6-K 1 d659378d6k.htm FORM 6-K FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under the

Securities Exchange Act of 1934

For the month of February, 2014

Commission File Number 1-8910

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

(Translation of registrant’s name into English)

OTEMACHI FIRST SQUARE, EAST TOWER

5-1, OTEMACHI 1-CHOME

CHIYODA-KU, TOKYO 100-8116 JAPAN

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x    Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             


ANNOUNCEMENT OF FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2013

On February 6, 2014, the registrant filed with the Tokyo Stock Exchange information as to the registrant’s financial condition and results of operations at and for the three and nine months ended December 31, 2013. Attached hereto is a copy of the press release and supplementary data relating thereto, both dated February 6, 2014, pertaining to such financial condition and results of operations, as well as forecasts for the registrant’s operations for the fiscal year ending March 31, 2014. The consolidated financial information of the registrant and that of its subsidiary, NTT DOCOMO, INC., included in the press release and the supplementary data relating thereto were prepared on the basis of accounting principles generally accepted in the United States. The non-consolidated financial information of the registrant and that of each of the registrant’s three wholly-owned subsidiaries, Nippon Telegraph and Telephone East Corporation, Nippon Telegraph and Telephone West Corporation and NTT Communications Corporation, as well as the consolidated financial information of its subsidiary, NTT DATA CORPORATION, included in the press release and the supplementary data relating thereto were prepared on the basis of accounting principles generally accepted in Japan. The consolidated financial information of the registrant’s subsidiary, Dimension Data Holdings plc, included in the supplementary data related to the press release was prepared on the basis of International Financial Reporting Standards (“IFRS”). The financial information for the three and nine months ended December 31, 2013 in the press release is unaudited.

The earnings projections of the registrant and its subsidiaries included in the press release contain forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in the attachment.

The registrant’s forward-looking statements are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of the registrant in light of information currently available to it regarding the registrant and its subsidiaries and affiliates, the economy and the telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of the registrant and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from any future results that may be derived from the forward-looking statements, as well as other risks included in the registrant’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

No assurance can be given that the registrant’s actual results will not vary significantly from any expectation of future results that may be derived from the forward-looking statements included herein.

The information on any website referenced herein or in the attached material is not incorporated by reference herein or therein.

The attached material is a translation of the Japanese original. The Japanese original is authoritative.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

By

 

  /s/ Kazuhiko Nakayama

  Name:   Kazuhiko Nakayama
  Title:   General Manager
    Investor Relations Office

Date: February 6, 2014


Financial Results Release

     February 6, 2014   

For the Nine Months Ended December 31, 2013

     [U.S. GAAP

Name of registrant: Nippon Telegraph and Telephone Corporation (“NTT”)

Code No.: 9432 (URL http://www.ntt.co.jp/ir/)

Stock exchange on which the Company’s shares are listed: Tokyo

Representative: Hiroo Unoura, President and Chief Executive Officer

Contact: Kazuhiko Nakayama, Head of IR, Finance and Accounting Department / TEL +81-3-6838-5481

Scheduled filing date of quarterly securities report: February 7, 2014

Scheduled date of dividend payments: -

Supplemental material on quarterly results: Yes

Presentation on quarterly results: Yes (for institutional investors and analysts)

 

1. Consolidated Financial Results for the Nine Months Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

Amounts are rounded off to the nearest million yen.

(1) Consolidated Results of Operations

 

     (Millions of yen)  
     Operating Revenues     Operating Income     Income before
Income Taxes
    Net Income
Attributable to NTT
 

Nine months ended December 31, 2013

     8,025,184         1.3     985,120         (0.8 )%      1,024,103         3.9     484,304         8.4

Nine months ended December 31, 2012

     7,921,720         1.8     993,237         (1.6 )%      985,688         (2.5 )%      446,687         24.4

Note: Percentages above represent changes from the corresponding previous period.

 

     Basic Earnings per Share
Attributable to NTT
    Diluted Earnings per  Share
Attributable to NTT
 

Nine months ended December 31, 2013

     418.78  (yen)      —  (yen) 

Nine months ended December 31, 2012

     366.64  (yen)      —  (yen) 

 

Notes:   1.    Comprehensive income (loss) attributable to NTT:   For the nine months ended December 31, 2013: 665,709 million yen 35.9%
       For the nine months ended December 31, 2012: 489,949 million yen 61.1%
  2.    Figures for Nine months ended December 31, 2012 have been revised from those disclosed on February 6, 2013, as described in “2. Others (3) Change of accounting policy” on page 9.

(2) Consolidated Financial Position

 

     (Millions of yen, except per share amounts)  
     Total Assets      Total Equity      NTT  Shareholders’
Equity
     Equity Ratio
(Ratio of NTT Shareholders’
Equity to Total Assets)
    NTT
Shareholders’
Equity per Share
 

December 31, 2013

     19,892,604         10,842,095         8,460,220         42.5     7,443.36  (yen) 

March 31, 2013

     19,549,067         10,522,003         8,231,439         42.1     6,944.17  (yen) 

 

Note: Figures for March 31, 2013 have been revised from those disclosed on May 10, 2013, as described in “2. Others (3) Change of accounting policy” on page 9.

 

2. Dividends

 

      Annual Dividends  
     End of
the first quarter
     End of
the second quarter
    End of
the third quarter
     Year-end     Total  

Year Ended March 31, 2013

     —           80.00  (yen)      —           80.00  (yen)      160.00  (yen) 

Year Ending March 31, 2014

     —           80.00  (yen)      —           —          —     

Year Ending March 31, 2014 (Forecasts)

     —           —          —           90.00  (yen)      170.00  (yen) 

Note: Change in forecasts of dividends during the nine months ended December 31, 2013: None

 

3. Consolidated Financial Results Forecasts for the Fiscal Year Ending March 31, 2014 (April 1, 2013 – March 31, 2014)

 

     (Millions of yen)  
     Operating Revenues     Operating Income     Income before
Income Taxes
    Net Income
Attributable to
NTT
    Basic Earnings per Share
Attributable to

NTT
 

Year Ending March 31, 2014

     11,000,000         2.8     1,230,000         2.3     1,280,000         6.9     585,000         12.1     503.22  (yen) 

 

Notes:    1.    Percentages above represent changes from the previous period.
   2.    Change in consolidated financial results forecasts for the fiscal year ending March 31, 2014 during the nine months ended December 31, 2013: No
   3.    The percentage changes from the previous period for the forecasts for the fiscal year ending March 31, 2014 for “Income before Income Taxes” and “Net Income Attributable to NTT” have been revised from those disclosed on May 10, 2013 as a result of changes to the figures in NTT’s consolidated financial statements disclosed during the fiscal year ended March 31, 2013, as described in “2. Others (3) Change of accounting policy” on page 9.

 

- 1 -


*Notes:

 

  (1) Change in significant consolidated subsidiaries during the nine months ended December 31, 2013, which resulted in changes in the scope of consolidation: None

 

  (2) Adoption of accounting which is simplified or exceptional for quarterly consolidated financial statements: None

Note: This refers to the application of simplified or exceptional accounting for quarterly consolidated financial statements.

 

  (3) Change of accounting policy

 

  i. Change due to revision of accounting standards and other regulations: Yes

 

  ii. Others: None
     (For further details, please see “Others” on page 9.)

 

  (4) Number of shares outstanding (common stock)

 

i.       Number of shares outstanding (including treasury stock):

  

 

December 31, 2013 : 1,136,697,235 shares

  

 

March 31, 2013 : 1,323,197,235 shares

  

ii.       Number of treasury stock:

  

 

December 31, 2013 : 84,865 shares

  

 

March 31, 2013 : 137,822,603 shares

  

iii.       Weighted average number of shares outstanding:

  

 

For the nine months ended December 31, 2013 :

    1,156,476,181 shares   
 

For the nine months ended December 31, 2012 :

    1,218,330,024 shares   

 

  * Presentation on the status of quarterly review process:

This earnings release is not subject to the quarterly review process as required by the Financial Instruments and Exchange Act of Japan. As of the date when this earnings release was issued, the quarterly financial statement review process as required by the Financial Instruments and Exchange Act was still ongoing.

 

  * Explanation for forecasts of operation and other notes:

Forward-looking statements in this earnings release, such as forecasts of results of operations, are based on the information currently available and certain assumptions that we regard as reasonable and therefore actual results may differ materially from those contained in or suggested by any forward-looking statements. With regard to the assumptions and other related matters concerning forecasts for the fiscal year ending March 31, 2014, please refer to pages 8 and 23.

On Thursday, February 6, 2014, NTT will hold a presentation on its financial results for institutional investors and analysts. Shortly thereafter, NTT plans to post on its website explanatory details, along with the materials used at the presentation.

 

- 2 -


1. Qualitative Information

(1) Qualitative Information Relating to Consolidated Business Results

 

i. Consolidated results

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change     Percent Change  

Operating revenues

     7,921.7         8,025.2         103.5        1.3

Operating expenses

     6,928.5         7,040.1         111.6        1.6

Operating income

     993.2         985.1         (8.1     (0.8 )% 

Income before income taxes and equity in earnings (losses) of affiliated companies

     985.7         1,024.1         38.4        3.9

Net income attributable to NTT

     446.7         484.3         37.6        8.4

During the nine months ended December 31, 2013, pursuant to its Medium-Term Management Strategy, adopted in November 2012, entitled “Towards the Next Stage,” NTT worked to expand its global cloud services and to strengthen its network service competitiveness in order to become a “valued partner” that customers continue to select.

<Expansion of Global Cloud Services>

In order to expand its global cloud services, NTT Group will take advantage of its capabilities as a group company to provide comprehensive and integrated cloud services from the information and telecommunications platform stage, such as providing data centers and an IP backbone, to the ICT management and applications stage.

Specifically, NTT Group entered into a stock transfer agreement with certain of the shareholders of RagingWire Data Centers (“RagingWire”), a leading provider of data center services in the U.S., to acquire 80% of the outstanding shares of RagingWire, in order to expand the server room space NTT Group can make available at high-quality data centers in the U.S. and to respond to the demand for cloud services.

NTT Group also entered into a stock transfer agreement with the shareholders of Virtela Technology Services Incorporated (“Virtela”), a major provider of network services and cloud-based managed network services in the U.S., to acquire 100% of the outstanding shares of Virtela, in order to improve NTT Group’s business efficiency by integrating operations and to improve services using network function virtualization technology.

In addition, NTT entered into an agreement with the shareholders of Everis Participaciones, S.L. (“Everis”) to acquire 100% of the outstanding shares of Everis, a company based in Spain that provides a wide range of IT services, including consulting, system integration and outsourcing, in order to acquire a business platform in Spain and countries in Latin America.

<Strengthening Network Service Competitiveness>

In the fixed-line communications field, NTT Group continued to work to increase new subscribers and improve long-term customer retention for its “FLET’S Hikari” services. The number of subscriptions for “FLET’S Hikari” (“FLET’S Hikari Light,” “FLET’S Hikari Next” and “B FLET’S”) in eastern Japan exceeded 10 million. In western Japan, NTT began to provide “FLET’S Smart Pay,” a payment service geared towards retail shops. Through “FLET’S Smart Pay,” NTT aims to contribute to the stimulation of the growth of retail shops by introducing a simple and easy-to-install payment service to further spread and increase the use of non-cash payment methods.

In the mobile communications field, NTT Group worked to expand its smartphone user base and to strengthen its competitiveness by launching a variety of handset lineups based on its “recommended smartphones,” and by making the iPhone (*1), which NTT Group started offering in September 2013, available in all DOCOMO shops. In addition, NTT Group expanded the service areas of its “Xi” services that provide a maximum download speed of 100 Mbps and above to the major cities in Japan, and simultaneously expanded its “Xi” services that provide a maximum download speed of 150 Mbps to high usage areas in the Tokyo, Nagoya and Osaka areas. Further, in order to provide customers with networks that are easy to access, NTT Group expanded its outdoor “quad-band LTE” service areas. “Quad-band LTE” is compatible with four spectrum bands (2GHz, 1.7GHz, 1.5GHz and 800MHz). NTT Group also developed and began the installation of indoor base stations and indoor antennas compatible with multi-bands to which the 1.7 GHz and 1.5 GHz frequencies have been added to the 2 GHz frequency previously used.

 

- 3 -


NTT Group worked to reduce costs related to fixed-line/mobile communications services in order to strengthen the competitiveness of its existing network services. Specifically, NTT worked to further increase the efficiency of its network facilities through the simplification and effective utilization of its existing network facilities, cost reductions in optical transmission line installation jobs by increasing jobs that do not require the dispatch of NTT employees, and also worked to further increase the efficiency of its maintenance and operational business.

As a result of these efforts, NTT Group’s consolidated operating revenues for the nine-month period ended December 31, 2013 were ¥8,025.2 billion (an increase of 1.3% from the same period of the previous fiscal year), consolidated operating expenses were ¥7,040.1 billion (an increase of 1.6% from the same period of the previous fiscal year), consolidated operating income was ¥985.1 billion (a decrease of 0.8% from the same period of the previous fiscal year), consolidated income before income taxes and equity in earnings (losses) of affiliated companies was ¥1,024.1 billion (an increase of 3.9% from the same period of the previous fiscal year), and consolidated net income attributable to NTT was ¥484.3 billion (an increase of 8.4% from the same period of the previous fiscal year).

 

Notes:

     1.       The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States.
     2.       Figures from the same period of the previous fiscal year have been revised due to the effect of the retrospective application of the equity method to investments.
     (*1)       “iPhone” is a registered trademark of Apple Inc. The iPhone trademark is used pursuant to AIPHONE CO., LTD.

 

- 4 -


ii. Segment results

Results by business segment are as follows.

 

 

Regional Communications Business Segment

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change     Percent Change  

Operating revenues

     2,712.1         2,626.4         (85.8     (3.2 )% 

Operating expenses

     2,634.3         2,525.9         (108.4     (4.1 )% 

Operating income

     77.9         100.5         22.6        29.0

Operating revenues in the regional communications business segment for the nine-month period ended December 31, 2013 were ¥2,626.4 billion (a decrease of 3.2% from the same period of the previous fiscal year) due to the slowdown in the increase in the number of “FLET’S Hikari” subscriptions. As a result, the increase in IP/packet communications revenues was unable to offset the decline in fixed voice related revenues resulting from the decline in fixed-line telephone subscriptions. On the other hand, operating expenses fell to ¥2,525.9 billion (a decrease of 4.1% from the same period of the previous fiscal year) due to a decrease in personnel expenses as a result of a decline in the number of employees, a decrease in depreciation expenses and other factors, including reductions in sales-related expenses. As a result, segment operating income for the nine-month period ended December 31, 2013 was ¥100.5 billion (an increase of 29.0% from the same period of the previous fiscal year).

Number of subscriptions

 

    (Thousands of subscriptions)  
    As of March 31, 2013      As of December 31, 2013      Change      Percent Change  

FLET’S Hikari(1)

    17,300         17,873         572         3.3

NTT East

    9,750         10,089         339         3.5

NTT West

    7,550         7,784         234         3.1

Hikari Denwa(2)

    15,169         15,950         781         5.2

NTT East

    8,085         8,526         441         5.5

NTT West

    7,084         7,424         340         4.8

Notes:

(1) “FLET’S Hikari” includes “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT East and “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West.
(2) The figures for Hikari Denwa indicate number of channels (in thousands).

 

- 5 -


 

Long Distance and International Communications Business Segment

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change     Percent Change  

Operating revenues

     1,228.8         1,312.7         83.9        6.8

Operating expenses

     1,125.3         1,212.3         87.0        7.7

Operating income

     103.5         100.4         (3.1     (3.0 )% 

Operating revenues in the long distance and international communications business segment for the nine-month period ended December 31, 2013 were ¥1,312.7 billion (an increase of 6.8% from the same period of the previous fiscal year). Although there was a decrease in fixed voice related revenues, operating revenues increased due to, among other things, an increase in system integration revenues and the depreciation of the yen. Despite cost reductions, operating expenses for the nine-month period ended December 31, 2013 increased to ¥1,212.3 billion (an increase of 7.7% from the same period of the previous fiscal year) due to, among other things, the depreciation of the yen. As a result, segment operating income for the nine-month period ended December 31, 2013 was ¥100.4 billion (a decrease of 3.0% from the same period of the previous fiscal year).

 

 

Mobile Communications Business Segment

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change     Percent Change  

Operating revenues

     3,370.8         3,363.6         (7.2     (0.2 )% 

Operating expenses

     2,668.0         2,677.8         9.9        0.4

Operating income

     702.8         685.7         (17.1     (2.4 )% 

Despite an increase in handset sales revenues as a result of robust smartphone sales efforts and a steady increase in revenues associated with operations in new business sectors, operating revenues for the mobile communications business segment for the nine-month period ended December 31, 2013 decreased to ¥3,363.6 billion (a decrease of 0.2% from the same period of the previous fiscal year) due to, among other things, a decline in mobile voice related revenues due to the impact of “Monthly Support” discount programs and a decrease in billable MOU. The eight new business sectors are media and content, finance and settlement of payments, commerce, medical and healthcare, M2M (machine-to-machine), aggregation and platforms, environment and ecology and safety and security. On the other hand, notwithstanding NTT Group’s ongoing cost-cutting efforts, due to an increase in depreciation expenses from the expansion of “Xi” service base stations, operating expenses for the nine-month period ended December 31, 2013 were ¥2,677.8 billion (an increase of 0.4% from the same period of the previous fiscal year). As a result, segment operating income for the nine-month period ended December 31, 2013 was ¥685.7 billion (a decrease of 2.4% from the same period of the previous fiscal year). MOU refers to average monthly minutes of use per subscriber.

Number of subscriptions

 

     (Thousands of subscriptions)  
     As of March 31, 2013      As of December 31, 2013      Change     Percent Change  

Mobile phone services

     61,536         62,182         646        1.0

FOMA

     49,970         43,160         (6,810     (13.6 )% 

Xi

     11,566         19,021         7,455        64.5

i-mode

     32,688         27,826         (4,862     (14.9 )% 

sp-mode

     18,285         22,271         3,987        21.8

Notes:

(1) Number of Mobile phone services subscribers includes communication module service subscribers, in addition to “FOMA” service and “Xi” service subscribers.
(2) Effective March 3, 2008, FOMA services became mandatory for subscription to “2in1” services. Such FOMA service subscriptions to “2in1” services are included in the number of Mobile phone services subscribers and also in the number of FOMA service subscribers.

 

- 6 -


 

Data Communications Business Segment

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change     Percent Change  

Operating revenues

     914.2         943.1         28.8        3.2

Operating expenses

     863.9         908.2         44.3        5.1

Operating income

     50.4         34.9         (15.5     (30.8 )% 

Despite a decrease in revenues caused by the scaling down of existing large-scale systems, operating revenues in the data communications business segment for the nine-month period ended December 31, 2013 were ¥943.1 billion (an increase of 3.2% from the same period of the previous fiscal year) due to, among other things, the increase in operating revenues of NTT’s overseas subsidiaries and the depreciation of the yen. Operating expenses for the nine-month period ended December 31, 2013 rose to ¥908.2 billion (an increase of 5.1% from the same period of the previous fiscal year) due to, among other things, the effects of an increase in unprofitable transactions and the depreciation of the yen. As a result, segment operating income for the nine-month period ended December 31, 2013 was ¥34.9 billion (a decrease of 30.8% from the same period of the previous fiscal year).

 

 

Other Business Segment

Nine-Month Period Ended December 31, 2013 (April 1, 2013 – December 31, 2013)

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
     Nine Months  Ended
December 31, 2013
     Change      Percent Change  

Operating revenues

     862.9         936.4         73.5         8.5

Operating expenses

     813.1         884.8         71.7         8.8

Operating income

     49.8         51.6         1.9         3.7

Operating revenues in the other business segment for the nine-month period ended December 31, 2013 were ¥936.4 billion (an increase of 8.5% from the same period of the previous fiscal year) due to, among other things, increased revenues in the finance and construction and power businesses. On the other hand, operating expenses for the nine-month period ended December 31, 2013 were ¥884.8 billion (an increase of 8.8% from the same period of the previous fiscal year) due to, among other things, an increase in revenue-linked expenses. As a result, segment operating income for the nine-month period ended December 31, 2013 was ¥51.6 billion (an increase of 3.7% from the same period of the previous fiscal year).

 

- 7 -


(2) Qualitative Information Relating to Consolidated Financial Position

Consolidated cash flows from operating activities for the nine-month period ended December 31, 2013 were ¥1,623.0 billion (a decrease of ¥39.6 billion (2.4%) from the same period of the previous fiscal year). This decrease in cash flows was due to, among other factors, an increase in installment sales of mobile devices.

Consolidated cash flows from investing activities showed outlays of ¥1,532.7 billion (an increase in outlays of ¥137.1 billion (9.8%) from the same period of the previous fiscal year). This increase was due to, among other factors, a decrease in income from the redemption of short-term investments associated with cash management activities exceeding three months in duration and an increase in payments for the purchase of non-current investments, and other such investments while capital investments decreased.

Consolidated cash flows from financing activities amounted to cash outlays of ¥88.9 billion (a decrease in outlays of ¥291.2 billion (76.6%) from the same period of the previous fiscal year). This decrease was due to, among other factors, an increase in short-term borrowings that offset an increase in stock repurchase.

As a result of the above, NTT Group’s consolidated cash and cash equivalents as of December 31, 2013 were ¥973.7 billion, an increase of ¥12.2 billion (1.3%) from the end of the previous fiscal year.

 

     (Billions of yen)  
     Nine Months  Ended
December 31, 2012
    Nine Months  Ended
December 31, 2013
    Change     Percent Change  

Cash flows from operating activities

     1,662.6        1,623.0        (39.6     (2.4 )% 

Cash flows from investing activities

     (1,395.7     (1,532.7     (137.1     (9.8 )% 

Cash flows from financing activities

     (380.1     (88.9     291.2        76.6

(3) Qualitative Information Relating to Consolidated Results Forecasts

There are no changes to the consolidated results forecasts for the fiscal year ending March 31, 2014 announced on May 10, 2013. For the assumptions used in the consolidated results forecasts and other related matters, please see page 23.

 

- 8 -


2. Others

 

(1) Change in significant consolidated subsidiaries during the nine months ended December 31, 2013, which resulted in changes in the scope of consolidation: None

 

(2) Adoption of accounting which is simplified or exceptional for quarterly consolidated financial statements: None

 

(3) Change of accounting policy

 

i. Reclassification of accumulated other comprehensive income

Effective April 1, 2013, NTT Group adopted Accounting Standards Update (“ASU”) 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” issued by the Financial Accounting Standards Board (“FASB”).

This new accounting standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes thereto, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income (if the amount being reclassified is required to be reclassified in its entirety) or by way of cross-reference (if a partial reclassification). The adoption of this accounting standard did not have any impact on NTT Group’s financial conditions and results of operations.

 

ii. Change in accounting estimate

Effective April 1, 2013, NTT Group has revised its estimate of the expected life of metal cables based on actual utilization to reflect an extended expected life. This modification complies with FASB Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections, and will be applied going forward as a change in accounting estimates. The financial impact from this change in accounting estimate on the nine months ended December 31, 2013 to “Income before income taxes and equity in earnings (losses) of affiliated companies,” “Net income attributable to NTT” and “Per share of common stock” of “Net income attributable to NTT” is expected to be ¥17,357 million, ¥10,738 million, and ¥9.29, respectively.

 

iii. Retrospective application of equity method for an investee

As a result of the application of the equity method for NTT Group’s investment in Philippine Long Distance Telephone Company from the beginning of the three months ended June 30, 2013, the equity method of accounting was applied retrospectively, in accordance with Accounting Standards Codification Topic 323, Investments – Equity Method and Joint Ventures, issued by the FASB.

Consequently, the reported consolidated financial statements for the nine and three months ended December 31, 2012 and fiscal year ended March 31, 2013 have been revised in NTT Group’s consolidated financial statements for this retrospective application as follows.

For the nine and three months ended December 31, 2012

The impact on major items on the consolidated statements of comprehensive income for the nine and three months ended December 31, 2012 was a ¥52,458 million decrease in “Unrealized gain (loss) on securities” and a ¥14,478 million decrease in “Foreign currency translation adjustments.”

For the fiscal year ended March 31, 2013

The impact on major items on the consolidated balance sheet as of March 31, 2013 was a ¥140,512 million increase in “Investments in affiliated companies,” a ¥303,601 million decrease in “Marketable securities and other investments,” a ¥58,467 million increase in “Deferred income taxes” under “Investments and other assets” and a ¥85,456 million decrease in “Accumulated other comprehensive income (loss).”

The impact on major items on the consolidated statements of income for the year ended March 31, 2013 was a ¥3,452 million decrease in “Other, net” under “Other income (expenses),” a ¥1,614 million increase in “Equity in earnings (losses) of affiliated companies” and a ¥2,139 million decrease in “Net income attributable to NTT.”

The impact on “Net income attributable to NTT” under “Per share of common stock” was a decrease of ¥1.77.

 

iv. Reclassifications

Effective as of the three months ended June 30, 2013, in connection with NTT Group’s current state of business and initiatives such as efforts to expand into new business areas in the mobile communications business, NTT has reclassified, among other things, part of its “Mobile Voice Related Services revenues” and “IP/Packet Communications Services revenues” as “Other revenues,” and part of its “Other revenues” as “System Integration revenues.” Results for the nine months ended December 31, 2012 reflect such reclassification.

 

- 9 -


(4) Additional information

Transition to a defined contribution pension plan

During the three months ended December 31, 2013, NTT Group made the decision to transition from the contract-type corporate pension plans to a defined contribution pension plan, effective from future contributions subsequent to April 1, 2014. This change is being made in compliance with FASB Accounting Standards Codification Topic 715, Compensation – Retirement Benefits, and the full amount of unamortized prior service costs relating to the previous pension plan amendment is being recognized in one lump sum as a curtailment gain from the change in pension plans. The resulting impact on “Operating expenses” for the fiscal year ending March 31, 2014 will be ¥12,966 million.

 

- 10 -


3. CONSOLIDATED FINANCIAL STATEMENTS

(1) Consolidated Balance Sheets

 

      Millions of yen  
     March 31,
2013
    December 31,
2013
    Increase
(Decrease)
 

ASSETS

      

Current assets:

      

Cash and cash equivalents

   ¥ 961,433      ¥ 973,654      ¥ 12,221   

Short-term investments

     53,753        29,692        (24,061

Notes and accounts receivable, trade

     2,428,099        2,426,930        (1,169

Allowance for doubtful accounts

     (44,961     (44,750     211   

Accounts receivable, other

     357,255        336,670        (20,585

Inventories

     350,721        457,836        107,115   

Prepaid expenses and other current assets

     338,794        451,392        112,598   

Deferred income taxes

     224,194        227,659        3,465   
  

 

 

   

 

 

   

 

 

 

Total current assets

     4,669,288        4,859,083        189,795   
  

 

 

   

 

 

   

 

 

 

Property, plant and equipment:

      

Telecommunications equipment

     13,432,047        13,063,946        (368,101

Telecommunications service lines

     15,143,239        15,318,363        175,124   

Buildings and structures

     5,993,215        6,050,685        57,470   

Machinery, vessels and tools

     1,868,972        1,903,160        34,188   

Land

     1,139,636        1,181,336        41,700   

Construction in progress

     334,326        362,936        28,610   
  

 

 

   

 

 

   

 

 

 
     37,911,435        37,880,426        (31,009

Accumulated depreciation

     (28,134,748     (28,179,853     (45,105
  

 

 

   

 

 

   

 

 

 

Net property, plant and equipment

     9,776,687        9,700,573        (76,114
  

 

 

   

 

 

   

 

 

 

Investments and other assets:

      

Investments in affiliated companies

     551,883        562,337        10,454   

Marketable securities and other investments

     357,222        424,108        66,886   

Goodwill

     824,216        929,754        105,538   

Software

     1,340,682        1,301,721        (38,961

Other intangible assets

     278,272        276,500        (1,772

Other assets

     997,989        1,141,169        143,180   

Deferred income taxes

     752,828        697,359        (55,469
  

 

 

   

 

 

   

 

 

 

Total investments and other assets

     5,103,092        5,332,948        229,856   
  

 

 

   

 

 

   

 

 

 

Total assets

   ¥ 19,549,067      ¥ 19,892,604      ¥ 343,537   
  

 

 

   

 

 

   

 

 

 

 

- 11 -


      Millions of yen  
     March 31,
2013
    December 31,
2013
    Increase
(Decrease)
 

LIABILITIES AND EQUITY

      

Current liabilities:

      

Short-term borrowings

   ¥ 77,455      ¥ 696,425      ¥ 618,970   

Current portion of long-term debt

     703,304        460,254        (243,050

Accounts payable, trade

     1,436,643        1,119,325        (317,318

Current portion of obligations under capital leases

     16,368        15,872        (496

Accrued payroll

     437,609        367,664        (69,945

Accrued interest

     8,971        8,485        (486

Accrued taxes on income

     228,736        163,119        (65,617

Accrued consumption tax

     54,667        58,884        4,217   

Advances received

     183,723        192,783        9,060   

Other

     351,913        410,248        58,335   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     3,499,389        3,493,059        (6,330
  

 

 

   

 

 

   

 

 

 

Long-term liabilities:

      

Long-term debt

     3,234,631        3,335,134        100,503   

Obligations under capital leases

     36,254        34,220        (2,034

Liability for employees’ retirement benefits

     1,505,571        1,407,794        (97,777

Accrued liabilities for point programs

     156,233        148,960        (7,273

Deferred income taxes

     198,824        210,544        11,720   

Other

     396,162        420,798        24,636   
  

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     5,527,675        5,557,450        29,775   
  

 

 

   

 

 

   

 

 

 

Equity:

      

NTT shareholders’ equity

      

Common stock, no par value

     937,950        937,950        —     

Additional paid-in capital

     2,827,612        2,826,988        (624

Retained earnings

     5,227,268        4,707,190        (520,078

Accumulated other comprehensive income (loss)

     (192,932     (11,527     181,405   

Treasury stock, at cost

     (568,459     (381     568,078   
  

 

 

   

 

 

   

 

 

 

Total NTT shareholders’ equity

     8,231,439        8,460,220        228,781   
  

 

 

   

 

 

   

 

 

 

Noncontrolling interests

     2,290,564        2,381,875        91,311   
  

 

 

   

 

 

   

 

 

 

Total equity

     10,522,003        10,842,095        320,092   
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   ¥ 19,549,067      ¥ 19,892,604      ¥ 343,537   
  

 

 

   

 

 

   

 

 

 

 

- 12 -


(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

NINE-MONTH PERIOD ENDED DECEMBER 31

Consolidated Statements of Income

 

     Millions of yen  
     2012     2013     Increase
(Decrease)
 

Operating revenues:

      

Fixed voice related services

   ¥ 1,291,153      ¥ 1,184,765      ¥ (106,388

Mobile voice related services

     967,283        789,546        (177,737

IP / packet communications services

     2,790,555        2,789,563        (992

Sale of telecommunication equipment

     644,695        740,095        95,400   

System integration

     1,423,729        1,585,561        161,832   

Other

     804,305        935,654        131,349   
  

 

 

   

 

 

   

 

 

 
     7,921,720        8,025,184        103,464   
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Cost of services (exclusive of items shown separately below)

     1,694,898        1,720,380        25,482   

Cost of equipment sold (exclusive of items shown separately below)

     649,260        646,856        (2,404

Cost of system integration (exclusive of items shown separately below)

     989,201        1,147,150        157,949   

Depreciation and amortization

     1,408,888        1,394,935        (13,953

Impairment loss

     788        166        (622

Selling, general and administrative expenses

     2,185,448        2,127,588        (57,860

Goodwill and other intangible asset impairments

     —          2,989        2,989   
  

 

 

   

 

 

   

 

 

 
     6,928,483        7,040,064        111,581   
  

 

 

   

 

 

   

 

 

 

Operating income

     993,237        985,120        (8,117
  

 

 

   

 

 

   

 

 

 

Other income (expenses):

      

Interest and amortization of bond discounts and issue costs

     (41,407     (36,944     4,463   

Interest income

     13,283        13,221        (62

Other, net

     20,575        62,706        42,131   
  

 

 

   

 

 

   

 

 

 
     (7,549     38,983        46,532   
  

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings (losses) of affiliated companies

     985,688        1,024,103        38,415   
  

 

 

   

 

 

   

 

 

 

Income tax expense (benefit):

      

Current

     360,991        389,112        28,121   

Deferred

     19,422        (3,618     (23,040
  

 

 

   

 

 

   

 

 

 
     380,413        385,494        5,081   
  

 

 

   

 

 

   

 

 

 

Income before equity in earnings (losses) of affiliated companies

     605,275        638,609        33,334   
  

 

 

   

 

 

   

 

 

 

Equity in earnings (losses) of affiliated companies

     (7,472     14        7,486   
  

 

 

   

 

 

   

 

 

 

Net income

     597,803        638,623        40,820   
  

 

 

   

 

 

   

 

 

 

Less – Net income attributable to noncontrolling interests

     151,116        154,319        3,203   
  

 

 

   

 

 

   

 

 

 

Net income attributable to NTT

   ¥ 446,687      ¥ 484,304      ¥ 37,617   
  

 

 

   

 

 

   

 

 

 

Per share of common stock:

      

Weighted average number of shares outstanding (Shares)

     1,218,330,024        1,156,476,181     

Net income attributable to NTT (Yen)

   ¥ 366.64      ¥ 418.78     
  

 

 

   

 

 

   

Consolidated Statements of Comprehensive Income

 

     Millions of yen  
     2012     2013     Increase
(Decrease)
 

Net income

   ¥ 597,803      ¥ 638,623      ¥ 40,820   

Other comprehensive income (loss), net of tax:

      

Unrealized gain (loss) on securities

     25,935        28,200        2,265   

Unrealized gain (loss) on derivative instruments

     (1,902     (2,540     (638

Foreign currency translation adjustments

     15,123        83,928        68,805   

Pension liability adjustments

     12,270        100,677        88,407   

Total other comprehensive income (loss)

     51,426        210,265        158,839   

Total comprehensive income (loss)

     649,229        848,888        199,659   

Less – Comprehensive income attributable to noncontrolling interests

     159,280        183,179        23,899   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) attributable to NTT

   ¥ 489,949        665,709      ¥ 175,760   
  

 

 

   

 

 

   

 

 

 

 

- 13 -


THREE-MONTH PERIOD ENDED DECEMBER 31

Consolidated Statements of Income

 

      Millions of yen  
     2012     2013     Increase
(Decrease)
 

Operating revenues:

      

Fixed voice related services

   ¥ 424,302      ¥ 390,283      ¥ (34,019

Mobile voice related services

     307,988        254,497        (53,491

IP / packet communications services

     939,700        925,755        (13,945

Sale of telecommunication equipment

     242,362        297,866        55,504   

System integration

     483,457        556,434        72,977   

Other

     286,519        334,279        47,760   
  

 

 

   

 

 

   

 

 

 
     2,684,328        2,759,114        74,786   
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Cost of services (exclusive of items shown separately below)

     569,633        571,178        1,545   

Cost of equipment sold (exclusive of items shown separately below)

     230,884        276,160        45,276   

Cost of system integration (exclusive of items shown separately below)

     352,548        410,510        57,962   

Depreciation and amortization

     478,793        475,815        (2,978

Impairment loss

     —          4        4   

Selling, general and administrative expenses

     722,202        693,354        (28,848
  

 

 

   

 

 

   

 

 

 
     2,354,060        2,427,021        72,961   
  

 

 

   

 

 

   

 

 

 

Operating income

     330,268        332,093        1,825   
  

 

 

   

 

 

   

 

 

 

Other income (expenses):

      

Interest and amortization of bond discounts and issue costs

     (12,894     (12,187     707   

Interest income

     4,524        4,449        (75

Other, net

     20,987        23,970        2,983   
  

 

 

   

 

 

   

 

 

 
     12,617        16,232        3,615   
  

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings (losses) of affiliated companies

     342,885        348,325        5,440   
  

 

 

   

 

 

   

 

 

 

Income tax expense (benefit):

      

Current

     120,648        123,341        2,693   

Deferred

     9,184        5,117        (4,067
  

 

 

   

 

 

   

 

 

 
     129,832        128,458        (1,374
  

 

 

   

 

 

   

 

 

 

Income before equity in earnings (losses) of affiliated companies

     213,053        219,867        6,814   
  

 

 

   

 

 

   

 

 

 

Equity in earnings (losses) of affiliated companies

     (12,152     (5,242     6,910   
  

 

 

   

 

 

   

 

 

 

Net income

     200,901        214,625        13,724   
  

 

 

   

 

 

   

 

 

 

Less – Net income attributable to noncontrolling interests

     47,629        53,861        6,232   
  

 

 

   

 

 

   

 

 

 

Net income attributable to NTT

   ¥ 153,272      ¥ 160,764      ¥ 7,492   
  

 

 

   

 

 

   

 

 

 

Per share of common stock:

      

Weighted average number of shares outstanding (Shares)

     1,207,638,148        1,137,382,961     

Net income attributable to NTT (Yen)

   ¥ 126.92      ¥ 141.35     
  

 

 

   

 

 

   

Consolidated Statements of Comprehensive Income

 

      Millions of yen  
     2012     2013      Increase
(Decrease)
 

Net income

   ¥ 200,901      ¥ 214,625       ¥ 13,724   

Other comprehensive income (loss), net of tax:

       

Unrealized gain (loss) on securities

     13,528        11,023         (2,505

Unrealized gain (loss) on derivative instruments

     (1,175     929         2,104   

Foreign currency translation adjustments

     15,581        13,088         (2,493

Pension liability adjustments

     4,179        94,649         90,470   

Total other comprehensive income (loss)

     32,113        119,689         87,576   

Total comprehensive income (loss)

     233,014        334,314         101,300   

Less – Comprehensive income attributable to noncontrolling interests

     57,316        67,249         9,933   
  

 

 

   

 

 

    

 

 

 

Total comprehensive income (loss) attributable to NTT

   ¥ 175,698      ¥ 267,065       ¥ 91,367   
  

 

 

   

 

 

    

 

 

 

 

- 14 -


(3) Consolidated Statements of Cash Flows

NINE-MONTH PERIOD ENDED DECEMBER 31

 

     Millions of yen  
     2012     2013     Increase
(Decrease)
 

Cash flows from operating activities:

      

Net income

   ¥ 597,803      ¥ 638,623      ¥ 40,820   

Adjustments to reconcile net income to net cash provided by operating activities  -

      

Depreciation and amortization

     1,408,888        1,394,935        (13,953

Impairment loss

     788        166        (622

Deferred taxes

     19,422        (3,618     (23,040

Goodwill and other intangible asset impairments

     —          2,989        2,989   

Loss on disposal of property, plant and equipment

     58,632        63,781        5,149   

Equity in (earnings) losses of affiliated companies

     7,472        (14     (7,486

(Increase) decrease in notes and accounts receivable, trade

     46,450        17,052        (29,398

(Increase) decrease in inventories

     (90,628     (105,619     (14,991

(Increase) decrease in other current assets

     (79,906     (91,842     (11,936

Increase (decrease) in accounts payable, trade and accrued payroll

     (229,969     (250,095     (20,126

Increase (decrease) in accrued consumption tax

     8,429        3,257        (5,172

Increase (decrease) in accrued interest

     (1,251     (1,254     (3

Increase (decrease) in advances received

     (4,837     3,861        8,698   

Increase (decrease) in accrued taxes on income

     (65,009     (67,341     (2,332

Increase (decrease) in other current liabilities

     18,014        18,127        113   

Increase (decrease) in liability for employees’ retirement benefits

     49,970        51,638        1,668   

Increase (decrease) in other long-term liabilities

     (19,945     9,724        29,669   

Other

     (61,718     (61,397     321   
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

   ¥ 1,662,605      ¥ 1,622,973      ¥ (39,632
  

 

 

   

 

 

   

 

 

 

 

- 15 -


     Millions of yen  
     2012     2013     Increase
(Decrease)
 

Cash flows from investing activities:

      

Payments for property, plant and equipment

   ¥ (1,165,357   ¥ (1,161,716   ¥ 3,641   

Payments for acquisitions of intangibles

     (326,638     (310,707     15,931   

Proceeds from sale of property, plant and equipment

     24,070        40,694        16,624   

Payments for purchase of non-current investments

     (27,492     (40,885     (13,393

Proceeds from sale and redemption of non-current investments

     12,208        12,788        580   

Acquisitions of subsidiaries, net of cash acquired

     (36,867     (55,459     (18,592

Payments for purchase of short-term investments

     (648,278     (50,004     598,274   

Proceeds from redemption of short-term investments

     787,578        72,643        (714,935

Other

     (14,906     (40,103     (25,197
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (1,395,682     (1,532,749     (137,067
  

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

      

Proceeds from issuance of long-term debt

     181,905        404,980        223,075   

Payments for settlement of long-term debt

     (378,924     (582,565     (203,641

Proceeds from issuance of short-term debt

     2,602,705        4,865,207        2,262,502   

Payments for settlement of short-term debt

     (2,380,405     (4,255,747     (1,875,342

Dividends paid

     (183,405     (186,174     (2,769

Proceeds from sale of (payments for acquisition of) treasury stock, net

     (100,018     (250,130     (150,112

Acquisition of treasury stock by subsidiary

     (14,598     (5,215     9,383   

Other

     (107,397     (79,277     28,120   
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (380,137     (88,921     291,216   
  

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     157        10,918        10,761   
  

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (113,057     12,221        125,278   

Cash and cash equivalents at beginning of period

     1,020,143        961,433        (58,710
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   ¥ 907,086      ¥ 973,654      ¥ 66,568   
  

 

 

   

 

 

   

 

 

 

Cash paid during the period for:

      

Interest

   ¥ 41,720      ¥ 37,430      ¥ (4,290

Income taxes, net

     426,954        458,349        31,395   

 

- 16 -


(4) Going Concern Assumption

None

(5) Business Segments

NINE-MONTH PERIOD ENDED DECEMBER 31

 

1. Sales and operating revenues

 

     (Millions of yen)  
     Nine months  ended
December 31, 2012
    Nine months  ended
December 31, 2013
    Increase
(Decrease)
 

Regional communications business

      

External customers

   ¥ 2,390,900      ¥ 2,304,623      ¥ (86,277

Intersegment

     321,245        321,751        506   
  

 

 

   

 

 

   

 

 

 

Total

     2,712,145        2,626,374        (85,771
  

 

 

   

 

 

   

 

 

 

Long-distance and international communications business

      

External customers

     1,150,214        1,241,488        91,274   

Intersegment

     78,597        71,181        (7,416
  

 

 

   

 

 

   

 

 

 

Total

     1,228,811        1,312,669        83,858   
  

 

 

   

 

 

   

 

 

 

Mobile communications business

      

External customers

     3,340,891        3,332,676        (8,215

Intersegment

     29,904        30,888        984   
  

 

 

   

 

 

   

 

 

 

Total

     3,370,795        3,363,564        (7,231
  

 

 

   

 

 

   

 

 

 

Data communications business

      

External customers

     808,065        853,675        45,610   

Intersegment

     106,173        89,379        (16,794
  

 

 

   

 

 

   

 

 

 

Total

     914,238        943,054        28,816   
  

 

 

   

 

 

   

 

 

 

Other business

      

External customers

     231,650        292,722        61,072   

Intersegment

     631,234        643,709        12,475   
  

 

 

   

 

 

   

 

 

 

Total

     862,884        936,431        73,547   
  

 

 

   

 

 

   

 

 

 

Elimination

     (1,167,153     (1,156,908     10,245   
  

 

 

   

 

 

   

 

 

 

Consolidated total

   ¥ 7,921,720      ¥ 8,025,184      ¥ 103,464   
  

 

 

   

 

 

   

 

 

 

 

2. Segment profit

 

     (Millions of yen)  
     Nine months  ended
December 31, 2012
     Nine months  ended
December 31, 2013
     Increase
(Decrease)
 

Segment profit

        

Regional communications business

   ¥ 77,859       ¥ 100,453       ¥ 22,594   

Long-distance and international communications business

     103,528         100,419         (3,109

Mobile communications business

     702,813         685,723         (17,090

Data communications business

     50,367         34,856         (15,511

Other business

     49,783         51,633         1,850   
  

 

 

    

 

 

    

 

 

 

Total segment profit

     984,350         973,084         (11,266
  

 

 

    

 

 

    

 

 

 

Elimination

     8,887         12,036         3,149   
  

 

 

    

 

 

    

 

 

 

Consolidated total

   ¥ 993,237       ¥ 985,120       ¥ (8,117
  

 

 

    

 

 

    

 

 

 

 

- 17 -


THREE-MONTH PERIOD ENDED DECEMBER 31

 

1. Sales and operating revenues

 

     (Millions of yen)  
     Three months  ended
December 31, 2012
    Three months  ended
December 31, 2013
    Increase
(Decrease)
 

Regional communications business

      

External customers

   ¥ 796,396      ¥ 766,214      ¥ (30,182

Intersegment

     106,700        111,008        4,308   
  

 

 

   

 

 

   

 

 

 

Total

     903,096        877,222        (25,874
  

 

 

   

 

 

   

 

 

 

Long-distance and international communications business

      

External customers

     386,954        426,007        39,053   

Intersegment

     27,438        22,763        (4,675
  

 

 

   

 

 

   

 

 

 

Total

     414,392        448,770        34,378   
  

 

 

   

 

 

   

 

 

 

Mobile communications business

      

External customers

     1,152,158        1,153,619        1,461   

Intersegment

     11,317        10,974        (343
  

 

 

   

 

 

   

 

 

 

Total

     1,163,475        1,164,593        1,118   
  

 

 

   

 

 

   

 

 

 

Data communications business

      

External customers

     273,934        298,610        24,676   

Intersegment

     32,959        30,557        (2,402
  

 

 

   

 

 

   

 

 

 

Total

     306,893        329,167        22,274   
  

 

 

   

 

 

   

 

 

 

Other business

      

External customers

     74,886        114,664        39,778   

Intersegment

     225,633        219,134        (6,499
  

 

 

   

 

 

   

 

 

 

Total

     300,519        333,798        33,279   
  

 

 

   

 

 

   

 

 

 

Elimination

     (404,047     (394,436     9,611   
  

 

 

   

 

 

   

 

 

 

Consolidated total

   ¥ 2,684,328      ¥ 2,759,114      ¥ 74,786   
  

 

 

   

 

 

   

 

 

 

 

2. Segment profit

 

     (Millions of yen)  
     Three months  ended
December 31, 2012
     Three months  ended
December 31, 2013
     Increase
(Decrease)
 

Segment profit

        

Regional communications business

   ¥ 27,585       ¥ 24,836       ¥ (2,749

Long-distance and international communications business

     37,318         38,934         1,616   

Mobile communications business

     228,072         215,103         (12,969

Data communications business

     18,976         28,425         9,449   

Other business

     15,534         21,178         5,644   
  

 

 

    

 

 

    

 

 

 

Total segment profit

     327,485         328,476         991   
  

 

 

    

 

 

    

 

 

 

Elimination

     2,783         3,617         834   
  

 

 

    

 

 

    

 

 

 

Consolidated total

   ¥ 330,268       ¥ 332,093       ¥ 1,825   
  

 

 

    

 

 

    

 

 

 

 

 

- 18 -


(6) NTT Shareholders’ Equity

1. Dividends

Cash dividends paid

 

Resolution

   The shareholders’ meeting on June 25, 2013

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends paid

   ¥94,830 million

Cash dividends per share

   ¥80

Date of record

   March 31, 2013

Date of payment

   June 26, 2013
  

Resolution

   The Board of Directors’ meeting on November 8, 2013

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends paid

   ¥91,344 million

Cash dividends per share

   ¥80

Date of record

   September 30, 2013

Date of payment

   December 9, 2013

2. Treasury stock

On May 10, 2013, the board of directors of NTT resolved that NTT may acquire up to 50 million shares of its outstanding common stock for an amount in total not exceeding ¥250 billion from May 13, 2013 through March 31, 2014. Based on this resolution, NTT repurchased 48,737,200 shares of its common stock for a total purchase price of ¥250,000 million between May 2013 and October 2013, and concluded the repurchase of its common stock authorized by the board of directors’ resolution.

On November 8, 2013, the board of directors of NTT resolved that NTT will cancel 186,500,000 shares held as treasury stock on November 15, 2013, and as a result of such cancellation conducted on November 15, 2013, retained earnings have decreased by ¥818,208 million.

On February 6, 2014, the board of directors of NTT resolved that NTT may acquire up to 38 million shares of its outstanding common stock for an amount in total not exceeding ¥200 billion from February 7, 2014 through March 31, 2014.

(7) Subsequent events

Please see note 6 for details on the resolutions regarding NTT’s repurchase of its common stock.

 

- 19 -


4. (Reference)

NON-CONSOLIDATED FINANCIAL STATEMENTS

(1) Non-Consolidated Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     Millions of yen  
     March 31,
2013
     December 31,
2013
 

ASSETS

     

Current assets:

     

Cash and bank deposits

   ¥ 20,869       ¥ 31,172   

Accounts receivable, trade

     2,769         941   

Supplies

     227         250   

Subsidiary deposits

     101,312         4,256   

Other

     431,032         461,602   
  

 

 

    

 

 

 

Total current assets

     556,211         498,223   
  

 

 

    

 

 

 

Fixed assets:

     

Property, plant and equipment

     169,788         163,056   

Intangible fixed assets

     43,905         37,372   

Investments and other assets

     

Investments in subsidiaries and affiliated companies

     5,073,510         5,093,770   

Long-term loans receivable to subsidiaries

     1,588,072         1,478,972   

Other

     36,364         43,028   
  

 

 

    

 

 

 

Total investments and other assets

     6,697,946         6,615,771   
  

 

 

    

 

 

 

Total fixed assets

     6,911,640         6,816,201   
  

 

 

    

 

 

 

TOTAL ASSETS

   ¥ 7,467,851       ¥ 7,314,424   
  

 

 

    

 

 

 

 

Notes:    1.    These quarterly financial statements are exempt from auditor’s review in the legal disclosure.
   2.    These quarterly financial statements are prepared based on “Regulation for Terminology, Forms and Preparation of Quarterly Financial Statements.”

 

- 20 -


(Reference)

 

     Millions of yen  
     March 31,
2013
    December 31,
2013
 

LIABILITIES

    

Current liabilities:

    

Accounts payable, trade

   ¥ 184      ¥ 29   

Current portion of corporate bonds

     120,000        139,997   

Current portion of long-term borrowings

     223,300        178,200   

Accrued taxes on income

     19,708        10,751   

Deposit received from subsidiaries

     89,376        51,640   

Other

     32,151        201,430   
  

 

 

   

 

 

 

Total current liabilities

     484,720        582,050   
  

 

 

   

 

 

 

Long-term liabilities:

    

Corporate bonds

     1,046,258        1,006,262   

Long-term borrowings

     1,021,530        962,430   

Long-term borrowings from subsidiary

     240,000        240,000   

Liability for employees’ retirement benefits

     31,858        32,985   

Asset retirement obligations

     1,140        1,383   

Other

     1,171        1,075   
  

 

 

   

 

 

 

Total long-term liabilities

     2,341,959        2,244,136   
  

 

 

   

 

 

 

TOTAL LIABILITIES

     2,826,680        2,826,186   
  

 

 

   

 

 

 

NET ASSETS

    

Shareholders’ equity:

    

Common stock

     937,950        937,950   

Capital surplus

     2,672,826        2,672,826   

Earned surplus

     1,598,861        877,385   

Treasury stock

     (568,458     (380
  

 

 

   

 

 

 

Total shareholders’ equity

     4,641,179        4,487,781   
  

 

 

   

 

 

 

Unrealized gains (losses), translation adjustments, and others:

    

Net unrealized gains (losses) on securities

     (7     456   
  

 

 

   

 

 

 

Total unrealized gains (losses), translation adjustments, and others

     (7     456   
  

 

 

   

 

 

 

TOTAL NET ASSETS

     4,641,171        4,488,237   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

   ¥ 7,467,851      ¥ 7,314,424   
  

 

 

   

 

 

 

 

Notes:

   1.    These quarterly financial statements are exempt from auditor’s review in the legal disclosure.
   2.    These quarterly financial statements are prepared based on “Regulation for Terminology, Forms and Preparation of Quarterly Financial Statements.”

 

 

- 21 -


(Reference)

(2) Non-Consolidated Statements of Income

NINE-MONTH PERIOD ENDED DECEMBER 31

(Based on accounting principles generally accepted in Japan)

 

     Millions of yen  
     2012      2013  

Operating revenues

   ¥ 390,401       ¥ 389,265   

Operating expenses

     104,769         100,206   
  

 

 

    

 

 

 

Operating income

     285,632         289,058   
  

 

 

    

 

 

 

Non-operating revenues:

     

Interest income

     19,099         16,351   

Lease and rental income

     8,678         8,428   

Miscellaneous income

     746         961   
  

 

 

    

 

 

 

Total non-operating revenues

     28,525         25,740   
  

 

 

    

 

 

 

Non-operating expenses:

     

Interest expenses

     12,675         11,423   

Corporate bond interest expenses

     13,698         11,842   

Miscellaneous expenses

     5,762         7,744   
  

 

 

    

 

 

 

Total non-operating expenses

     32,136         31,010   
  

 

 

    

 

 

 

Recurring profit

     282,022         283,789   
  

 

 

    

 

 

 

Income before income taxes

     282,022         283,789   
  

 

 

    

 

 

 

Income taxes

     1,024         883   
  

 

 

    

 

 

 

Net income

   ¥ 280,997       ¥ 282,905   
  

 

 

    

 

 

 

 

(Reference) Major components of operating revenues

     

Dividends received

   ¥ 279,290       ¥ 284,394   

Revenues from group management

     14,250         13,875   

Revenues from basic R&D

   ¥ 90,749       ¥ 85,874   

 

Notes:    1.    These quarterly financial statements are exempt from auditor’s review in the legal disclosure.
   2.    These quarterly financial statements are prepared based on “Regulation for Terminology, Forms and Preparation of Quarterly Financial Statements.”

 

- 22 -


[Note]

 

 

 

The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

 

 

 

- 23 -


Attachment

Nippon Telegraph and Telephone Corporation

February 6, 2014

NTT’s Shares and Shareholders (as of December 31, 2013)

 

1. Classification of Shareholders

 

Details

  NTT’s Shares and Shareholders (1 unit = 100 shares)     Shares
Representing
Less Than
One Unit
 
  Government
and Public
Bodies
    Financial
Institutions
    Securities
Firms
    Other
Domestic
Corporations
    Foreign Corporations, etc.     Domestic
Individuals,
etc.
    Total    
          Non-
Individuals
    Individuals        

Total Holders

    3        256        61        6,704        1,121        868        811,419        820,432        —     

Total Shares (Units)

    4,312,317        1,774,390        69,993        160,862        3,068,179        5,419        1,958,900        11,350,060        1,691,235   

        %

    37.99        15.63        0.62        1.42        27.03        0.05        17.26        100.00        —     

 

Notes:

     (1)       “Domestic Individuals, etc.” includes 851 units of treasury stock, and “Shares Representing Less Than One Unit” includes 65 shares of treasury stock. 85,165 shares of treasury stock represents are recorded in the shareholders’ register; the actual number of stock of treasury stock at the end of December 31, 2013 was 84,865.
     (2)       “Other Domestic Corporations” includes 157 units under the name of the Japan Securities Depository Center, and “Shares Representing Less Than One Unit” includes 72 shares under the name of the Japan Securities Depository Center.
     (3)       The number of shareholders who only own shares representing less than one unit is 229,248.

 

2. Classification by Number of Shares

 

Details

   NTT’s Shares and Shareholders (1 unit = 100 shares)      Shares
Representing
Less Than
One Unit
 
   At Least
1,000 Units
     At Least
500 Units
     At Least
100 Units
     At Least
50 Units
     At Least
10 Units
     At Least
5 Units
     At Least
1 Unit
     Total     

Number of Holders

     382         165         814         926         22,702         52,937         742,506         820,432         —     

%

     0.05         0.02         0.10         0.11         2.77         6.45         90.50         100.00         —     

Total Shares (Units)

     9,198,892         112,663         165,399         59,882         348,134         321,375         1,143,715         11,350,060         1,691,235   

%

     81.05         0.99         1.46         0.53         3.07         2.83         10.08         100.00         —     

 

Notes:

     (1)       “At Least 1,000 Units” includes 851 units of treasury stock, and “Shares Representing Less Than One Unit” includes 65 shares of treasury stock.
     (2)       “At Least 100 Units” includes 157 units under the name of the Japan Securities Depository Center, and “Shares Representing Less Than One Unit” includes 72 shares under the name of the Japan Securities Depository Center.

 

3. Principal Shareholders

 

Name

   Share Holdings
(in thousands
of shares)
     Percentage of
Total Shares
Issued (%)
 

The Minister of Finance

     431,231         37.94   

Japan Trustee Services Bank, Ltd. (Trust Account)

     40,611         3.57   

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

     33,006         2.90   

Japan Trustee Services Bank, Ltd. (Trust Account 9)

     18,479         1.63   

Moxley and Co LLC

     16,726         1.47   

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

     15,018         1.32   

NTT Employee Share-Holding Association

     10,465         0.92   

The Bank of New York Mellon SA/NV 10

     10,420         0.92   

Nippon Life Insurance Company

     7,650         0.67   

State Street Bank and Trust Company 505225

     7,484         0.66   
  

 

 

    

 

 

 

Total

     591,094         52.00   
  

 

 

    

 

 

 

 

- 24 -


LOGO

 

Financial Results for the Nine Months Ended December 31, 2013

February 6, 2014


LOGO

 

The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

* “E” in this material represents that the figure is a plan or projection for operation.

** “FY” in this material indicates the fiscal year ending March 31 of the succeeding year.

*** “3Q” in this material represents the 9-month period beginning on April 1 and ending on December 31.

Financial Results for the Nine Months Ended December 31, 2013

—1—

Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


LOGO

 

FY2013/3Q Highlights

Operating Revenues and Operating Income remained mostly Consolidated unchanged from the previous fiscal year

Operating Income

(Billions of yen) Net Income increased 8% year-on-year

3Q FY Expansion of global cloud services

1,230.0

1,202.0 (forecast) Promoting M&A

Acquisition of NextiraOne, a European ICT services provider (by Dimension Data) Acquisition of Optimal Solutions Integration, a U.S. systems integration provider (by NTT DATA)

993.2 985.1

Expanding order volume by cross-selling: total of approx. $550 million in orders during FY2013/3Q

Overseas sales: 159.4 billion yen increase year-on-year; steadily expanding FY2012 FY2013 Percentage of sales to overseas corporations: 37% (5% increase year-on-year)

Enhanced competitiveness of network services

Global Revenues Expansion of NTT’s user base

(Billions of yen)

Sales of 9.87 million smartphones and 19.02 million Xi subscribers (net increase of

3Q FY 7.46 million subscribers)

1,200.0

17.87 million FLET’S Hikari subscribers (net increase of 0.57 million subscribers)

954.1 (forecast)

Expansion of Wi-Fi platforms

Cost reductions

861.0 Cost reductions related to fixed-line and mobile access services: approx. 70%

701.6 progress toward NTT’s medium-term target of 500 billion yen reduction (by the end of FY2014)

Increased shareholder returns

FY2012 FY2013 Completed the repurchase of 250.0 billion yen (49 million shares) of its common stock Cancelled 187 million shares of its treasury stock

Financial Results for the Nine Months Ended December 31, 2013 — 2 — Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


LOGO

 

FY2013/3Q Consolidated Results and Forecasts Highlights (U.S. GAAP)

Operating Revenues and Operating Income remained relatively unchanged from the previous fiscal year.

Net Income reached 484.3 billion yen (the highest level in five years), an 8.4% increase year-on-year.

(Billions of yen)

FY2013/3Q % progress FY2013 compared to

FY2012/3Q

Forecasts FY2013 Change Forecasts

[%] year-on-year

Operating

8,025.2 +103.5 +1.3% 7,921.7 11,000.0 73.0%

Revenues Operating

7,040.1 +111.6 +1.6% 6,928.5 9,770.0 72.1%

Expenses Operating

985.1 (8.1) (0.8)% 993.2 1,230.0 80.1%

Income

484.3 +37.6 +8.4% 446.7 585.0 82.8%

Net Income

Net income represents net income attributable to NTT, excluding noncontrolling interests.

Net Income for FY2012/3Q has been revised to reflect the retroactive application of the equity method of accounting for Philippine Long Distance Telephone Company.

Financial Results for the Nine Months Ended December 31, 2013

— 3 —

Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


LOGO

 

Consolidated Results and Forecasts (U.S. GAAP)

FY2013/3Q Contributing Factors by Segment

Regional communications business: Operating Income increased due to efforts to limit FLET’S Hikari subscription cancellations and cost controls.

Long distance and international communications business: Operating Revenues increased due to an increase in overseas sales. Operating Income was consistent with the level of the previous fiscal year, excluding temporary factors.

Mobile communications business: Operating Income decreased despite the launch of iPhone sales due to a delay in full-scale sales efforts.

Data communications business: Despite the effect of unprofitable business deals, the decline in profit margins has slowed due to an increase in profits during the three months ended December 31, 2013.

Operating [year-on-year:+103.5]

Revenues Data (Billions of yen)

Long distance and

Mobile communications international communications business 10.2 communications 73.5 business Elimination of business

85.8 7.2 28.8 Other intersegment/Others 8,025.2 7,921.7 83.9 business Regional communications business

FY2012/3Q FY2013/3Q

Operating [year-on-year:+111.6]

Data

Expenses communications 7.1 Regional Long distance and Mobile communications international communications business 71.7 Elimination of business communications business intersegment/Others business 44.3 Other 7,040.1 6,928.5 9.9 business

108.4 87.0

FY2012/3Q FY2013/3Q

Operating

[year-on-year:(8.1)]

Income

Regional Long distance and Mobile Data Other business Elimination of communications international communications communications intersegment/

FY2012/3Q communications FY2013/3Q business business business Others business

993.2 22.6 3.1 17.1 15.5 1.9 3.1 985.1

Financial Results for the Nine Months Ended December 31, 2013 —4— Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


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Progress of Broadband Services


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Progress of Broadband Services

Number of Subscribers for Fixed Broadband Services

The number of FLET’s Hikari subscribers increased 0.57 million to 17.87 million due to competitive prices and efforts to retain customers.

NTT Group aims to achieve its annual targets by, among other things, strengthening its efforts to meet the demands of small- to medium-sized businesses and through Wi-Fi use.

Number of subscribers

(Thousands)

Changes from the preceding quarter

1

2

3

1 Number of FLET’S Hikari subscribers includes B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light and FLET’S Hikari WiFi Access provided by NTT East and B FLET’S, FLET’S Hikari Premium, FLET’S Hikari Mytown, FLET’S Hikari Next, FLET’S Hikari Light and FLET’S Hikari WiFi Access provided by NTT West.

2 Number of opened connections excludes openings due to relocations.

3 Number of Hikari Denwa subscribers is presented in thousands of channels.

Financial Results for the Nine Months Ended December 31, 2013

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Progress of Broadband Services

Number of Subscribers for Mobile Broadband Services

The number of Xi subscribers grew steadily, reaching 19.02 million.

NTT Group further expanded its user base through the development of sales strategies geared toward young people, the provision of attractive handsets and the strengthening of its network quality.

Number of subscribers

(Thousands)

Changes from the preceding quarter

The number of communication module service subscribers is included in FOMA subscribers.

Financial Results for the Nine Months Ended December 31, 2013

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Progress of Broadband Services

ARPU of Fixed Broadband Services (FLET’S Hikari)

Optional Service increased year-on-year due to an increase in, among other things, the number of Hikari Denwa subscribers.

Basic Monthly Charge decreased year-on-year as a result of increased service discounts.

NTT East Optional Service (Yen) Basic Monthly Charge

NTT West

(Yen)

FLET’S Hikari includes B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light and FLET’S Hikari WiFi Access provided by NTT East and B FLET’S, FLET’S Hikari Premium,

FLET’S Hikari Mytown, FLET’S Hikari Next, FLET’S Hikari Light and FLET’S Hikari WiFi Access provided by NTT West. Commencing in the fiscal year ending March 31, 2014, NTT East and NTT West began including in their respective FLET'S Hikari ARPU calculations revenues from NTT East's and NTT West's “FLET'S VPN WIDE” virtual private network option. NTT East's and NTT West's FLET'S Hikari ARPU for the three months ended June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013 and for the fiscal year ended March 31, 2013 have been revised to include revenues from “FLET’S VPN WIDE.” Please see page 22 regarding the calculation of ARPU.

Financial Results for the Nine Months Ended December 31, 2013

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Progress of Broadband Services

ARPU of Mobile Broadband Services (FOMA, Xi)

Voice ARPU decreased year-on-year as a result of, among other things, the impact of increased monthly support discounts.

Although there was an increase in smartphone use, Packet ARPU decreased year-on-year due to the impact of monthly support discounts.

Smart ARPU increased year-on-year due to, among other things, the expansion of “dmarket” and other new services.

(Yen)

?Communication module service subscribers and the revenues thereof are not included in the calculation of mobile broadband services ARPU. Please see page 22 regarding the calculation of ARPU.

Financial Results for the Nine Months Ended December 31, 2013

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Progress of Broadband Services

Number of Subscribers for Video Services

The number of Hikari TV and FLET’S TV subscribers increased to 3.84 million. NTT Group continued to expand its customer base through its initiatives to shift toward multi-devices centered around smart TV and through the development of new businesses, such as music and games.

(Thousands)

?“FLET’S TV” requires a subscription to “FLET’S TV Transmission Service,” provided by NTT East and NTT West, and a subscription to Opticast Inc.’s broadcast service, “Opticast Facility Use Services.”

Financial Results for the Nine Months Ended December 31, 2013

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Financial Information


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Subsidiaries’ Results (JPN GAAP Non-Consolidated)

NTT East Financial Results

Although Operating Revenues decreased as a result of lower revenues from Voice Transmission Services, Operating Income increased due to, among other things, efforts to streamline expenses.

(Billions of yen)

FY2013/3Q

Operating 45.0

Revenues (3.3)% Progress

74.0%

1,364.6 1,319.5

Voice Transmission Services (47.4) IP Services +6.5 Others (4.0)

FY2012/3Q FY2013/3Q

54.0

Operating

(4.1)% Progress

Expenses

72.7%

1,303.6 Personnel expenses (1.4) 1,249.5 Expenses for purchase of goods and services and other expenses (39.7) Depreciation expenses and loss on disposal of assets (12.8)

FY2012/3Q FY2013/3Q

Operating Progress Income 9.0 107.6%

60.9 +14.8% 70.0

FY2013E

48.7

(2.7%)

1,831.7 1,783.0

Voice Transmission Services (67.1) IP Services +7.1 Others +11.3

FY2012 FY2013E

48.7

(2.8)%

1,766.7 Personnel expenses (0.9) 1,718.0 Expenses for purchase of goods and services and other expenses (33.8) Depreciation expenses and loss on disposal of assets (13.9)

FY2012 FY2013E

±0

65.0 ±0% 65.0

Financial Results for the Nine Months Ended December 31, 2013

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Subsidiaries’ Results (JPN GAAP Non-Consolidated)

NTT West Financial Results

Although Operating Revenues decreased as a result of lower revenues from Voice Transmission Services, Operating Income increased due to, among other things, efforts to streamline expenses.

FY2013/3Q

36.5

Operating

Revenues (3.0)%

1,208.5

Voice Transmission Services (43.8) IP Services +8.1 Others (0.8)

FY2012/3Q

37.2

Operating

(3.1)%

Expenses

1,190.3 Personnel expenses (4.8) Expenses for purchase of goods and services and other expenses (18.6) Depreciation expenses and loss on disposal of assets (13.6)

FY2012/3Q

Operating

Income 0.6

18.2 +3.8%

Progress

73.9%

1,172.0

FY2013/3Q

Progress

73.6%

1,153.0

FY2013/3Q

Progress

94.9%

18.9

(Billions of yen)

FY2013E

41.9

(2.6)%

1,627.9 Voice Transmission Services (58.8) 1,586.0 IP Services +17.0 Others (0.2)

FY2012 FY2013E

42.7

(2.7)%

1,608.7 Personnel expenses (4.4) 1,566.0 Expenses for purchase of goods and services and other expenses (17.1) Depreciation expenses and loss on disposal of assets (21.1)

FY2012 FY2013E

0.7

19.2 +4.1% 20.0

Financial Results for the Nine Months Ended December 31, 2013

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Subsidiaries’ Results (JPN GAAP Non-Consolidated)

NTT Communications Financial Results

In response to the decrease in Operating Revenues for Voice Transmission Service, NTT Com focused on cost reductions through improved business operation efficiency.

FY2013/3Q

Operating 14.3 Revenues (2.0)%

699.7 Voice Transmission Service (18.0) IP Services (2.3) Others +6.0

FY2012/3Q

6.4

Operating

Expenses (1.1)%

605.8

Personnel expenses (6.5) Expenses for purchase of goods and services and other expenses +0.5 Depreciation expenses and loss on disposal of assets (0.4)

FY2012/3Q

Operating

Income 7.8

93.9 (8.4)%

Progress

74.1%

685.4

FY2013/3Q

Progress

73.7%

599.3

FY2013/3Q

Progress

76.8%

86.0

(Billions of yen)

FY2013E

19.8

(2.1)%

944.8 Voice Transmission Services (24.9) 925.0 IP Services +0.1 Others +4.9

FY2012 FY2013E

13.6

(1.7)%

826.6 813.0

Personnel expenses (5.4) Expenses for purchase of goods and services and other expenses (6.1) Depreciation expenses and loss on disposal of assets (2.0)

FY2012 FY2013E

6.1

118.1 (5.2)% 112.0

Financial Results for the Nine Months Ended December 31, 2013

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Subsidiaries’ Results (JPN GAAP Consolidated)

NTT DATA Financial Results

Despite the effect of unprofitable business deals, the decline in profit margins slowed due to an increase in profits during the three months ended December 31, 2013.

(Billions of yen)

FY2013/3Q FY2013E

28.0

Operating 30.6 Progress +2.2% Revenues 70.9%

+3.4%

1,301.9 1,330.0 911.8 942.5

FY2012/3Q FY2013/3Q FY2012 FY2013E

53.7

Operating Progress +4.4%

53.8 %

Expenses 72.2%

+6.2%

1,216.2 1,270.0 862.9 916.8

FY2012/3Q FY2013/3Q FY2012 FY2013E

Operating Progress

Income 23.1 42.9% 25.6

48.8 (47.4)% 25.7 85.6 (30.0)% 60.0

Financial Results for the Nine Months Ended December 31, 2013

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Subsidiaries’ Results (U.S. GAAP Consolidated)

NTT DOCOMO Financial Results

Operating Income decreased despite the launch of iPhone sales due to a delay in full-scale sales efforts.

(Billions of yen)

FY2013/3Q FY2013E

169.9

Operating 7.2 +3.8

Progress

Revenues (0.2) 72.5%

4,470.1 4,640.0 3,370.8 3,363.6

FY2012/3Q FY2013/3Q FY2012 FY2013E

167.1

+4.6

Operating 6.3 Progress Expenses 70.4%

+0.2

3,632.9 3,800.0 2,668.6 2,674.9

FY2012/3Q FY2013/3Q FY2012 FY2013E

Operating Progress

Income 13.5 82.0% 2.8

702.2 (1.9) 688.7 837.2 +0.3 840.0

Financial Results for the Nine Months Ended December 31, 2013

—14—

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Details of Difference Between Consolidated Operating Income and Total Operating Income of

5

 

Major Subsidiaries

FY2012/3Q

90.2

924.2 NTT (Holding Company): 6.3

NTT URBAN DEVELOPMENT (Consolidated): 23.8 NTT COMWARE: 4.3 NTT FINANCE (Consolidated): 20.6 Outsourcing companies (East): 3.1 Outsourcing companies (West): (1.0) Other companies: 32.9

(Billions of yen)

21.2

Pension (actuarial difference, etc.): (4.3)

Depreciation of engineering facilities: (21.7) 993.2 Adjustments between operating and non-operating items, including eliminations, etc.

Total operating income Total operating income of subsidiaries other than Elimination and Consolidated operating of 5 major subsidiaries the 5 major subsidiaries (excluding the effect of U.S. GAAP income

(JPN GAAP) dividends received by NTT (Holding Company)) adjustments (U.S. GAAP)

FY2013/3Q

19.8

75.8

Pension (actuarial difference, etc): 22.1

Depreciation of engineering facilities: (18.7) 985.1 889.4 NTT (Holding Company): 4.6 Adjustments between operating and non-operating NTT URBAN DEVELOPMENT (Consolidated): 25.9 items, including eliminations, etc.

NTT COMWARE: 0.9

NTT FINANCE (Consolidated): 14.0 Outsourcing companies (East): 5.3 Outsourcing companies (West): (5.4) Other companies: 30.5

Total operating income Total operating income of subsidiaries other than Elimination and Consolidated operating of 5 major subsidiaries the 5 major subsidiaries (excluding the effect of U.S. GAAP income

(JPN GAAP) dividends received by NTT (Holding Company)) adjustments (U.S. GAAP)

Financial Results for the Nine Months Ended December 31, 2013

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Details of Consolidated Cash Flows

FCF decreased by 176.7 billion yen year-on-year as a result of, among other things, an increase in installment sales of mobile handsets and an increase in M&A outlays.

Cash flows from Cash flows from FCF Cash flows from operating activities investing activities (A) + (B) financing activities (A) (B)

(Billions of yen)

2,000

1,000

0

(1,000)

(2,000)

1,662.6

1,623.0

(1,395.7)

(1,532.7)

266.9

90.2

(380.1)

(88.9)

FY2012/3Q

FY2013/3Q

(176.7)

(137.1) +291.2

(39.6)

Increase/Decrease from the same period of the previous fiscal year

Financial Results for the Nine Months Ended December 31, 2013

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Appendices


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Capital Appendices Investment

(Billions of yen)

1,970.0 1,946.6 1,870.0 1,285.58 1,342.2 1,309.0 116.6 159.3 140.0 95.3 82.9 109.2 79.6 64.7 95.0 243.3 245.4 246.4 249.7 249.5 246.1 501.3 540.4 472.3

FY2011 FY2012 FY2013E

Other

NTT DATA (Consolidated)

NTT Communications

NTT West

NTT East

NTT DOCOMO (Consolidated)

FY2011/3Q FY2011 FY2012/3Q FY2012 FY2013/3Q FY2013E

Financial Results for the Nine Months Ended December 31, 2013

—17—

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Appendices

Shareholder Returns

(yen)

Dividend

Dividends per share

Dividends per share

Pay-out ratio

Pay-out ratio

200 100 0 110 120 120 140 160 170 33.8%

FY2008 FY2009 FY2010

FY2011

FY2012

FY2013E

50% 25% 0%

* Figures for FY2012 have been revised to reflect the retroactive application of the equity method of accounting for Philippine Long

Distance Telephone Company.

(Billions of yen)

Share buy backs

500 400 300 200 100 0 200.0 381.7 150.0

Up to 200.0* 250.0

FY2008 FY2009 FY2010

FY2011

FY2012

FY2013E

*In response to the disposal of NTT stock by the Japanese government, NTT has resolved to repurchase up to 38 million shares or up to 200.0 billion yen of its common stock by March 2014

Financial Results for the Nine Months Ended December 31, 2013

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Appendices

FY2013/3Q Details of Financial Results (Per Item)

Operating

Fixed IP/packet : (3.3) (Billions of yen) Revenues [ year-on-year:+103.5] Mobile IP/packet : +1.8 Other : +0.5

Voice related SI revenues and sales IP/packet Other revenues services revenues of telecommunications communications 284.1 equipment services revenues

1.0 131.3 257.2

Fixed voice

7,921.7 Systems Integration 8,025.2 Mobile voice Telecommunications equipment

Systems Integration : +161.8 Fixed voice : (106.4) Telecommunications equipment (Fixed-line) : + 0.9 Mobile voice : (177.7) Telecommunications equipment (Mobile) : +94.5

FY2012/3Q FY2013/3Q

Operating

Expenses [year-on-year:+111.6]

4.3

21.9 Other expenses

4.0

89.4 Personnel expenses Depreciation Expenses for purchase

6,928.5 expenses and loss on of goods and services 7,040.1 disposal and other expenses of assets

FY2012/3Q FY2013/3Q

*Beginning with FY2013, NTT Group revised a portion of its breakdown of Operating Revenue components. As a result, each of the components of Operating Revenues for FY2012 has been adjusted to reflect this change.

Financial Results for the Nine Months Ended December 31, 2013 :—19— Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


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Details Appendices of Consolidated Balance Sheet

March 31, 2013 December 31, 2013

(Billions of yen)

19,892.6 19,549.1

Liabilities Assets Liabilities

Assets 9,050.5 9,027.1 19,892.6 19,549.1 (+23.4) (+343.5)

Interest-Bearing Interest-Bearing Debt Debt 4,036.0 4,515.2 (+479.2)

Liability for Employees’ Liability for Employees’ Retirement Benefits Depreciable Assets Depreciable Assets Retirement Benefits 1,505.6 (property, plant and 1,407.8 (property, plant and equipment) equipment) ((97.8))

8,156.3 8,302.7 ((146.4))

Equity Equity

10,522.0 10,842.1

(+320.1) Deferred Tax Deferred Tax Assets Assets (non-current)

Treasury Stock Treasury Stock (non-current) 697.4 (0.4) (568.5) 752.8 ((55.5)) [+568.1]

* Figures for March 31, 2013 have been revised to reflect the retroactive application of the equity method of accounting for Philippine Long Distance Telephone Company.

Financial Results for the Nine Months Ended December 31, 2013

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Appendices

Consolidated and Main Subsidiaries’ Financial Results for FY2013/3Q

(Billions of yen)

(1)

 

NTT NTT

NTT East NTT West NTT Com NTT DATA NTT DOCOMO Consolidated (Holding Company)

Non-Consolidated Non-Consolidated Non-Consolidated Non-Consolidated Consolidated Consolidated

(U.S. GAAP) (JPN GAAP) (JPN GAAP) (JPN GAAP) (JPN GAAP) (JPN GAAP) (U.S. GAAP)

Operating Revenues 8,025.2 389.2 1,319.5 1,172.0 685.4 942.5 3,363.6

Change year-on-year 103.5 (1.1) (45.0) (36.5) (14.3) 30.6 (7.2) (% change) 1.3% (0.3)% (3.3)% (3.0)% (2.0)% 3.4% (0.2)% Forecasts for FY2013 11,000.0 433.0 1,783.0 1,586.0 925.0 1,330.0 4,640.0 (% progress) 73.0% 89.9% 74.0% 73.9% 74.1% 70.9% 72.5%

Operating Expenses 7,040.1 100.2 1,249.5 1,153.0 599.3 916.8 2,674.9

Change year-on-year 111.6 (4.5) (54.0) (37.2) (6.4) 53.8 6.3 (% change) 1.6% (4.4)% (4.1)% (3.1)% (1.1)% 6.2% 0.2% Forecasts for FY2013 9,770.0 149.0 1,718.0 1,566.0 813.0 1,270.0 3,800.0 (% progress) 72.1% 67.3% 72.7% 73.6% 73.7% 72.2% 70.4%

Operating Income 985.1 289.0 70.0 18.9 86.0 25.7 688.7

Change year-on-year (8.1) 3.4 9.0 0.6 (7.8) (23.1) (13.5) (% change) (0.8)% 1.2% 14.8% 3.8% (8.4)% (47.4)% (1.9)% Forecasts for FY2013 1,230.0 284.0 65.0 20.0 112.0 60.0 840.0 (% progress) 80.1% 101.8% 107.6% 94.9% 76.8% 42.9% 82.0%

Income Before (2)

Income Taxes 1,024.1 283.7 89.9 27.6 102.3 28.4 703.6

Change year-on-year 38.4 1.7 8.8 0.8 (3.3) (16.3) 4.3 (% change) 3.9% 0.6% 11.0% 3.2% (3.2)% (36.5)% 0.6% Forecasts for FY2013 1,280.0 278.0 83.0 28.0 122.0 49.0 842.0 (% progress) 80.0% 102.1% 108.2% 98.7% 83.9% 58.0% 83.6%

(3)

 

(4)

Net Income 484.3 282.9 57.8 18.4 69.0 10.1 430.2

(5)

 

Change year-on-year 37.6 1.9 5.5 (3.4) (2.3) (11.9) 13.7 (% change) 8.4% 0.7% 10.7% (15.8)% (3.3)% (54.1)% 3.3% Forecasts for FY2013 585.0 280.0 50.0 19.0 84.0 23.0 510.0 (% progress) 82.8% 101.0% 115.8% 97.1% 82.2% 44.0% 84.3%

(1) The number of consolidated subsidiaries is 840 and the number of companies accounted for under the equity method is 110.

(2) “Income Before Income Taxes” for NTT (Holding Company), NTT East, NTT West, NTT Communications and NTT DATA represent their recurring profits. (3) “Net Income” for NTT Consolidated represents “Net income attributable to NTT, excluding noncontrolling interests.” (4) “Net Income” for NTT DOCOMO represents “Net income attributable to NTT DOCOMO, excluding noncontrolling interests.”

(5) “Change year-on-year (% change)” of “Net Income” for NTT Consolidated reflects the retroactive application of the equity method of accounting for Philippine Long Distance Telephone Company.

Financial Results for the Nine Months Ended December 31, 2013

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Appendices

Calculation of ARPU

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues attributable to each designated service on a per user basis. In the case of NTT Group’s fixed-line business, ARPU is calculated by dividing revenue items included in the operating revenues of NTT Group’s regional communications business segment, that is, telephone subscriber lines, "INS-NET" and "FLET'S Hikari," by the number of Active Subscribers to the relevant services.

In the case of mobile communications business, ARPU is calculated by dividing revenue items included in operating revenues from NTT Group’s mobile communications business segment, such as revenues from FOMA mobile phone services and Xi mobile phone services, that are incurred consistently each month (i.e., basic monthly charges and voice/packet transmission charges), by the number of Active Subscribers to the relevant services. The calculation of these figures excludes revenues that are not representative of monthly average usage, such as telecommunications equipment sales, activation fees and universal service charges.

NTT believes that its ARPU figures calculated in this way provide useful information regarding the monthly average usage of its subscribers. The revenue items included in the numerators of NTT Group’s ARPU figures are based on its financial results comprising its U.S. GAAP results of operations.

Notes

(1)We compute the following four categories of ARPU for business conducted by each of NTT East and NTT West.

Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines): Calculated based on revenues from monthly charges and call charges for Telephone Subscriber Lines and INS-NET Subscriber Lines, which are included in operating revenues from Voice Transmission Services (excluding IP Services), and revenues from "FLET'S ADSL" and "FLET'S ISDN," which are included in operating revenues from IP Services.

Telephone Subscriber Lines ARPU: Calculated based on revenues from monthly charges and call charges for Telephone Subscriber Lines and revenues from "FLET'S ADSL." INS-NET Subscriber Lines ARPU: Calculated based on revenues from monthly charges and call charges for "INS-NET" Subscriber Lines and revenues from "FLET'S ISDN."

FLET’S Hikari ARPU: Calculated based on revenues from "FLET’S Hikari" (including "FLET’S Hikari" optional services), which are included in operating revenues from IP Services, revenues from monthly charges, call charges and connection device charges for "Hikari Denwa," and revenues from "FLET’S Hikari" optional services, which are included in Supplementary Business revenues.

—"FLET'S Hikari" includes "B FLET'S," "FLET'S Hikari Next," "FLET'S Hikari Light" and "FLET'S Hikari WiFi Access" provided by NTT East, and "B FLET'S," "FLET'S Hikari Premium," "FLET'S Hikari Mytown," "FLET'S Hikari Next," "FLET'S Hikari Light" and "FLET'S Hikari WiFi Access" provided by NTT West.

—Commencing in the fiscal year ending Mar. 31, 2014, NTT East and NTT West began including in their respective FLET'S Hikari ARPU calculations revenues from NTT East's and NTT West's “FLET'S VPN WIDE” virtual private network option. These revenues are part of NTT East's and NTT West's operating revenues from IP services. As a result of this new calculation methodology, NTT East's and NTT West's FLET'S Hikari ARPU for the three months ended Jun. 30, 2012, Sept. 30, 2012, Dec. 31, 2012 and Mar. 31, 2013 and for the fiscal year ended Mar. 31, 2013 include revenues from “FLET'S VPN WIDE” as stated below.

FY2012/1Q: NTT East 20yen, NTT West 10yen FY2012/2Q: NTT East 20yen, NTT West 20yen FY2012/3Q: NTT East 20yen, NTT West 20yen FY2012/4Q: NTT East 20yen, NTT West 20yen FY2012 Results: NTT East 20yen, NTT West 20yen

(2)Revenues from interconnection charges are excluded from the calculation of Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), Telephone Subscriber Lines ARPU, INS-NET Subscriber Lines ARPU, and FLET'S Hikari ARPU.

(3)For purposes of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), Telephone Subscriber Lines ARPU and INS-NET Subscriber Lines ARPU, the number of subscribers is determined based on the number of subscriptions for each service.

(4)In terms of number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases roughly ten times greater than INS-Net 64. For this reason, for the purpose of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines) and INS-NET Subscriber Lines ARPU, one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions.

(5)For purposes of calculating FLET'S Hikari ARPU, number of subscribers is determined based on the number of "FLET'S Hikari" subscribers, including subscribers to "B FLET'S," "FLET'S Hikari Next," "FLET'S Hikari Light" and "FLET'S Hikari WiFi Access" provided by NTT East, and subscribers to "B FLET'S," "FLET'S Hikari Premium," "FLET'S Hikari Mytown," "FLET'S Hikari Next," "FLET'S Hikari Light" and "FLET'S Hikari WiFi Access" provided by NTT West.

(6)The following is the formula we use to compute ARPU for mobile business conducted by NTT DOCOMO.

Mobile Aggregate ARPU ("FOMA"+"Xi") = Voice ARPU ("FOMA"+"Xi") + Packet ARPU ("FOMA"+"Xi") + Smart ARPU ("FOMA"+"Xi").

—NTT DOCOMO’s Voice ARPU ("FOMA"+"Xi") is based on operating revenues related to voice services, such as basic monthly charges and voice communication charges attributable to our "FOMA" and "Xi" services, and our Packet ARPU ("FOMA"+"Xi") is based on operating revenues related to packet services, such as flat monthly fees and packet communication charges attributable to our "FOMA" and "Xi" services and our Smart ARPU (“FOMA”+”Xi”) is based on operating revenues from a part of Other Operating Revenues attributable to “FOMA” and “Xi” wireless communications services (content services related revenues, fee collection agency commissions, handset warranty service revenues, advertising revenues, etc.).

(7)NTT DOCOMO began using the Smart ARPU metric from the three months ended Sept. 30, 2012. As a result, Smart ARPU is now included in Mobile Aggregate ARPU. In addition, the following amounts (content services related revenues) that were formerly included in Packet ARPU are now classified as Smart ARPU: 80 yen out of Packet ARPU revenues for the nine months ended Dec. 31, 2012; and 80 yen out of Packet ARPU revenues for the year ended Mar. 31, 2013.

(8)Communications module service, phone number storage service, mail address storage service and docomo Business Transceiver subscribers and the revenues therefrom are not included in the calculations of Mobile Aggregate ARPU.

(9)Number of active subscribers used in the ARPU calculation of NTT East and NTT West are as below.

1Q Results: Sum of number of active subscribers** for each month from Apr. to Jun.

2Q Results: Sum of number of active subscribers** for each month from Jul. to Sept.

3Q Results: Sum of number of active subscribers** for each month from Oct. to Dec.

4Q Results: Sum of number of active subscribers** for each month from Jan. to Mar.

Nine Months Results: Sum of number of active subscribers** for each month from Apr. to Dec.

FY Results : Sum of number of active subscribers** for each month from Apr. to Mar.

FY Forecast: Sum of the sum of actual number of active subscribers at the end of each month from Apr. to Sept. and the average expected active number of subscribers during the second half of the fiscal year ((number of subscribers at end of Sept. + number of expected subscribers at end of the following Mar.)/2)x6

(10)Number of active subscribers used in the ARPU calculation of NTT DOCOMO are as below.

1Q Results: Sum of number of active subscribers** for each month from Apr. to Jun.

2Q Results: Sum of number of active subscribers** for each month from Jul. to Sept.

3Q Results: Sum of number of active subscribers** for each month from Oct. to Dec.

4Q Results: Sum of number of active subscribers** for each month from Jan. to Mar.

Nine Months Results: Sum of number of active subscribers** for each month from Apr. to Dec.

FY Results: Sum of number of active subscribers** for each month from Apr. to Mar.

FY Forecast: Sum of expected number of active subscribers** for each month from Apr. to Mar.

(11) Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

**active subscribers = (number of subscribers at end of previous month + number of subscribers at end of the current month)/2

Financial Results for the Nine Months Ended December 31, 2013

—22—

Copyright (c) 2014 Nippon Telegraph and Telephone Corporation


February 6, 2014

FOR IMMEDIATE RELEASE

Financial Statements for the Nine Months Ended December 31, 2013

The results of Nippon Telegraph and Telephone East Corporation (NTT East) for the nine months ended December 31, 2013 are presented in the following attachments.

(Attachments)

 

1. Non-Consolidated Comparative Balance Sheets

 

2. Non-Consolidated Comparative Statements of Income

 

3. Business Results (Non-Consolidated Operating Revenues)

For inquiries, please contact:

Mr. Yasuhiro Kawamori or Mr. Chikashi Sakurai

Accounting Section, Finance Division

Nippon Telegraph and Telephone East Corporation

Tel: +81-3-5359-3331

E-mail: kessan_info@sinoa.east.ntt.co.jp


1. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     March 31, 2013     December 31, 2013     Increase
(Decrease)
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     484,112        475,679        (8,432

Antenna facilities

     4,643        4,440        (203

Terminal equipment

     55,006        47,742        (7,263

Local line facilities

     846,814        844,976        (1,838

Long-distance line facilities

     4,608        4,254        (353

Engineering facilities

     621,339        611,322        (10,016

Submarine line facilities

     1,520        1,500        (19

Buildings

     455,586        444,246        (11,339

Construction in progress

     36,097        31,685        (4,411

Other

     268,012        262,628        (5,383

Total property, plant and equipment

     2,777,740        2,728,478        (49,261

Intangible fixed assets

     92,108        88,393        (3,715

Total fixed assets - telecommunications businesses

     2,869,848        2,816,871        (52,977

Investments and other assets

      

Other investments and assets

     210,652        218,294        7,642   

Allowance for doubtful accounts

     (898     (804     94   

Total investments and other assets

     209,754        217,490        7,736   

Total fixed assets

     3,079,602        3,034,361        (45,241

Current assets:

      

Cash and bank deposits

     59,223        16,092        (43,130

Notes receivable

     7        41        33   

Accounts receivable, trade

     261,400        245,542        (15,857

Supplies

     36,206        37,922        1,716   

Other current assets

     215,233        194,387        (20,846

Allowance for doubtful accounts

     (1,826     (1,649     177   

Total current assets

     570,243        492,336        (77,907
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     3,649,846        3,526,698        (123,148
  

 

 

   

 

 

   

 

 

 

 

– 1 –


     (Millions of yen)  
     March 31, 2013      December 31, 2013     Increase
(Decrease)
 

LIABILITIES

       

Long-term liabilities:

       

Long-term borrowings from parent company

     576,195         552,485        (23,710

Liability for employees’ retirement benefits

     222,469         235,249        12,779   

Reserve for point services

     6,658         9,740        3,082   

Reserve for unused telephone cards

     12,647         11,494        (1,153

Allowance for environmental measures

     —           4,511        4,511   

Asset retirement obligations

     602         1,240        637   

Other long-term liabilities

     11,856         9,687        (2,169

Total long-term liabilities

     830,430         824,409        (6,021

Current liabilities:

       

Current portion of long-term borrowings from parent company

     168,155         147,420        (20,735

Accounts payable, trade

     93,597         39,026        (54,571

Accrued taxes on income

     7,681         6,758     (923

Allowance for environmental measures

     —           11        11   

Asset retirement obligations

     —           1        1   

Other current liabilities

     401,697         335,732        (65,965

Total current liabilities

     671,132         528,950        (142,182
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES

     1,501,563         1,353,359        (148,203
  

 

 

    

 

 

   

 

 

 

NET ASSETS

       

Shareholders’ equity:

       

Common stock

     335,000         335,000        —     

Capital surplus

     1,499,726         1,499,726        —     

Earned surplus

     313,284         337,661        24,376   

Total shareholders’ equity

     2,148,011         2,172,388        24,376   

Unrealized gains (losses), translation adjustments, and others:

       

Net unrealized gains (losses) on securities

     271         951        679   

Total unrealized gains (losses), translation adjustments, and others

     271         951        679   
  

 

 

    

 

 

   

 

 

 

TOTAL NET ASSETS

     2,148,283         2,173,339        25,055   
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

     3,649,846         3,526,698        (123,148
  

 

 

    

 

 

   

 

 

 

 

Note:   *NTT East participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 2 –


2. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
    Nine months ended
December 31, 2013
    Increase
(Decrease)
    Year ended
March 31, 2013
 

Telecommunications businesses:

        

Operating revenues

     1,269,877        1,224,588        (45,288     1,689,238   

Operating expenses

     1,218,349        1,164,766        (53,582     1,636,091   

Operating income from telecommunications businesses

     51,528        59,822        8,293        53,146   

Supplementary businesses:

        

Operating revenues

     94,727        94,987        260        142,559   

Operating expenses

     85,275        84,799        (475     130,634   

Operating income from supplementary businesses

     9,451        10,187        735        11,924   

Operating income

     60,980        70,009        9,029        65,071   

Non-operating revenues:

        

Interest income

     36        52        15        62   

Dividends received

     2,491        3,674        1,183        2,494   

Lease and rental income

     32,510        33,331        820        43,166   

Miscellaneous income

     7,401        4,616        (2,785     14,467   

Total non-operating revenues

     42,439        41,674        (765     60,190   

Non-operating expenses:

        

Interest expenses

     6,730        5,508        (1,221     8,792   

Lease and rental expenses

     14,703        15,532        829        24,063   

Miscellaneous expenses

     955        724        (231     3,512   

Total non-operating expenses

     22,389        21,765        (623     36,368   

Recurring profit

     81,030        89,918        8,887        88,893   

Special losses

     3,482        3,382        (99     7,980   

Income before income taxes

     77,548        86,535        8,987        80,912   

Income taxes

     25,269     28,659     3,389        28,090   

Net income

     52,278        57,876        5,597        52,822   

 

Note:

   *NTT East participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


3. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
     Nine months ended
December 31, 2013
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2013
 

Voice transmission services revenues (excluding IP services revenues)

     441,396         393,909         (47,486     (10.8     579,196   

Monthly charge revenues*

     317,341         286,725         (30,615     (9.6     417,852   

Call rates revenues*

     36,846         32,244         (4,601     (12.5     47,939   

Interconnection call revenues*

     55,682         48,354         (7,327     (13.2     72,378   

IP services revenues

     624,195         630,705         6,510        1.0        835,886   

Leased circuit services revenues (excluding IP services revenues)

     92,550         88,803         (3,746     (4.0     122,777   

Telegram services revenues

     11,944         11,080         (863     (7.2     16,107   

Other telecommunications services revenues

     99,790         100,087         297        0.3        135,270   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Telecommunications total revenues

     1,269,877         1,224,588         (45,288     (3.6     1,689,238   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplementary business total revenues

     94,727         94,987         260        0.3        142,559   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,364,604         1,319,575         (45,028     (3.3     1,831,797   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

* Partial listing only

 

– 4 –


February 6, 2014

FOR IMMEDIATE RELEASE

Financial Statements for the Nine Months Ended December 31, 2013

The results of Nippon Telegraph and Telephone West Corporation (NTT West) for the nine months ended December 31, 2013 are presented in the following attachments.

(Attachments)

 

1. Non-Consolidated Comparative Balance Sheets

 

2. Non-Consolidated Comparative Statements of Income

 

3. Business Results (Non-Consolidated Operating Revenues)

For inquiries, please contact:

Takashi Sasaki or Yusuke Umeda

Accounting Section, Finance Division

Nippon Telegraph and Telephone West Corporation

Tel: +81-6-4793-3141

E-mail: kessan-info@west.ntt.co.jp


1. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     March 31, 2013     December 31, 2013     Increase
(Decrease)
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     468,937        451,652        (17,284

Antenna facilities

     6,816        6,492        (324

Terminal equipment

     18,408        18,065        (343

Local line facilities

     923,767        937,727        13,959   

Long-distance line facilities

     2,597        2,448        (148

Engineering facilities

     562,018        551,040        (10,978

Submarine line facilities

     2,096        3,219        1,123   

Buildings

     376,023        363,604        (12,419

Construction in progress

     30,453        26,126        (4,326

Other

     226,593        224,079        (2,514

Total property, plant and equipment

     2,617,712        2,584,457        (33,255

Intangible fixed assets

     71,968        76,911        4,942   

Total fixed assets - telecommunications businesses

     2,689,681        2,661,368        (28,312

Investments and other assets

      

Other investments and assets

     150,915        159,142        8,226   

Allowance for doubtful accounts

     (249     (185     64   

Total investments and other assets

     150,665        158,957        8,291   

Total fixed assets

     2,840,347        2,820,325        (20,021

Current assets:

      

Cash and bank deposits

     29,799        14,843        (14,956

Notes receivable

     8        266        257   

Accounts receivable, trade

     219,908        193,716        (26,191

Supplies

     38,222        33,674        (4,547

Other current assets

     176,844        153,985        (22,858

Allowance for doubtful accounts

     (1,362     (597     764   

Total current assets

     463,421        395,889        (67,532
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     3,303,768        3,216,215        (87,553
  

 

 

   

 

 

   

 

 

 

 

– 1 –


     (Millions of yen)  
     March 31, 2013      December 31, 2013     Increase
(Decrease)
 

LIABILITIES

       

Long-term liabilities:

       

Long-term borrowings from parent company

     951,797         868,087        (83,710

Liability for employees’ retirement benefits

     221,270         232,923        11,652   

Reserve for point services

     4,882         6,212        1,329   

Reserve for unused telephone cards

     11,960         10,869        (1,090

Allowance for environmental measures

     —           8,129        8,129   

Asset retirement obligations

     309         342        33   

Other long-term liabilities

     10,448         7,190        (3,258

Total long-term liabilities

     1,200,669         1,133,754        (66,914

Current liabilities:

       

Current portion of long-term borrowings from parent company

     182,057         177,420        (4,637

Accounts payable, trade

     72,315         34,797        (37,518

Short-term borrowings

     —           30,000        30,000   

Accrued taxes on income

     1,005         539     (465

Asset retirement obligations

     —           3        3   

Other current liabilities

     336,852         338,268        1,416   

Total current liabilities

     592,231         581,028        (11,202
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES

     1,792,900         1,714,783        (78,116
  

 

 

    

 

 

   

 

 

 

NET ASSETS

       

Shareholders’ equity:

       

Common stock

     312,000         312,000        —     

Capital surplus

     1,170,054         1,170,054        —     

Earned surplus

     28,645         19,015        (9,629

Total shareholders’ equity

     1,510,699         1,501,069        (9,629

Unrealized gains (losses), translation adjustments, and others:

       

Net unrealized gains (losses) on securities

     169         362        192   

Total unrealized gains (losses), translation adjustments, and others

     169         362        192   
  

 

 

    

 

 

   

 

 

 

TOTAL NET ASSETS

     1,510,868         1,501,431        (9,437
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

     3,303,768         3,216,215        (87,553
  

 

 

    

 

 

   

 

 

 

 

Note:

  *NTT West participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 2 –


2. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
    Nine months ended
December 31, 2013
    Increase
(Decrease)
    Year ended
March 31, 2013
 

Telecommunications businesses:

        

Operating revenues

     1,114,541        1,070,392        (44,148     1,482,982   

Operating expenses

     1,103,516        1,061,231        (42,284     1,474,459   

Operating income from telecommunications businesses

     11,024        9,160        (1,864     8,523   

Supplementary businesses:

        

Operating revenues

     94,049        101,681        7,632        144,998   

Operating expenses

     86,784        91,862        5,078        134,317   

Operating income from supplementary businesses

     7,264        9,818        2,553        10,681   

Operating income

     18,289        18,978        689        19,205   

Non-operating revenues:

        

Interest income

     6        16        10        10   

Dividends received

     857        1,900        1,043        858   

Lease and rental income

     27,895        27,055        (840     37,029   

Miscellaneous income

     4,078        2,871        (1,206     4,887   

Total non-operating revenues

     32,837        31,844        (993     42,785   

Non-operating expenses:

        

Interest expenses

     11,350        10,147        (1,202     14,942   

Lease and rental expenses

     12,558        11,647        (911     16,727   

Miscellaneous expenses

     440        1,381        941        1,938   

Total non-operating expenses

     24,348        23,176        (1,172     33,607   

Recurring profit

     26,778        27,646        868        28,382   

Special losses

     —          6,087        6,087        —     

Income before income taxes

     26,778        21,559        (5,219     28,382   

Income taxes

     4,862     3,109     (1,753     7,443   

Net income

     21,916        18,450        (3,466     20,939   

 

Note:

  *NTT West participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


3. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
     Nine months ended
December 31, 2013
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2013
 

Voice transmission services revenues
(excluding IP services revenues)

     441,369         397,504         (43,865     (9.9     579,801   

Monthly charge revenues*

     315,703         287,690         (28,012     (8.9     416,088   

Call rates revenues*

     33,711         29,876         (3,835     (11.4     43,864   

Interconnection call revenues*

     61,691         53,972         (7,718     (12.5     80,143   

IP services revenues

     493,881         502,053         8,172        1.7        660,902   

Leased circuit services revenues
(excluding IP services revenues)

     84,571         78,617         (5,953     (7.0     112,172   

Telegram services revenues

     13,733         12,751         (981     (7.1     18,484   

Other telecommunications services revenues

     80,985         79,465         (1,520     (1.9     111,621   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Telecommunications total revenues

     1,114,541         1,070,392         (44,148     (4.0     1,482,982   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplementary business total revenues

     94,049         101,681         7,632        8.1        144,998   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,208,590         1,172,073         (36,516     (3.0     1,627,981   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

* Partial listing only.

 

– 4 –


February 6, 2014

FOR IMMEDIATE RELEASE

NTT Com Announces Financial Results for the Nine Months Ended December 31, 2013

TOKYO, JAPAN — NTT Communications Corporation (NTT Com) announced today its financial results for the nine months ended December 31, 2013. Please see the following attachments for further details:

 

I. Non-Consolidated Comparative Balance Sheets

 

II. Non-Consolidated Comparative Statements of Income

 

III. Business Results (Non-Consolidated Operating Revenues)

 

IV. Financial Results of NTT Communications Group

#    #    #

About NTT Communications Corporation

NTT Communications provides consultancy, architecture, security and cloud services to optimize the information and communications technology (ICT) environments of enterprises. These offerings are backed by the company’s worldwide infrastructure, including a leading global tier-1 IP network, the Arcstar Universal One™ VPN network, reaching 160 countries/regions, and over 150 secure data centers. NTT Communications’ solutions leverage the global resources of NTT Group companies, including Dimension Data, NTT DOCOMO and NTT DATA.

www.ntt.com | Twitter@NTT Communications | Facebook@NTT Communications | LinkedIn@NTT

For more information

(Mr.) Masaya Okazaki or (Mr.) Masato Uchiyama

Accounting and Taxation, Finance, NTT Communications

Tel: +81 3 6700 4311

Email: info-af@ntt.com


I. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     March 31, 2013     December 31, 2013     Increase
(Decrease)
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     145,637        138,678        (6,959

Antenna facilities

     1,459        1,601        142   

Terminal equipment

     764        718        (45

Local line facilities

     810        754        (55

Long-distance line facilities

     7,122        6,456        (665

Engineering facilities

     54,238        53,050        (1,187

Submarine line facilities

     20,482        16,660        (3,822

Buildings

     138,995        170,608        31,613   

Construction in progress

     8,303        21,922        13,618   

Other

     85,621        81,867        (3,754

Total property, plant and equipment

     463,434        492,318        28,883   

Intangible fixed assets

     82,864        79,597        (3,267

Total fixed assets - telecommunications businesses

     546,299        571,915        25,616   

Investments and other assets

      

Investment securities

     166,291        167,324        1,033   

Investments in subsidiaries and affiliated companies

     167,637        217,719        50,081   

Other investments and assets

     42,591        41,357        (1,233

Allowance for doubtful accounts

     (232     (220     11   

Total investments and other assets

     376,287        426,180        49,892   

Total fixed assets

     922,587        998,096        75,509   

Current assets:

      

Cash and bank deposits

     9,593        24,698        15,104   

Notes receivable

     25        6        (19

Accounts receivable, trade

     181,157        163,900        (17,256

Supplies

     8,024        9,196        1,171   

Other current assets

     119,298        70,799        (48,499

Allowance for doubtful accounts

     (2,148     (2,093     55   

Total current assets

     315,951        266,507        (49,444
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     1,238,538        1,264,603        26,065   
  

 

 

   

 

 

   

 

 

 

 

– 1 –


     (Millions of yen)  
     March 31, 2013      December 31, 2013     Increase
(Decrease)
 

LIABILITIES

       

Long-term liabilities:

       

Long-term borrowings from parent company

     60,080         58,400        (1,680

Liability for employees’ retirement benefits

     84,126         88,413        4,287   

Reserve for point services

     3,674         3,039        (634

Reserve for unused telephone cards

     5,292         4,809        (482

Asset retirement obligations

     600         1,461        860   

Other long-term liabilities

     17,609         15,078        (2,530

Total long-term liabilities

     171,383         171,203        (180

Current liabilities:

       

Current portion of long-term borrowings from parent company

     3,586         3,360        (226

Accounts payable, trade

     25,136         21,255        (3,881

Short-term borrowings

     730         42,648        41,918   

Accounts payable, other

     176,150         137,889        (38,260

Accrued taxes on income

     15,134         4,944     (10,189

Allowance for losses on construction

     21         1,163        1,142   

Allowance for loss on disaster

     6         —          (6

Asset retirement obligations

     —           26        26   

Other current liabilities

     34,788         34,757        (30

Total current liabilities

     255,554         246,046        (9,508
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES

     426,938         417,249        (9,688
  

 

 

    

 

 

   

 

 

 

NET ASSETS

       

Shareholders’ equity:

       

Common stock

     211,763         211,763        —     

Capital surplus

     131,615         131,615        —     

Earned surplus

     391,104         426,691        35,587   

Total shareholders’ equity

     734,483         770,070        35,587   

Unrealized gains (losses), translation adjustments, and others:

       

Net unrealized gains (losses) on securities

     77,116         77,283        166   

Total unrealized gains (losses), translation adjustments, and others

     77,116         77,283        166   
  

 

 

    

 

 

   

 

 

 

TOTAL NET ASSETS

     811,600         847,354        35,753   
  

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

     1,238,538         1,264,603        26,065   
  

 

 

    

 

 

   

 

 

 

 

Note: *NTT Com participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 2 –


II. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
    Nine months ended
December 31, 2013
    Increase
(Decrease)
    Year ended
March 31, 2013
 

Telecommunications businesses:

        

Operating revenues

     585,491        560,547        (24,944     775,217   

Operating expenses

     495,278        477,337        (17,941     664,162   

Operating income from telecommunications businesses

     90,212        83,209        (7,003     111,054   

Supplementary businesses:

        

Operating revenues

     114,272        124,883        10,611        169,594   

Operating expenses

     110,578        122,045        11,467        162,512   

Operating income from supplementary businesses

     3,694        2,838        (856     7,082   

Operating income

     93,907        86,048        (7,859     118,137   

Non-operating revenues:

        

Interest income

     156        221        64        227   

Dividends received

     7,354        10,091        2,737        7,517   

Lease and rental income

     9,569        9,688        118        13,099   

Miscellaneous income

     2,329        3,342        1,012        3,868   

Total non-operating revenues

     19,410        23,343        3,932        24,712   

Non-operating expenses:

        

Interest expenses

     1,300        1,158        (141     1,690   

Lease and rental expenses

     4,952        4,237        (714     6,967   

Miscellaneous expenses

     1,368        1,641        273        4,463   

Total non-operating expenses

     7,621        7,038        (583     13,121   

Recurring profit

     105,696        102,353        (3,343     129,728   

Special profits

     8,394        16,169        7,774        24,021   

Special losses

     —          4,927        4,927        31,895   

Income before income taxes

     114,090        113,595        (495     121,853   

Income taxes

     42,642     44,507     1,865        56,542   

Net income

     71,448        69,087        (2,360     65,311   

 

Note: *NTT Com participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


III. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
     Nine months ended
December 31, 2013
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2013
 

Voice transmission services revenues (excluding IP services revenues)

     224,647         206,625         (18,022     (8.0     293,931   

IP services revenues

     278,651         276,276         (2,374     (0.9     371,860   

Open computer network services revenues*

     116,883         115,371         (1,512     (1.3     155,892   

VPN services revenues*

     118,542         119,790         1,248        1.1        158,732   

Data communications revenues (excluding IP services revenues)

     51,567         46,569         (4,997     (9.7     67,670   

Leased circuit services revenues*

     38,412         34,032         (4,379     (11.4     50,328   

Solution services revenues

     124,852         136,902         12,050        9.7        183,960   

Others

     20,045         19,056         (988     (4.9     27,388   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     699,764         685,430         (14,333     (2.0     944,812   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

Note:

   VPN services revenues mainly include revenues from services of Arcstar Universal One, Arcstar IP-VPN, Arcstar Global IP-VPN, e-VLAN, Global e-VLAN, Group-VPN and a part of GIGASTREAM. The amounts of “IP-Virtual private network services revenues” (including Arcstar IP-VPN services revenues), and “Wide-Area Ethernet services revenues” (including e-VLAN services revenues), partially listed in the previous fiscal year, for the nine months ended December 31, 2013 are 47,967 million yen and 31,888 million yen, respectively.
   * Partial listing only

 

– 4 –


IV. Financial Results of NTT Communications Group

 

     (Millions of yen)  
     Nine months ended
December 31, 2012
     Nine months ended
December 31, 2013
     Increase
(Decrease)
    Percent
Increase
(Decrease)
 

Operating revenues

     881,457         888,444         6,987        0.8   

Operating expenses

     783,442         791,342         7,900        1.0   

Operating income

     98,015         97,102         (913     (0.9

 

– 5 –


February 6, 2014

Nippon Telegraph and Telephone Corporation

Supplementary Data for

the Nine Months Ended December 31, 2013

Contents

 

     pages  

1.    Number of Subscribers

     1   

2.    Number of Employees

     2   

3.    Capital Investment

     2   

4.    Financial Results and Projections

     3~6   

5.    Average Monthly Revenue per Unit (ARPU)

     7   

6.    Interest-Bearing Liabilities (Consolidated)

     8   

7.    Indices (Consolidated)

     8   

8.    Reconciliation of Financial Indices (Consolidated)

     8   

The projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.


1. Number of Subscribers

 

     (in thousands except for Public Telephones)  
     A
As of
Mar. 31, 2013
     B
As of
Jun. 30, 2013
     C
As of
Sept. 30, 2013
     D
As of
Dec. 31, 2013
    E
As of
Mar. 31, 2014
(Forecast)(7)
 
                          F            G  
                                 Change     Progress            Change  
                                 D-A     F/G            E-A  

Telephone Subscriber Lines(1)

     25,042         24,497         24,002         23,511         (1,532     69.0     22,823         (2,220

NTT East

     12,289         12,008         11,762         11,522         (767     65.4     11,117         (1,172

NTT West

     12,753         12,489         12,240         11,988         (765     73.0     11,706         (1,048

INS-Net(2)

     3,724         3,632         3,539         3,452         (272     64.0     3,299         (425

NTT East

     1,914         1,864         1,815         1,767         (147     64.5     1,686         (228

NTT West

     1,810         1,768         1,724         1,685         (125     63.4     1,613         (197

Telephone Subscriber Lines + INS-Net

     28,766         28,129         27,541         26,962         (1,804     68.2     26,121         (2,645

NTT East

     14,203         13,872         13,576         13,289         (914     65.3     12,803         (1,400

NTT West

     14,563         14,256         13,964         13,673         (890     71.5     13,318         (1,245

Public Telephones

     210,448         207,184         203,120         199,617         (10,831     63.3     193,348         (17,100

NTT East

     100,564         99,049         97,285         95,533         (5,031     69.9     93,364         (7,200

NTT West

     109,884         108,135         105,835         104,084         (5,800     58.6     99,984         (9,900

FLET’S ISDN

     127         122         118         113         (14     82.7     110         (17

NTT East

     58         55         53         51         (7     72.9     48         (10

NTT West

     69         67         65         63         (6     97.6     62         (7

FLET’S ADSL

     1,848         1,751         1,663         1,572         (276     68.7     1,446         (402

NTT East

     858         803         756         711         (147     58.6     608         (250

NTT West

     990         948         906         861         (130     85.3     838         (152

FLET’S Hikari(3)

     17,300         17,521         17,672         17,873         572        57.2     18,300         1,000   

NTT East

     9,750         9,902         9,985         10,089         339        67.7     10,250         500   

NTT West

     7,550         7,619         7,687         7,784         234        46.7     8,050         500   

FLET’S Hikari LIGHT

     661         715         763         813         152        43.4     1,011         350   

NTT East

     437         459         481         509         72        48.1     587         150   

NTT West

     224         257         283         304         80        39.8     424         200   

Hikari Denwa

     15,169         15,412         15,664         15,950         781        62.5     16,419         1,250   

NTT East

     8,085         8,233         8,372         8,526         441        63.1     8,785         700   

NTT West

     7,084         7,178         7,292         7,424         340        61.8     7,634         550   

Conventional Leased Circuit Services

     260         257         255         252         (8     59.7     247         (13

NTT East

     128         127         125         124         (4     68.6     122         (6

NTT West

     132         130         129         128         (3     51.7     125         (7

High Speed Digital Services

     152         149         148         146         (5     70.1     144         (7

NTT East

     80         78         78         76         (3     84.4     76         (4

NTT West

     72         71         71         70         (2     53.2     69         (3

NTT Group Major ISPs(4)

     11,611         11,531         11,511         11,508         (104     35.3     11,318         (293

OCN

     8,207         8,165         8,165         8,178         (30     12.8     7,975         (232

Plala

     3,071         3,031         3,011         2,994         (78     112.3     3,002         (69

Hikari TV

     2,453         2,520         2,625         2,727         274        50.1     3,000         547   

FLET’S TV Transmission Services

     1,003         1,032         1,067         1,113         110        57.8     1,193         190   

NTT East

     714         731         750         776         62        62.2     814         100   

NTT West

     289         302         318         337         48        53.0     379         90   

Mobile(5)

     61,536         61,623         61,772         62,182         646        34.8     63,390         1,854   

FOMA(6)

     49,970         47,425         45,374         43,160         (6,810     58.8     38,390         (11,580

Xi

     11,566         14,198         16,398         19,021         7,455        55.5     25,000         13,434   

i-mode

     32,688         30,689         29,228         27,826         (4,862     56.2     24,030         (8,658

sp-mode

     18,285         19,921         21,079         22,271         3,987        44.9     27,160         8,875   

 

Notes:    (1)   Number of Telephone Subscriber Lines is the total of individual lines and central station lines (Subscriber Telephone Light Plan is included).
   (2)   “INS-Net” includes “INS-Net 64” and “INS-Net 1500.” In terms of number of channels, transmission rate, and line use rate (base rate), “INS-Net 1500” is in all cases roughly ten times greater than “INS-Net 64.” For this reason, one “INS-Net 1500” subscription is calculated as ten “INS-Net 64” subscriptions (“INS-Net 64 Lite Plan” is included).
   (3)   Number of FLET’S Hikari subscribers includes subscribers to “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT East, and subscribers to “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West.
   (4)   “NTT Group Major ISPs” includes “WAKWAK” and “InfoSphere,” in addition to “OCN” and “Plala.”
   (5)   Number of Mobile service subscribers includes communication module service subscribers, in addition to “FOMA” service and “Xi” service subscribers.
   (6)   Effective March 3, 2008, FOMA services became mandatory for subscription to “2in1” services. Such FOMA service subscriptions to “2in1” services are included in the number of Mobile service subscribers and also in the number of FOMA service subscribers.
   (7)   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 1 -


2. Number of Employees

 

      (Person)  
     A
As of
Dec. 31, 2012
     B
As of
Dec. 31, 2013
    C
As of
Mar. 31, 2014
(Forecast)(3)
 
                   Change        
                   B-A        

NTT Consolidated

     237,000         233,950         (3,050     225,750   

Core Group Companies

          

NTT (Holding Company)

     2,950         2,900         (50     2,900   

NTT East

     5,950         5,800         (150     5,700   

NTT West

     5,200         5,000         (200     4,950   

NTT Communications

     7,700         6,950         (750     6,900   

NTT DATA (Consolidated)

     62,300         64,700         2,400        64,300   

NTT DOCOMO (Consolidated)

     24,500         24,600         100        24,250   

(Reference) Outsourcing Companies

          

East Outsourcing Companies(1)

     33,650         30,850         (2,800     27,800   

West Outsourcing Companies(2)

     34,550         31,950         (2,600     28,650   

 

Notes:

     (1   Figures for East Outsourcing Companies include the consolidated prefectural outsourcing companies (NTT EAST-TOKYO and others), NTT-ME and NTT EAST SOLUTIONS.
     (2   As of October 1, 2013, due to a reorganization within NTT West Group, NTT has revised the scope of the term “West Outsourcing Companies.” As a result of this change, the revised figures for West Outsourcing Companies under “A. As of Dec. 31, 2012” include employees from the consolidated regional outsourcing companies (NTT WEST-KANSAI and others), NTT MARKETING ACT, NTT NEOMEIT, NTT HOMETECHNO, NTT IT MATE (NTT IT MATE KANSAI and others) and NTT BUSINESS ASSOCIE WEST. The revised figures for West Outsourcing Companies under “B. As of Dec. 31, 2013” and “C. As of Mar. 31, 2014 (Forecast)” include employees from NTT BUSINESS SOLUTIONS, NTT MARKETING ACT, NTT NEOMEIT, NTT FIELDTECHNO and NTT BUSINESS ASSOCIE WEST.
     (3   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

3. Capital Investment

 

     (Billions of yen)  
     A
Nine Months
Ended  Dec. 31,
2012
     B
Nine Months
Ended Dec. 31,
2013
    C
Year Ending
Mar.  31, 2014

(Forecast)
 
                   Change     Progress        
                   B-A     B/C        

NTT Consolidated

     1,342.2        1,309.0         (33.2     70.0     1,870.0   

Core Group Companies

            

NTT (Holding Company)

     21.2         15.7         (5.5     54.2     29.0   

NTT East

     249.5         246.1         (3.3     70.3     350.0   

NTT West

     245.4         246.4         0.9        72.5     340.0   

NTT Communications

     64.7         95.0         30.2        67.9     140.0   

NTT DATA (Consolidated)

     82.9         109.2         26.2        73.8     148.0   

NTT DOCOMO (Consolidated)

     540.4        472.3         (68.1     67.5     700.0   

 

Note :

      Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 2 -


4. Financial Results and Projections (NTT Consolidated, NTT (Holding Company))
     (Billions of yen)  
     A
Nine Months
Ended  Dec. 31,
2012
     B
Nine Months
Ended Dec. 31,
2013
    C
Year Ending
Mar.  31, 2014
(Forecast)(2)
 
                   Change     Progress        
                   B-A     B/C        

NTT Consolidated (US GAAP)

            

Operating Revenues(1)

     7,921.7         8,025.2         103.5        73.0     11,000.0   

Fixed Voice Related Services

     1,291.2         1,184.8         (106.4     —          —     

Mobile Voice Related Services

     967.3         789.5         (177.7     —          —     

IP/Packet Communications Services

     2,790.6         2,789.6         (1.0     —          —     

Sales of Telecommunications Equipment

     644.7         740.1         95.4        —          —     

System Integration

     1,423.7         1,585.6         161.8        —          —     

Other

     804.3         935.7         131.3        —          —     

Operating Expenses(1)

     6,928.5         7,040.1         111.6        72.1     9,770.0   

Cost of Services (exclusive of items shown separately below)

     1,694.9         1,720.4         25.5        —          —     

Cost of Equipment Sold (exclusive of items shown separately below)

     649.3         646.9         (2.4     —          —     

Cost of System Integration (exclusive of items shown separately below)

     989.2         1,147.2         157.9        —          —     

Depreciation and Amortization

     1,408.9         1,394.9         (14.0     —          —     

Impairment Loss

     0.8         0.2         (0.6     —          —     

Selling, General and Administrative Expenses

     2,185.4         2,127.6         (57.9     —          —     

Write-Down of Goodwill and Other Intangible Assets

     —           3.0         3.0        —          —     

Operating Income

     993.2         985.1         (8.1     80.1     1,230.0   

Income Before Income Taxes

     985.7         1,024.1         38.4        80.0     1,280.0   

Net Income Attributable to NTT

     446.7         484.3         37.6        82.8     585.0   

(Ref.) Details of “Cost of Services,” “Cost of Equipment Sold,” “Cost of System Integration” and “Selling, General and Administrative Expenses”

   

Personnel

     1,581.3         1,603.2         21.9        —          —     

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

     3,663.8         3,753.2         89.4        —          —     

Loss on Disposal of Property, Plant and Equipment

     107.0         117.0         10.0        —          —     

Other Expenses

     166.7         168.6         1.9        —          —     

Total

     5,518.8         5,642.0         123.2        —          —     

NTT (Holding Company) (JPN GAAP)

            

Operating Revenues

     390.4         389.2         (1.1     89.9     433.0   

Operating Expenses

     104.7         100.2         (4.5     67.3     149.0   

Operating Income

     285.6         289.0         3.4        101.8     284.0   

Non-Operating Revenues

     28.5         25.7         (2.7     75.7     34.0   

Non-Operating Expenses

     32.1         31.0         (1.1     77.5     40.0   

Recurring Profit

     282.0         283.7         1.7        102.1     278.0   

Net Income

     280.9         282.9        1.9       101.0 %     280.0   

 

Notes:

     (1   Effective as of the three months ended June 30, 2013, in connection with NTT Group’s current state of business and initiatives such as efforts to expand into new business areas in the mobile communications business, NTT has reclassified, among other things, part of its “Mobile Voice Related Services revenues” and “IP/Packet Communications Services revenues” as “Other revenues,” and part of its Other revenues as “System Integration revenues.” Results for the nine months ended December 31, 2012 reflect such reclassification.
     (2   As a result of the application of the equity method for NTT Group’s investment in Philippine Long Distance Telephone Company from the beginning of the three months ended June 30, 2013, the equity method of accounting was applied retrospectively in accordance with Accounting Standards Codification Topic 323, Investments-Equity Method and Joint Ventures, issued by the FASB.
     (3   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 3 -


4. Financial Results and Projections (NTT East, NTT West)

 

    (Billions of yen)  
    A
Nine Months Ended
Dec. 31, 2012
    B
Nine Months Ended
Dec. 31, 2013
    C
Year Ending
Mar. 31, 2014
(Forecast)(3)(4)
 
                Change     Progress        
                B-A     B/C        

NTT East (JPN GAAP)

         

Operating Revenues

    1,364.6        1,319.5        (45.0     74.0     1,783.0   

Voice Transmission Services (excluding IP)(1)

    441.3        393.9        (47.4     76.9     512.0   

IP Services(2)

    624.1        630.7        6.5        74.8     843.0   

Leased Circuit (excluding IP)

    92.5        88.8        (3.7     75.9     117.0   

Telegraph

    11.9        11.0        (0.8     73.9     15.0   

Other

    99.7        100.0        0.2        65.9     296.0   

Supplementary Business

    94.7        94.9        0.2       

Operating Expenses

    1,303.6        1,249.5        (54.0     72.7     1,718.0   

Personnel

    81.6        80.1        (1.4     74.2     108.0   

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

    853.2        813.5        (39.7     72.1     1,129.0   

Depreciation and Amortization

    288.3        273.6        (14.7     74.8     366.0   

Loss on Disposal of Property, Plant and Equipment

    26.8        28.0        1.2        65.2     43.0   

Taxes and Public Dues

    53.5        54.2        0.6        75.3     72.0   

Operating Income

    60.9        70.0        9.0        107.6     65.0   

Non-Operating Revenues

    42.4        41.6        (0.7     86.8     48.0   

Non-Operating Expenses

    22.3        21.7        (0.6     72.6     30.0   

Recurring Profit

    81.0        89.9        8.8        108.2     83.0   

Net Income

    52.2        57.8        5.5        115.8     50.0   

NTT West (JPN GAAP)

         

Operating Revenues

    1,208.5        1,172.0        (36.5     73.9     1,586.0   

Voice Transmission Services (excluding IP)(1)

    441.3        397.5        (43.8     76.3     521.0   

IP Services(2)

    493.8        502.0        8.1        74.0     678.0   

Leased Circuit (excluding IP)

    84.5        78.6        (5.9     74.2     106.0   

Telegraph

    13.7        12.7        (0.9     79.7     16.0   

Other

    80.9        79.4        (1.5     68.4     265.0   

Supplementary Business

    94.0        101.6        7.6       

Operating Expenses

    1,190.3        1,153.0        (37.2     73.6     1,566.0   

Personnel

    78.8        73.9        (4.8     73.3     101.0   

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

    766.8        748.2        (18.6     72.9     1,027.0   

Depreciation and Amortization

    264.6        248.9        (15.6     76.1     327.0   

Loss on Disposal of Property, Plant and Equipment

    30.3        32.6        2.3        72.6     45.0   

Taxes and Public Dues

    49.5        49.2        (0.2     74.7     66.0   

Operating Income

    18.2        18.9        0.6        94.9     20.0   

Non-Operating Revenues

    32.8        31.8        (0.9     81.7     39.0   

Non-Operating Expenses

    24.3        23.1        (1.1     74.8     31.0   

Recurring Profit

    26.7        27.6        0.8        98.7     28.0   

Net Income

    21.9        18.4        (3.4     97.1     19.0   

 

Notes:

   (1)   Operating Revenues from Voice Transmission Services (excluding IP) of NTT East and NTT West for the nine months ended December 31, 2013 include monthly charges, call charges and interconnection charges of 286.7 billion yen, 32.2 billion yen and 48.3 billion yen for NTT East, and 287.6 billion yen, 29.8 billion yen and 53.9 billion yen for NTT West, respectively.
   (2)   Operating Revenues from IP Services of NTT East and NTT West for the nine months ended December 31, 2013 include “FLET’S Hikari” and “Hikari Denwa” charges (including monthly charges, call charges and connection device charges) of 355.4 billion yen and 133.5 billion yen for NTT East, and 282.9 billion yen and 110.3 billion yen for NTT West, respectively. “FLET’S Hikari” includes “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT East, and “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West.
   (3)   Beginning on April 1, 2013, NTT Group has revised its estimate of the expected life of metal cables based on actual utilization to reflect an extended expected life. Forecast figures for the fiscal year ending March 31, 2014 reflect these revisions.
   (4)   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 4 -


4. Financial Results and Projections (NTT Communications, Dimension Data)

 

     (Billions of yen)  
     A
Nine Months Ended
Dec. 31, 2012
     B
Nine Months Ended
Dec. 31, 2013
    C
Year Ending
Mar. 31, 2014
(Forecast)(6)
 
                   Change     Progress        
                   B-A     B/C        

NTT Communications (JPN GAAP)

            

Operating Revenues

     699.7         685.4         (14.3     74.1     925.0   

Voice Transmission Services (excluding IP)(1)

     224.6         206.6         (18.0     76.8     269.0   

IP Services(1)

     278.6         276.2         (2.3     74.3     372.0   

Data Transmission Services (excluding IP)(1)

     51.5         46.5         (4.9     77.6     60.0   

Leased Circuit(1)

     38.4         34.0         (4.3     75.6     45.0   

Solutions Business

     124.8         136.9         12.0        68.8     199.0   

Other

     20.0         19.0         (0.9     76.2     25.0   

Operating Expenses

     605.8         599.3         (6.4     73.7     813.0   

Personnel

     67.4         60.8         (6.5     74.2     82.0   

Cost of Services, Cost of Equipment Sold, and Selling, General and Administrative Expenses

     282.0         294.0         12.0        74.0     608.0   

Communication Network Charges

     167.2         155.7         (11.4    

Depreciation and Amortization

     76.9         77.4         0.5        73.7     105.0   

Loss on Disposal of Property, Plant and Equipment

     3.1         2.3         (0.7     39.9     6.0   

Taxes and Public Dues

     9.1         8.9         (0.2     74.2     12.0   

Operating Income

     93.9         86.0         (7.8     76.8     112.0   

Non-Operating Revenues

     19.4         23.3         3.9        106.1     22.0   

Non-Operating Expenses

     7.6         7.0         (0.5     58.7     12.0   

Recurring Profit

     105.6         102.3         (3.3     83.9     122.0   

Net Income

     71.4         69.0         (2.3     82.2     84.0   

Dimension Data (IFRS)(2)(3)

            

Operating Revenues

     349.3         425.6         76.3        74.5     571.0   

Operating Expenses(4)

     336.4         413.5         77.1        74.6     554.0   

Operating Income(5)

     12.9         12.1         (0.8     71.3     17.0   

Net Income Attributable to NTT

     9.3         8.1         (1.2     —          —     

 

Notes:    (1)   Beginning with the three months ended June 30, 2013, NTT consolidated IP-VPN and Wide-area Ethernet operating revenues into VPN operating revenues. Operating Revenues from Voice Transmission Services (excluding IP) of NTT Communications for the nine months ended December 31, 2013 include revenues from telephone subscriber lines (105.4 billion yen). Operating Revenues from IP Services include revenues from OCN (115.3 billion yen) and VPN (119.7 billion yen). Operating Revenues from Leased Circuit include revenues from conventional leased circuits (2.0 billion yen) and high-speed digital (13.0 billion yen). IP-VPN and Wide-area Ethernet operating revenues for the nine months ended December 31, 2013 were 47.9 billion yen and 31.8 billion yen, respectively.
   (2)   Since Dimension Data’s statements of income from January 1 to December 31 are consolidated into NTT’s consolidated statements of income from April 1 to March 31, Dimension Data’s financial results for the nine months ended September 30, 2012 are stated under “A. Nine Months Ended Dec. 31, 2012,” Dimension Data’s financial results for the nine months ended September 30, 2013 are stated under “B. Nine Months Ended Dec. 31, 2013” and Dimension Data’s forecasts for the twelve months ended December 31, 2013 are stated under “C. Year Ending Mar. 31, 2014 (Forecast).”
   (3)   Conversion rate for Dimension Data figures: USD1.00 = JPY96.83
   (4)   Operating Expenses include costs associated with the acquisition of Dimension Data by NTT.
   (5)   Operating Income for the nine months ended December 31, 2013 under US GAAP was 4.1 billion yen.
   (6)   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 5 -


4. Financial Results and Projections (NTT DATA, NTT DOCOMO)

 

      (Billions of yen)  
     A
Nine Months Ended
Dec. 31, 2012
    B
Nine Months Ended
Dec. 31, 2013
    C
Year Ending
Mar. 31, 2014
(Forecast)(2)
 
                 Change     Progress        
                 B-A     B/C        

NTT DATA Consolidated (JPN GAAP)

          

Operating Revenues

     911.8        942.5        30.6        70.9     1,330.0   

Public & Financial IT Services

     506.5        497.8        (8.7     68.9     723.0   

Enterprise IT Services

     208.8        194.1        (14.7     67.4     288.0   

Solutions & Technologies

     120.1        127.1        7.0        71.5     178.0   

Global Business

     176.1        228.2        52.1        78.7     290.0   

Elimination or Corporate

     (99.8     (104.9     (5.0     70.4     (149.0

Cost of Sales

     690.1        733.8        43.6        71.3     1,029.0   

Gross Profit

     221.6        208.7        (12.9     69.3     301.0   

Selling, General and Administrative Expenses

     172.8        182.9        10.1        75.9     241.0   

Operating Income

     48.8        25.7        (23.1     42.9     60.0   

Non-Operating Income (Loss)

     (4.0     2.7        6.7        —          (11.0

Recurring Profit

     44.7        28.4        (16.3     58.0     49.0   

Net Income

     22.0        10.1        (11.9     44.0     23.0   

NTT DOCOMO Consolidated (US GAAP)

          

Operating Revenues(1)

     3,370.8        3,363.6        (7.2     72.5     4,640.0   

Mobile Communications Services

     2,399.1        2,220.2        (178.9     75.0     2,961.0   

Voice Revenues

     981.4        800.6        (180.7     77.6     1,032.0   

Packet Communications Revenues

     1,417.8        1,419.6        1.8        73.6     1,929.0   

Equipment Sales

     583.7        675.8        92.1        67.1     1,007.0   

Other Operating Revenues

     388.0        467.6        79.6        69.6     672.0   

Operating Expenses

     2,668.6        2,674.9        6.3        70.4     3,800.0   

Personnel

     208.9        207.8        (1.2     72.6     286.0   

Cost of Services, Cost of Equipment Sold, and Selling, General and Administrative Expenses

     1,726.5        1,710.4        (16.1     68.2     2,507.0   

Depreciation and Amortization

     500.5        521.8        21.3        73.2     713.0   

Loss on Disposal of Property, Plant and Equipment

     39.8        47.6        7.7        73.2     65.0   

Communication Network Charges

     163.7        158.0        (5.8     82.7     191.0   

Taxes and Public Dues

     29.1        29.4        0.3        77.3     38.0   

Operating Income

     702.2        688.7        (13.5     82.0     840.0   

Non-Operating Income (Loss)

     (3.0     14.9        17.8        —          2.0   

Income Before Income Taxes

     699.2        703.6        4.3        83.6     842.0   

Net Income Attributable to NTT DOCOMO

     416.5        430.2        13.7        84.3     510.0   

 

Notes:    (1)   Certain reclassifications have been made to “Operating Revenues” for the same period of the previous fiscal year to conform to the presentation used for the nine months ended December 31, 2013.
   (2)   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

- 6 -


5. Average Monthly Revenue per Unit (ARPU)

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues attributable to each designated service on a per user basis. In the case of NTT Group’s fixed-line business, ARPU is calculated by dividing revenue items included in the operating revenues of NTT Group’s regional communications business segment, that is, telephone subscriber lines, INS-NET and FLET’S Hikari, by the number of Active Subscribers to the relevant services.

In the case of mobile communications business, ARPU is calculated by dividing revenue items included in operating revenues from NTT Group’s mobile communications business segment, such as revenues from FOMA mobile phone services and Xi mobile phone services, that are incurred consistently each month (i.e., basic monthly charges and voice/packet transmission charges), by the number of Active Subscribers to the relevant services. The calculation of these figures excludes revenues that are not representative of monthly average usage, such as telecommunications equipment sales, activation fees and universal service charges.

NTT believes that its ARPU figures calculated in this way provide useful information regarding the monthly average usage of its subscribers. The revenue items included in the numerators of NTT Group’s ARPU figures are based on its financial results comprising its U.S. GAAP results of operations.

 

     (Yen)  
     Three Months
Ended
Jun. 30, 2013
(From Apr. to
Jun., 2013)
     Three Months
Ended
Sept. 30, 2013
(From Jul. to
Sept., 2013)
     Three Months
Ended
Dec. 31, 2013
(From Oct. to
Dec., 2013)
     Nine Months
Ended
Dec. 31, 2012
(From Apr. to
Dec.,  2012)
     Nine Months
Ended
Dec. 31, 2013
(From Apr. to
Dec., 2013)
     Year Ended
Mar. 31, 2013
     Year Ending
Mar. 31, 2014
(Forecast)
 

NTT East

                    

Aggregate Fixed Line ARPU (Telephone Subscriber Line + INS-NET Subscriber Line)

     2,760         2,760         2,760         2,810         2,760         2,810         2,750   

Telephone Subscriber Lines ARPU

     2,410         2,410         2,410         2,460         2,410         2,450         2,400   

INS-NET Subscriber Lines ARPU

     5,030         5,030         5,040         5,060         5,040         5,060         5,030   

FLET’S Hikari ARPU

     5,750         5,680         5,650         5,880         5,690         5,860         5,700   

NTT West

                    

Aggregate Fixed Line ARPU (Telephone Subscriber Line + INS-NET Subscriber Line)

     2,690         2,700         2,700         2,730         2,700         2,720         2,690   

Telephone Subscriber Lines ARPU

     2,380         2,390         2,390         2,420         2,390         2,410         2,380   

INS-NET Subscriber Lines ARPU

     4,880         4,890         4,900         4,900         4,890         4,890         4,850   

FLET’S Hikari ARPU

     5,840         5,850         5,850         5,890         5,850         5,880         5,770   

NTT DOCOMO

                    

Mobile Aggregate ARPU (FOMA+Xi)

     4,610         4,590         4,510         4,890         4,570         4,840         4,530   

Voice ARPU (FOMA+Xi)

     1,470         1,430         1,370         1,800         1,420         1,730         1,320   

Packet ARPU (FOMA+Xi)

     2,680         2,670         2,640         2,690         2,660         2,690         2,700   

Smart ARPU (FOMA+Xi)

     460         490         500         400         490         420         510   

 

Notes:    (1)      We compute the following four categories of ARPU for business conducted by each of NTT East and NTT West.
         Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines): Calculated based on revenues from monthly charges and call charges for Telephone Subscriber Lines and INS-NET Subscriber Lines, which are included in operating revenues from Voice Transmission Services (excluding IP Services), and revenues from “FLET’S ADSL” and “FLET’S ISDN,” which are included in operating revenues from IP Services.
         Telephone Subscriber Lines ARPU: Calculated based on revenues from monthly charges and call charges for Telephone Subscriber Lines and revenues from “FLET’S ADSL.”
         INS-NET Subscriber Lines ARPU: Calculated based on revenues from monthly charges and call charges for “INS-NET” Subscriber Lines and revenues from “FLET’S ISDN.”
         FLET’S Hikari ARPU: Calculated based on revenues from “FLET’S Hikari” (including “FLET’S Hikari” optional services), which are included in operating revenues from IP Services, revenues from monthly charges, call charges and connection device charges for “Hikari Denwa,” and revenues from “FLET’S Hikari” optional services, which are included in Supplementary Business revenues.
         “FLET’S Hikari” includes “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT East, and “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West.
         Commencing in the fiscal year ending March 31, 2014, NTT East and NTT West began including in their respective FLET’S Hikari ARPU calculations revenues from NTT East’s and NTT West’s “FLET’S VPN WIDE” virtual private network option. These revenues are part of NTT East’s and NTT West’s operating revenues from IP services. As a result of this new calculation methodology, NTT East’s and NTT West’s FLET’S Hikari ARPU for the three months ended June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013 and for the fiscal year ended March 31, 2013 include revenues from “FLET’S VPN WIDE” as stated below.
            FY2012/1Q: NTT East 20yen, NTT West 10yen
            FY2012/2Q: NTT East 20yen, NTT West 20yen
            FY2012/3Q: NTT East 20yen, NTT West 20yen
            FY2012/4Q: NTT East 20yen, NTT West 20yen
            FY2012 Results: NTT East 20yen, NTT West 20yen
   (2)    Revenues from interconnection charges are excluded from the calculation of Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), Telephone Subscriber Lines ARPU, INS-NET Subscriber Lines ARPU, and FLET’S Hikari ARPU.
   (3)    For purposes of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), Telephone Subscriber Lines ARPU and INS-NET Subscriber Lines ARPU, the number of subscribers is determined based on the number of subscriptions for each service.
   (4)    In terms of number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases roughly ten times greater than INS-Net 64. For this reason, for the purpose of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines) and INS-NET Subscriber Lines ARPU, one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions.
   (5)    For purposes of calculating FLET’S Hikari ARPU, number of subscribers is determined based on the number of “FLET’S Hikari” subscribers, including subscribers to “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT East, and subscribers to “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West.
   (6)    The following is the formula we use to compute ARPU for mobile business conducted by NTT DOCOMO.
         Mobile Aggregate ARPU (“FOMA”+“Xi”) = Voice ARPU (“FOMA”+“Xi”) + Packet ARPU (“FOMA”+“Xi”) + Smart ARPU (“FOMA”+“Xi”).
            NTT DOCOMO’s Voice ARPU (“FOMA”+“Xi”) is based on operating revenues related to voice services, such as basic monthly charges and voice communication charges attributable to our “FOMA” and “Xi” services, and our Packet ARPU (“FOMA”+“Xi”) is based on operating revenues related to packet services, such as flat monthly fees and packet communication charges attributable to our “FOMA” and “Xi” services and our Smart ARPU (“FOMA”+“Xi”) is based on operating revenues from a part of Other Operating Revenues attributable to “FOMA” and “Xi” wireless communications services (content services related revenues, fee collection agency commissions, handset warranty service revenues, advertising revenues, etc.).
   (7)    NTT DOCOMO began using the Smart ARPU metric from the three months ended September 30, 2012. As a result, Smart ARPU is now included in Mobile Aggregate ARPU. In addition, the following amounts (content services related revenues) that were formerly included in Packet ARPU are now classified as Smart ARPU: 80 yen out of Packet ARPU revenues for the nine months ended December 31, 2012; and 80 yen out of Packet ARPU revenues for the year ended March 31, 2013.
   (8)    Communications module service, phone number storage service, mail address storage service and docomo Business Transceiver subscribers and the revenues therefrom are not included in the calculations of Mobile Aggregate ARPU.
   (9)    Number of active subscribers used in the ARPU calculation of NTT East and NTT West are as below.
            1Q Results: Sum of number of active subscribers** for each month from April to June
            2Q Results: Sum of number of active subscribers** for each month from July to September
            3Q Results: Sum of number of active subscribers** for each month from October to December
            4Q Results: Sum of number of active subscribers** for each month from January to March
            Nine Months Results: Sum of number of active subscribers** for each month from April to December
            FY Results : Sum of number of active subscribers** for each month from April to March
            FY (Forecast): Sum of the sum of actual number of active subscribers at the end of each month from April to September and the average expected active number of subscribers during the second half of the fiscal year ((number of subscribers at end of September + number of expected subscribers at end of the following March)/2)x6
   (10)    Number of active subscribers used in the ARPU calculation of NTT DOCOMO are as below.
            1Q Results: Sum of number of active subscribers** for each month from April to June
            2Q Results: Sum of number of active subscribers** for each month from July to September
            3Q Results: Sum of number of active subscribers** for each month from October to December
            4Q Results: Sum of number of active subscribers** for each month from January to March
            Nine Months Results: Sum of number of active subscribers** for each month from April to December
            FY Results: Sum of number of active subscribers** for each month from April to March
            FY (Forecast): Sum of expected number of active subscribers** for each month from April to March
   (11)    Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.
      **active subscribers = (number of subscribers at end of previous month + number of subscribers at end of the current month)/2

 

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6. Interest-Bearing Liabilities (Consolidated)

 

     (Billions of yen)  
     As of
Mar. 31, 2013
     As of
Dec. 31, 2013
     As of
Mar. 31, 2014
(Forecast)
 

Interest-Bearing Liabilities

     4,036.0         4,515.2         4,100.0   

 

Note:

   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.

 

7. Indices (Consolidated)
     Year Ended
Mar. 31, 2013
     Nine Months Ended
Dec. 31, 2013
     Year Ending
Mar. 31, 2014
(Forecast)(1)
 

EBITDA

     3,207.4 billion yen         2,443.8 billion yen         3,215.0 billion yen   

EBITDA Margin

     30.0%                        30.5%                        29.2%                  

Operating FCF

     1,237.5 billion yen         1,134.8 billion yen         1,345.0 billion yen   

ROCE

     6.1%                        —                          6.1%                  

 

Notes:

   (1)   Forecasts for the year ending March 31, 2014 have not been changed from those announced in the financial results for the six months ended September 30, 2013.
   (2)   Reconciliation of Indices are as follows.

 

8. Reconciliation of Financial Indices (Consolidated)
         Year Ended
Mar. 31, 2013
     Nine Months Ended
Dec. 31, 2013
     Year Ending
Mar. 31, 2014
(Forecast)
 

EBITDA (a+b)

     3,207.4 billion yen         2,443.8 billion yen         3,215.0 billion yen   

        a  

  Operating Income      1,202.0 billion yen         985.1 billion yen         1,230.0 billion yen   

        b  

  Depreciation and Amortization, and Loss on Disposal of Property, Plant and Equipment      2,005.5 billion yen         1,458.7 billion yen         1,985.0 billion yen   

EBITDA Margin [(c/d)X100]

     30.0%                        30.5%                        29.2%                  

        a  

  Operating Income      1,202.0 billion yen         985.1 billion yen         1,230.0 billion yen   

        b  

  Depreciation and Amortization, and Loss on Disposal of Property, Plant and Equipment      2,005.5 billion yen         1,458.7 billion yen         1,985.0 billion yen   

        c  

  EBITDA (a+b)      3,207.4 billion yen         2,443.8 billion yen         3,215.0 billion yen   

        d  

  Operating Revenues      10,700.7 billion yen         8,025.2 billion yen         11,000.0 billion yen   

Operating FCF [(c-d)]

     1,237.5 billion yen         1,134.8 billion yen         1,345.0 billion yen   

        a  

  Operating Income      1,202.0 billion yen         985.1 billion yen         1,230.0 billion yen   

        b  

  Depreciation and Amortization, and Loss on Disposal of Property, Plant and Equipment      2,005.5 billion yen         1,458.7 billion yen         1,985.0 billion yen   

        c  

  EBITDA (a+b)      3,207.4 billion yen         2,443.8 billion yen         3,215.0 billion yen   

        d  

  Capital Investment(1)      1,970.0 billion yen         1,309.0 billion yen         1,870.0 billion yen   

ROCE [(b/c)X100]

     6.1%                        —                          6.1%                  

        a  

  Operating Income      1,202.0 billion yen         —                          1,230.0 billion yen   
  (Normal Statutory Tax Rate)      38%                        —                          38%                  

        b  

  Operating Income X (1 - Normal Statutory Tax Rate)      742.1 billion yen         —                          759.4 billion yen   

        c  

  Operating Capital Employed(2)      12,212.0 billion yen         —                          12,460.6 billion yen   

 

Notes:

     (1   Figures for capital investment are the accrual-based amounts required for acquisition of Property, Plant and Equipment and Intangible Assets. The differences from the figures for “Payments for Property, Plant and Equipment” and “Payments for Acquisition of Intangible Assets” in the consolidated statements of cash flows are as described in the reconciliation below.
     (2   Figures for operating capital employed for the “Year Ended Mar. 31, 2013” have been revised to reflect the retroactive application of the equity method of accounting.

 

     (Billions of yen)  
     Year Ended
Mar. 31, 2013
     Nine Months Ended
Dec. 31, 2013
 

Payments for Property, Plant and Equipment

     1,538.1         1,161.7   

Payments for Acquisition of Intangible Assets

     446.6         310.7   

Total

     1,984.7         1,472.4   

Difference from Capital Investment

     14.7         163.4   

 

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