Asaza Fund, a non-profit organization,

and local governments (Sumida-ku, Tokyo and Kitakyushu,

Fukuoka), NEC Capital Solutions is supporting the Waku-

waku Children’s Pond Project, where volunteers—many of

whom are employees of the Company—build biotopes and

provide a series of programs, including the maintenance and

management of the biotopes for the children of interested

elementary schools. Through first-hand experience of

observing frogs, insects and other creatures in the biotope,

the children will develop insight into the mechanisms of nat-

ural eco-systems from small “recycling societies.” The pro-

gram serves to enhance the environmental awareness of the

To encourage environmental management, we employ an

environmental management system based on the PDCA

(plan-do-check-act) cycle centering on ISO14001. As part of

our environmental risk management, we also check off-lease

equipment in accordance with the Waste Management Law,

and investigate and check soil contamination at office build-

ings, asbestos, and other potential issues.

Environmental management initiatives

Environmental accounting

Environmental management

Environmental initiatives

Environmental and Community Commitments

NEC Capital Solutions is developing specific environmental

initiatives in offices and has defined long-term goals that it

aims to achieve by fiscal 2050 based on fiscal 1999 stan-

dards. Our environmental items cover CO2 emissions, energy

and resource conservation, industrial and general waste dis-

charge volumes, green purchase rate, and other issues.

Our environmental management activities employ a unique

method for assessing not only environmental aspects, but

also profitability, sociality, feasibility and continuous improve-

ment, enabling us to assess our business activities. To achieve

the targets set out in our environmental management policy,

each section in NEC Capital Solutions sets annual environ-

mental management goals and the Environmental

Management Committee, which is held four times a year, fol-

lows up the PDCA cycle. This enables us to reduce the bur-

den we place on the environment and helps customers and

the community to do the same.

13

010_7014401372108.indd 13 2009/08/14 9:39:22

July 2008 Received a mecc (Minato Eco-conscious Consortium) prize in the environmental division

Dec. 2008 Received a special award in the environmental rating system of the Development Bank of Japan (DBJ)

Dec. 2008Ranked second in the Financial Category of the 12th Environmental Management Survey published by the

Nihon Keizai Shimbun

Dec. 2008Rated in the environmental rating system of the Promotion of Environmentally Conscious Management

program of DBJ

External assessment of NEC Capital Solutions in fiscal 2008

younger generation.

A total of 20 employees of the Company participated in

the project as volunteers in fiscal 2008 and built biotopes for

four schools in Tokyo and one school in Kitakyushu.

Social contribution-oriented shareholder special

benefit plan

NEC Capital Solutions operates a social contribution-oriented

shareholder special benefit plan that donates an amount,

equivalent to the special benefit, to the Green Fund man-

aged by the National Afforestation Promotion Organization

when a shareholder declines to receive a shareholder special

benefit as a taken of our thanks to our shareholders.

Participation in the NEC Make-a-Difference Drive

The NEC Group is working on the local community contribu-

tion-oriented “NEC Make-a-Difference Drive,” where

employees take part in bolstering the value of NEC.

Employees of NEC Capital Solutions also take part in the

Drive by donating blood, tidying up neighborhoods through

litter collection, and providing support for education and

medical treatment for children in developing countries.

To make clear the responsibility for managing the Company

and executing business actions, and to make swift decisions,

we have an executive officer system. Executive officers have

executive responsibility for their duties, while the Board of

Directors supervises and monitors the action of executive offi-

cers. NEC Capital Solutions has separated the supervisory

function of directors and the executive function of its officers

and has clearly defined the command structure, administra-

tive authority, and responsibilities of executive officers and

department heads, and the functions and positions of the

Board of Directors, Management Conference, Business

Execution Conference, and committees for the appropriate

Corporate governance system

Corporate Governance

14

010_7014401372108.indd 14 2009/08/14 9:39:22d010_sp_7014401372108.indd 13-14 2009/08/18 20:22:43

Corporate Social Responsibility

and efficient performance of their duties.

The Auditing Division undertakes internal audits of all

operations from the viewpoint of appropriateness, effective-

ness, and compliance. Corporate Auditors attend meetings

of the Board of Directors and other important internal meet-

ings, and audit the actions of directors, executive officers,

and other employees through direct hearings about their

actions.

The Board of Corporate Auditors, the Auditing Division,

and accounting auditors cooperate to enhance the transpar-

ence and soundness of management of the Company as well

as to audit the actions taken by the Company.

To facilitate its CSR activities, the Company established the

CSR Promotion Committee and the CSR Promotion Division.

The former is headed by the President and consists primarily

of Board members who discuss CSR activities from the per-

spective of the overall Company. The latter examines specific

CSR initiatives.

We have set up the Information Security Committee and pre-

pared basic policies on information security to maintain and

improve information security throughout the Company. In

addition, we properly store and manage documents related

to important meetings and business execution pursuant to

our internal rules.

We hold ISO27001 certification, the international standard

for information security management systems, to ensure and

maintain the confidentiality of our information assets.

Our Code of Conduct stipulates that employees shall have no

relations with anti-social forces that threaten the order and

security of civil society, and that all employees shall be reso-

lute in their stand against such forces.

Under the leadership of the President, we are developing an

internal control system based on the Basic Policy on Internal

Control System under the Companies Act. The internal con-

trol system is constantly reviewed and strengthened so that

we can build and develop an efficient and legitimate compli-

ance management control system.

The Company has also established the Compliance & RM

System for CSR promotion

Information management system

Basic concept for excluding anti-social forces

Internal control system

Corporate Governance

Election/Dismissal/Supervision

Corporate AuditorsBoard of Corporate Auditors

Election/Dismissal Election/Dismissal Election/Dismissal

General Shareholders’ Meeting

Audit

Executive Officers

Management CommitteeAccounting Auditor

Auditing Division

Sales / Staff Division

President

DirectorsBoard of Directors

Internal Audit

Cooperation

Cooperation

Accounting

Cooperation

Audit

Committee chaired by the President to bolster internal audit-

ing, develop and revise internal regulations and systems, and

provide various types of compliance training. The Company is

also practicing comprehensive compliance, developing infor-

mation security, and concentrating on the effective perfor-

mance of its duties. To ensure the reliability of financial

reporting (as set out in the so-called J-SOX Act) under the

Financial Instruments and Exchange Act, the Company is

refining its financial reporting system to ensure that its finan-

cial reporting is reliable and appropriate.

We have also established an internal whistle-blowing sys-

tem that reports violations by employees and directors of

laws and regulations, the Articles of Incorporation, and other

rules of the Company. The system sustains and strengthens

self-correcting processes.

15

010_7014401372108.indd 15 2009/08/14 9:39:22

Introduction of Officers: Directors and Corporate Auditorsas of June 23, 2009

From left: Hidetaka Itahashi, Shigeho Tanaka

President Hidetaka Itahashi

Members of the Board Shigeho Tanaka

Shigehiko YamamotoDirector, Executive Partners, Inc.

Manabu KinoshitaAssociate Senior Vice President, NEC Corporation

Hirofumi DomyoChief Manager, Corporate Finance Division, NEC Corporation

Corporate Auditors Hiromi Urita

Toshio Matsushita

Naotaka MinamiChief Manager, Corporate Auditing Bureau, NEC Corporation

Shunji YoshinagaGeneral Manager, Controller Department, IT Services Planning Division, NEC Corporation

16

010_7014401372108.indd 16 2009/08/14 9:39:23d010_sp_7014401372108.indd 15-16 2009/08/18 20:22:43

Contents

Financia l Sect ion

18 5-Year Summary

19 Operating and Financial Review

21 Consolidated Balance Sheets

23 Consolidated Statements of Operations

24 Consolidated Statements of Changes in Net Assets

25 Consolidated Statements of Cash Flows

26 Notes to Consolidated Financial Statements

36 Report of Independent Auditors

17

010_7014401372108.indd 17 2009/08/14 9:39:23

Consolidated Financial Data

Millions of YenThousands of U.S. Dollars

2009 2008 2007 2006 2005 2009

For the year:

Revenues ¥ 260,995 ¥ 264,116 – – – $ 2,636,313

(Loss) Income before income taxes (6,172) 6,043 – – – (62,345)

Net (loss) income (3,806) 3,946 – – – (38,445)

At year-end:

Total assets ¥ 754,126 ¥ 780,334 – – – $ 7,617,433

Total net assets 56,388 62,012 – – – 569,576

(Yen) (U.S. Dollars)

Per share data:

Basic net (loss) income ¥ (176.75) ¥ 183.25 – – – $ (1.79)

Cash dividends 44.00 44.00 – – – 0.44

Key indicators:

Price earnings ratio – 7.14% – – – –

Number of employees 500 465 – – – –

1. The U.S. dollar amounts represent translation of Japanese yen, for convenience only, at the rate of ¥99=U.S.$1.00 in effect on March 31, 2009.2. The Company has prepared consolidated financial statements from the fiscal year ended March 31, 2008.

18

5-Year Summary

011_7014401372108.indd 18 2009/08/07 20:39:55d010_sp_7014401372108.indd 17-18 2009/08/18 20:22:44

600

0

200

300

400

500

100

2007 2008 2009

Billion yen

■ Leasing business■ Other business

■ Loan business

217.7 229.6

309.7

541.7

469.2

248.5

3.0

2.4

311.3

521.4

208.0

2.2

300

0

100

150

200

250

50

2007 2008 2009

Billion yen

■ Information and communication equipment■ Office equipment ■ Others

172.5169.1

36.9

229.6217.7

14.0

31.2

166.1

17.324.5

208.0

23.6

700

600

Billion yen

0

200

300

400

500

100

2007 2008 2009

■ Leasing business ■ Loan business

567.5

682.8

115.3

570.1

709.3

139.2

515.4

662.7

147.3

1. Business ResultsUncertainty surrounding the Japanese economy increased in the fiscal year under review. Falling stock prices and the appreciation of the yen were among the contributing factors reflecting the intensifying economic instability caused by the global financial crisis. In the leasing industry, capital outlays for lease equipment have continued to decline on a year-on-year basis in recent years. Moreover, more and more companies, especially large companies, are opting to avoid leasing in the wake of changes in accounting and taxation systems. In the circumstances, the Company changed its corporate name from NEC Leasing, Ltd. to NEC Capital Solutions Limited to make a new start on its 30th anniversary, November 30, 2008. The Company is determined to remake itself as a capital solutions company that operates in areas beyond leasing and financing. In its Third Medium-Term Business Plan, the Company plans to develop competitive operations in the Asset Solutions and Finance Solutions domains, in addition to its core leasing business in the Vendor Solutions domain. In the Asset Solutions domain, the Company established and began operating Reboot Technology Services Limited, an equity method affiliate and a joint venture engaging in the export of used personal computers, with Macquarie Asset Finance Japan Limited in April 2008. In the Finance Solutions domain, the Company concluded a business and capital alliance agreement with RISA Partners, Inc. in February 2009. The Company and RISA Partners, Inc. have been considering specific initiatives in a Cooperation Promotion Committee, which we jointly established. With the Company focused on capital solutions backed by the power of the NEC Group, the Company will provide solutions for issues ranging from the introduction of personal computers to management-level challenges. On a consolidated basis, net sales declined 1.2% year on year, to ¥260,995 million ($2,636,313 thousand), in the fiscal year under review. Because of a valuation loss from derivatives transactions in addition to increases in funding costs and bad debt charges, operating income fell 39.6%, to ¥3,615 million ($36,517 thousand). A net loss of ¥3,806 million ($38,445 thousand) was recorded, reflecting a loss on valuation of

Contracts executedby business

Leasing business contractsexecuted by equipment

Operating assetsby business

investments in securities in addition to a fall in ordinary income and other factors. Although the results declined in the face of valuation losses associated with unexpectedly severe fluctuations in financial markets, the Company developed the structures of its core operations described above, and believes that it has made steady progress in executing its strategies for the future. A description of outcomes by business segment is provided below: Costs associated with a loss on the disposition of leased assets caused by bankruptcy of lessees and other factors are reclassified in selling, general, and administrative expenses from the fiscal year ended March 2009. To make comparisons easier, ¥1,783 million ($18,010 thousand) was transferred from costs in the other business for the previous fiscal year to selling, general, and administrative expenses in the leasing business. This is reflected in the following comment.

(i) Leasing BusinessContracts executed in the leasing business declined 9.4% year on year, to ¥208.0 billion ($2,100,965 thousand). Although net sales declined 1.3% year on year, operating income rose 22.9%, to ¥5,128 million ($51,799 thousand), with an increase in related costs, especially funding costs and selling, general, and administrative expenses, such as bad debts, more than offset by a 14.5% rise in re-leasing and a gross profit rise associated with the change in the lease accounting standard.

(ii) Loan BusinessNet sales in the loan business rose 22.2% year on year, to ¥3,387 million ($34,207 thousand), reflecting the steady expansion of the business portfolio in the finance business, including corporate finance. However, an operating loss of ¥768 million ($7,763 thousand) was recorded, attributable to a rise in bad debt costs associated with a significant increase in the number of large-scale bankruptcies from the previous fiscal year.

(iii) Other BusinessNet sales in the other business fell 3.6% year on year, to ¥16,534 million ($167,018 thousand), since revenues from

Note: Figures for the fiscal year ended March 2007 are non-consolidated financial results.

19

Operating and Financial Review

011_7014401372108.indd 19 2009/08/07 20:39:56

large-scale of asset sales and structured finance were recorded in the previous year. Operating income dropped 66.6% year on year, to ¥662 million ($6,690 thousand), primarily reflecting a loss on the valuation from derivatives transactions of ¥2,998 million ($30,286 thousand).

2. Forecasts for Fiscal Year Ending March 31, 2010

The Company expects that the outlook for the Japanese economy in the fiscal year ending March 2010 will continue to be challenging, given worsening stock market conditions and the cooling of consumption in association with the global financial market turbulence that occurred in the fiscal year. In the leasing industry, the Company is concerned that the effects of customers electing not to lease because of the application of a new lease accounting standard from this year and changes to the taxation system will continue. As a consequence, the outlook is inevitably for an even more severe operating environment. Responding to these circumstances, the Company is developing initiatives for the following goals in the three core businesses set out in the Third Medium-Term Business Plan: (1) In the Finance Solutions domain, the Company will establish new, competitive business models in corporate finance and corporate turnarounds, where RISA Partners has strengths, calling on RISA Partners’ network of financial institutions, (2) In the Asset Solutions domain, the Company will take advantage of the expertise in asset management and the worldwide sales network of Reboot Technology Services, and (3) In the Vendor Solutions domain, the Company will speedily build a new system for promoting cooperation with NEC Corporation. NEC Capital Solutions aims to become a company that will provide value-added solutions for customers by expanding its business portfolio steadily and making the most of the value of the NEC brand, the Company’s core competence. As a result of these initiatives, the Company forecasts net sales of ¥243.0 billion and net income of ¥3.6 billion on a consolidated basis for the fiscal year ending March 31, 2010.

3. Assets, Liabilities, and Net Assets Total assets and net assets as of March 31, 2009, were ¥754,126 million ($7,617,433 thousand) and ¥56,388 million ($569,576 thousand), respectively. The capital adequacy ratio was 7.5%. Operating assets in the loan business rose 5.8% year on year, to ¥147,290 million ($1,487,780 thousand), with loan assets, including loans to companies, increasing 5.6%, to ¥113,838 million ($1,149,881 thousand), and installment sales climbing 6.3%, to ¥33,452 million ($337,899 thousand), owing to the expansion of the finance business. Operating assets in the leasing business declined 9.6%, to ¥515,376 million ($5,205,827 thousand), with an increase in operating lease assets more than offset by a fall in finance lease assets in association with the liquidation of receivables. Total operating assets fell 6.6% to ¥662,667 million ($6,693,606 thousand).

4. Cash Flow StatusCash and cash equivalents at the end of the fiscal year under review increased by ¥11,801 million ($119,205 thousand) year on year, to ¥25,003 million ($252,558 thousand). The following is a description of cash flows and significant factors:

(Cash Flows from Operating Activities)Net cash provided by operating activities was ¥51,393 million ($519,123 thousand). The major factors were a decrease in lease receivables and investment in leases of ¥60,725 million ($613,385 thousand) and an increase in loans receivables of ¥6,030 million ($60,913 thousand).

(Cash Flows from Investing Activities)Net cash used in investing activities was ¥22,313 million ($225,379 thousand), primarily reflecting purchases of investment securities of ¥23,354 million ($235,901 thousand).

(Cash Flows from Financing Activities)Net cash used in financing activities was ¥13,985 million ($141,265 thousand). The principal factors were an increase in short-term borrowings of ¥18,711 million ($188,999 thousand).

300

0

100

150

200

250

50

2007 2008 2009

Billion yen

■ Leasing business■ Other business

■ Loan business

247.4 244.2

17.1264.1

265.7

16.41.9 2.8

241.1

16.5261.0

3.4

700

0

200

300

400

500

600

100

2007 2008 2009

Billion yen

■ Securitization■ Long-term loans ■ Short-term loans

■ Bonds ■ CP

37.0

206.0

629.1

384.2

0.6

1.3 15.010.0

34.0

230.0

664.6

400.1

0.5

168.0

647.5

410.8

43.81.4

1.2

0

0.4

0.6

0.8

1.0

0.2

2007 2008 2009

%

Cost of funding ratio (%)= Cost of funding ÷ average balance ofinterest-bearing debts

1.01

0.77

1.21

Revenue by business Interest-bearing debts Cost of funding ratio

Note: Figures for the fiscal year ended March 2007 are non-consolidated financial results.

20

011_7014401372108.indd 20 2009/08/07 20:39:56d010_sp_7014401372108.indd 19-20 2009/08/18 20:22:44

AssetsMillions of Yen

Thousands of U.S. Dollars (Note 1)

2009 2008 2009

■ Current assets:

Cash and cash equivalents ¥ 25,003 ¥ 13,202 $ 252,558

Leases receivable and investment in leases (Notes 6, 10) 507,787 – 5,129,161

Accounts receivable:

Installment sales 33,452 31,459 337,899

Loans (Notes 6, 13) 113,838 107,808 1,149,881

Leases 23,704 23,707 239,438

Other 4 3 38

Allowance for doubtful accounts (6,764) (1,624) (68,322)

Securities (Note 4) 6,263 – 63,261

Deferred tax assets (Note 7) 1,586 1,357 16,019

Other 3,857 5,247 38,956

Total current assets 708,730 181,159 7,158,889

■ Investments and other assets:

Investment securities (Note 4) 23,501 19,875 237,381

Deferred tax assets (Note 7) 7,043 2,688 71,140

Other 6,629 8,664 66,958

Allowance for doubtful accounts (3,920) (1,874) (39,591)

Total investments and other assets 33,253 29,353 335,888

■ Property and equipment, net :

Leased assets 8,491 381,097 85,766

Allowance for loss on disposal of leased property and equipment – (2,842) –

Assets held for own use 472 444 4,769

Property and equipment, net 8,963 378,699 90,535

■ Intangible assets:

Computer programs leased to customers 14 187,236 145

Other 3,166 3,887 31,976

Total intangible assets 3,180 191,123 32,121

Total assets ¥ 754,126 ¥ 780,334 $ 7,617,433

NEC Capital Solutions LimitedMarch 31, 2009 and 2008

21

Consolidated Balance Sheets

011_7014401372108.indd 21 2009/08/07 20:39:56

Liabilities and net assetsMillions of Yen

Thousands of U.S. Dollars (Note 1)

2009 2008 2009

■ Current liabilities:

Short-term borrowings (Note 5) ¥ 211,792 ¥ 230,483 $ 2,139,313

Current portion of long-term debt (Notes 5, 6) 98,514 137,138 995,093

Notes and accounts payable – trade (Note 13) 21,733 28,841 219,528

Accrued income taxes 32 1,569 326

Deposits received 4,999 5,239 50,491

Other 16,104 14,459 162,668

Total current liabilities 353,174 417,729 3,567,419

■ Long-term liabilities:

Long-term debt (Notes 5, 6) 337,237 296,956 3,406,431

Accrued retirement benefits (Note 9) 1,100 789 11,106

Other 6,227 2,848 62,901

Total long-term liabilities 344,564 300,593 3,480,438

Total liabilities 697,738 718,322 7,047,857

■ Net assets :

Shareholders’ equity

Common stock 3,777 3,777 38,150

Authorized: 86,000,000 shares

Issued: 21,533,400 shares

Capital surplus (Note 12) 4,648 4,648 46,950

Retained earnings (Note 12) 48,007 52,760 484,920

Treasury stock, at cost 301 shares in 2009 and 150 shares in 2008 (1) (0) (5)

Total shareholders’ equity 56,431 61,185 570,015

Valuation and translation adjustments

Net unrealized gain on marketable securities 145 621 1,460

Deferred (losses) gains on hedging derivatives (188) 206 (1,899)

Foreign currency translation adjustments (0) – (0)

Total valuation and translation adjustments (43) 827 (439)

Total net assets 56,388 62,012 569,576

Total liabilities and net assets ¥ 754,126 ¥ 780,334 $ 7,617,433

The accompanying notes are an integral part of these statements.

22

011_7014401372108.indd 22 2009/08/07 20:39:56d010_sp_7014401372108.indd 21-22 2009/08/18 20:22:45

Millions of Yen

Thousands of U.S. Dollars (Note 1)

2009 2008 2009

■ Revenues:

Leases ¥ 241,074 ¥ 244,195 $ 2,435,088

Loans and installment sales 3,387 2,771 34,207

Other 16,534 17,150 167,018

Total revenues 260,995 264,116 2,636,313

■ Costs:

Leases 219,019 225,456 2,212,314

Interest expense 7,918 6,532 79,982

Other 13,785 15,472 139,243

Total costs 240,722 247,460 2,431,539

Gross profit 20,273 16,656 204,774

Selling, general, and administrative expenses 16,658 10,673 168,257

Operating income 3,615 5,983 36,517

■ Other income (expenses):

Interest and dividend income 36 31 360

Interest expense (104) (87) (1,053)

Loss on valuation of investments in securities (9,533) (65) (96,293)

Other, net (186) 181 (1,876)

(Loss) Income before income taxes (6,172) 6,043 (62,345)

■ Income taxes (Note 7):

Current 1,628 3,186 16,442

Deferred (3,994) (1,089) (40,342)

(2,366) 2,097 (23,900)

Net (loss) income ¥ (3,806) ¥ 3,946 $ (38,445)

Yen U.S. Dollars (Note 1)

2009 2008 2009

■ Amounts per share:

Basic net (loss) income ¥ (176.75) ¥ 183.25 $ (1.79)

Cash dividends applicable to the year 44.00 44.00 0.44

The accompanying notes are an integral part of these statements.

NEC Capital Solutions LimitedYears ended March 31, 2009 and 2008

23

Consolidated Statements of Operations

011_7014401372108.indd 23 2009/08/07 20:39:56

Millions of Yen

Shareholders’ Equity Valuation and translation adjustments

Total net assets

Number of shares issued (Thousands of

shares)

Common stock Capital surplus Retained earnings

Treasury stock

Net unrealized gain on

marketable securities

Deferred (losses) gains on hedging

derivatives

Foreign currency

translation adjustments

Balance at March 31, 2007 21,533 ¥ 3,777 ¥ 4,648 ¥ 49,762 ¥ (0) ¥ 1,115 ¥ 15 ¥ — ¥ 59,317Net income 3,946 3,946Cash dividends (948) (948)Other, net (494) 191 (303)

Balance at March 31, 2008 21,533 3,777 4,648 52,760 (0) 621 206 — 62,012Net loss (3,806) (3,806)Cash dividends (947) (947)Other, net (1) (476) (394) (0) (871)

Balance at March 31, 2009 21,533 ¥ 3,777 ¥ 4,648 ¥ 48,007 ¥ (1) ¥ 145 ¥ (188) ¥ (0) ¥ 56,388

Thousands of U.S. Dollars (Note 1)

Shareholders’ Equity Valuation and translation adjustments

Total net assetsCommon stock Capital surplus Retained

earningsTreasury

stock

Net unrealized gain on

marketable securities

Deferred (losses) gains on hedging

derivatives

Foreign currency

translation adjustments

Balance at March 31, 2008 $ 38,150 $ 46,950 $ 532,935 $ (4) $ 6,271 $ 2,083 $ — $ 626,385Net loss (38,445) (38,445)Cash dividends (9,570) (9,570)Other, net (1) (4,811) (3,982) (0) (8,794)

Balance at March 31, 2009 $ 38,150 $ 46,950 $ 484,920 $ (5) $ 1,460 $ (1,899) $ (0) $ 569,576

The accompanying notes are an integral part of these statements.

NEC Capital Solutions LimitedYears ended March 31, 2009 and 2008

24

Consolidated Statements of Changes in Net Assets

011_7014401372108.indd 24 2009/08/07 20:39:56d010_sp_7014401372108.indd 23-24 2009/08/18 20:22:45

Millions of YenThousands of

U.S. Dollars (Note 1)

2009 2008 2009

■ Cash flows from operating activities:

(Loss) Income before income taxes ¥ (6,172) ¥ 6,043 $ (62,345)Adjustments to reconcile income before income taxes

to net cash provided by (used in) operating activities:Depreciation and amortization 2,735 215,768 27,626Increase in allowance for losses on disposal of leased property — 1,125 —Increase in allowance for doubtful accounts 3,933 356 39,731(Gain) Loss on sales/disposal of leased assets (617) 4,335 (6,236)Gain on sales of investment in securities — (196) —Loss on valuation of investments in securities 9,533 65 96,293Proceeds from sales of leased assets 744 7,137 7,520Interest and dividend income (35) (29) (354)Interest expense 8,022 6,620 81,035Exchange gain (702) — (7,089)Loss on valuation of derivatives 2,998 — 30,286Equity in losses of affiliated companies 85 — 861Increase in installment sales receivable (1,993) (5,690) (20,133)Decrease in lease receivables and investment in leases 60,725 — 613,385Increase in loans receivable (6,030) (18,322) (60,913)Purchases of leased assets (6,965) (228,257) (70,351)Other, net (4,629) 8,520 (46,766)

Subtotal 61,632 (2,525) 622,550Interest and dividend income received 649 457 6,559Interest paid (7,846) (7,055) (79,254)Income taxes paid (3,042) (2,790) (30,732)

Net cash provided by (used in) operating activities 51,393 (11,913) 519,123

■ Cash flows from investing activities:

Purchases of assets held for own use (858) (949) (8,669)Purchases of investment securities (23,354) (16,661) (235,901)Proceeds from redemption of investment securities 2,105 — 21,260Other (206) 386 (2,069)Net cash used in investing activities (22,313) (17,224) (225,379)

■ Cash flows from financing activities:

(Decrease) Increase in short-term borrowings, net (18,711) 23,891 (188,999)Increase in long-term debt/bonds 195,390 74,115 1,973,631Repayment of long-term debt/bonds (189,716) (72,514) (1,916,326)Issuance of bond — 10,000 —Purchases of treasury stock (1) — (1)Cash dividends paid (947) (948) (9,570)Net cash (used in) provided by financing activities (13,985) 34,544 (141,265)

Foreign currency translation adjustments on cash and cash equivalents (3,294) — (33,274)Net increase in cash and cash equivalents 11,801 5,407 119,205Cash and cash equivalents at beginning of year 13,202 7,795 133,353Cash and cash equivalents at end of year ¥ 25,003 ¥ 13,202 $ 252,558

The accompanying notes are an integral part of these statements.

NEC Capital Solutions LimitedYears ended March 31, 2009 and 2008

25

Consolidated Statements of Cash Flows

011_7014401372108.indd 25 2009/08/07 20:39:56

1. Basis of PresentationNEC Capital Solutions Limited (the ”Company”) maintains its

books of account in accordance with the provisions set forth in

the Corporation Law of Japan (the ”Law”), and the Financial

Instruments and Exchange Law of Japan (formerly, the

Securities and Exchange Law of Japan) and in conformity with

accounting principles generally accepted in Japan (”Japanese

GAAP”), which are different in certain respects as to the

application and disclosure requirements of International

Financial Reporting Standards. The accompanying consolidated

financial statements have been compiled from the consolidated

financial statements that were filed with the Director of the

Kanto Local Finance Bureau as required by the Financial

Instruments and Exchange Law of Japan. In preparing the

accompanying consolidated financial statements, certain

reclassifications and rearrangements have been made to the

consolidated financial statements issued domestically in order to

present them in a format that is more familiar to readers

outside Japan.

The translation of Japanese yen amounts into U.S. dollar

amounts is included solely for convenience, as a matter of

arithmetic computation only, at ¥99 = U.S.$1.00, the

approximate rate of exchange in effect on March 31, 2009. This

translation should not be construed as a representation that

Japanese yen amounts have been, could have been, or could in

the future be, converted into U.S. dollar amounts at this or any

other rate.

2. Summary of Significant Accounting Policies

a) ConsolidationThe consolidated financial statements include the accounts of

the following consolidated subsidiaries for the year ended

March 31, 2009:

Consolidated subsidiaries ... NL Asset Service, Ltd.

TEAM Cignus Limited

Investment in affiliated company, Reboot Technology

Services Limited, is accounted for by the equity method.

The consolidated subsidiaries close their books at March 31,

2009, the same financial year as the Company.

All significant intercompany balances and transactions have

been eliminated in consolidation.

b) Revenue recognitionLeases:

Revenues from finance lease contracts with customers and

corresponding costs are recognized at the time the payments

under the leases are due as stipulated in the lease contracts

without regard to the actual collection of such payments.

Installment sales:

Operating revenues from installment sales and the related costs

are recognized at the time of the contracts, and income on

such contracts is deferred and allocated over the contract

periods as the related installment receivables become due.

c) Allocation of interest expenseInterest expense on borrowings is allocated to operating

expenses and other expenses based on the balances of the

respective assets relating to operating and other activities.

Interest expense classified as an operating expense is recorded

net of the corresponding interest income from deposits.

d) Allowance for doubtful accountsAllowance for doubtful accounts is recorded to provide for

provable losses on bad debts based on historical experience for

those receivables other than specific doubtful accounts, and

based on an estimate of the uncollectible amounts after a

review of the collectibility for the specific doubtful receivables.

e) Cash and cash equivalentsCash and cash equivalents consist of callable cash deposits at

banks and short-term investments with original maturities of

three months or less that are readily convertible into cash with

only an insignificant risk of any change in their value.

f) Investment in securitiesInvestment in securities are classified into two categories and

accounted for as follows:

1. Held-to-maturity securities

Held-to-maturity securities are stated at amortized cost.

2. Available-for-sale securities

Marketable available-for-sale securities are reported at fair

value, with any unrealized gain or loss, net of the applicable

taxes, reported as a separate component of net assets. The

cost of securities sold is determined by the moving-average

method. Non-marketable available-for-sale securities are

stated at cost determined by the moving-average method.

g) Property and equipment Property and equipment are stated at cost less accumulated

depreciation. Depreciation of assets held for own use is

computed by the declining-balance method over the respective

useful lives of the assets that range from five to six years.

Property and equipment leased to customers are depreciated

over the term of the lease using the straight-line method.

h) Computer softwareCosts related to software purchased for internal use are

amortized by the straight-line method over an estimated useful

life of five years.

NEC Capital Solutions LimitedYear ended March 31, 2009

26

Notes to Consolidated Financial Statements

011_7014401372108.indd 26 2009/08/07 20:39:57d010_sp_7014401372108.indd 25-26 2009/08/18 20:22:45

i) Accounting for derivativesThe Company utilizes derivative financial instruments principally

in order to mitigate the risk of fluctuation in interest rates on

borrowings. The Company has established entity level controls

that include policies and procedures for risk assessment in

accordance with the Company’s rules for interest-rate swap

transactions. Under these rules, the Company conducts

transactions within a certain range and places limits on the

applicable assets and liabilities based on the actual demand. In

addition, the Company also assesses the effectiveness of the

hedging and verifies the approval, reporting and monitoring of

all transactions involving derivatives. The Company does not

hold or issue derivative financial instruments for trading

purposes. Derivatives are carried at fair value with any changes

in unrealized gain or loss credited or charged to operations,

except for those that meet the criteria for deferral hedge

accounting under which unrealized gain or loss is deferred as a

separate component of net assets.

j) Retirement benefit plan Employees’ retirement benefits:

The Company has a defined-benefit corporate pension plan,

which is essentially a defined-benefit plan with guaranteed

benefits and a defined-contribution pension plan, as well as a

severance indemnity plan covering virtually all employees other

than directors and corporate auditors. Under the terms of these

plans, eligible employees upon retirement are entitled to lump-

sum severance payments or annuity pension payments based

on their level of compensation upon termination and their years

of service with the Company. To provide a portion of the lump-

sum benefits or annuity payments, the Company participates in

the NEC corporate pension fund established for NEC group

companies in accordance with the Welfare Pension Insurance

Law.

Accrued retirement benefits have been provided for

employees’ retirement benefits, based on an estimate of the

projected benefit obligation and the pension plan assets at the

end of the year.

k) Income taxesIncome taxes are calculated based on taxable income and

charged to income on an accrual basis. Deferred income tax

assets and liabilities are recognized for the temporary

differences between the financial reporting and the tax bases of

the assets and liabilities that will result in taxable or deductible

amounts in the future. Calculations of deferred tax assets and

liabilities are based on the enacted tax laws.

l) Per share dataBasic net income per share is calculated by dividing the net

income available to shareholders of common stock by the

weighted-average number of shares of common stock

outstanding during the year.

Diluted net income per share has not been disclosed because

no potentially dilutive shares were outstanding.

Cash dividends per share presented in the accompanying

statements of income, including the dividends to be paid

subsequent to the end of the year, are stated as applicable to

the respective years.

3. Change in Accounting PoliciesThe Company had previously accounted for finance lease

transactions without the transfer of ownership in a manner

similar to the accounting of ordinary rental transactions.

Starting from the current fiscal year, however, the Company

adopted the Accounting Standard for Lease Transactions

(Accounting Standards Board of Japan Standard No. 13 as

amended on March 30, 2007) and the Guidance on Accounting

Standard for Lease Transactions (Accounting Standards Board of

Japan Guidance No. 16 as amended on March 30, 2007) and

accounts for finance lease transactions without the transfer of

ownership in a manner similar to the accounting of ordinary

sale or purchase transactions.

With respect to finance lease transactions without a transfer

of ownership that commenced on or before March 31, 2008,

the Company, as lessor, reclassified the appropriate book value

of the leased assets (net of accumulated depreciation) to the

investment in leases in the accompanying balance sheet. The

Company allocates the equivalent of unearned interest income

on the investment in leases over the remaining lease period

from the beginning of the current fiscal year based on a

straight-line method.

On the other hand, as lessee, the Company continues to

apply the accounting treatment that is similar to the accounting

for ordinary rental transactions.

As a result, compared with the results that would have been

recorded had the previous accounting method continued to be

used, ¥504,394 million ($5,094,895 thousand) was recorded in

current assets instead of fixed assets for the current fiscal year.

Also, operating income increased by ¥1,666 million ($16,828

thousand), and the loss before income taxes decreased by the

same amount.

The effect of the application of the accounting standard on

segment information is described in the Segment Information

section.

Allowance for loss on disposal of leased property and

equipment was transferred to allowance for doubtful accounts

as a result of the application of Accounting Standard for Lease

Transaction.

27

Notes to Consolidated Financial Statements

011_7014401372108.indd 27 2009/08/07 20:39:57

4. Investment in SecuritiesInvestment in securities at March 31, 2009 and 2008 consisted

of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009Current:

Available-for-sale securities ¥ 2,527 — $ 25,528

Held-to-maturity securities 793 — 8,008

Non-marketable available-for-sale securities 2,943 — 29,725

Total ¥ 6,263 — $ 63,261

Non-current:

Available-for-sale securities ¥ 4,036 ¥ 1,760 $ 40,772

Held-to-maturity securities 2,006 15,000 20,251

Non-marketable available-for-sale securities 17,459 3,115 176,358

Total ¥ 23,501 ¥ 19,875 $ 237,381

Change of purpose of holding of bonds

During the current fiscal year, the Company reclassified

certain bonds held to maturity of ¥1,590 million ($16,065

thousand) as available-for-sale securities, since the credit risk of

the bonds could no longer be considered low.

Impairment of securities

During the current fiscal year, the Company recognized an

impairment loss of ¥9,377 million ($94,724 thousand) on

securities (held-to-maturity securities). If the market value of a

security at the end of the fiscal year declines 50% or more from

the amortized cost, an impairment loss will be recognized. If the

market value of a security at the end of the fiscal year falls 30%

to 50% from the amortized cost, the Company will recognize

an impairment loss that it considers necessary, considering the

recoverability of the market value.

The acquisition cost and aggregate fair value of available-for-

sale securities with readily determinable market value at March

31, 2009, and 2008 were as follows:

March 31, 2009

Acquisition cost

Unrealized gain

Unrealized loss Fair value

Millions of Yen

Available-for-sale securities:

Current

Debt securities ¥ 2,506 ¥ 23 ¥ 2 ¥ 2,527

Non-current

Equity securities 712 303 16 999

Debt securities 3,027 10 — 3,037

Total ¥ 6,245 ¥ 336 ¥ 18 ¥ 6,563

March 31, 2008

Acquisition cost

Unrealized gain

Unrealized loss Fair value

Millions of Yen

Available-for-sale securities:

Equity securities ¥ 712 ¥ 1,049 ¥ 1 ¥ 1,760

March 31, 2009

Acquisition cost

Unrealized gain

Unrealized loss Fair value

Thousands of U.S. Dollars

Available-for-sale securities:

Current

Debt securities $ 25,317 $ 231 $ 20 $ 25,528

Non-current

Equity securities 7,198 3,060 160 10,098

Debt securities 30,571 103 — 30,674

Total $ 63,086 $ 3,394 $ 180 $ 66,300

Held-to-maturity securities with readily determinable market

value at March 31, 2009 and 2008 were as follows:

March 31, 2009

Carrying amount

Unrealized gain

Unrealized loss Fair value

Millions of Yen

Held-to-maturity securities:

Current

Debt securities ¥ 793 — ¥ 12 ¥ 781

Non-current

Debt securities 2,006 — 561 1,445

Total ¥ 2,799 — ¥ 573 ¥ 2,226

March 31, 2008

Carrying amount

Unrealized gain

Unrealized loss Fair value

Millions of Yen

Held-to-maturity securities:

Debt securities ¥ 15,000 — ¥ 3,006 ¥ 11,994

March 31, 2009

Carrying amount

Unrealized gain

Unrealized loss Fair value

Thousands of U.S. Dollars

Held-to-maturity securities:

Current

Debt securities $ 8,008 — $ 125 $ 7,883

Non-current

Debt securities 20,251 — 5,665 14,586

Total $ 28,259 — $ 5,790 $ 22,469

28

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Non-marketable securities whose fair value was not readily

determinable at March 31, 2009 and 2008 were as follows:

Carrying valueMillions of Yen Thousands of

U.S. dollars

2009 2008 2009Non-marketable securities:

Equity securities ¥ 6,520 ¥ 2,675 $ 65,860

Available-for-sale securities 2,943 — 29,725

Other 10,939 440 110,498

Total ¥ 20,402 ¥ 3,115 $ 206,083

5. Short-Term Borrowings and Long-Term Debt

Short-term borrowings at March 31, 2009 and 2008 were as

follows:

Millions of Yen Thousands of U.S. Dollars

Weighted-average interest

rate

2009 2008 2009 2009Short-term loans from banks ¥ 43,792 ¥ 483 $ 442,343 1.30%

Commercial paper 168,000 230,000 1,696,970 0.70%

Total ¥ 211,792 ¥ 230,483 ¥ 2,139,313 —

Long-term debt at March 31, 2009 and 2008 consisted of

the following:

Millions of Yen Thousands of U.S. Dollars

Weighted-average interest

rate

2009 2008 2009 2009Long-term loans, principally from banks ¥ 410,751 ¥ 400,094 $ 4,148,999 1.13%

Payables under securitized lease receivables 15,000 — 151,515 1.34%

Unsecured bonds 10,000 34,000 101,010 1.90%

Total 435,751 434,094 4,401,524 —

Less current portion 98,514 137,138 995,093 —

¥ 337,237 ¥ 296,956 $ 3,406,431 —

The aggregate annual maturities of long-term debt

subsequent to March 31, 2009 are summarized as follows:

Year ending March 31, Millions of Yen Thousands of U.S. Dollars

2010 ¥ 98,514 $ 995,093

2011 88,686 895,821

2012 108,585 1,096,812

2013 60,255 608,637

2014 55,543 561,041

2015 and thereafter 24,168 244,120

¥ 435,751 $ 4,401,524

No assets were pledged as collateral for secured debt at

March 31, 2009.

At March 31, 2009, the Company had overdraft facilities or

line-of-credit agreements with 32 financial institutions that

were set up in order to procure working capital effectively. The

unused committed lines of credit under such agreements at

March 31, 2009, totaled ¥182,300 million ($1,841,414

thousand).

6. Commitment and Others(1) Loan commitment for lender’s sideAs of March 31, 2009, the Company had the following

balances:

Millions of Yen Thousands of U.S. Dollars

Loan commitment agreements as of March 31, 2009 ¥ 7,302 $ 73,764

The loans provided under these credit facilities as of March 31, 2009 4,218 42,614

Aggregated balance of loan commitments available for customers of the company ¥ 3,084 $ 31,150

(2) Securitization of Lease ReceivablesUnder the Business Asset Securitization Law, the Company sold

its lease receivables as a means for funding for its operations

and recorded relevant liabilities as included in current portion of

long-term debt and long-term debt on the accompanying

balance sheet. The year end balance of the relevant transferred

lease receivables is as follow:

Millions of Yen Thousands of U.S. Dollars

Transferred lease receivable for funding ¥ 19,836 $ 200,364

(3) Sale-and-Leaseback TransactionThe Company sold its leased assets and has leased back those

assets from a buyer-lessor. The Company accounts for the sale-

and-leaseback transaction as a financing transaction. The year-

end balances of sold-and-leasedback assets and relevant unpaid

liabilities are as follows:

Millions of Yen Thousands of U.S. Dollars

Current assets

Lease receivable and investment in leases ¥ 23,665 $ 239,043

Long-term liabilities

Long-term debt 831 8,394

7. Income TaxesThe Company is subject to Japanese national and local income

taxes that, in the aggregate, resulted in a statutory tax rate of

approximately 40.5% for the years ended March 31, 2009 and

2008.

29

Notes to Consolidated Financial Statements

011_7014401372108.indd 29 2009/08/07 20:39:57

The tax effects of significant temporary differences that

resulted in deferred tax assets and liabilities at March 31, 2009

and 2008 were as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009Deferred tax assets:

Property and equipment ¥ 906 ¥ 1,320 $ 9,151

Allowance for doubtful accounts 1,370 766 13,836

Accrued retirement benefits for employees 445 320 4,497

Accrued bonuses 230 215 2,327

Accrued business tax — 126 —

Loss on valuation of investments in securities 3,797 — 38,354

Other 1,979 1,858 19,987

Total deferred tax assets ¥ 8,727 ¥ 4,605 88,152

Deferred tax liabilities:

Net unrealized gain on other marketable securities (98) (420) (993)

Other — (140) —

Total deferred tax liabilities (98) (560) (993)

Net deferred tax assets ¥ 8,629 ¥ 4,045 $ 87,159

Reconciliation between the statutory income tax rate and

the effective income tax rate as a percentage of income before

income tax and minority interests is as follows:

2009 2008Statutory income tax rate — 40.5%

Expenses not deductible for tax purposes — 0.4

Per capita inhabitants tax — 0.2

Valuation of allowance — (6.1)

Other — (0.3)

Actual effective income tax rate — 34.7

The above information for 2009 is not required to be

disclosed because the difference between the statutory tax rate

and the Company’s effective tax rate for financial statement

purposes is less than five percent of the statutory tax rate.

8. Derivatives(1) Objectives of derivative instrumentsThe Company enters into derivative instruments including

interest rate swaps associated with its financing activities, and

credit default swaps and currency-linked derivatives that are

embedded in structured bonds associated with its investing

activities.

The Company’s operating assets are comprised principally of

those with fixed income such as investment in leased. However,

it primarily utilizes variable-rate debt obligations to raise its

funds. The variable-rate debt obligations expose the Company

to variability in cash flows as well as profit margin due to

change in interest rates. To manage the variability in cash flows

caused by interest rate changes, the Company enters into

interest rate swaps. The Company does not hold and issue

derivative instruments for trading purposes. The Company

accounts for the interest rate swaps by using the hedge

accounting, which is more fully discussed in Note 2. i).

Hedging instruments and hedged items are as follows:

Hedging instruments: interest rate swaps

Hedged items: variable-rate debt obligations

The Company evaluates risk of default as well as other

characteristics of derivative instruments embedded within its

structured bonds.

(2) Risks associated with derivative instrumentsThe Company’s derivative instruments generally involve

exposure to both market and credit risks. The Company

primarily uses pay-fixed, receive-variable interest rate swaps to

effectively change variable-rate debt obligations to fixed-rate

debt obligations. Through these swaps, market risks resulting

from mismatching at cash due under borrowings and cash

collected from lessees and other debtors are offset against the

effect of hedging derivative instruments. Due to the hedging

objectives, gains or losses from derivative instruments caused by

market risks will not significantly affect the Company’s

operating results. The Company does not expect an event of

non-performance by counterparties to derivative instruments

since the counterparties are internationally recognized financial

institutions with limited risk of default.

Credit default swaps and currency linked derivatives

embedded in structured bonds are exposed to market risks and

credit risks. The market risks include risks of decline in the

market value of the structured bonds as well as reduction in

future interest income to be received due to changes in foreign

exchange and credit default swaps markets. Credit risks include

risks that principal amounts of debt securities are not repaid

upon occurrence of credit events under the credit default swap

agreement. However, the Company monitors the credit default

swap market to assess and evaluate the likelihood of credit

events.

(3) Risk management policyThe Company enters into derivative instruments in accordance

with its internal policies. The policies include the objectives for

derivative instruments, risk management policies and

procedures (including authorization, responsibilities and

reporting). In addition, the Company maintains segregation of

duties by assigning different employees in the Finance Business

30

011_7014401372108.indd 30 2009/08/07 20:39:57d010_sp_7014401372108.indd 29-30 2009/08/18 20:22:46

Division with the authority to enter into derivative instruments

separate from employees responsible for bookkeeping.

Structured debt at fair value at March 31, 2009 and 2008

was as follows:

March 31, 2009

Amount of contract

Gain Loss Fair value

Millions of Yen

Credit default swap and others ¥ 7,000 — ¥ 3,350 ¥ 3,650

March 31, 2008

Amount of contract

Gain Loss Fair value

Millions of Yen

Credit default swap and others ¥ 7,000 — ¥ 352 ¥ 6,648

March 31, 2009

Amount of contract

Gain Loss Fair value

Thousands of U.S. Dollars

Credit default swap and others $ 70,707 — $ 33,836 $ 36,871

1. The fair value is determined based on quoted prices provided

by dealers and other financial institutions.

2. Credit default swaps are derivatives embedded in structured

debt.

3. The structured debt is carried at fair value, and any

unrealized losses are included in net income.

9. Accrued Retirement BenefitsThe Company has a defined-benefit corporate pension plan,

which consists of a defined-benefit plan with guaranteed

benefits and a defined-contribution pension plan, as well as a

severance indemnity plan covering virtually all employees other

than directors and corporate auditors. Under the terms of these

plans, eligible employees are entitled to lump-sum payments or

annuity payments based on their level of compensation upon

termination and their years of service with the Company.

In April 2007, the Company transferred part of the defined-

benefit pension plans to defined-contribution pension plans. No

past service liability was incurred as a result of the transfer to

defined-contribution pension plans.

Accrued retirement benefits for employees at March 31,

2009 and 2008 consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009Reconciliation

Projected benefit obligation ¥ (2,607) ¥ (2,509) $ (26,327)

Fair value of pension plan assets 1,152 1,439 11,634

Unfunded retirement benefit obligation (1,455) (1,070) (14,693)

Unrecognized actuarial loss 355 281 3,587

Accrued retirement benefits ¥ (1,100) ¥ (789) $ (11,106)

The components of net periodic benefit costs for the years

ended March 31, 2009 and 2008 were as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009Components of net periodic retirement benefit expense:

Service cost ¥ 138 ¥ 127 $ 1,397

Interest cost 63 62 634

Expected return on pension plan assets (36) (41) (363)

Amortization of actuarial loss 281 57 2,840

Amortization of prior service cost — — —

Other 32 27 316

Net periodic retirement benefit expense ¥ 478 ¥ 232 $ 4,824

The major assumptions used in the calculation of the

projected benefit obligation were as follows:

2009 2008Method of attributing projected benefits to years of service

P o i n t b a s i s a n d straight-line method

P o i n t b a s i s a n d straight-line method

Discount rate at end of year 2.5% 2.5%

Expected rate of return on pension plan assets 2.5% 2.5%

Amortization of prior service cost Charged to income for the year

Charged to income for the year

Amortization of actuarial gain (loss) Charged to income for the following year

Charged to income for the following year

31

Notes to Consolidated Financial Statements

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10. Lease TransactionsInformation relating to finance leases of the Company as lessor

for the year ended March 31, 2009 is summarized as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2009a) Components of investment in leases

Lease payments receivables ¥ 504,696 $ 5,097,942

Estimation of residual value 11,848 119,680

Un-earned interest income (24,826) (250,775)

Investment in leases ¥ 491,718 $ 4,966,847

b) Collecting schedule of lease payments receivables after the fiscal year end

Leases receivable

Due within 1 year ¥ 3,973 $ 40,128

Due after 1 year through 2 years 3,884 39,236

Due after 2 year through 3 years 3,688 37,254

Due after 3 year through 4 years 3,368 34,020

Due after 4 year through 5 years 1,571 15,870

Due after 5 years 377 3,809

Investment in leases

Due within 1 year ¥ 178,276 $ 1,800,772

Due after 1 year through 2 years 136,979 1,383,627

Due after 2 year through 3 years 94,592 955,473

Due after 3 year through 4 years 57,813 583,971

Due after 4 year through 5 years 25,268 255,234

Due after 5 year 11,768 118,865

c) Finance leases that do not transfer ownership to the lessees

Compared with the results that would have been recorded had the Company applied the lease accounting standard retroactively to the starting date of these lease transactions, the loss before income taxes for the current fiscal year increased by ¥12,370 million ($124,951 thousand).

Finance leases that do not transfer ownership to the lessees

were accounted for in the same manner as operating leases.

Information relating to finance leases of the Company as

lessor for the year ended March 31, 2008 is summarized as

follows:

Millions of Yen

2008Acquisition cost of the leased assets ¥ 1,226,397

Accumulated depreciation 660,849

Net carrying amount ¥ 565,548

Future lease payments ¥ 575,403

Future lease payments due within one year 198,480

Rental revenues ¥ 229,566

Depreciation expense 166,578

Rental revenues attributable to interest income 17,743

Information relating to finance leases of the Company as lessee

which do not transfer ownership to the lessee for the years

ended March 31, 2009 and 2008 is summarized as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009Acquisition cost of the leased assets ¥ 214 ¥ 218 $ 2,159

Accumulated depreciation 205 178 2,066

Net carrying amount ¥ 9 ¥ 40 $ 93

Future lease payments ¥ 10 ¥ 44 $ 105

Future lease payments due within one year 9 33 93

Lease payments ¥ 34 ¥ 47 $ 344

Depreciation expense 30 42 306

Lease payments attributable to interest expense 1 3 14

With respect to the finance lease transactions without the

transfer of ownership that commenced before March 31, 2008,

the Company continues to account for those transactions in a

manner similar to the accounting of ordinary rental

transactions.

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11. Segment Informationa) Business segments

2009Leasing Loans Other Total Elimination and/or

corporate Consolidated

Millions of Yen

Revenues

Revenues from customers ¥ 241,074 ¥ 3,387 ¥ 16,534 ¥ 260,995 ¥ — ¥ 260,995

Intersegment revenues — — — — — —

Total 241,074 3,387 16,534 260,995 — 260,995

Operating expenses 235,946 4,155 15,872 255,973 1,407 257,380

Operating income ¥ 5,128 ¥ (768) ¥ 662 ¥ 5,022 ¥ (1,407) ¥ 3,615

Assets ¥ 533,692 ¥ 148,284 ¥ 15,032 ¥ 697,008 ¥ 57,118 ¥ 754,126

Depreciation 2,210 266 149 2,625 110 2,735

Capital expenditures 7,793 127 72 7,992 52 8,044

2008Leasing Loans Other Total Elimination and/or

corporate Consolidated

Millions of yen

Revenues

Revenues from customers ¥ 244,195 ¥ 2,771 ¥ 17,150 ¥ 264,116 ¥ — ¥ 264,116

Intersegment revenues — — 0 0 (0) —

Total 244,195 2,771 17,150 264,116 (0) 264,116

Operating expenses 238,239 2,109 16,951 257,299 834 258,133

Operating income ¥ 5,956 ¥ 662 ¥ 199 ¥ 6,817 ¥ (834) ¥ 5,983

Assets ¥ 593,766 ¥ 142,263 ¥ 21,210 ¥ 757,239 ¥ 23,095 ¥ 780,334

Depreciation 215,291 175 202 215,668 100 215,768

Capital expenditures 230,224 140 161 230,525 80 230,605

2009Leasing Loans Other Total Elimination and/or

corporate Consolidated

Thousands of dollars

Revenues

Revenues from customers $ 2,435,088 $ 34,207 $ 167,018 $ 2,636,313 $ — $ 2,636,313

Intersegment revenues — — — — — —

Total 2,435,088 34,207 167,018 2,636,313 — 2,636,313

Operating expenses 2,383,289 41,970 160,328 2,585,587 14,209 2,599,796

Operating income $ 51,799 $ (7,763) $ 6,690 $ 50,726 $ (14,209) $ 36,517

Assets $ 5,390,831 $ 1,497,822 $ 151,833 $ 7,040,486 $ 576,947 $ 7,617,433

Depreciation 22,319 2,691 1,508 26,518 1,108 27,626

Capital expenditures 78,719 1,287 722 80,728 530 81,258

•Segment categories are defined according to lines of business.

•Business segments are classified as follows:

a) Leasing—leasing of office equipment and industrial

machinery, etc.

b) Loans—loans, factoring and installment sales, etc.

c) Other—sales of used equipment of off-leased or terminated

leasing contract and collection of maintenance fees, etc.

• Operating expenses that cannot be allocated to the above

segments and are included in elimination and/or corporate are

¥1,407 million ($14,209 thousand) for fiscal 2009 and ¥834

33

Notes to Consolidated Financial Statements

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12. Legal Reserve and Retained Earnings, and Dividends

Under the Law and regulations, the entire amount paid for new

shares is required to be designated as common stock. However,

a company may, by a resolution of the Board of Directors,

designate an amount not exceeding one-half of the price of the

new shares as additional paid-in capital, which is included in

capital surplus in the accompanying consolidated balance

sheets.

The Law provides that earnings in an amount equal to at

least 10 percent of appropriations of retained earnings to be

paid as dividends should be appropriated as a capital surplus or

a legal reserve until the total of capital surplus and legal reserve

equals 25 percent of stated common stock. Legal reserve is

included in retained earnings in the accompanying consolidated

balance sheets. In addition to transfer from capital surplus to

stated common stock, either capital surplus or legal reserve may

be available for dividends by resolution of the general meeting

of shareholders.

Under the Law, all additional paid-in capital and all legal

reserve may be transferred to other capital surplus and retained

earnings, respectively, which are potentially available for

dividends.

The maximum amount that the Company can distribute as

dividends is calculated based on the non-consolidated financial

statements of the Company in accordance with the Law.

13. Related Party TransactionsThe year ended March 31, 2009:

The Company procured equipment for lease transactions from

NEC Corporation who has 37.3% ownership share in the

Company at a transaction amount of ¥67,826 million

($685,111 thousand) and the outstanding balance of ¥14,840

million ($149,902 thousand) at the year end has been included

in ”Notes and accounts payable—trade.” The Company entered

into factoring contracts with NEC Corporation at a transaction

amount of ¥17,542 million ($177,192 thousand) and the

outstanding balance of ¥3,849 million ($38,879 thousand) at

the year end has been included in ”Accounts receivable—

loans.” The Company also entered into factoring contracts with

NEC Saitama, Ltd. and NEC Wireless Networks, Ltd. at

aggregate transaction amounts of ¥14,616 million ($147,636

thousand) and ¥8,131 million ($82,136 thousand), respectively,

and the outstanding balances at the year end have been

included in ”Accounts receivable—loans” of ¥3,251 million

($32,836 thousand) and ¥1,468 million ($14,830 thousand),

respectively.

The Company procured equipment for lease transactions

from a group company, NEC Nexsolutions, Ltd. at a transaction

amount of ¥9,010 million ($91,009 thousand) and the

outstanding balance of ¥1,738 million ($17,551 thousand) at

the year end has been was included in ”Notes and accounts

payable—trade.”

million for fiscal 2008, and a large portion of these expenses

consists of selling, general and administrative expenses used

for administrative departments.

• Assets for the whole company in elimination and/or corporate

as of March 31, 2009 and 2008 are ¥57,118 million

($576,947 thousand) and ¥23,095 million, respectively, and a

large portion of these assets consists of surplus funds (cash

and cash equivalents) and long-term investments (investment

securities).

• Capital expenditures include payments for long-term prepaid

expenses.

•Change in accounting method

As discussed in Note 3, effective from the year ended March

31, 2009, the Company adopted the Accounting Standard for

Lease Transactions (Accounting Standards Board of Japan

Standard No. 13 as amended on March 30, 2007) and the

Guidance on Accounting Standard for Lease Transactions

(Accounting Standards Board of Japan Guidance No. 16 as

amended on March 30, 2007). Compared with the results that

would have been recorded had the previous accounting

method continued to be used, operating income from the

leasing segment increased by ¥1,666 million ($16,828

thousand).

b) Geographical segmentsThe information on geographical segments is not required to be

disclosed because the amounts of domestic revenues and total

assets are more than 90% of the amounts of revenues and

total assets of all segments for the year ended March 31, 2009.

There was no foreign subsidiary or branch requiring the

geographical segment disclosure for the year ended March 31,

2008.

c) Revenues from foreign customersThe information on revenues from foreign customers is not

required to be disclosed because the amounts of revenues from

foreign customers are less than 10% of consolidated revenues

for the year ended March 31, 2009. There was no revenue from

foreign customers for the year ended March 31, 2008.

34

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(Additional Information)

Effective from the current fiscal year, the Company adopted the

Accounting Standard for Related Party Disclosures (Accounting

Standards Board of Japan Standard No. 11 issued on October

17, 2006) and the Guidance on Accounting Standard for

Related Party Disclosures (Accounting Standards Board of Japan

Standard Guidance No. 13 issued on October 17, 2006).

However, there was no change in scope of disclosure as a

result of this adoption.

The year ended March 31, 2008:

The Company procured equipment for lease transactions from

NEC Corporation who has 37.7% ownership share in the

Company at a transaction amount of ¥64,040 million and the

outstanding balance of ¥17,035 million at the year end has

been included in ”Notes and accounts payable—trade.” The

Company entered into factoring contracts with NEC

Corporation at transaction amount of ¥17,483 million and the

outstanding balance of ¥3,639 million at the year end has been

included in ”Accounts receivable—loans.” The Company also

entered into factoring contracts with NEC Saitama, Ltd., NEC

Personal Products, Ltd. and NEC Wireless Networks, Ltd. at

aggregate net investments of ¥11,043 million, ¥9,685 million,

and ¥9,081 million, respectively, and the outstanding balances

at the year end have been included in ”Accounts receivable—

loans” of ¥3,750 million, ¥1,756 million and ¥2,006 million,

respectively.

The Company procured equipment for lease transactions

from a group company, NEC Nexsolutions, Ltd. at transaction

amount of ¥8,633 million and the outstanding balance of

¥1,498 million at the year end has been was included in ”Notes

and accounts payable—trade.”

35

Notes to Consolidated Financial Statements

011_7014401372108.indd 35 2009/08/07 20:39:58

36

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37

011_7014401372108.indd 37 2009/08/07 20:39:59

NEC Leasing, Ltd. was established in 1978 as a leasing company providing sales finance on behalf of NEC

Corporation. Since then, it has played a role in ushering in the information and communications technolo-

gies (ICT) age through financing, especially leases.

With a changing operating environment, including new accounting standards for lease transactions and

amendments to the tax system, NEC Leasing decided to transform its leasing-centered business structure to

create a path for continued growth. To provide solutions that fully respond to our customers’ capital needs,

we aim to become a boutique offering specialized solutions.

NEC Leasing changed its name to NEC Capital Solutions, which better reflects this goal, on November 30,

2008, the 30th anniversary of its founding. We take this opportunity to redouble our focus on achieving

continued growth.

On November 30, 2008, NEC Leasing, Ltd. changed its name to NEC Capital Solutions Limited.

Nov. 1978

Mar. 1996

Founded as NEC Leasing, Ltd., an NEC sales finance company

Performing assets (based on purchase prices) exceed 1 trillion yen

History

Contents

3 Financial Highlights

4 Message from the President

5 Interview with the President

7 Business at a Glance

8 Progress of the Third Medium-Term Business Plan

13 Corporate Social Responsibility

1

090_7014401372108.indd 1 2009/08/14 9:42:50

Corporate data (as of April 1, 2009)

Operation Started November 30, 1978

Paid-in Capital ¥3,776 million

Representative Hidetaka Itahashi, President

Employees 511

Main Business •�Leasing�of�information�and�communi-cation�equipment,�office�equipment,�industrial�equipment�and�various�other�equipment

•�Installment�sales�and�factoring,�busi-ness�loans,�collection�agency services,�and�others

Main Banks Sumitomo�Mitsui�Banking�Corporation

The�Bank�of�Tokyo-Mitsubishi�UFJ,�Ltd.

The�Sumitomo�Trust�and�Banking�Co.,�Ltd.

Mizuho�Corporate�Bank,�Ltd.

The�Norinchukin�Bank,�and�others

IR information

http://www.necap.co.jp/english/index.htmlThe Company offers ample IR information to its

shareholders�and�investors�through�the�Company’s�

website.

The�website�discloses�useful�information�such�as�its�

management�policies,�financial�results,�share�

information and other information for the shareholders

and�investors�to�better�understand�the�Company.

Network (as of April 1, 2009)Head Office

Branches

Hokkaido�Branch Hokuriku�Branch

Tohoku�Branch Kansai�Branch

Nishitokyo�Branch Kyoto�Branch

Kanto�Branch Kobe�Branch

Niigata�Branch Chugoku�Branch

Chiba�Branch Shikoku�Branch

Kanagawa�Branch Kyushu�Branch

Shizuoka�Branch Kumamoto�Branch

Chubu�Branch Minamikyushu�Branch

Offices

Aomori�Office

Yamagata�Office

Hamamatsu�Office

Nagano�Office

Fukui�Office

Oita�Office

Nagasaki�Office

Miyazaki�Office

Stock information (as�of�March�31,�2009)

Number of shares authorized 86,000,000 shares

Number of shares issued 21,533,400 shares

Number of shares of one unit 100 shares

Number of shareholders 7,947

Principal shareholders (as�of�March�31,�2009)

Shareholders Number of shares(Thousands)

Voting rights(%)

NEC Corporation 8,110 37.66

Sumitomo�Mitsui�Finance�and�Leasing�Co.,�Ltd. 5,390 25.03

Japan�Trustee�Services�Bank,�Ltd. 1,021 4.74

The�Master�Trust�Bank�of�Japan,�Ltd. 838 3.89

GOLDMAN.�SACHS�&�CO.�REG 612 2.84

NORTHERN TRUST COMPANY (AFVC) SUB�A/C�AMERICAN�CLIENTS 312 1.45

Trust�&�Custody�Services�Bank,�Ltd. 230 1.07

The�Sumitomo�Trust�and�Banking�Co.,�Ltd. 200 0.93

SUMITOMO�LIFE�INSURANCE�COMPANY 200 0.93

Mitsui�Sumitomo�Life�Insurance�Compa-ny,�Limited 200 0.93

Share distribution by type of shareholder (as�of�March�31,�2009)

Other corporations

62.86%

Securities companies

0.13%

14.09%

11.79%

Individuals / private andother investors

11.13%

Financial institutions

Non-resident investors

Stock price and trading volume (From April 2008 to June 2009)

Stock price (Yen)

2,000

1,500

1,000

500

2,000

0

500

1,000

1,500

4 5 6 7 8 9 10 11 12 1 2 3 4 5 60

Trading volume (Thousands of shares)

2008 2009

38

Corporate Information/Stock Information

005_7014401372108.indd 2 2009/08/14 9:44:55d010_sp_7014401372108.indd 37-38 2009/08/18 20:22:49

AN

NU

AL

RE

PO

RT

20

09

NEC Sumisei Bldg, 29-11, Shiba 5-chome, Minatoku, Tokyo 108-0014, JapanTel. +81 (0)3-5476-5625

www.necap.co.jp ANNUAL REPORT 2009 Year ended March 31, 2009

Cert no. SA-COC-1442

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