Annual Reports

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Volkswagen 6-K 2009

Documents found in this filing:

  1. 6-K
  2. 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 November, 2009.

Commission File Number 1-8910

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

(Translation of registrant’s name into English)

3-1, OTEMACHI 2-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):             

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨    No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            .


INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2009

Attached is the registrant’s unaudited interim consolidated financial statements for the three and six months ended September 30, 2009, including the notes thereto, prepared on the basis of accounting principles generally accepted in the United States.

The attached financial statements were included in the registrant’s quarterly report which the registrant filed on November 10, 2009 with the Financial Services Agency of Japan. The registrant’s quarterly report filed with the Financial Services Agency included additional information not included in this report on Form 6-K. Such additional information is either immaterial or has been previously reported by the registrant. Most of the contents of this report on Form 6-K and the registrant’s quarterly report have previously been disclosed by the registrant in the registrant’s press release dated November 9, 2009, a copy of which was furnished under cover of Form 6-K on November 9, 2009.

The information included herein contains 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 any expectation of future results that may be derived from the forward-looking statements.

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


SIGNATURE

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/ Koji Ito

  Name:   Koji Ito
  Title:   General Manager
    Finance and Accounting Department

Date: November 10, 2009


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     March 31,
2009
    September 30,
2009
    September 30,
2009
 

ASSETS

      

Current assets:

      

Cash and cash equivalents

   ¥ 1,052,777      ¥ 952,434      $ 10,583   

Short-term investments

     20,264        47,294        525   

Notes and accounts receivable, trade

     1,947,765        1,719,174        19,102   

Allowance for doubtful accounts

     (45,208     (40,485     (450

Inventories (Note 3)

     313,494        372,275        4,136   

Prepaid expenses and other current assets

     512,479        568,516        6,317   

Deferred income taxes

     266,480        259,351        2,882   
                        

Total current assets

     4,068,051        3,878,559        43,095   
                        

Property, plant and equipment:

      

Telecommunications equipment

     14,705,383        14,792,341        164,359   

Telecommunications service lines

     13,968,838        14,095,223        156,614   

Buildings and structures

     5,770,337        5,790,863        64,343   

Machinery, vessels and tools

     1,755,854        1,778,561        19,762   

Land

     1,111,734        1,116,371        12,404   

Construction in progress

     305,167        311,278        3,459   
                        
     37,617,313        37,884,637        420,941   

Accumulated depreciation

     (27,415,794     (27,808,799     (308,987
                        

Net property, plant and equipment

     10,201,519        10,075,838        111,954   
                        

Investments and other assets:

      

Investments in affiliated companies

     622,735        638,266        7,092   

Marketable securities and other investments

     277,375        294,830        3,276   

Goodwill

     453,617        490,245        5,447   

Other intangibles

     1,406,991        1,396,714        15,519   

Other assets

     894,828        893,996        9,933   

Deferred income taxes

     871,272        878,435        9,760   
                        

Total investments and other assets

     4,526,818        4,592,486        51,027   
                        

Total assets

   ¥ 18,796,388      ¥ 18,546,883      $ 206,076   
                        

The accompanying notes are an integral part of these financial statements.

 

1


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     March 31,
2009
    September 30,
2009
    September 30,
2009
 

LIABILITIES AND EQUITY

      

Current liabilities:

      

Short-term borrowings

   ¥ 388,028      ¥ 252,356      $ 2,804   

Current portion of long-term debt

     603,041        414,220        4,603   

Accounts payable, trade

     1,302,607        909,402        10,105   

Accrued payroll

     454,575        393,213        4,369   

Accrued interest

     12,481        11,802        131   

Accrued taxes on income

     288,803        257,604        2,862   

Accrued consumption tax

     28,326        34,252        381   

Advances received

     114,934        135,486        1,505   

Deposit received

     275,089        243,576        2,706   

Other

     226,315        224,128        2,490   
                        

Total current liabilities

     3,694,199        2,876,039        31,956   
                        

Long-term liabilities:

      

Long-term debt

     3,691,688        3,881,336        43,126   

Obligations under capital leases

     47,394        42,802        476   

Liabilities for employees’ retirement benefits

     1,639,785        1,658,350        18,426   

Other

     577,692        615,183        6,835   
                        

Total long-term liabilities

     5,956,559        6,197,671        68,863   
                        

Equity:

      

Nippon Telegraph and Telephone Corporation (“NTT”) shareholders’ equity

      

Common stock, no par value (Note 4)

      

Authorized – 6,192,920,900 shares

      

Issued – 1,574,120,900 shares at March 31 and September 30, 2009

     937,950        937,950        10,422   

Additional paid-in capital

     2,841,037        2,841,016        31,567   

Retained earnings (Note 4)

     5,066,637        5,276,101        58,623   

Accumulated other comprehensive income (loss)

     (341,917     (308,343     (3,426

Treasury stock, at cost (Note 4) – 250,844,167 shares at March 31 and 250,837,921 shares at September 30, 2009

     (1,205,597     (1,205,553     (13,395
                        

Total NTT shareholders’ equity

     7,298,110        7,541,171        83,791   
                        

Noncontrolling interests

     1,847,520        1,932,002        21,466   
                        

Total equity

     9,145,630        9,473,173        105,257   
                        

Contingent liabilities (Note 8)

      

Total liabilities and equity

   ¥ 18,796,388      ¥ 18,546,883      $ 206,076   
                        
     Yen     U.S. dollars
(Note 2)
 
     March 31,
2009
    September 30,
2009
    September 30,
2009
 

Per share of common stock:

      

Shareholders’ equity

   ¥ 5,515.18      ¥ 5,698.83      $ 63.32   
                        

The accompanying notes are an integral part of these financial statements.

 

2


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

SIX-MONTH PERIOD ENDED SEPTEMBER 30

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     2008     2009     2009  

Operating revenues:

      

Fixed voice related services

   ¥ 1,315,716      ¥ 1,194,434      $ 13,271   

Mobile voice related services

     1,179,627        1,084,606        12,051   

IP/packet communications services

     1,416,757        1,535,954        17,066   

Sale of telecommunications equipment

     369,321        295,696        3,286   

System integration

     541,444        567,062        6,301   

Other

     341,728        320,356        3,560   
                        
     5,164,593        4,998,108        55,535   
                        

Operating expenses (Note 7):

      

Cost of services (exclusive of items shown separately below)

     1,161,911        1,177,744        13,086   

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

     459,941        387,317        4,304   

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

     344,082        361,388        4,015   

Depreciation and amortization

     1,020,780        996,992        11,078   

Impairment loss

     401        500        6   

Selling, general and administrative expenses

     1,432,396        1,427,397        15,860   
                        
     4,419,511        4,351,338        48,349   
                        

Operating income (loss)

     745,082        646,770        7,186   
                        

Other income (expenses):

      

Interest and amortization of bond discounts and issue costs

     (30,134     (28,811     (320

Interest income

     12,602        12,290        137   

Other, net

     43,611        13,341        148   
                        
     26,079        (3,180     (35
                        

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

     771,161        643,590        7,151   
                        

Income tax expense (benefit):

      

Current

     338,954        291,010        3,233   

Deferred

     (102,279     (31,245     (347
                        
     236,675        259,765        2,886   
                        

Income (loss) before equity in earnings (losses) of affiliated companies

     534,486        383,825        4,265   

Equity in earnings (losses) of affiliated companies

     7,421        4,718        52   
                        

Net income (loss)

     541,907        388,543        4,317   
                        

Less – Net income attributable to noncontrolling interests

     (135,554     (106,299     (1,181
                        

Net income (loss) attributable to NTT

   ¥ 406,353      ¥ 282,244      $ 3,136   
                        

Summary of total comprehensive income (loss):

      

Net income (loss)

   ¥ 541,907      ¥ 388,543      $ 4,317   

Other comprehensive income (loss)

     (38,012     43,506        483   

Comprehensive income (loss)

     503,895        432,049        4,800   

Less Other comprehensive income attributable to noncontrolling interests

     (130,561     (116,231     (1,291

Comprehensive income (loss) attributable to NTT

   ¥ 373,334      ¥ 315,818      $ 3,509   
                        
     Shares or yen     U.S. dollars
(Note 2)
 
     2008     2009     2009  

Per share of common stock (Note 4):

      

Weighted average number of shares outstanding

     1,357,276,301        1,323,282,575     

Net income (loss) attributable to NTT

   ¥ 299.39      ¥ 213.29      $ 2.37   
                        

The accompanying notes are an integral part of these financial statements.

 

3


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THREE-MONTH PERIOD ENDED SEPTEMBER 30

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     2008     2009     2009  

Operating revenues:

      

Fixed voice related services

   ¥ 652,186      ¥ 595,260      $ 6,614   

Mobile voice related services

     580,695        544,590        6,051   

IP/packet communications services

     721,691        774,685        8,608   

Sale of telecommunications equipment

     152,947        131,886        1,465   

System integration

     285,208        283,297        3,148   

Other

     178,278        165,501        1,839   
                        
     2,571,005        2,495,219        27,725   
                        

Operating expenses (Note 7):

      

Cost of services (exclusive of items shown separately below)

     585,879        594,893        6,610   

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

     193,428        173,765        1,931   

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

     184,309        179,238        1,991   

Depreciation and amortization

     517,024        500,386        5,560   

Impairment loss

     401        196        2   

Selling, general and administrative expenses

     716,945        725,742        8,064   
                        
     2,197,986        2,174,220        24,158   
                        

Operating income (loss)

     373,019        320,999        3,567   
                        

Other income (expenses):

      

Interest and amortization of bond discounts and issue costs

     (14,952     (14,006     (156

Interest income

     6,279        5,952        66   

Other, net

     18,914        4,729        53   
                        
     10,241        (3,325     (37
                        

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

     383,260        317,674        3,530   
                        

Income tax expense (benefit):

      

Current

     189,900        166,456        1,849   

Deferred

     (101,485     (39,005     (433
                        
     88,415        127,451        1,416   
                        

Income (loss) before equity in earnings (losses) of affiliated companies

     294,845        190,223        2,114   

Equity in earnings (losses) of affiliated companies

     3,886        2,014        22   
                        

Net income (loss)

     298,731        192,237        2,136   
                        

Less – Net income attributable to noncontrolling interests

     (67,912     (49,550     (551
                        

Net income (loss) attributable to NTT

   ¥ 230,819      ¥ 142,687      $ 1,585   
                        

Summary of total comprehensive income (loss):

      

Net income (loss)

   ¥ 298,731      ¥ 192,237      $ 2,136   

Other comprehensive income (loss)

     (4,383     11,018        123   

Comprehensive income (loss)

     294,348        203,255        2,259   

Less – Other comprehensive income attributable to noncontrolling interests

     (66,740     (52,811     (587

Comprehensive income (loss) attributable to NTT

   ¥ 227,608      ¥ 150,444      $ 1,672   
                        
     Shares or yen     U.S. dollars
(Note 2)
 
     2008     2009     2009  

Per share of common stock (Note 4):

      

Weighted average number of shares outstanding

     1,350,740,988        1,323,283,730     

Net income (loss) attributable to NTT

     170.88      ¥ 107.83      $ 1.20   
                        

The accompanying notes are an integral part of these financial statements.

 

4


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX-MONTH PERIOD ENDED SEPTEMBER 30

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     2008     2009     2009  

Cash flows from operating activities:

      

Net income (loss)

   ¥ 541,907      ¥ 388,543      $ 4,317   

Adjustments to reconcile net income (loss) to net cash provided by operating activities -

      

Depreciation and amortization

     1,020,780        996,992        11,078   

Impairment loss

     401        500        6   

Deferred taxes

     (102,279     (31,245     (347

Loss on disposal of property, plant and equipment

     45,473        44,796        498   

Equity in (earnings) losses of affiliated companies

     (7,421     (4,718     (53

(Increase) decrease in notes and accounts receivable, trade

     157,971        238,387        2,648   

(Increase) decrease in inventories

     (101,950     (59,507     (661

(Increase) decrease in other current assets

     (85,482     (57,279     (637

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

     (389,742     (329,069     (3,656

Increase (decrease) in accrued consumption tax

     (1,314     5,831        65   

Increase (decrease) in accrued interest

     (1,163     (689     (8

Increase (decrease) in advances received

     19,014        20,464        227   

Increase (decrease) in accrued taxes on income

     (6,334     (32,246     (358

Increase (decrease) in other current liabilities

     (14,057     (113     (1

Increase (decrease) in liability for employees’ retirement benefits

     (9,061     40,933        455   

Increase (decrease) in other long-term liabilities

     21,673        35,266        392   

Other

     774        (14,370     (160
                        

Net cash provided by (used in) operating activities

     1,089,190        1,242,476        13,805   
                        

Cash flows from investing activities:

      

Payments for property, plant and equipment

     (850,669     (727,184     (8,080

Proceeds from sale of property, plant and equipment

     46,309        16,036        178   

Payments for purchase of non-current investments

     (66,044     (52,245     (580

Proceeds from sale and redemption of non-current investments

     38,899        16,148        179   

Payments for purchase of short-term investments

     (2,541     (39,486     (439

Proceeds from redemption of short-term investments

     4,494        16,128        179   

Acquisition of intangibles and other assets

     (320,496     (298,134     (3,312
                        

Net cash provided by (used in) investing activities

   ¥ (1,150,048   ¥ (1,068,737   $ (11,875
                        

The accompanying notes are an integral part of these financial statements.

 

5


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX-MONTH PERIOD ENDED SEPTEMBER 30

 

     Millions of yen     Millions of
U.S. dollars
(Note 2)
 
     2008     2009     2009  

Cash flows from financing activities:

      

Proceeds from issuance of long-term debt

   ¥ 395,173      ¥ 368,174      $ 4,091   

Payments for settlement of long-term debt

     (292,575     (344,493     (3,828

Proceeds from issuance of short-term debt

     2,327,475        2,167,618        24,085   

Payments for settlement of short-term debt

     (2,301,358     (2,303,342     (25,592

Dividends paid (Note 4)

     (61,375     (72,780     (809

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

     (100,748     23        0   

Acquisition of treasury stocks by subsidiary

     (51,848     —          —     

Other

     (76,790     (90,863     (1,010
                        

Net cash provided by (used in) financing activities

     (162,046     (275,663     (3,063
                        

Effect of exchange rate changes on cash and cash equivalents

     (2,991     1,581        18   
                        

Net increase (decrease) in cash and cash equivalents

     (225,895     (100,343     (1,115

Cash and cash equivalents at beginning of period

     1,169,566        1,052,777        11,698   
                        

Cash and cash equivalents at end of period

   ¥ 943,671      ¥ 952,434      $ 10,583   
                        

Cash paid during the period for:

      

Interest

   ¥ 31,306      ¥ 29,490      $ 328   

Income taxes, net

     261,362        288,524        3,206   

The accompanying notes are an integral part of these financial statements.

 

6


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1. Summary of significant accounting policies:

As permitted by Section 93 of “Regulation Concerning the Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements” (Japanese Cabinet Office Ordinance No. 64 of 2007), the accompanying consolidated balance sheets at March 31 and September 30, 2009, and the consolidated statements of income for the three and six months ended September 30, 2008 and 2009 and cash flows for the six months ended September 30, 2008 and 2009 of NTT and its subsidiaries (“NTT Group”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain disclosures required by U.S. GAAP have been omitted.

(1) Application of New Accounting Standards

Business Combinations

Effective April 1, 2009, NTT Group adopted the accounting pronouncement issued by the Financial Accounting Standards Board (“FASB”) in December 2007 relating to business combinations. This pronouncement requires use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. The adoption of this pronouncement did not have a material impact on the results of operations or the financial position of NTT Group for the six months ended September 30, 2009.

Noncontrolling Interests in Consolidated Financial Statements

Effective April 1, 2009, NTT Group adopted the accounting pronouncement issued by FASB in December 2007 relating to noncontrolling interests in consolidated financial statements. This pronouncement establishes accounting and reporting standards for the noncontrolling interest (previously referred to as minority interests) in a subsidiary and for the deconsolidation of a subsidiary. This pronouncement requires the presentation that the noncontrolling interest should be reclassified to equity and consolidated net income should be adjusted to include net income attributed to the noncontrolling interest in the consolidated financial statements. This pronouncement also requires single method of accounting as equity transactions for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation.

The adoption of this pronouncement has an impact on the presentation of noncontrolling interests in the consolidated financial statements including retrospective reclassification; however, the adoption of this pronouncement did not have a material impact on the results of operations or financial position of NTT Group.

 

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Accounting for Financial Guarantee Insurance Contracts

Effective April 1, 2009, NTT Group adopted the accounting pronouncement issued by FASB in May 2008 relating to accounting for financial guarantee insurance contracts. This pronouncement prescribes accounting for insurers of financial obligations, bringing consistency to recognizing and recording premiums and to loss recognition. This pronouncement also requires expanded disclosures about financial guarantee insurance contracts. The adoption of this pronouncement did not have a material impact on the results of operations or the financial position of NTT Group.

Subsequent Events

Effective April 1, 2009, NTT Group adopted the accounting pronouncement issued by FASB in May 2009 relating to subsequent events. This pronouncement requires that the effect of subsequent events that occurred after the balance-sheet date and before the date the financial statements are either “issued” or “available to be issued” should be evaluated and disclosed. The adoption of this pronouncement did not have an impact on the results of operations or the financial position of NTT Group.

The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles

Effective July 1, 2009, NTT Group adopted the accounting pronouncement issued by FASB in June 2009 relating to the FASB Accounting Standards Codification and the hierarchy of generally accepted accounting principles. This pronouncement prescribes the change which divides non-governmental U.S. GAAP into the authoritative Codification and the non-authoritative guidance, doing away with the previous four-level hierarchy. The financial statements that adopted this pronouncement should follow the Codification in place of legacy accounting pronouncements. The adoption of this pronouncement did not have an impact on the results of operations or the financial position of NTT Group.

(2) Recent Pronouncements

In April 2009, FASB issued the accounting pronouncement relating to mergers and acquisitions of not-for-profit entities. This pronouncement gives not-for-profit entities specific guidance on accounting for mergers and acquisitions, including analogies to business-combination accounting and more uniform presentations. This pronouncement prescribes how to determine whether a combination is a merger or an acquisition, how to account for each, and the disclosures that should be made. This pronouncement is to be applied prospectively to mergers for which merger dates are on or after the beginning of an initial reporting period beginning on or after December 15, 2009, and to acquisitions for which acquisition dates are on or after the beginning of the first annual reporting period beginning on or after December 15, 2009. Earlier application is prohibited. The adoption of this pronouncement will not have an impact on the results of operations or financial position of NTT Group.

 

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In June 2009, the FASB issued the accounting pronouncement relating to accounting for transfers of financial assets. This pronouncement eliminates the concept and associated guidance of a “qualifying special-purpose entity” (“QSPE”), creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. This statement is effective (including for existing QSPEs) as of the beginning of a company’s first fiscal year that begins after November 15, 2009 and for subsequent interim and annual reporting periods. This pronouncement also provides for transfers that occurred before and after its effective date. Management is currently evaluating the impact of the adoption of this pronouncement on its results of operations and financial position of NTT Group.

In June 2009, the FASB issued the accounting pronouncement relating to the variable interest entity (“VIE”). This pronouncement prescribes the change of the approach to determining a VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) and requires companies to reassess more frequently whether they must consolidate VIEs. This pronouncement is effective as of the beginning of a company’s first fiscal year that begins after November 15, 2009 and for subsequent interim and annual reporting periods. Management is currently evaluating the impact of the adoption of this pronouncement on its results of operations and financial position of NTT Group.

(3) Net Income attributable to NTT per Share

Basic net income attributable to NTT per share (“EPS”) is computed based on the average number of shares outstanding during the period and is appropriately adjusted for any free distribution of common stock. Diluted EPS assumes the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock. Since NTT did not issue dilutive securities for the six months ended September 30, 2008 and 2009, there is no difference between basic EPS and diluted EPS. In January 2009, NTT effected the split of one share of its common stock into 100 shares. The computations of EPS have been adjusted retroactively for the three and six months ended September 30, 2008 and are presented to reflect the stock split.

(4) Reclassifications

Certain items for prior periods’ financial statements have been reclassified to conform to the presentation for the three and six months ended September 30, 2009.

 

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2. Convenience translation into U.S. dollar amounts:

The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of and for the three and six months ended September 30, 2009 have been translated into United States dollars at the rate of ¥90 = U.S.$1, the approximate current exchange rate prevailing on September 30, 2009. Those U.S. dollar amounts presented in the consolidated financial statements and related notes are included solely for convenience of the reader. This translation should not be construed as a representation that any or all the amounts shown could be converted into U.S. dollars at this or any other rate.

 

3. Inventories:

Inventories at March 31 and September 30, 2009 comprised the following:

 

     Millions of yen    Millions of
U.S. dollars
     March 31,
2009
   September 30,
2009
   September 30,
2009

Telecommunications equipment to be sold and materials

   ¥ 139,155    ¥ 194,241    $ 2,158

Projects in progress

     132,638      133,947      1,488

Supplies

     41,701      44,087      490
                    

Total

   ¥ 313,494    ¥ 372,275    $ 4,136
                    

 

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4. Equity:

Outstanding shares and Treasury stock–

The changes in the number of outstanding shares and treasury stock for the fiscal year ended March 31, 2009 and for the six months ended September 30, 2009, were as follows:

 

     Change in shares  
     Issued
shares
   Treasury
stock
 

Balance at March 31, 2008

   15,741,209    2,102,470.82   

Acquisition of treasury stock through purchase of fractional shares

   —      2,726.22   

Purchase of treasury stock under resolution of the board of directors

   —      341,307.00   

Resale of treasury stock to fractional shareholders

   —      (1,824.08

Effect of stock split

   1,558,379,691    242,023,316.04   

Acquisition of treasury stock through purchase of less-than-one-unit shares

   —      10,623   

Purchase of treasury stock under resolution of the board of directors

   —      6,386,800   

Resale of treasury stock to holders of less-than-one-unit shares

   —      (21,252

Balance at March 31, 2009

   1,574,120,900    250,844,167   

Acquisition of treasury stock through purchase of less-than-one-unit shares

   —      14,990   

Resale of treasury stock to holders of less-than-one-unit shares

   —      (21,236
           

Balance at September 30, 2009

   1,574,120,900    250,837,921   
           

With the implementation of the “Law for Partial Amendments to the Law Concerning Book-Entry Transfer of Corporate Bonds and Other Securities for the Purpose of Streamlining the Settlement of Trades of Stocks and Other Securities (Law No. 88 of 2004)” (“Settlement Streamlining Law”), on January 5, 2009, share certificates of listed companies were converted to electronic form.

The introduction of the electronic share certificate system required that fractional shares be eliminated. In order to provide for a smooth transition away from the fractional share system, the board of directors, at their meeting held May 13, 2008, resolved that, subject to approval of the introduction of the unit share system at the 23rd general shareholders meeting and the approval of the Minister of Internal Affairs and Communications, on the day immediately preceding the implementation date of the electronic share certificate system, one share of common stock be split into 100 shares, and the number of shares constituting one unit be set at 100. This resolution was approved at the 23rd general shareholders meeting and by the Minister of Internal Affairs and Communications on June 25, 2008.

 

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The effective date of the stock split was determined when the implementation date of the Settlement Streamlining Law was set as January 5, 2009. Accordingly, on January 4, 2009, NTT effected the split of one share of its common stock into 100 shares, pursuant to the foregoing resolution. The computations of the per share amount have been adjusted retroactively for the three and six months ended September 30, 2008 and are presented to reflect the effect of the stock split.

On May 13, 2008, the board of directors resolved that NTT may acquire up to 450,000 outstanding shares (pre-stock split) of its common stock at an amount in total not exceeding ¥200 billion from May 14, 2008 through March 24, 2009. Based on this resolution, NTT acquired 341,307 shares (pre-stock split) of its common stock for a total purchase price of ¥169,767 million from July through December 2008. In January 2009, NTT acquired 6,386,800 shares of its common stock after the stock split for ¥30,233 million. The shareholders’ meeting on June 24, 2009, did not resolve that NTT may acquire its common stock.

Dividend–

(1) Cash dividends paid

 

Resolution

   The shareholders’ meeting on June 24, 2009

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends paid

   ¥72,780 million ($758 million)

Cash dividends per share

   ¥55 ($0.57)

Date of record

   March 31, 2009

Date of payment

   June 25, 2009

(2) Cash dividends declared

 

Resolution

   The Board of Directors’ meeting on November 9, 2009

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends declared

   ¥79,397 million ($882 million)

Cash dividends per share

   ¥60 ($0.67)

Date of record

   September 30, 2009

Date of payment

   December 10, 2009

 

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Changes in equity–

Changes in total equity, NTT shareholders’ equity and equity attributable to the noncontrolling interest for the six months ended September 30, 2008, and 2009, were as follows:

 

     Millions of yen        
     NTT shareholders’
equity
    Noncontrolling
interests
    Total
equity
 

Balance at March 31, 2008

   ¥ 7,410,761      ¥ 1,863,998      ¥ 9,274,759   

Dividends paid to NTT Shareholders

     (61,375     —          (61,375

Dividends paid to noncontrolling interests

     —          (44,163     (44,163

Acquisition of treasury stocks

     (101,222     —          (101,222

Resale of treasury stocks

     474        —          474   

Other equity transactions

     —          (37,731     (37,731

Net income (loss)

     406,353        135,554        541,907   

Other comprehensive income (loss)

     (33,019     (4,993     (38,012

Unrealized gain (loss) on securities

     (11,102     (2,297     (13,399

Unrealized gain (loss) on derivative instruments

     414        (210     204   

Foreign currency translation adjustments

     (15,666     (2,165     (17,831

Pension liability adjustments

     (6,665     (321     (6,986

Balance at September 30, 2008

   ¥ 7,621,972      ¥ 1,912,665      ¥ 9,534,637   
     Millions of yen        
     NTT shareholders’
equity
    Noncontrolling
interests
    Total
equity
 

Balance at March 31, 2009

   ¥ 7,298,110      ¥ 1,847,520      ¥ 9,145,630   

Dividends paid to NTT Shareholders

     (72,780     —          (72,780

Dividends paid to noncontrolling interests

     —          (39,831     (39,831

Acquisition of treasury stocks

     (58     —          (58

Resale of treasury stocks

     81        —          81   

Other equity transactions

     —          8,082        8,082   

Net income (loss)

     282,244        106,299        388,543   

Other comprehensive income (loss)

     33,574        9,932        43,506   

Unrealized gain (loss) on securities

     12,069        4,802        16,871   

Unrealized gain (loss) on derivative instruments

     (2,141     4        (2,137

Foreign currency translation adjustments

     15,318        4,303        19,621   

Pension liability adjustments

     8,328        823        9,151   

Balance at September 30, 2009

   ¥ 7,541,171      ¥ 1,932,002      ¥ 9,473,173   

 

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     Millions of U.S. dollars        
     NTT shareholders’
equity
    Noncontrolling
interests
    Total
equity
 

Balance at March 31, 2009

   $ 81,090      $ 20,528      $ 101,618   

Dividends paid to NTT Shareholders

     (808 )      —          (808 ) 

Dividends paid to noncontrolling interests

     —          (443 )      (443 ) 

Acquisition of treasury stocks

     (1 )      —          (1 ) 

Resale of treasury stocks

     1        —          1   

Other equity transactions

     —          90        90   

Net income (loss)

     3,136        1,181        4,317   

Other comprehensive income (loss)

     373        110        483   

Unrealized gain (loss) on securities

     134        53        187   

Unrealized gain (loss) on derivative instruments

     (24 )      0        (24 ) 

Foreign currency translation adjustments

     170        48        218   

Pension liability adjustments

     93        9        102   

Balance at September 30, 2009

   $ 83,791      $ 21,466      $ 105,257   

 

5. Fair value measurements:

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

Level

 

1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level

 

2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level

 

3—Inputs are unobservable inputs for the asset or liability.

Assets and liabilities measured at fair value on a recurring basis as of March 31 and September 30, 2009 are as follows:

 

     Millions of yen
     March 31, 2009
     Fair value measurements using
     Total    Level 1 *1    Level 2 *2    Level 3 *3

Assets

           

Available-for-sale securities

   ¥ 170,551    ¥ 168,695    ¥ 1,856      —  

Derivatives

     6,205      —        6,205      —  

Liabilities

           

Derivatives

   ¥ 5,651      —      ¥ 5,651      —  
     Millions of yen
     September 30, 2009
     Fair value measurements using
     Total    Level 1 *1    Level 2 *2    Level 3 *3

Assets

           

Available-for-sale securities

   ¥ 195,417    ¥ 166,875    ¥ 2,035    ¥ 26,507

Derivatives

     4,599      —        4,599      —  

Liabilities

           

Derivatives

   ¥ 8,689      —      ¥ 8,689      —  

 

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     Millions of U.S. dollars
     September 30, 2009
     Fair value measurements using
     Total    Level 1 *1    Level 2 *2    Level 3 *3

Assets

           

Available-for-sale securities

   $ 2,171    $ 1,854    $ 23    $ 294

Derivatives

     51      —        51      —  

Liabilities

           

Derivatives

   $ 97      —      $ 97      —  

 

*1 Quoted prices for identical assets or liabilities in active markets
*2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived principally from observable market data
*3 Unobservable inputs

Available-for-sale securities–

Available-for-sale securities comprised marketable equity securities and debt securities, and financial instruments classified as available-for-sale debt securities. If active market prices are available, fair value is measured by quoted prices for identical assets in active markets, which is classified to level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is classified to level 2. If debt securities do not have quoted prices for identical assets, fair value is measured by inputs derived from unobservable data including discount rate, which is classified to level 3.

Assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2009 are as follows:

 

     Millions of yen
   September 30, 2009
     Fair value measurements using    Losses
(before tax)
      Total    Level 1 *1    Level 2 *2    Level 3 *3   

Assets

              

Real estate

   ¥ 16,456    —      —      ¥ 16,456    ¥ 4,776

 

     Millions of U.S. dollars
   September 30, 2009
     Fair value measurements using    Losses
(before tax)
      Total    Level 1 *1    Level 2 *2    Level 3 *3   

Assets

              

Real estate

   $ 183    —      —      $ 183    $ 53

 

*1 Quoted prices for identical assets or liabilities in active markets
*2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived principally from observable market data
*3 Unobservable inputs

 

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Real estate–

If a decline in value or an increase in estimated costs of completion of real estate held for resale included in inventories makes inventory cost to be unrecoverable, the real estate is written down by its fair value. In measuring fair value of such inventories, fair value is measured by using various evaluation models based on inputs that are unobservable in the market, such as a salable price based on a real-estate appraisal, which is classified to level 3.

Real estate in the table above includes that transferred from inventories to property, plant and equipment as a result of a change in use after measuring fair value.

 

6. Business segment and geographic area:

The operating segments reported below are those for which segment-specific financial information is available. NTT Group’s management uses this financial information to make decisions on the allocation of management resources and to evaluate business performance. Accounting policies used to determine segment profit/loss are consistent with those used to prepare the consolidated financial statements in accordance with accounting principles generally accepted in the United States.

The regional communications business segment principally comprises revenues from fixed voice related services, IP/packet communications services, sales of telecommunications equipment, and other operating revenues.

The long distance and international communications business segment principally comprises revenues from fixed voice related services, IP/packet communications services, sales of telecommunications equipment, system integration services, and other operating revenues.

The mobile communications business segment principally comprises revenues from mobile voice related services, IP/packet communications services, and sales of telecommunications equipment.

 

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The data communications business segment principally comprises revenues from system integration services.

The other business segment principally comprises operating revenues from such activities as building-maintenance, real estate rental, systems development, leasing, and research and development.

Business segments -

Sales and operating revenue:

 

For the three months

ended September 30

   Millions of yen     Millions of
U.S. dollars
 
   2008     2009     2009  

Regional communications business -

      

Customers

   ¥ 867,435      ¥ 848,503      $ 9,428   

Intersegment

     145,810        128,425        1,427   
                        

Total

     1,013,245        976,928        10,855   

Long distance and international communications business -

      

Customers

     293,147        281,121        3,124   

Intersegment

     31,814        27,259        303   
                        

Total

     324,961        308,380        3,427   

Mobile communications business -

      

Customers

     1,086,853        1,050,220        11,669   

Intersegment

     10,685        10,833        120   
                        

Total

     1,097,538        1,061,053        11,789   

Data communications business -

      

Customers

     233,584        236,196        2,624   

Intersegment

     31,867        27,990        311   
                        

Total

     265,451        264,186        2,935   

Other -

      

Customers

     89,986        79,179        880   

Intersegment

     201,609        184,962        2,055   
                        

Total

     291,595        264,141        2,935   

Elimination

     (421,785     (379,469     (4,216
                        

Consolidated total

   ¥ 2,571,005      ¥ 2,495,219      $ 27,725   
                        

 

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For the six months

ended September 30

   Millions of yen     Millions of
U.S. dollars
 
   2008     2009     2009  

Regional communications business -

      

Customers

   ¥ 1,725,745      ¥ 1,682,317      $ 18,693   

Intersegment

     282,607        255,346        2,837   
                        

Total

     2,008,352        1,937,663        21,530   

Long distance and international communications business -

      

Customers

     581,141        564,052        6,267   

Intersegment

     55,306        52,412        583   
                        

Total

     636,447        616,464        6,850   

Mobile communications business -

      

Customers

     2,243,360        2,123,513        23,595   

Intersegment

     24,424        22,294        248   
                        

Total

     2,267,784        2,145,807        23,843   

Data communications business -

      

Customers

     446,481        476,044        5,289   

Intersegment

     60,818        58,242        647   
                        

Total

     507,299        534,286        5,936   

Other -

      

Customers

     167,866        152,182        1,691   

Intersegment

     391,325        373,164        4,146   
                        

Total

     559,191        525,346        5,837   

Elimination

     (814,480     (761,458     (8,461
                        

Consolidated total

   ¥ 5,164,593      ¥ 4,998,108      $ 55,535   
                        

 

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Segment profit or loss:

 

For the three months

ended September 30

   Millions of yen     Millions of
U.S. dollars
 
   2008    2009     2009  

Operating income (loss):

       

Regional communications business

   ¥ 29,526    ¥ 34,622      $ 385   

Long distance and international communications business

     27,518      26,344        293   

Mobile communications business

     279,069      231,955        2,577   

Data communications business

     23,198      15,631        174   

Other

     9,220      (4,313     (48
                       

Total

     368,531      304,239        3,381   

Elimination

     4,488      16,760        186   
                       

Consolidated operating income

   ¥ 373,019    ¥ 320,999      $ 3,567   
                       

For the six months

ended September 30

   Millions of yen     Millions of
U.S. dollars
 
   2008    2009     2009  

Operating income (loss):

       

Regional communications business

   ¥ 40,700    ¥ 50,698      $ 563   

Long distance and international communications business

     55,430      51,236        569   

Mobile communications business

     574,208      482,325        5,359   

Data communications business

     44,851      36,873        410   

Other

     23,407      6,861        76   
                       

Total

     738,596      627,993        6,977   

Elimination

     6,486      18,777        209   
                       

Consolidated operating income

   ¥ 745,082    ¥ 646,770      $ 7,186   
                       

Transfers between reportable businesses are made at arms-length prices. Operating income is sales and operating revenues less costs and operating expenses.

Geographic information is not presented due to immateriality of revenue attributable to international operations.

There have been no sales and operating revenue from transactions with a single external customer amounting to 10% or more of NTT’s revenues for the six months ended September 30, 2008 and 2009.

 

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7. Research and development expenses:

Research and development expenses are charged to income as incurred and such amounts charged to income for the six months ended September 30, 2008 and 2009 were ¥114,440 million and ¥122,283 million ($1,359 million), respectively. Such amounts charged to income for the three months ended September 30, 2008 and 2009 were ¥61,177 million and ¥63,905 million ($710 million), respectively.

 

8. Contingent liabilities:

Contingent liabilities at September 30, 2009 for loans guaranteed amounted to ¥9,814 million ($109 million).

At September 30, 2009, NTT Group had no material litigation or claims outstanding, pending or threatened against it, which would be expected to have a material adverse effect on NTT’s consolidated financial position or results of operations.

 

9. Subsequent events:

There were no significant subsequent events for the period after September 30, 2009, through November 10, 2009, the issue date of the financial statements.

 

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