RNS Number:2319M
Nippon Telegraph and Telephone Corp
12 May 2005
PART 2
Attachment
Nippon Telegraph and Telephone Corporation
May 12, 2005
NTT's Shares and Shareholders (as of March 31, 2005)
1. Classification of Shareholders
NTT's Shares and Shareholders
Foreign Corporations, etc.
Government Financial Securities Other Domestic
and Public Institutions Firms Domestic Not Individuals, Odd-Lot
Details Bodies Corporations Individuals Individuals etc. Total Shares
Total 4 456 116 12,008 854 94 1,341,574 1,355,106
Holders
Total
Shares 6,431,835 2,247,601 42,233 259,026 2,761,456 289 3,960,858 15,703,298 37,911
% 40.96 14.31 0.27 1.65 17.59 0.00 25.22 100.00
Notes: 1. "Other Domestic Corporations" includes 13,193 shares under the name of Japan Securities
Depository Center, and "Odd-Lot Shares" includes 0.72 shares under the name of Japan
Securities Depository Center.
2. "Domestic Individuals, etc." includes 801,458 shares of treasury stock, and "Odd-Lot Shares"
includes 0.67 shares of treasury stock. The actual number of treasury stock
shares at the end of March 31, 2005 was 801,450.67.
3. The number of shareholders who own only odd-lot shares is 380,678.
2. Classification by Number of Shares
NTT's Shares and Shareholders
At At At At At At At Total
Least Least Least Least Least Least Least Odd-Lot
Details 1,000 500 100 50 10 5 1 Shares
Number of 357 163 1,052 1,514 36,222 85,074 1,230,724 1,355,106
Holders
% 0.03 0.01 0.08 0.11 2.67 6.28 90.82 100.00
Total Shares 12,327,228 111,719 206,770 96,771 555,257 516,588 1,888,965 15,703,298 37,911
% 78.50 0.71 1.32 0.62 3.53 3.29 12.03 100.00
Notes: 1. "At Least 1,000" includes 13,193 shares under the name of the Japan Securities Depository
Center, and "Odd-Lot Shares" includes 0.72 shares under the name of Japan Securities
Depository Center.
2. "At Least 1,000" includes 801,458 shares of treasury stock, and "Odd-Lot Shares" includes
0.67 shares of treasury stock.
3. Principal Shareholders
Name Share Percent of
Holdings Total
Shares
Issued
The Minister of Finance 6,431,810.26 40.86
Japan Trustee Services Bank, Ltd. (Trust Account) 594,411.00 3.78
The Master Trust Bank of Japan, Ltd. (Trust Account) 489,163.00 3.11
Moxley and Company 301,268.00 1.91
The Chase Manhattan Bank, N.A. London 275,381.00 1.75
State Street Bank and Trust Company 505103 176,224.00 1.12
NTT Employee Share-Holding Association 141,092.22 0.90
Nippon Life Insurance Company 95,953.68 0.61
State Street Bank and Trust Client Omnibus Account OM02 84,278.00 0.54
The Sumitomo Trust and Banking Company, Ltd. (Trust Account B) 81,699.00 0.52
------------ -------
Total 8,671,280.16 55.09
------------ -------
Note: The Company's holdings of treasury stock (801,450.67 shares) are not
included in the above figures.
--------------------------------------------------------------------------------
Nippon Telegraph and Telephone Corporation
May 12, 2005
Consolidated Financial Results for the Year ended March 31, 2005
April 1, 2004 - March 31, 2005
(Consolidated Results of Operations)
(Billions of Yen)
Details Year Year
ended ended
March March
31, 2005 31, 2004 Percent
(Decrease) (Decrease)
-------- -------- ---------- ----------
Operating Revenues 10,805.9 11,095.5 (289.7 ) (2.6% )
Operating Expenses 9,594.7 9,535.2 59.5 0.6%
-------- -------- ---------- ----------
Operating Income 1,211.2 1,560.3 (349.1 ) (22.4% )
Other Income (Expenses), Net 512.1 (33.0 ) 545.1 -
-------- -------- ---------- ----------
Income before Income Taxes 1,723.3 1,527.3 196.0 12.8%
Income Taxes 713.9 603.2 110.7 18.4%
Minority Interests in Earnings of Consolidated 290.2 260.0 30.3 11.6%
Subsidiaries
Equity in Net Earnings (Losses) of Affiliates (9.0 ) (20.3 ) 11.3 55.8%
-------- -------- ---------- ----------
Net Income (Loss) 710.2 643.9 66.3 10.3%
Note: NTT's consolidated financial statements have been prepared in
accordance with the accounting principles generally accepted in the United
States of America (U.S. GAAP).
(Operating Performance of NTT and its Major Subsidiaries)
(Billions of Yen)
NTT (Holding NTT East NTT West NTT NTT DATA NTT
Company) Communications DoCoMo
Details
Non-Consolidated Non-Consolidated Non-Consolidated Non-Consolidated Consolidated Consolidated
-------- ---------------- ---------------- ---------------- ---------------- ------------ ----
Operating 323.2 2,180.9 2,098.0 1,090.0 854.1 4,844.6
Revenues
Change from 65.1 (86.2 ) (68.8 ) (16.5 ) 7.4 (203.5 )
previous
year
% Change 25.2% (3.8% ) (3.2% ) (1.5% ) 0.9% (4.0% )
Operating 179.5 2,093.1 2,027.8 1,020.1 814.8 4,060.4
Expenses
Change from (6.6 ) (87.5 ) (52.2 ) 29.8 27.8 115.3
previous
year
% Change (3.6% ) (4.0% ) (2.5% ) 3.0% 3.5% 2.9%
Operating 143.7 87.7 70.1 69.8 39.2 784.2
Income
Change from 71.8 1.3 (16.5 ) (46.3 ) (20.4 ) (318.8 )
previous
year
Recurring 151.7 97.6 80.0 67.9 32.1 *1,288.2
Profit
Change from 73.0 (0.2 ) (10.4 ) (45.0 ) (17.4 ) 187.1
previous
year
Special 350.6 8.3 10.1 4.0 -
Profits
Special - 6.7 7.1 25.0 -
Losses
Net Income 455.6 58.1 41.0 24.6 20.1 747.6
(Loss)
Change from 215.3 0.1 (20.4 ) 0.4 (6.8 ) 97.6
previous
year
* NTT DoCoMo's "Recurring Profit" represents its "Income before Income Taxes."
-1-
--------------------------------------------------------------------------------
(Consolidated Financial Results Forecasts for the Year Ending March 31, 2006)
(Billions of Yen)
NTT (Holding NTT
Company) NTT East NTT West Communications NTT
Consolidated NTT DATA DoCoMo
Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated
Operating 10,590.0 340.0 2,012.0 1,966.0 1,081.0 880.0 4,805.0
Revenues
Change (215.9 ) 16.7 (168.9 ) (132.0 ) (9.0 ) 25.9 (39.6 )
from
previous
year
% Change (2.0% ) 5.2% (7.7% ) (6.3% ) (0.8% ) 3.0% (0.8% )
Operating 9,540.0 169.0 1,997.0 1,962.0 1,023.0 835.0 3,995.0
Expenses
Change (54.7 ) (10.5 ) (96.1 ) (65.8 ) 2.8 20.2 (65.4 )
from
previous
year
% Change (0.6% ) (5.9% ) (4.6% ) (3.2% ) 0.3% 2.5% (1.6% )
Operating 1,050.0 171.0 15.0 4.0 58.0 45.0 810.0
Income
Change (161.2 ) 27.2 (72.7 ) (66.1 ) (11.8 ) 5.8 25.8
from
previous
year
Income 1,080.0 *177.0 * 25.0 * 15.0 * 60.0 41.0 874.0
before
Income
Taxes
Change (643.3 ) 25.2 (72.6 ) (65.0 ) (7.9 ) 8.9 (414.2 )
from
previous
year
Net 440.0 174.0 15.0 9.0 34.0 27.0 533.0
Income
Change (270.2 ) (281.6 ) (43.1 ) (32.0 ) 9.3 6.9 (214.6 )
from
previous
year
* "Income before Income Taxes" for NTT (Holding Company), NTT
East, NTT West, NTT Communications, and NTT DATA represent their recurring
profits.
Note:
The consolidated financial results forecasts above are forward-looking
statements about the future performance of NTT which are based on the
assumptions, estimates, judgments, projections and beliefs of the management of
NTT in light of the information currently available to it. The projected numbers
in this report were derived using certain assumptions that are indispensable for
making projections in addition to facts that have been ascertained in the past
and confirmed accurately. Risks and uncertainties inherent in future
projections, NTT's future business operation, the status of the economy
in Japan and abroad, possible fluctuations in the securities markets and other
changes in circumstances could cause NTT's actual results to differ
materially from the projected figures above.
The numbers of the other consolidated subsidiaries (397 companies) are as
follows:
NTT East Corporation Group (89 companies)
NTT West Corporation Group (50 companies)
NTT Communications Group (45 companies)
NTT DATA Group (43 companies)
NTT DoCoMo Group (89 companies) and
NTT Facilities Group (11 companies), NTT Urban Development Group (8 companies),
NTT Comware Corporation Group (8 companies), NTT Business Associe Group (19
companies), and 35 other companies.
-2-
--------------------------------------------------------------------------------
(Reference)
* Number of Telephone Subscriber Services
(Thousands)
Details March March Increase Percent
--- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------ ------ -----------
Telephone + INS-Net 58,788 60,072 (1,284 ) (2.1% )
Telephone Subscriber Lines 50,321 50,938 (617 ) (1.2% )
INS-Net Subscriber Lines 8,467 9,135 (667 ) (7.3% )
FLET'S ADSL 5,208 4,089 1,119 27.4%
B FLET'S 1,665 840 824 98.1%
Cellular 48,825 46,328 2,497 5.4%
FOMA* 11,501 3,045 8,456 277.7%
i-mode 44,021 41,077 2,944 7.2%
FOMA* 11,353 2,997 8,356 278.8%
Notes:
1. "Number of Telephone Subscriber Lines" is the total of individual lines and central station
lines.
2. 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 subscriber is calculated as ten
INS-Net 64 subscribers.
3. "Number of Cellular" includes the DoPa Single Service subscribers.
* Partial listing only.
* Indicators
Details March March Increase
--- 31, 31, (Decrease)
2005 2004 ----------
------- -------
EBITDA Margin 32.8% 35.5% (2.7 point )
Operating Free Cash Flow (Billions of yen) 1,482.2 1,920.2 (438.0 )
ROCE 5.8% 7.3% (1.5 point )
Notes:
1. EBITDA Margin = (Operating income + DA)/Operating revenues
2. Operating Free Cash Flow = Operating income + DA - Capital investment
3. ROCE = Operating incomex(1 - Statutory tax rate)/Operating capital employed
* DA (Depreciation and amortization, Loss on disposal of property, plant and equipment) : (March 31, 2005) 2,328.4
billion yen (March 31, 2004) 2,373.5 billion yen
* Capital investment : See figures in the table of "Capital Investements" below.
* Operating capital employed : (March 31, 2005) 12,307.0billion yen (March 31, 2004) 12,324.0 billion yen
* Statutory tax rate : (March 31, 2005) 41% (March 31, 2004) 42%
Details March March Increase (Employees)
--- 31, 31, (Decrease) Percent
2005 2004 ---------- Increase
------- ------- (Decrease)
-----------
Number of Employees 201,500 205,300 (3,800 ) (1.9% )
(Billions of Yen)
Details March March Increase Percent
--- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------- ------- ----------
Capital Investments 2,057.4 2,013.6 43.8 2.2%
Note: The figures represent the accrual-based amounts required for acquisition
of property, plant and equipment, and intangibles.
(Billions of Yen)
Details March March Increase Percent
--- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------- ------- ----------
Interest-Bearing Debts 5,525.8 5,921.7 (395.8 ) (6.7% )
-3-
--------------------------------------------------------------------------------
Non-Consolidated Financial Results for the Year Ended March 31, 2005
April 1, 2004 - March 31, 2005
(Based on accounting principles generally accepted in Japan)
(Operating Results)
Details Year Year Increase (Billions
--- ended ended (Decrease) of Yen)
March 31, March ---------- Percent
2005 31, Increase
--------- 2004 (Decrease)
----- ----------
Operating Revenues 323.2 258.1 65.1 25.2%
Operating Expenses 179.5 186.2 (6.6 ) (3.6% )
Operating Income 143.7 71.8 71.8 100.0%
Non-Operating Income 7.9 6.8 1.1 17.5%
Recurring Profit 151.7 78.6 73.0 92.8%
Special Profits 350.6 189.5 161.0 85.0%
Special Losses - 12.1 (12.1 ) -
Net Income 455.6 240.3 215.3 89.6%
(Proposal for Appropriation of Unappropriated Retained Earnings)
Details (Billions
--- of Yen)
Year ended
March 31,
2005
-----------
Unappropriated Retained Earnings for the Year * 651.4 Net Income 455.6
Return of Special Depreciation Reserve to 1.8 Unappropriated Retained Earnings Brought 243.0
Retained Earnings Forward (+)
Total 653.3 Interim Dividends for the Year (-) 47.2
---------------------------------------------------
Appropriation of Unappropriated Retained 44.8 * Unappropriated Retained Earnings for the 651.4
Earnings Year
Cash Dividends 44.8
Bonuses to Directors and Corporate Auditors 70 million yen
Unappropriated Retained Carried Forward 608.4
(Forecasts for the Year Ending March 31, 2006)
Details Operating Operating Recurring (Billions
--- Revenues Income Profit of Yen)
--------- --------- --------- Net
Income
---------
Forecasts for the Year Ending March 31, 2006 340.0 171.0 177.0 174.0
-4-
--------------------------------------------------------------------------------
Nippon Telegraph and Telephone East Corporation
May 12, 2005
Non-Consolidated Financial Results for the Year Ended March 31, 2005
April 1, 2004 - March 31, 2005
(Based on accounting principles generally accepted in Japan)
Operating Results
Details Year Year Increase (Billions
---- Ended Ended (Decrease) of Yen)
March March ---------- Percent
31, 31, Increase
2005 2004 (Decrease)
------- ------- ----------
Operating Revenues 2,180.9 2,267.1 (86.2) (3.8%)
Operating Expenses 2,093.1 2,180.7 (87.5) (4.0%)
Operating Income 87.7 86.4 1.3 1.5%
Non-Operating Income 9.8 11.4 (1.5) (13.7%)
Recurring Profit 97.6 97.8 (0.2) (0.2%)
Special Profits 8.3 9.3 (0.9) (9.8%)
Special Losses 6.7 6.7 - -
Income before Income Taxes 99.2 100.4 (1.1) (1.1%)
Income Taxes 41.1 42.4 (1.2) (3.0%)
Net Income 58.1 57.9 0.1 0.2%
Notes: 1. Special Profits for the year ended March 31, 2005 are gain on sale of property, plant and equipment.
2. Special Losses for the year ended March 31, 2005 are amortization of cumulative effect of change in
accounting standard for severance payments and pension plans.
Proposal for Appropriation of Unappropriated Retained Earnings
(Billions
of Yen)
-----------
Details Year Ended
---- March 31,
2005
-----------
Unappropriated Retained Earnings for the Year *83.5 Net Income 58.1
Cash Dividends 33.5 Unappropriated Retained Earnings Brought 25.4
Forward(+)
Bonuses to Directors and Corporate Auditors 54 million yen
------------------------------------------ ----
Appropriation of Unappropriated Retained Earnings 33.5 * Unappropriated Retained Earnings for the 83.5
Year
Unappropriated Retained Earnings Carried Forward 50.0
Forecasts for the Year Ending March 31, 2006
Details Operating Operating Recurring (Billions
---- Revenues Income Profit of Yen)
--------- --------- --------- Net
Income
---------
Forecasts for the Year Ending March 31, 2006 2,012.0 15.0 25.0 15.0
- 1 -
--------------------------------------------------------------------------------
Breakdown of Operating Revenues and Operating Expenses
(1) Operating Revenues
Service Year Year Increase (Billions
--- Ended Ended (Decrease) of Yen)
March March ---------- Percent
31, 31, Increase
2005 2004 (Decrease)
------- ------- ----------
Voice Transmission Services Revenues (excluding the 1,401.4 1,506.9 (105.5) (7.0%)
amounts of IP Services Revenues)
Monthly Charge Revenues* 903.6 939.5 (35.9) (3.8%)
Call Rates Revenues* 190.4 238.7 (48.3) (20.2%)
Interconnection Call Revenues* 215.1 224.4 (9.2) (4.1%)
IP Services Revenues 211.3 151.3 60.0 39.7%
Leased Circuit Services Revenues (excluding the amounts of 208.7 246.9 (38.2) (15.5%)
IP Services Revenues)
Telegram Services Revenues 27.2 30.9 (3.7) (12.2%)
Other Telecommunications Services Revenues 175.9 166.5 9.3 5.6%
Related Business Revenues 156.2 164.3 (8.0) (4.9%)
------- ------- ---------- ----------
Total 2,180.9 2,267.1 (86.2) (3.8%)
------- ------- ---------- ----------
* Partial listing only
Note: "Voice Transmission Services Revenues" represent the total
of telephone revenues and ISDN revenues.
(2) Operating Expenses
Details Year Year Increase (Billions
--- Ended Ended (Decrease) of Yen)
March March ---------- Percent
31, 31, Increase
2005 2004 (Decrease)
------- ------- ----------
Personnel 206.5 234.3 (27.8) (11.9%)
Purchase of goods and services 1,275.3 1,343.5 (68.1) (5.1%)
Depreciation and amortization 469.8 458.8 11.0 2.4%
Retirement of fixed assets 63.7 68.4 (4.6) (6.8%)
Miscellaneous Taxes 77.6 75.6 1.9 2.6%
------- ------- ---------- ----------
Total 2,093.1 2,180.7 (87.5) (4.0%)
------- ------- ---------- ----------
- 2 -
--------------------------------------------------------------------------------
Financial Position
Details March March Increase (Billions
---- 31, 31, (Decrease) of Yen)
2005 2004 ---------- Percent
------- ------- Increase
(Decrease)
----------
Fixed Assets 3,503.8 3,664.0 (160.2 ) (4.4)%
Current Assets 584.4 642.6 (58.1 ) (9.1)%
Total Assets 4,088.3 4,306.7 (218.4 ) (5.1)%
Long-Term Liabilities 1,547.2 1,744.8 (197.6 ) (11.3)%
Current Liabilities 622.0 668.1 (46.1 ) (6.9)%
Total Liabilities 2,169.2 2,413.0 (243.8 ) (10.1)%
Interest-Bearing Debt* 1,028.0 1,105.6 (77.6 ) (7.0)%
Shareholders' Equity 1,919.0 1,893.6 25.4 1.3%
Total of Liabilities and Shareholders' Equity 4,088.3 4,306.7 (218.4 ) (5.1)%
* Partial listing only
Cash Flows
Details Year Year (Billions
---- Ended Ended of Yen)
March March Increase
31, 31,
2005 2004 (Decrease)
------ ------ ----------
I. Cash Flows from Operating Activities 432.9 537.8 (104.9 )
II. Cash Flows from Investing Activities (388.0 ) (380.7 ) (7.2 )
III. Cash Flows from Financing Activities (110.1 ) (191.4 ) 81.3
IV. Net Increase (Decrease) in Cash and Cash Equivalents (65.2 ) (34.3 ) (30.9 )
V. Cash and Cash Equivalents at Beginning of Year 186.2 220.6 (34.3 )
VI. Cash and Cash Equivalents at End of Year 121.0 186.2 (65.2 )
- 3 -
--------------------------------------------------------------------------------
Reference
1. Number of Subscriber Lines
Details March March Increase Percent
--- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------ ------ ----------
Number of Telephone Subscriber Lines #(1,000) 24,925 25,264 (339) (1.3)%
Number of ISDN Subscriber Lines #(1,000) 4,425 4,756 (331) (7.0)%
Number of Subscriber Lines 29,350 30,020 (670) (2.2)%
Notes: 1. "Number of Telephone Subscriber Lines" is the total of individual lines and central
station lines (Analog Lite Plan is included).
2. Since, 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, one INS-Net 1500 subscriber is calculated as ten
INS-Net 64 subscribers (INS-Net 64 Lite Plan is included).
2. Number of IP-related Services Subscribers
Details March March Increase Percent
--- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
----- ----- ----------
Number of B-FLET'S Subscribers #(1,000) 885 426 459 107.7%
Number of FLET'S ADSL Subscribers #(1,000) 2,833 2,283 551 24.1%
Number of FLET'S ISDN Subscribers #(1,000) 413 514 (101) (19.7)%
3. Number of Employees
Details March March Increase (Employees)
--- 31, 31, (Decrease) Percent
2005 2004 ---------- Increase
------ ------ (Decrease)
-----------
Number of Employees 14,200 14,900 (700) (4.7)%
4. Capital Investements
Details Year Year Increase (Billions
--- Ended Ended (Decrease) of Yen)
March March ---------- Percent
31, 31, Increase
2005 2004 (Decrease)
----- ----- ----------
Capital Investments 399.1 377.8 21.3 5.6%
- 4 -
--------------------------------------------------------------------------------
May 12, 2005
FOR IMMEDIATE RELEASE
Settlement for Fiscal Year Ended March 31, 2005
The results of Nippon Telegraph and Telephone East Corporation (NTT East) for
fiscal 2004 are presented in the following attachments.
(Attachments)
1. Summary of Results for Fiscal Year Ended March 31,2005
2. Non-consolidated Balance Sheets
3. Non-consolidated Statements of Income
4. Non-consolidated Statements of Cash Flows
5. Proposal for Appropriation of Unappropriated Retained Earnings
6. Business Results (Non-consolidated Operating Revenues)
7. Changes in Directors
Inquiries:
Hiroshi Niitsu and Kenkichi Nakata
Accounting Section, Finance Division
NTT East
Tel: +81-3-5359-3331
E-mail: kessan@sinoa.east.ntt.co.jp
--------------------------------------------------------------------------------
Attachment 1
Summary of Results for Fiscal Year Ended March 31, 2005
During the fiscal year ended March 31, 2005, the economy continued to show signs
of a steady recovery. Personal consumption showed a gradual increase and capital
investment increased. Toward the end of the fiscal year, however, the economic
recovery eased as personal consumption turned flat.
In the information and communications sector, demand for broadband services has
been growing rapidly, ADSL speed has continued to rise, and intense competition
for customers has led to lower rates. In the second half of the fiscal year,
demand for optical access services expanded on a large scale. In the fixed-line
market, competitive conditions became even more severe as other
telecommunications carriers entered the basic service fees market by providing
direct subscriber telephone services using dry copper lines.
Within this business environment, Nippon Telegraph and Telephone East
Corporation (NTT East) has worked hard to develop new sources of revenue and
build a strong financial base while keeping business operations focused on the
vision of being "a truly customer-oriented company." NTT East
has positioned this fiscal term as the critical year for gearing up its recently
launched "Hikari" optic network and has implemented an internal
reorganization in order to further boost its sales and service-development
capabilities and to accelerate decision making. In addition, NTT East has worked
actively to develop a wide range of new IP/broadband services and to provide
high value-added content.
The main actions implemented during this fiscal year may be summarized as
follows.
First, in the broadband market, NTT East worked to further upgrade and expand
its services to respond to its customers' diverse needs, while
continuing to lower rates. Specifically, in August 2004, NTT East began offering
faster transfer speeds through "FLET'S ADSL More III,"
with maximum download speeds of approximately 47 Mbps and maximum upload speeds
of approximately 5 Mbps. In November 2004, we introduced the 1 Gbps B FLET'S
"Hyper Family Type," which provides services to
multiple subscribers via a fiber optic network with maximum download and upload
speeds of 100 Mbps.
-1-
--------------------------------------------------------------------------------
In addition, NTT East began providing a high quality IP Telephony Service
(Hikari Denwa) which uses fiber access to provide low-priced voice transmissions
with the same quality as fixed telephone lines, first to condominium complexes
in September 2004, and then to single-family dwellings in February 2005. While
actively expanding our service areas, NTT East also added a menu of services for
small and medium-sized enterprises in April 2005, so that our existing corporate
IP telephone services can be used by a wider range of corporate customers.
Meanwhile, NTT East began providing an IP-based video phone terminal called
"FLET'S PHONE VP1000" operated by a user-friendly touch
screen, for added customer convenience. We also launched the "FLET'S SPOT"
service which provides high-speed, flat-rate wireless
Internet access at speeds up to 54 Mbps using wireless LAN access points near
major train stations, hotels, and other key locations in the Tokyo metropolitan
area.
In broadband content, NTT East expanded the menu of the "DisneyBB on
FLET'S" which allows users to have fun together with Disney
characters. It also expanded its offerings of high value-added content for the
broadband environment through business alliances including launching the new
"Try To Golfers'BB on FLET'S" service which
gives users a virtual experience of actual golf courses.
NTT East has also taken a number of steps to promote sales. We have worked to
lower rates by instituting toll-free calls between "Corporate IP
Telephone Service" subscribers for intraprefectual in addition to
interprefectual calls, reduced the monthly access rates for B FLET'S
services, and extended campaigns that waive the monthly fees for FLET'S
and other services for a limited period of time.
-2-
--------------------------------------------------------------------------------
With respect to phone rates, in April 2004, NTT East launched a new fixed-line
to mobile telephone service which allows users to dial the NTT East access code
0036 and receive lower rates than those set by mobile carriers. Considering the
recent changes in the competitive environment of the telecommunications market,
and in anticipation of the coming era of optical IP services, which will usher
in a system of flat basic charges and call rates, NTT East introduced the
"Ichiritsu" fee reduction plan in January 2005, and lowered
subscription fees (facilities and equipment charges) in March 2005.
In the corporate services sector, NTT East implemented a review of its
headquarters in July 2004 in order to construct business units for each business
group based on operations by industry and business category and to realize a
corporate system that will enable it to provide total services from service
development to sales. Under NTT East's "Team M@rketing
Solutions," a business concept for tackling issues and developing new
businesses in partnership with its corporate customers, NTT East has been
working actively to provide new services for business users, including data
centers and corporate optic access services such as "Mega Data Netz,
" "Super Wide LAN," and "Metro Ether,"
while simultaneously moving forward with its "total solutions"
business designed to meet the increasingly diverse and sophisticated needs of
its customers, by taking advantage of the bilateral-contract system under the
amended Telecommunications Business Law, revised in April 2004. In addition,
active efforts are under way in the e-Japan Strategic Sales Promotion Division
of the Corporate Business Headquarters, as well as the e-Japan Strategic Sales
Promotion Office of the Business Communications Department of each branch, to
respond to opportunities presented by the e-Japan Priority Plans of local
governments within the NTT East area.
As for business management structure, we have established three new units
-the Consumer Business Headquarters, Corporate Business Headquarters,
and Network Business Headquarters-and implemented a reorganization of
NTT East corporate headquarters by streamlining and consolidating administrative
departments to increase the speed of decision making, including relationships
with branch offices. In addition, the NTT East Group has been working actively
to expand its business domain, as seen in the development of a new IT home
consulting business offered through partnerships with the prefectural
outsourcing subsidiaries* established under the group's structural
reform program.
-3-
--------------------------------------------------------------------------------
* Prefectural outsourcing subsidiaries: Companies set up at the prefecture
level named NTT Service (prefecture name) Corporation, NTT ME (prefecture or
region name) Corporation, or NTT Business Associe (prefecture name) Co., Ltd.
We also recognize that ensuring compliance is vitally important to the continued
existence of any business, and have pursued this through upgrading management
systems and providing thorough employee education. In anticipation of the
full-scale enforcement of the Personal Information Protection Act this April,
NTT East formulated and released a policy on the protection of personal
information, and established a Personal Information Protection Promotion Office.
NTT East will continue to diligently promote the appropriate handling of
personal information.
In its efforts to protect the environment and in accordance with "NTT
East's Global Environment Charter" enacted in December 1999, NTT
East has continued to advance environmental management and worked to reduce
burden on the environment, for example, by developing eco-steel telephone poles
with superior durability and corrosion prevention properties, taking measures to
counter global warming, reducing paper resources and waste materials,
continuously implementing information and communications life-cycle assessments
(LCA), and most recently, by publishing the NTT East Environmental Report 2004.
Furthermore, NTT East provided support to the victims of the October 2004
Niigata Chuetsu Earthquake by making an all-out effort to quickly restore
telecommunications facilities and resume communications services. In addition,
NTT East strove to ensure means of communication by setting up public telephones
and operating the "171" disaster message service, and did not
charge basic fees to customers who suffered equipment damage or were otherwise
unable to use their telephones. NTT East also provided free Dial Q2 services to
broadcasters and public organizations in order to assist the collection of
contributions to the victims of the Sumatra earthquake and tsunami.
-4-
--------------------------------------------------------------------------------
As a consequence of these developments, NTT East's business results for
the fiscal year ended March 31, 2005 were as follows. Operating revenue totaled
2,180.9 billion yen (a decrease of 3.8% from the previous year), recurring
profit amounted to 97.6 billion yen (a decrease of 0.2% from the previous year),
and net profit totaled 58.1 billion yen (an increase of 0.2% from the previous
year).
-5-
--------------------------------------------------------------------------------
Attachment 2
NON-CONSOLIDATED BALANCE SHEETS
(Based on accounting principles generally accepted in Japan)
March 31, March 31, 2005
2004
--------- ---------------------
Millions Millions * Millions
of Yen of Yen of US$
--------- --------- --------
ASSETS
FIXED ASSETS 3,664,084 3,503,830 32,746
CURRENT ASSETS 642,633 584,469 5,462
TOTAL ASSETS 4,306,718 4,088,300 38,208
--------- --------- --------
LIABILITIES
LONG-TERM LIABILITIES:
Long-term debt 1,010,103 883,881 8,260
Liability for employees' severance payments 728,580 656,004 6,130
Other 6,207 7,359 68
Total long-term liabilities 1,744,890 1,547,245 14,460
--------- --------- --------
CURRENT LIABILITIES:
Current portion of long-term debt 95,559 144,171 1,347
Accounts payable, trade 170,463 118,372 1,106
Accounts payable, other 324,058 273,517 2,556
Accrued taxes on income 146 2,676 25
Other 77,950 83,266 778
Total current liabilities 668,178 622,004 5,813
--------- --------- --------
TOTAL LIABILITIES 2,413,069 2,169,249 20,273
--------- --------- --------
SHAREHOLDERS' EQUITY
Common stock 335,000 335,000 3,130
Additional paid-in capital 1,499,726 1,499,726 14,016
Unappropriated retained earnings for the year 57,985 83,563 780
Net unrealized gains (losses) on securities 936 760 7
TOTAL SHAREHOLDERS' EQUITY 1,893,648 1,919,050 17,935
--------- --------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,306,718 4,088,300 38,208
--------- --------- --------
Note:* Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded down.
-6-
--------------------------------------------------------------------------------
Attachment 3
NON-CONSOLIDATED STATEMENTS OF INCOME
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
------------------------------------
2004 2005
--------- -----------------------
Millions Millions * Millions
of Yen of Yen of US$
--------- --------- --------
OPERATING REVENUES 2,267,184 2,180,928 20,382
OPERATING EXPENSES 2,180,778 2,093,194 19,562
OPERATING INCOME 86,406 87,733 819
NON-OPERATING REVENUES 61,277 61,006 570
NON-OPERATING EXPENSES 49,830 51,124 477
RECURRING PROFIT 97,853 97,615 912
SPECIAL PROFITS 9,305 8,397 78
SPECIAL LOSSES 6,736 6,736 62
INCOME BEFORE INCOME TAXES 100,422 99,276 927
CORPORATION, INHABITANT, AND ENTERPRISE TAXES 16,237 (21,153 ) (197 )
DEFERRED TAX EXPENSES (BENEFITS) 26,200 62,300 582
NET INCOME 57,985 58,129 543
--------- --------- --------
PER SHARE DATA #(in exact) of Yen of Yen of US$
--------- --------- --------
NET INCOME 8,646 8,667 81
CASH DIVIDEND 4,850 5,000 46
Note:* Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded
down.
-7-
--------------------------------------------------------------------------------
Attachment 4
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
--------------------------------------
2004 2005
-------- ------------------------
Millions Millions *Millions
of Yen of Yen of US$
-------- --------- ---------
Cash flows from operating activities:
Income before income taxes 100,422 99,276 927
Depreciation and amortization 465,913 483,027 4,514
Loss on disposal of property, plant and equipment 45,879 40,136 375
Increase (decrease) in liability for employees' severance payments (63,293 ) (72,575 ) (678 )
(Increase) decrease in accounts receivable 5,654 12,725 118
Increase (decrease) in accounts payable and accrued expenses (7,316 ) (83,952 ) (784 )
Increase (decrease) in accrued consumption tax 1,332 (158 ) (1 )
Other (48,441 ) (11,987 ) (112 )
-------- - ---------- ----------
Sub-total 500,151 466,490 4,359
--------- ---------- ----------
Interest and dividends received 1,216 297 2
Interest paid (20,919 ) (17,771 ) (166 )
Income taxes received (paid) 57,412 (16,095 ) (150 )
--------- ---------- ----------
Net cash provided by (used in) operating activities 537,861 432,922 4,046
--------- -------- - ----------
Cash flows from investing activities:
Payments for property, plant and equipment (377,906 ) (401,013 ) (3,747 )
Acquisition of investments (1,564 ) (7,353 ) (68 )
Other (1,313 ) 20,315 189
--------- ---------- ----------
Net cash provided by (used in) investing activities (380,784 ) (388,050 ) (3,626 )
--------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 10,000 17,950 167
Payments for settlement of long-term debt (143,373 ) (95,559 ) (893 )
Increase (decrease) in short-term borrowings (55,000 ) - -
Dividends paid (3,035 ) (32,495 ) (303 )
--------- ---------- ----------
Net cash provided by (used in) financing activities (191,408 ) (110,104 ) (1,029 )
--------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (34,331 ) (65,232 ) (609 )
Cash and cash equivalents at beginning of year 220,619 186,287 1,741
--------- ---------- ----------
Cash and cash equivalents at end of year 186,287 121,055 1,131
--------- ---------- ----------
Note:* Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded
down.
-8-
--------------------------------------------------------------------------------
Attachment 5
PROPOSAL FOR APPROPRIATION OF UNAPPROPRIATED RETAINED EARNINGS
Year Ended (Millions of
March 31, Yen)
2004 Year Ended
------------- March 31,
2005
-------------
Unappropriated Retained Earnings for the Year 57,985 83,563
Proposal of Appropriation:
Cash Dividends 32,495 33,500
(Y4,850 per ) (Y5,000 per )
share share
Bonuses to directors and corporate auditors 57 54
(Portion to corporate auditors) (11 ) (13 )
Unappropriated Retained Earnings Carried Forward 25,433 50,008
Note: Fractions are rounded down.
-9-
--------------------------------------------------------------------------------
Attachment 6
BUSINESS RESULTS (NON-CONSOLIDATED OPERATING REVENUES)
(Based on accounting principles generally accepted in Japan)
Services Year Year (Millions
----- Ended Ended of Yen)
March 31, March 31,
2004 2005 Increase
--------- --------- (Decrease)
----------
Voice Transmission Services 1,506,952 1,401,433 (105,518 )
Revenues (excluding the amounts of IP Services Revenues)
Monthly Charge Revenues* 939,584 903,629 (35,954 )
Call Rates Revenues* 238,749 190,405 (48,343 )
Interconnection Call Revenues* 224,417 215,128 (9,289 )
IP Services Revenues 151,343 211,357 60,014
Leased Circuit Services Revenues (excluding the amounts of IP Services 246,962 208,730 (38,232 )
Revenues)
Telegram Services Revenues 30,992 27,201 (3,791 )
Other Telecommunications Services Revenues 166,561 175,907 9,345
--------- --------- -----------
Telecommunications
Total Revenues 2,102,812 2,024,629 (78,182 )
--------- --------- -----------
Related Business
Total Revenues 164,371 156,298 (8,073 )
--------- --------- -----------
Total Operating Revenues 2,267,184 2,180,928 (86,256 )
--------- --------- -----------
* Partial listing only
Note: Fractions are rounded down.
-10-
--------------------------------------------------------------------------------
Attachment 7
Changes in Directors
(1) Candidates for Senior Vice President
Toyohiko Takabe (NTT Corporation)
Fuminori Kozono (Deputy Senior Executive Manager, Corporate Business Headquarters)
Hiroki Watanabe (Executive Manager, Strategy Planning Division, Corporate Business Headquarters)
Masayuki Yamamura (NTT Corporation)
Kiyoshi Kousaka (NTT West Corporation)
(2) Senior Vice President scheduled to retire from office
President
Satoshi Miura (Scheduled to join NTT Corporation)
Senior Executive Vice
President
Goro Yagihashi (Scheduled to join DAIMEI TELECOM ENGINEERING CORP.)
Executive Vice President
Kazuo Ohki (Scheduled to join NTT-ME Corporation)
Senior Vice President
Akira Arima (Scheduled to join NTT Corporation)
Senior Vice President
Masaki Mitsumura (Scheduled to join NTT Communications Corporation)
-11-
--------------------------------------------------------------------------------
(3) Personnel scheduled to take posts of President, Senior Executive Vice
President, and Executive Vice President
(i) President Toyohiko Takabe
(ii) Senior Executive Vice President
Executive Vice President Tetsuo Koga
(iii) Executive Vice President
Senior Vice President Atsushi Yano
-12-
--------------------------------------------------------------------------------
(4) New Executives' Positions and Organizational Responsibilities
New Position(s) and Name Current Position(s) and
----------------
Organizational Responsibilities Organizational Responsibilities
-------------------- ---------------------------------------------
Senior Executive Vice President Hajime Takashima Senior Executive Vice President
Senior Executive Manager, Senior Executive Manager, Corporate
Corporate Business Headquarters Business Headquarters
Responsible for: Responsible for Information System
Information System
Technology Department
Procurement and Supply Center
Senior Executive Vice President Tetsuo Koga Executive Vice President
Senior Executive Manager, Senior Executive Manager, Consumer
Consumer Business Headquarters Business Headquarters
Responsible for: Executive Manager, Business Marketing
Protection of Personal Data Department, Consumer Business Headquarters
Institutional Affairs
General Affairs and Personnel Department
Accounts and Finance Department
Executive Vice President Atsushi Yano Senior Vice President
Senior Executive Manager, Executive Manager, Plant Planning
Network Business Headquarters Department, Network Business Headquarters
Senior Vice President Fuminori Kozono Deputy Senior Executive Manager,
Deputy Senior Executive Manager, Corporate Business Headquarters
Corporate Business Headquarters Executive Manager, e-Japan Strategic
Executive Manager, e-Japan Strategic Sales Promotion Division, Corporate
Sales Promotion Division, Business Headquarters
Corporate Business Headquarters
-13-
--------------------------------------------------------------------------------
New Position(s) and Name Current Position(s) and
------------------
Organizational Responsibilities Organizational Responsibilities
----------------------- --------------------------------------------
Senior Vice President Hiroki Watanabe Executive Manager, Strategy Planning
Executive Manager, Division, Corporate Business Headquarters
Corporate Strategy Planning Department
Senior Vice President Masayuki Yamamura
General Manager, Tokyo Branch
Deputy Senior Executive Manager,
Corporate Business Headquarters
Senior Vice President Kiyoshi Kousaka
Note:
Toyohiko Takabe will become a Senior Vice President on June 28, 2005, and will
be appointed President of NTT East on the same day. Similarly, Kiyoshi Kousaka
will become a Senior Vice President of NTT Corporation on June 28, 2005, and
will be appointed Senior Vice President of NTT East on the same day. Senior Vice
President Kiyoshi Kousaka has met the requirements for external Senior Vice
President.
Executives scheduled to retire from office will do so following the sixth
regular shareholders' meeting (June 24), except for President Satoshi
Miura, who will resign on June 28, 2005.
-14-
--------------------------------------------------------------------------------
Nippon Telegraph and Telephone West Corporation
May 12, 2005
Non-Consolidated Financial Results for the Year Ended March 31, 2005
April 1, 2004 - March 31, 2005
(Based on accounting principles generally accepted in Japan)
Operating Results
Details Year Year Increase (Billions
--- Ended Ended (Decrease) of Yen)
March March ----------
31, 31, Percent
2005 2004 Increase
------- ------- (Decrease)
----------
Operating Revenues 2,098.0 2,166.8 (68.8 ) (3.2%)
Operating Expenses 2,027.8 2,080.1 (52.2 ) (2.5%)
Operating Income 70.1 86.6 (16.5 ) (19.1%)
Non-Operating Income 9.9 3.8 6.0 156.7%
Recurring Profit 80.0 90.5 (10.4 ) (11.6%)
Special Profits 10.1 15.0 (4.8 ) (32.2%)
Special Losses 7.1 7.1 - -
Income before Income Taxes 83.0 98.3 (15.3 ) (15.6%)
Income Taxes 41.9 36.8 5.1 13.8%
Net Income 41.0 61.5 (20.4 ) (33.2%)
Proposal for Appropriation of Unappropriated Retained Earnings
Details (Billions of Yen)
--- Year Ended
March 31,
2005
-----------
Unappropriated Retained Earnings for the Year *68.6 Net Income 41.0
Cash Dividends 31.2
Bonuses to Directors and Corporate Auditors 55 million yen Unappropriated Retained Earnings Brought 27.5
Forward(+)
---------------------------------------------------
Appropriation of Unappropriated Retained Earnings 31.2 * Unappropriated Retained Earnings for the 68.6
Year
Unappropriated Retained Earnings Carried Forward 37.4
Forecasts for the Year Ending March 31, 2006
Details Operating Operating Recurring (Billions
--- Revenues Income Profit of Yen)
--------- --------- --------- Net
Income
---------
Forecasts for the Year Ending 1,966.0 4.0 15.0 9.0
March 31, 2006
- 1 -
--------------------------------------------------------------------------------
Breakdown of Operating Revenues and Operating Expenses
(1) Operating Revenues
(Billions
of Yen)
----------
Service Year Year Increase Percent
---- Ended Ended (Decrease) Increase
March March ---------- (Decrease)
31, 31, ----------
2005 2004
------- -------
Voice Transmission Services Revenues (excluding the 1,369.1 1,465.8 (96.6 ) (6.6% )
amounts of IP Services Revenues)
Monthly Charge Revenues* 872.8 905.5 (32.7 ) (3.6% )
Call Rates Revenues* 198.7 245.9 (47.2 ) (19.2% )
Interconnection Call Revenues* 209.5 216.1 (6.6 ) (3.1% )
IP Services Revenues 180.3 127.2 53.0 41.7%
Leased Circuit Services Revenues (excluding the amounts 174.3 206.0 (31.6 ) (15.4% )
of IP Services Revenues)
Telegram Services Revenues 31.1 33.4 (2.2 ) (6.7% )
Other Telecommunications Services Revenues 165.9 165.2 0.6 0.4%
Related Business Revenues 177.0 169.0 8.0 4.7%
------- ------- ---------- - ---------- -
Total 2,098.0 2,166.8 (68.8 ) (3.2% )
------- ------- ---------- - ---------- -
* Partial listing only
Note: "Voice Transmission Services Revenues" represent the total of telephone
revenues and ISDN revenues.
(2) Operating Expenses
(Billions
of Yen)
----------
Details Year Year Increase Percent
---- Ended Ended (Decrease) Increase
March March ---------- (Decrease)
31, 31, ----------
2005 2004
------- -------
Personnel 195.1 226.6 (31.5 ) (13.9% )
Purchase of goods and services 1,277.6 1,270.7 6.9 0.5%
Depreciation and amortization 425.8 453.4 (27.6 ) (6.1% )
Retirement of fixed assets 56.1 57.0 (0.9 ) (1.6% )
Miscellaneous Taxes 73.0 72.1 0.9 1.3%
------- ------- ---------- - ---------- -
Total 2,027.8 2,080.1 (52.2 ) (2.5% )
------- ------- ---------- - ---------- -
- 2 -
--------------------------------------------------------------------------------
Financial Position
Details March March Increase (Billions
---- 31, 31, (Decrease) of Yen)
2005 2004 ---------- Percent
------- ------- Increase
(Decrease)
----------
Fixed Assets 3,440.4 3,595.2 (154.7 ) (4.3% )
Current Assets 640.3 630.5 9.8 1.6%
Total Assets 4,080.8 4,225.8 (144.9 ) (3.4% )
Long-Term Liabilities 1,775.3 1,865.6 (90.2 ) (4.8% )
Current Liabilities 754.6 815.2 (60.5 ) (7.4% )
Total Liabilities 2,530.0 2,680.8 (150.8 ) (5.6% )
Interest-Bearing Debts* 1,297.2 1,381.4 (84.2 ) (6.1% )
Shareholders' Equity 1,550.7 1,544.9 5.8 0.4%
Total of Liabilities and Shareholders' Equity 4,080.8 4,225.8 (144.9 ) (3.4% )
* Partial listing only
Cash Flows
Details (Billions
---- of Yen)
Year
Ended
March 31,
2005
---------
Cash Flows from Operating Activities 498.2
Cash Flows from Investing Activities (369.4 )
Cash Flows from Financing Activities (118.6 )
Cash and Cash Equivalents at Beginning of Year 118.8
Cash and Cash Equivalents at End of Year 128.9
- 3 -
--------------------------------------------------------------------------------
Reference
1. Number of Subscriber Lines
Details March March Increase Percent
---- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------ ------ ----------
Number of Telephone Subscriber Lines (1,000) 25,396 25,674 (278 ) (1.1% )
Number of ISDN Subscriber Lines (1,000) 4,042 4,378 (337 ) (7.7% )
Number of Subscriber Lines 29,438 30,053 (615 ) (2.0% )
Notes: 1. "Number of Telephone Subscriber Lines" is the total of individual lines and central
station lines (Analog Lite Plan is included).
2. Since, 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, one INS-Net 1500 subscriber is calculated
as ten INS-Net 64 subscribers (INS-Net 64 Lite Plan is included).
2. Number of IP-related Services Subscribers
Details March March Increase Percent
---- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
----- ----- ----------
Number of B-FLET'S Subscribers (1,000) 779 414 365 88.2%
Number of FLET'S ADSL Subscribers (1,000) 2,374 1,806 568 31.5%
Number of FLET'S ISDN Subscribers (1,000) 356 466 (110 ) (23.5% )
3. Number of Employees
(Employees)
-----------
Details March March Increase Percent
---- 31, 31, (Decrease) Increase
2005 2004 ---------- (Decrease)
------ ------ -----------
Number of Employees 12,850 13,750 (900 ) (6.5% )
4. Capital Investements
Details Year Year Increase (Billions
---- Ended Ended (Decrease) of Yen)
March March ---------- Percent
31, 31, Increase
2005 2004 (Decrease)
----- ----- ----------
Capital Investments 397.8 397.6 0.2 0.1%
- 4 -
--------------------------------------------------------------------------------
May 12, 2005
FOR IMMEDIATE RELEASE
Settlement for Fiscal Year Ended March 31, 2005
The results of Nippon Telegraph and Telephone West Corporation (NTT West) for
fiscal 2004 are presented in the following attachments.
(Attachments)
1. Summary of Results for Fiscal Year Ended March 31,2005
2. Non-consolidated Balance Sheets
3. Non-consolidated Statements of Income
4. Non-consolidated Statements of Cash Flows
5. Proposal for Appropriation of Unappropriated Retained Earnings
6. Business Results (Non-consolidated Operating Revenues)
7. New Board of Directors
Inquiries:
Mr. Shinji Uchida or Mr. Kazunori Oonishi
Accounting Section, Finance Division
NTT West
Tel: 06-4793-3141
E-mail: kessan-info@west.ntt.co.jp
--------------------------------------------------------------------------------
Attachment 1
Summary of Results for Fiscal Year Ended March 31, 2005
During the fiscal year ended March 31, 2005, the Japanese economy moved
gradually toward a moderate recovery, with significant improvement in corporate
earnings and capital spending.
The telecommunications market has been undergoing drastic structural changes in
anticipation of the changeover from voice to Internet and data
telecommunications, along with the rapid proliferation of IP phone services. In
this environment, the full scale introduction of direct connection phone
services using dry copper bodes an era of intense competition in the fixed-line
phone market, including basic rates. Meanwhile, the business environment
surrounding the growing broadband market has grown harsher than ever, due to
intensifying competition among telecommunications carriers for new customers in
the form of both services and prices, this in spite of the fact that broadband
access services like optical fiber and ADSL are experiencing full-scale
proliferation and expansion.
In the midst of the significant environmental changes in the market and
competitive conditions, Nippon Telegraph and Telephone West Corporation (NTT
West) positioned fiscal 2004 as critical year for making a dramatic leap into
the optical fiber broadband market, and for transforming the base of its revenue
structure from telephones to IP. Toward this end, NTT West moved forward with
efforts to take full advantage of the characteristics of optical fiber to enrich
its application and content services, promote high value-added solution
businesses like security services, expand the operations of the entire NTT West
Group, and reexamine the current price structure of fixed-line phone services.
Specifically, NTT West implemented the following measures:
1. Development of the Broadband Business
i. Expanded Broadband Access Services
In the area of optical fiber services, NTT West added to the existing B-FLET'S
plans with the launch of the "FLET'S HIKARI PREMIUM
Family Type" plan, a new access service for detached houses that
provides connectivity via ISPs, high-quality video-telephony via IPv6
technology, and security, to satisfy diverse user needs. NTT West also
introduced the "Video Communication Network Service", which
enables bundled transmission of up to 400 channels, to satisfy the needs of
broadcasters that use telecommunications services to distribute multi-channel
video via optical fiber lines.
In ADSL, NTT West expanded its existing plans with the addition of "FLET'S ADSL
More Special," which boasts a downstream speed of up to
44 47 Mbps and an upstream speed of up to 5 Mbps, in response to customer
demand for faster telecommunications.
--------------------------------------------------------------------------------
NTT West ran a limited-time, no-monthly-fee campaign for new subscribers to
B-FLET'S and FLET'S ADSL services. NTT West also introduced
attractive special discount programs: "FLET'S ATTO (amazing)
DISCOUNT," which provides a discount on monthly charges conditioned on 2
continuous years of use, and "FLET'S ZUTTO (continuous)
DISCOUNT," which offers an automatic discount on monthly charges based
on the number of years of use, in order to attract new customers and encourage
continued use of the service.
Further, to expand the availability of FLET'S services and to respond to
the need for "after-hours system failure recovery" primarily on
the part of corporate and SOHO users, NTT West extended the "Support
Menu," which provides 24/7 service 365 days a year, to cover the
"Family 100" plan, in addition to the "FLET'S
ADSL Type 2," "B-FLET'S Business Type,"
"B-FLET'S Basic Type," and "B-FLET'S
Mansion Type" plans.
ii) Expanded Broadband Application Services
In response to the need for lower call rates and the growing demand for
high-quality IP telephone services comparable to fixed-line telephony, NTT West
promoted the rapid deployment of its IP phone service by offering the
"HIKARIDENWA (optical fiber phone)" to B-FLET'S Mansion Type
users living in multi-family housing, and in February 2005 began accepting
advance applications for the service from FLET'S HIKARI PREMIUM Family
Type users living in detached houses. NTT West modified its service terms for
the "HIKARI DENWA Business Type" plan (formerly, IP Phone
Service for Corporate Customers) to include additional options for lower-cost
access lines (B-FLET'S Basic Type), in order to make the service
accessible to a wider spectrum of business customers.
NTT West improved the transmission speed of its public wireless LAN service,
"FLET'S SPOT," to 54 Mbps, and boosted the number of
access points in the western Japan region to over 3,000 by the end of March,
making the service more conveniently accessible to more customers. All of these
accomplishments underscore its status as Japan's largest public wireless
LAN service provider.
NTT West also launched a new application service for B-FLET'S and FLET'S ADSL
customers, "FLET'S v6 APPLI," an add-on
service based on IPv6 technology that provides high-quality video-telephony and
security functions.
Furthermore, in broadband content distribution, NTT West launched "FLET'S v6
CAST," an IPv6-enabled content distribution service for
high-quality video and music that connects the servers of content providers. It
is available to FLET'S HIKARI PREMIUM and FLET'S v6 APPLI
subscribers.
Furthermore, NTT West, ITOCHU Corporation and SKY Perfect Communications Inc.
joined forces in February 2004 to conduct a two-month test distribution of
quality-controlled content via IPv6 technology. The results of this test led to
On Demand TV, Inc., a joint venture between ITOCHCHU, SKY Perfect, NTT West and
NTT East, and the March 2005 launch of "On Demand TV" video
distribution for NTT East and West FLET'S subscribers.
--------------------------------------------------------------------------------
In addition, since last year FLET'S SQUARE has been collaborating with
leading content owners to provide attractive content that is unique to FLET'S
services. This includes video programs from Takarazuka Revue Company
related to its shows, "In Quest of the Blue Bird" and "Takarazuka Dream
Kingdom," a variety of entertainment from The Walt Disney Company Japan, Ltd.,
and new "Pokemon content" from The Pokemon Company.
2. Development of the Solution Business
NTT West has been offering the "prosol Series" of system
solutions to satisfy the needs of a wide range of customers, from public to
private sector corporations. During the period under review, NTT West expanded
its "N.prosol" lineup, which provides total solutions for
optimized networks, with the launch of "SSL-VPN Solution," a
service that responds to the growing demand for security through the easy
creation of a safe, reliable remote access environment for smaller businesses
and municipalities, and the "Video Conference Package," a
service that enables rapid, high-quality video communication connections at low
cost via broadband circuits like B-FLET'S.
NTT West also added to its lineup for "C.prosol," a total
solution for optimized commerce (commercial transaction cycles) that enables
enterprises, regardless of type of business, to quickly apply information
technology to their business at low cost. NTT West introduced the "Shared EDI
Solution for Liquor Businesses," which is specifically
designed to facilitate greater operating efficiency and speed for liquor
businesses, and the "EDI Solution for Department Stores," which
assists vendors like wholesalers and manufacturers in achieving strategic
merchandising.
Furthermore, as a new item in the lineup for "D.prosol," a total
solution addressing customers demand for protection against security threats,
NTT West worked together with NTT MARKETING ACT and NTT NEOMEIT to launch the
"Information Security Audit Service," which allows an objective
assessment of a customer's information assets management. NTT West has
also partnered with Tokio Marine and Fire Insurance Company, Limited to
introduce "Security Check Safety," a security diagnostic service
which includes an indemnification plan, providing a total security solution that
covers any demand for compensation for damages arising from a security breach.
Additionally, NTT West introduced two new services: "U.prosol,"
a total solution that assists the management of universities in creating the
best environment for education and research as well as surviving an era of tough
competition with the support of information technology; and "A.prosol,
" a total solution that aids in the revitalization of rural regions
through improved productivity, one of the real challenges faced by today's
agricultural industry.
--------------------------------------------------------------------------------
Meanwhile, NTT West integrated IP and mobile telephony to build an IP phone
system connecting 49 OSAKA GAS CO., LTD. operating bases. This IP phone system
handles external calls through the "HIKARI DENWA Business Type"
service (formerly, IP Phone Service for Corporate Customers) provided to
corporate customers by NTT West, while internal calls (between operating bases)
are handled by NTT West's high-quality, optical fiber, wide-area
Ethernet service. On the company premises, a mobile terminal serves to make/
receive both internal (between operating bases) and external calls via the IP
phone system, while the same terminal device serves off premises as a mobile
phone. All in all, the system contributes to total communications cost savings
while achieving high-quality voice communications comparable to fixed-line
telephony. At the same time, it leads to improved productivity by transforming
working styles.
3. Expanded NTT West Group Operations
NTT NEOMEIT CORPORATION has been actively working to expand its operations
through closer ties and diverse alliances with NTT West Group companies,
focusing on system integration and maintenance integration (SI/MI). During the
period under review, NTT NEOMEIT launched the "AQStage PF IP Call Center
Service," a service with enhanced security that employs grid technology;
"InfoDock," a comprehensive information security diagnostic
tool; and "AQStage Call S," an IP phone service for small- and
medium-sized businesses. NTT NEOMEIT also enriched its service lineup with the
introduction of "AQStage Shared Public Wireless LAN Access Point
Service," which houses multiple wireless LAN carriers in a single public
wireless LAN access point to promote widespread use of the LAN access service
while solving radio interference problems.
Furthermore, in order to prevent possible personal information leaks resulting
from the disposal and replacement of personal computers, NTT NEOMEIT has tied up
with TOKYO LEASING CO., LTD. to establish a reutilization/recycling business for
personal computers. The first step was marked by the opening of a "PC
Security Recycle Center," which handles all processes from complete hard
disk data erasure to the recycling of used personal computers and intermediate
treatment of industrial waste, in a high-security environment.
NTT MARKETING ACT CORPORATION, meanwhile, introduced "ACTOS WATCH-OVER
EYE," a new monitoring service for the security of the elderly. Sensor
systems are installed in the homes of elderly people who live alone so that
either other family members or local government staff can review the daily
living situation remotely via personal computer, and an e-mail message can be
transmitted to a pre-registered contact should any problem be detected.
NTT MARKETING ACT likewise joined with NTT Syscom Corporation and Dai Nippon
Printing Co., Ltd. to develop "ACTOS KIT OKKAKE (surveillance) CAMERA
MENU," an image distribution system combining broadband circuits and
wireless IC tag technology. NTT MARKETING ACT has begun to market this system
through its group companies as a solution package mainly for kindergartens and
nursery schools.
--------------------------------------------------------------------------------
In addition to the above, since last year NTT MARKETING ACT has been offering
"ACTOS e-MACHISHIROU"(Find your town information on the web), a
portal site that provides local community information, as a solution that allows
local stores and businesses to attract more customers and increase sales; and
"ACTOS MOBILE C," a service that enables timely distribution of
e-mail and coupons to members of a user company via mobile phones using
2-dimensional codes.
4. Measures for Fixed-Line Telephone Services
i. Reduction in Telephone Charges and Review of Telephone Installation Charges
To properly respond to changes in the business environment and customer needs,
and in an effort to achieve the smooth migration of fixed-line phone subscribers
to optical fiber IP networks, NTT West reduced basic charges (line service
charges) and eliminated the fees NTT West charges for the touch-tone option. To
the same end, NTT West introduced two new types of discount plans: "
Ichirittu Plan 1,"which permits intra-prefecture calls at a flat rate of
Y8.5 per 3 minutes, and "Ichirittu Plan 2," which allows
intra-prefecture calls at a flat rate of Y7.5 per 3 minutes for a fixed monthly
payment of Y100 per telephone line.
NTT West also reexamined the telephone installation charges for subscriber
telephone lines and INS-Net 64 lines, as well as the surcharge for the Light
Plan (subscriber telephone and INS-Net 64 Light).
ii. Launch of Service for Calls from Fixed-line to Mobile Telephones
In the past, calls from fixed-line to mobile phones were priced exclusively by
the mobile-phone operators. However, NTT West has been able to start its own
low-rate telephone service for calls from fixed-line to mobile telephones (THANK
YOU DIAL 0039 Service), now that dialing a mobile-phone operator's
identification number enables NTT West to determine the charges itself.
In addition to the above, NTT West waived the basic fees for customers who could
not use their telephones due to building damage from typhoons and those who had
no access to their telephones because they had been ordered to evacuate, and
also waved reinstallation charges for customers who moved from damaged buildings
to temporary housing. NTT West also provided a Dial Q2 collection service free
of charge for donations for the victims of the Niigata Chuetsu Earthquake and
the Sumatra Earthquake.
Meanwhile, in light of the severe social criticism stemming from a series of
corporate scandals, the NTT West Group has been actively working to reinforce
its corporate ethics. During the period under review, the Group further applied
itself to cultivating high ethical standards both officially and privately, and
creating a solid corporate culture against fraud and misconduct. Among other
things, the Group also held corporate ethics workshops similar to those held
last year for all levels of management and employees, produced new videos that
carry the president's message to employees, and conducted a survey of
corporate ethics awareness among all employees, in order to install a
consciousness of ethics throughout the organization.
--------------------------------------------------------------------------------
Moreover, in light of the lessons learned from the recent spate of information
leaks, the NTT West Group has been promoting proper management of customer
information through training workshops for all employees, in order to boost
morale and tighten control over the handling of customer information. In
addition, NTT West has completely overhauled its systems operations and is
exercising closer supervision over the customer information held by contractors,
in order to implement all possible means to protect the information NTT West has
on its customers.
In the area of environmental protection, NTT West has been addressing the
conservation of paper resources, measures against global warming, and reduction
of industrial waste, which are its top priorities for reducing the environmental
impact of its business activities. Specifically, NTT West has taken effective
measures to reduce the consumption of pure pulp for telephone directories, cut
back the consumption of power for communications, and reduced industrial waste,
through annual numerical targets established under a medium- to long-term action
program.
The NTT West Group has also been working on certification to ISO14001, the
international standard for environmental management systems, in order to
constantly improve its efforts to protect the environment and reduce
environmental risks. NTT West's strategy has been to have each branch or
office location apply for certification under its own budget; during the period
under review, the Okayama and Kumamoto branches joined 13 other branches that
had already succeeded in obtaining this certification. The Group will continue
to work hard to achieve certification for every branch as well as all group
companies by the end of fiscal 2005.
As part of NTT West Group's program of actively disclosing information
regarding the status of the Group's environmental protection measures,
in October 2004 NTT West compiled and published the NTT West Group Environmental
Report, a follow-up to the edition of the previous year. The report presents the
overall progress of NTT West Group's environmental protection measures
as well as the environmental protection activities of the NTT MARKETING ACT
Group and NTT NEOMEIT Group, demonstrating its commitment to the protection of
the environment as a matter of corporate responsibility.
As a result of the above, operating revenue for the fiscal year amounted to
2,098 billion yen (down 3.2% from the previous year), and recurring profit
amounted to 80 billion yen (down 11.6% from the previous year). Net income
totaled 41 billion yen (down 33.2% from the previous year), marking the second
consecutive year of positive net income.
--------------------------------------------------------------------------------
Attachment 2
NON-CONSOLIDATED BALANCE SHEETS
(Based on accounting principles generally accepted in Japan)
March 31, March 31, 2005
2004 ---------------------
---------
Millions Millions *
Millions
of Yen of Yen of US$
--------- --------- --------
Assets
Fixed assets 3,595,293 3,440,499 32,154
Current assets 630,525 640,329 5,984
Total assets 4,225,819 4,080,829 38,138
--------- --------- --------
Liabilities
Long-term liabilities:
Long-term debt 1,065,285 1,055,194 9,861
Liability for employees' severance payments 790,436 710,090 6,636
Other 9,945 10,112 94
Total long-term liabilities 1,865,667 1,775,397 16,592
--------- --------- --------
Current liabilities:
Current portion of long-term debt 276,201 200,090 1,870
Accounts payable, trade 137,748 167,218 1,562
Accounts payable, other 288,992 269,332 2,517
Accrued taxes on income 186 2,481 23
Other 112,095 115,567 1,080
Total current liabilities 815,225 754,690 7,053
--------- --------- --------
Total liabilities 2,680,893 2,530,087 23,645
--------- --------- --------
Shareholders' equity
Common stock 312,000 312,000 2,915
Additional paid-in capital 1,170,054 1,170,054 10,935
Unappropriated retained earnings for the year 62,109 68,670 641
Net unrealized gains (losses) on securities 762 17 0
Total shareholders' equity 1,544,926 1,550,741 14,492
--------- --------- --------
Total liabilities and shareholders' equity 4,225,819 4,080,829 38,138
--------- --------- --------
Note: Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March
* 31, 2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 3
NON-CONSOLIDATED STATEMENTS OF INCOME
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
------------------------------------
2004 2005
--------- ----------------------
Millions Millions *
of of Millions
Yen Yen
--------- --------- of US$
--------
Operating revenues 2,166,852 2,098,048 19,607
Operating expenses 2,080,163 2,027,899 18,952
Operating income 86,688 70,148 655
Non-operating revenues 54,910 56,074 524
Non-operating expenses 51,038 46,135 431
Recurring profit 90,560 80,087 748
Special profits 15,001 10,170 95
Special losses 7,181 7,181 67
Income before income taxes 98,381 83,077 776
Corporation, inhabitant, and enterprise taxes (52,421 ) (57,120 ) (533 )
Deferred tax expenses (benefits) 89,300 99,100 926
Net income 61,502 41,097 384
--------- - --------- - -------- -
of Yen of Yen of US$
--------- --------- --------
Per share data (in exact)
Net income 9,849 6,577 61
Cash dividend 5,528 5,000 46
Note: Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March
* 31,2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 4
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
----------------------------------
2004 2005
-------- ---------------------
Millions Millions *
of Yen of Yen Millions
-------- --------
of US$
--------
Cash flows from operating activities:
Income before income taxes 98,381 83,077 776
Depreciation and amortization 460,027 435,060 4,065
Loss on disposal of property, plant and equipment 35,576 33,319 311
Increase (decrease) in liability for employees' severance payments (74,174 ) (80,346 ) (750 )
(Increase) decrease in accounts receivable (17,431 ) 1,956 18
Increase (decrease) in accounts payable and accrued expenses (9,252 ) (6,390 ) (59 )
Increase (decrease) in accrued consumption tax 2,652 (2,652 ) (24 )
Other 16,907 1,162 10
-------- - -------- - -------- -
Sub-total 512,687 465,187 4,347
-------- - -------- - -------- -
Interest and dividends received 716 283 2
Interest paid (22,421 ) (19,698 ) (184 )
Income taxes received (paid) 69,813 52,439 490
-------- - -------- - -------- -
Net cash provided by (used in) operating activities 560,795 498,212 4,656
-------- - -------- - -------- -
Cash flows from investing activities:
Payments for property, plant and equipment (409,205 ) (381,332 ) (3,563 )
Acquisition of investments (806 ) (3,678 ) (34 )
Other 23,640 15,609 145
-------- - -------- - -------- -
Net cash provided by (used in) investing activities (386,371 ) (369,401 ) (3,452 )
-------- - -------- - -------- -
Cash flows from financing activities:
Proceeds from issuance of long-term debt 200,000 190,000 1,775
Payments for settlement of long-term debt (417,656 ) (276,201 ) (2,581 )
Increase (decrease) in short-term borrowings 40,000 2,000 18
Dividends paid (18,769 ) (34,494 ) (322 )
-------- - -------- - -------- -
Net cash provided by (used in) financing activities (196,426 ) (118,696 ) (1,109 )
-------- - -------- - -------- -
Net increase (decrease) in cash and cash equivalents (22,001 ) 10,114 94
Cash and cash equivalents at beginning of year 140,808 118,806 1,110
-------- - -------- - -------- -
Cash and cash equivalents at end of year 118,806 128,920 1,204
-------- - -------- - -------- -
Note:* Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 5
PROPOSAL FOR APPROPRIATION OF UNAPPROPRIATED RETAINED EARNINGS
Year Ended (Millions of
March 31, Yen)
2004 Year Ended
------------- March 31,
2005
-------------
Unappropriated Retained Earnings for the Year 62,109 68,670
Proposal of Appropriation:
Cash Dividends 34,494 31,200
(Y5,528 per ) (Y5,000 per )
share share
Bonuses to directors and corporate auditors 42 55
(Portion to corporate auditors) (11 ) (13 )
Unappropriated Retained Earnings Carried Forward 27,572 37,415
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 6
BUSINESS RESULTS (NON-CONSOLIDATED OPERATING REVENUES)
(Based on accounting principles generally accepted in Japan)
Services Year Year (Millions
----- Ended Ended of Yen)
March 31, March 31, Increase
2004 2005 (Decrease)
--------- --------- ----------
Voice Transmission Services Revenues (excluding the amounts of IP 1,465,833 1,369,195 (96,637 )
Services Revenues)
Monthly Charge Revenues* 905,590 872,886 (32,704 )
Call Rates Revenues* 245,963 198,733 (47,229 )
Interconnection Call Revenues* 216,169 209,544 (6,625 )
IP Services Revenues 127,284 180,326 53,041
Leased Circuit Services Revenues (excluding the amounts of IP Services 206,031 174,392 (31,638 )
Revenues)
Telegram Services Revenues 33,421 31,180 (2,241 )
Other Telecommunications Services Revenues 165,281 165,929 648
--------- --------- ---------- -
Telecommunications total revenues 1,997,852 1,921,025 (76,826 )
--------- --------- ---------- -
Related business total revenues 169,000 177,022 8,022
--------- --------- ---------- -
Total operating revenues 2,166,852 2,098,048 (68,804 )
--------- --------- ---------- -
* Partial listing only
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 7
NEW BOARD OF DIRECTORS
(Subject to Shareholder's Approval)
President
Shunzo Morishita
Senior Executive Vice Presidents
Tsutomu Ebe
Jun-ichi Yuuki
Executive Vice Presidents
ShinichiOtake
Hiroaki Takano
Senior Vice Presidents
Fumio Takaesu Yukihiro Ozaki Shinji Jikuya
Yasuyoshi Katayama Takayuki Watanabe Takushi Itoh
Akio Nishio Kazutoshi Murao Michitomo Ueno
Hiroo Unoura
Corporate Auditors
Sadayoshi Ishikawa Toshihisa Fukumoto Kazuaki Katori
Note: The first three members of this list are nominated for positions with
representative authority.
--------------------------------------------------------------------------------
May 12, 2005
NTT Communications Corporation
NON-CONSOLIDATED STATEMENT OF INCOME
(Based on accounting principles generally accepted in Japan)
Billions
of Yen
----------
Year Year Increase % Increase
Ended Ended (Decrease) (Decrease)
March March 31, ---------- ----------
31, 2004
2005 ---------
-------
Operating Revenues 1,090.0 1,106.6 (16.5) (1.5)%
Operating Expenses 1,020.1 990.3 29.8 3.0%
Operating Income 69.8 116.2 (46.3) (39.9)%
Non-Operating Income (1.9 ) (3.1 ) 1.2 39.8%
Recurring Profit 67.9 113.0 (45.0) (39.9)%
Special Profits 4.0 - 4.0 -
Special Losses 25.0 50.4 (25.4) (50.4)%
Income before Income Taxes 47.0 62.5 (15.5) (24.8)%
Income Taxes 22.4 38.3 (15.9) (41.6)%
Net Income 24.6 24.1 0.4 1.8%
Note:
1. Fractions are rounded down.
2. Special Profits for the year ended March 31, 2005 : ACCA Networks Co., Ltd. 4 billion yen
3. Special Losses for the year ended March 31, 2005 : NTT USA Inc. 24.2 billion yen ; NTT Australia Pty. Ltd. 0.7
billion yen
PROPOSAL FOR APPROPRIATION OF UNAPPROPRIATED RETAINED EARNINGS
(Based on accounting principles generally accepted in Japan)
Billions of Yen
-------------------
Year Ended
March
31, 2005
-------------------
Unappropriated Retained Earnings for the Year * 41.2 Net Income 24.6
Cash Dividends 8.7 Unappropriated Retained Earnings Carried 16.6
Forward
-------------------------------------------------
Bonuses to Directors and Corporate Auditors 61 (million yen) * Unappropriated Retained Earnings for the 41.2
Year
Total of Appropriation of Unappropriated 8.7
Retained Earnings
Unappropriated Retained Earnings Carried 32.4
Forward
Note: Fractions are rounded down.
FORECASTS FOR THE YEAR ENDING MARCH 31, 2006
(Based on accounting principles generally accepted in Japan)
Billions
of Yen
--------
Operating Revenues 1,081.0
Operating Expenses 1,023.0
Operating Income 58.0
Recurring Profit 60.0
Net Income 34.0
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
BREAKDOWN OF OPERATING REVENUES AND OPERATING EXPENSES
(Based on accounting principles generally accepted in Japan)
Billions
of Yen
----------
Year Year Increase % Increase
Ended Ended (Decrease) (Decrease)
March March ---------- ----------
31, 31,
2005 2004
------- -------
OPERATING REVENUES
Voice Transmission Services Revenues 440.6 467.3 (26.7) (5.7 %)
(Excluding the amounts of IP Services Revenues)
IP Services Revenues 278.3 223.7 54.5 24.4 %
Major Items:
Open Computer Network Services Revenues 133.4 123.9 9.5 7.7 %
IP-Virtual Private Network Services Revenues 63.1 56.4 6.7 12.0 %
Wide-Area Ethernet Services Revenues 35.0 20.2 14.8 73.0 %
Data Communications Revenues 212.7 267.0 (54.2) (20.3 %)
(Excluding the amounts of IP Services Revenues)
Major Items:
Leased Circuit Services Revenues 135.6 168.4 (32.8) (19.5 %)
Frame-Relay Services Revenues 31.6 46.8 (15.1) (32.4 %)
Solutions Services Revenues 125.8 117.2 8.6 7.4 %
Others 32.5 31.1 1.3 4.2 %
Total 1,090.0 1,106.6 (16.5) (1.5 %)
OPERATING EXPENSES
Personnel 86.5 86.7 (0.1) (0.2 %)
Purchase of goods and services 514.3 493.6 20.7 4.2 %
Depreciation and amortization 120.2 117.6 2.6 2.3 %
Retirement of fixed assets 17.7 19.5 (1.8) (9.4 %)
Communication Network Charges 269.2 261.5 7.7 2.9 %
Miscellaneous Taxes 12.0 11.3 0.6 5.9 %
Total 1,020.1 990.3 29.8 3.0 %
Reference:
Non-Operating Expenses 28.0 29.7 (1.6 ) (5.5 %)
Major Item:
Financial Expenses 14.4 15.1 (0.6 ) (4.5 %)
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
NON-CONSOLIDATED BALANCE SHEET
(Based on accounting principles generally accepted in Japan)
Billions
of Yen
----------
March March Increase % Increase
31, 31,
2005 2004 (Decrease) (Decrease)
------- ------- ---------- ----------
ASSETS
Fixed Assets 1,234.4 1,244.6 (10.2 ) (0.8%)
Current Assets 306.7 284.5 22.2 7.8%
Total Assets 1,541.2 1,529.2 11.9 0.8%
LIABILITIES
Long-Term Liabilities 756.1 830.4 (74.3 ) (8.9%)
Current Liabilities 379.9 323.9 56.0 17.3%
Total Liabilities 1,136.1 1,154.3 (18.2 ) (1.6%)
Major Item:
Interest-Bearing Debts 779.9 853.4 (73.4 ) (8.6%)
SHAREHOLDERS' EQUITY 405.1 374.8 30.2 8.1%
TOTAL OF LIABILITIES AND SHAREHOLDERS' EQUITY 1,541.2 1,529.2 11.9 0.8%
Note: Fractions are rounded down.
CASH FLOWS
(Based on accounting principles generally accepted in Japan)
Billions
of Yen
----------
Year Year Increase
Ended Ended (Decrease)
----------
March March
31, 31,
2005 2004
------ ------
Cash Flows from Operating Activities 233.5 242.2 (8.7 )
Cash Flows from Investing Activities (154.7 ) (138.7 ) (16.0 )
Cash Flows from Financing Activities (83.0 ) (96.8 ) 13.7
Cash and Cash Equivalents at end of year 61.0 65.4 (4.3 )
Reference
1. Number of Employees
Employees
----------
March March Increase % Increase
31, 31,
2005 2004 (Decrease) (Decrease)
----- ----- ---------- ----------
7,700 7,700 - -
2. Capital Investments
Billions
of Yen
----------
Year Year Increase % Increase
Ended Ended (Decrease) (Decrease)
March March ---------- ----------
31, 31,
2005 2004
----- -----
143.6 124.8 18.7 15.0%
--------------------------------------------------------------------------------
NTT Communications Major Services
"Myline" carrier-selection services
As of March 31, 2004 As of March 31, 2005
--------------------- ---------------------
Myline registrations for inter-prefectural long-distance 23,874,000 25,153,000
calls (subscriber market %) (subscriber market %)
share: 57.5 share: 60.7
Myline registrations for international calls 19,987,000 21,388,000
(subscriber market %) (subscriber market %)
share: 53.9 share: 57.3
Traffic
April 1, April 1,
2003 to 2004 to
March March
31, 2004 31, 2005
-------- --------
Traffic* Numbers of calls 8.34 **
billion
Duration of calls 360 **
million
hours
* Calls for NTT Com's specific numbers and inter-prefectural calls. Does not include free dial and
interconnected calls.
** Not yet available.
"OCN" Internet access services
As of March 31, As of March 31,
2004 2005
-------------- --------------
OCN service subscribers 4,118,000 4,640,000
Main network services for business customers
As of March 31, As of March 31,
2004 2005
-------------- --------------
Business customers of main network services 337,000 354,000
Leased circuits 50,000 41,000
Frame relay / Cell relay 56,000 39,000
IP-VPN 86,000 93,000
OCN Internet access 129,000 150,000
Ethernet services (e-VLAN) 17,000 22,000
Data centers
As of March 31, As of March 31,
2004 2005
-------------- --------------
Colocation service users 396 460
Data centers* 67 in Japan 67 in Japan
26 overseas 27 overseas
Total size of domestic data centers Approx. 56,000 Approx. 56,000
m2 m2
Note: Domestic centers are those that have applied for Information Security
Management System approval.
--------------------------------------------------------------------------------
May 12, 2005
NTT Com Announces Financial Results For Fiscal Year Ended March 31, 2005
TOKYO, JAPAN - NTT Communications Corporation (NTT Com) today announced
its non-consolidated financial results for the fiscal year that ended March 31,
2005.
Revenue from phone, leased-circuit and other existing services continued to
decline, but success with new services helped to generate operating revenues of
1,090.0 billion yen, down only 1.5% year on year. Despite continued efforts to
drastically reduce costs, recurring profit declined 39.9% to 67.9 billion yen
due to significant market changes. A special loss of 25 billion yen was booked
for the revaluation of shares held in NTT USA, Inc. and other affiliates, but
net income rose 1.8% to 24.6 billion yen as a result of 4 billion yen profit
from the sale of shares in ACCA Networks Company.
BACKGROUND
The global market for information and communication technologies (ICT) continued
to experience intensifying competition and ongoing consolidation among market
players. Technological innovation led to new competition, such as rival carriers
adding their own vertical services to customer premises via "dry copper
" lines and introducing expanded IP phone services via optical fiber
lines. Demand rose for integrated voice and IP services and increased
information security prior to the full-scale introduction of Japan's new
Personal Information Protection Law in April 2005. Economic globalization,
including expanded multinational business in China, India and other parts of
Asia, generated diversified demand for seamless global networks and other
ICT-based products and services.
In line with other ICT companies, NTT Com took aggressive steps to raise its
competitiveness and take advantage of potential new revenue sources and growth
in the rapidly changing business environment. Guided by its vision of becoming a
"Global IP Solution Company," NTT Com continued to develop and
strengthen comprehensive services for network reliability, security, IT asset
management and global access within four core business domains -
solutions, network management, security and global services.
BUSINESS STRATEGIES
During the fiscal year, NTT Com developed new one-stop solutions and business
models for diversified customer needs. To support such efforts, the company
focused resources on growth areas, reorganized sales, delivery, customer
services and product development, strengthened operations and reduced costs. It
also broadened the scope of proactive business models aimed at helping customers
achieve both 20% lower costs and 20% greater performance, and aggressively
diversified its high-demand security services.
OPERATING RESULTS
Operating revenue from voice and data transmission services (excluding IP
services) declined due to intensifying competition and the market shift to
low-cost IP services. Nevertheless, operating revenue from IP and solutions
services showed solid increases as a result of continuing success of NTT Com's
transformation into a global IP solution company. Specifically, NTT
Com actively worked to develop the following in its four core business domains.
In global services, NTT Com became the first Asian carrier to be named "
Best Global Carrier" at the World Communication Awards 2004 in
recognition of its global IP-VPN services for multinational companies and the
global reach of its services. In addition, NTT Com opened up an office in India
to become the first Japanese telecommunications company to provide global IP-VPN
services in this promising market. NTT Communications China was established to
provide multinational companies with value-added solutions services. Verio
Inc.'s financial condition continued to recover thanks to its strengthened
partnership with NTT America, Inc.
--------------------------------------------------------------------------------
In solutions services, the company offered outsourcing services for networking,
hosting, applications, servers and security and other solutions to help business
customers improve operational efficiency and reduce total cost of ownership. A
new service called ".Phone Business V" became Japan's
first service for live video communications between PCs and NTT DoCoMo's
third-generation FOMA-brand mobile phones. For individuals, the company created
broadband services for personal solutions, such as the CoDen Hikari service,
which bundles voice, Internet and video services, the OCN Music Store
music-downloading service and the OCN Theater video-on-demand service for
subscribers who use optical fiber.
In network management services, the company launched the AGILIT hosting service,
which combines automated operations, IT infrastructure management and security.
It also packaged VPN services with maintenance and monitoring services for
routers and desktop computers.
In security services, as demand grew in anticipation of the full-scale
introduction of the Personal Information Protection Law in April 2005, NTT Com
responded with new security inspection services, such as customer-security
monitoring and evaluation services, and sales of smart cards for security
applications at financial institutions. NTT Com also upgraded internal security
at its own workplaces.
1. Voice Transmission Services
Operating revenue from voice transmission services (excluding IP services) fell
5.7% to 440.6 billion yen. Revenue declined because of shrinking demand for
fixed-line phone services, and new competition from IP phone services as well as
rival carriers adding their own vertical services to customer premises via
"dry copper" lines. New revenue was generated through the
introduction of services such as PL@TINUM LINE, which offers unprecedented low
rates on calls placed locally, out of city (same prefecture), internationally or
to mobile phones. Revenue was also augmented in international markets with
stronger sales of prepaid cards and through increased market share.
2. IP Services
Operating revenue from IP services, underpinned by expanding demand, rose 24.4%
to 278.3 billion yen. As of the end of March 2005, 4.64 million users were
subscribing to NTT Com's "OCN" ISP, which was enhanced
with higher-speed ADSL service and expanded access to optical fiber services
during the year.
3. Data Communications Services
Operating revenue from data communications services (excluding IP services)
dropped 20.3% to 212.7 billion yen. Revenues declined due to competition from
cheaper IP-VPN and VPN services that leverage Internet cost advantages. For
those customers who place maximum priority on the quality, reliability and
security of leased circuits, however, NTT Com launched a simple, highly reliable
leased-circuit service called Giga Stream.
4. Solutions Services
Operating revenue from solutions services rose 7.4% to 125.8 billion yen. NTT
Com worked to increase revenue from comprehensive solutions for customer
facilities and systems, such as data-centers, security and managed (monitoring
and operation) services.
5. Other Services
Revenue from other value-added services, mainly for the leasing of facilities
and resale of products, increased 4.2% to 32.5 billion yen.
The breakdown of revenues was changed from this reporting period in accordance
with revisions to Japan's telecommunications business accounting
regulations.
# # #
--------------------------------------------------------------------------------
About NTT Com
NTT Communications is a subsidiary of Nippon Telegraph and Telephone (NTT)
Corporation (NYSE: NTT) - one of the world's largest telecommunications
companies. NTT Com provides high-quality, technologically advanced network
management, security and solution services to consumers, corporations and
governments on a global basis, with a special focus on the Asia-Pacific region.
Its world-class backbone network, combined with the networks of partner
companies around the world, offers access to more than 200 countries. NTT Com
Group has over 30 companies in the Asia-Pacific region, Europe and the Americas.
The company has garnered several awards for its leading edge technologies,
outstanding performance and customer service, including "Best Global
Carrier - 2004." For more information, please visit http//:www.ntt.com
More information about this release:
Media:
(Mr.) Tei A. Gordon or (Ms.) Akiko Suzaki
Media Relations
Tel. +81 3 6700 4010 / info@ntt.com
All others:
(Mr.) Noboru Takeuchi or (Mr.) Makoto Inoue
Accounts and Finance Department
Tel. +81 3 6700 4311 / infoaf@ntt.com
--------------------------------------------------------------------------------
Attachment 1
NON-CONSOLIDATED BALANCE SHEETS
(Based on accounting principles generally accepted in Japan)
March 31, March 31, 2005
2004 ---------------------
---------
Millions Millions *Millions
of Yen of Yen of US$
--------- --------- --------
ASSETS
Fixed assets 1,244,658 1,234,435 11,536
Current assets 284,554 306,776 2,867
Total assets 1,529,213 1,541,212 14,403
--------- --------- --------
LIABILITIES
Long-term liabilities:
Long-term debt 751,736 678,813 6,344
Liability for employees' severance payments 74,416 73,380 685
Other 4,333 3,965 37
Total long-term liabilities 830,486 756,159 7,066
--------- --------- --------
Current liabilities:
Current portion of long-term debt 98,297 82,530 771
Accounts payable, trade 47,252 60,265 563
Short-term borrowings 3,382 644 6
Accounts payable, other 146,704 178,524 1,668
Accrued taxes on income - 12,007 112
Other 28,276 45,975 429
Total current liabilities 323,913 379,947 3,550
--------- --------- --------
Total liabilities 1,154,399 1,136,107 10,617
--------- --------- --------
SHAREHOLDERS' EQUITY
Common stock 211,650 211,650 1,978
Additional paid-in capital 119,149 119,149 1,113
Unappropriated retained earnings for the year 25,485 41,231 385
Net unrealized gains (losses) on securities 18,529 33,074 309
Total shareholders' equity 374,813 405,105 3,786
--------- --------- --------
Total liabilities and shareholders' equity 1,529,213 1,541,212 14,403
--------- --------- --------
Note: *Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 2
NON-CONSOLIDATED STATEMENTS OF INCOME
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
------------------------------------
2004 2005
--------- ----------------------
Millions Millions *Millions
of Yen of Yen of US$
--------- --------- --------
Operating revenues 1,106,603 1,090,072 10,187
Operating expenses 990,386 1,020,196 9,534
Operating income 116,216 69,876 653
Non-operating revenues 26,527 26,166 244
Non-operating expenses 29,710 28,082 262
Recurring profit 113,034 67,959 635
Special profits - 4,094 38
Special losses 50,460 25,022 233
Income before income taxes 62,573 47,032 439
Corporation, inhabitant, and enterprise taxes (1,610 ) 37,420 349
Deferred tax expenses (benefits) 40,000 (15,000 ) (140 )
Net income 24,183 24,612 230
--------- - --------- - -------- -
Per share data (in exact) of Yen of Yen of US$
--------- --------- --------
Net income 13,866 14,109 131
Cash dividend 5,064 5,000 46
Note: *Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 3
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS
(Based on accounting principles generally accepted in Japan)
Year Ended March 31
----------------------------------
2004 2005
-------- ---------------------
Millions Millions *
of Yen of Yen Millions
-------- -------- of US$
--------
Cash flows from operating activities:
Income before income taxes 62,573 47,032 439
Depreciation and amortization 120,082 123,494 1,154
Loss on disposal of property, plant and equipment 14,975 13,822 129
Increase (decrease) in loan-loss reserves 88 (325 ) (3 )
Increase (decrease) in liability for employees' severance payments 586 (1,035 ) (9 )
Evaluation losses on shares of affiliated companies 50,460 25,022 233
(Increase) decrease in accounts receivable 11,542 (3,934 ) (36 )
Increase (decrease) in accounts payable and accrued expenses 18,010 25,228 235
Increase (decrease) in accrued consumption tax (5,531 ) (269 ) (2 )
Other 11,966 7,819 73
-------- - -------- - -------- -
Sub-total 284,754 236,854 2,213
-------- - -------- - -------- -
Interest and dividends received 1,561 2,222 20
Interest paid (15,322 ) (14,733 ) (137 )
Income taxes received (paid) (28,770 ) 9,159 85
-------- - -------- - -------- -
Net cash provided by (used in) operating activities 242,223 233,503 2,182
-------- - -------- - -------- -
Cash flows from investing activities:
Payments for property, plant and equipment (120,774 ) (155,158 ) (1,450 )
Acquisition of investments (860 ) (1,603 ) (14 )
(Increase) decrease in short-term loan (163 ) (365 ) (3 )
Other (16,921 ) 2,332 21
-------- - -------- - -------- -
Net cash provided by (used in) investing activities (138,719 ) (154,794 ) (1,446 )
-------- - -------- - -------- -
Cash flows from financing activities:
Proceeds from issuance of long-term debt 19,541 8,783 82
Payments for settlement of long-term debt (99,220 ) (98,297 ) (918 )
Increase (decrease) in short-term borrowings (4,911 ) 15,246 142
Dividends paid (12,246 ) (8,811 ) (82 )
-------- - -------- - -------- -
Net cash provided by (used in) financing activities (96,837 ) (83,078 ) (776 )
-------- - -------- - -------- -
Effect of exchange rate changes on cash and cash equivalents (246 ) 9 0
-------- - -------- - -------- -
Net increase (decrease) in cash and cash equivalents 6,419 (4,359 ) (40 )
Cash and cash equivalents at beginning of year 59,024 65,444 611
-------- - -------- - -------- -
Cash and cash equivalents at end of year 65,444 61,084 570
-------- - -------- - -------- -
Note: *Yen amounts have been translated, for convenience only, at Y107=US$1.00,
the approximate exchange rate on March 31, 2005. Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 4
PROPOSAL FOR APPROPRIATION OF UNAPPROPRIATED RETAINED EARNINGS
(Millions of Yen)
Year Ended Year Ended
March 31,
2004 March 31,
------------- 2005
-------------
Unappropriated retained earnings for the Year 25,485 41,231
Proposal of appropriation:
Cash dividends 8,811 8,700
(Y5,064 per ) (Y5,000 per )
share share
Bonuses to directors and corporate auditors 55 61
(Portion to corporate auditors) (10 ) (10 )
Unappropriated Retained Earnings Carried Forward 16,618 32,469
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 5
BUSINESS RESULTS (NON-CONSOLIDATED OPERATING REVENUES)
(Based on accounting principles generally accepted in Japan)
(Millions of Yen)
Services Year Year Increase
----- Ended Ended (Decrease)
March 31, March 31, ----------
2004 2005
--------- ---------
Voice transmission services revenues (excluding the amounts of IP services 467,399 440,655 (26,743 )
revenues)
IP services revenues 223,761 278,315 54,554
Open computer network services revenues* 123,957 133,475 9,518
IP-Virtual private network services revenues* 56,439 63,198 6,758
Wide-Area Ethernet services revenues* 20,279 35,086 14,807
Data communications revenues (excluding the amounts of IP services 267,042 212,751 (54,290 )
revenues)
Leased circuit services revenues* 168,497 135,642 (32,854 )
Solution services revenues 117,205 125,829 8,623
Others 31,195 32,520 1,324
--------- --------- ---------- -
Total operating revenues 1,106,603 1,090,072 (16,531 )
--------- --------- ---------- -
* Partial listing only
Note: Fractions are rounded down.
--------------------------------------------------------------------------------
Attachment 6
NTT Communications' New Board of Directors
(subject to shareholders' approval)
President and CEO
Hiromi Wasai
Senior Executive Vice Presidents
Masayuki Nomura
Masaki Mitsumura
Executive Vice Presidents
Masae Tamura
Osamu Inoue
Yo Yusa
Senior Vice Presidents
Masayuki Nakagawa
Koichi Maeda
Akira Yabiki
Sadao Maki
Mitsuo Murakami
Masanobu Suzuki
Tatsuo Kawasaki
Tetsuya Obata
Corporate Auditors
Kenichi Shiraishi
Yutaka Yamaga
Kikuo Mito
--------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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