NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Summary of significant
accounting policies:
As permitted by the “Regulation Concerning the Terminology, Forms and Preparation Methods of Quarterly
Consolidated Financial Statements” (Japanese Cabinet Office Ordinance No. 64 of 2007), the accompanying consolidated balance sheets at March 31 and December 31, 2016, the consolidated statements of income and the consolidated
statements of comprehensive income for the three and nine months ended December 31, 2015 and 2016 and consolidated statements of cash flows for the nine months ended December 31, 2015 and 2016 of NTT and its subsidiaries (collectively with
NTT, “NTT Group”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain disclosures required by U.S. GAAP have been omitted.
(1) Change in Accounting Procedures for Consolidated Quarterly Financial Results
Change in depreciation method
NTT and its subsidiaries in Japan traditionally used the
declining-balance method for calculating depreciation of property, plant, and equipment. Effective April 1, 2016, NTT and its subsidiaries adopted the straight-line method of depreciation.
As NTT Group plans to complete the expansion of its service areas for fiber-optic services and LTE services in the network business, it has been shifting
the focus of its capital investments to improving the efficiency in using facilities while maintaining the current functionality. With respect to network services, NTT has started providing the “Hikari Collaboration Model,” the wholesale
provision of fiber-optic access services, which can be used by customers of both fixed-line communications services and mobile communications services in the long-term. Through these efforts, NTT expects the stable usage of property, plant, and
equipment going forward.
For these reasons, NTT believes that the straight-line depreciation method better reflects the pattern of
consumption of the future benefits to be derived from those assets being depreciated.
The effect of the change in the depreciation method is
recognized prospectively as a change in the accounting estimate pursuant to FASB
ASC-250,
“Accounting Changes and Error Corrections.”
In line with the change in the depreciation method, NTT reviewed the residual carrying amount of property, plant, and equipment and other necessary items and made changes where necessary.
As a result of the change in the depreciation method, depreciation expenses on a consolidated basis for the nine and three months ended December 31,
2016 decreased by ¥185,322 million and ¥58,659 million, respectively. Consolidated net income attributable to NTT and consolidated basic net income attributable to NTT per share for the nine and three months ended December 31,
2016 increased by ¥101,854 million and ¥31,037 million, and ¥49.60 and ¥15.24, respectively.
(2) Change in Fiscal
Year End of Certain Subsidiaries
As of April 1, 2015, certain of NTT’s consolidated subsidiaries changed their fiscal year ends from
December 31 to March 31, thereby eliminating a three-month lag between their fiscal year ends and NTT’s fiscal year end in NTT’s quarterly consolidated financial statements. The elimination of this lag was applied as a change in
accounting policy. NTT did not make any retrospective adjustments to its financial statements as these changes did not have a material impact on the consolidated financial statements for the fiscal year ended March 31, 2015. As a result of this
change, NTT’s retained earnings have increased by ¥700 million, and its accumulated other comprehensive income (loss), noncontrolling interests and redeemable noncontrolling interests have decreased by ¥9,702 million,
¥595 million and ¥419 million, respectively, as of the beginning of the previous fiscal year. In addition, the change in cash and cash equivalents resulting from this change in fiscal year end is presented in the consolidated
statements of cash flows under “Increase (decrease) in cash and cash equivalents due to change in fiscal year end of consolidated subsidiaries.”
– 9
–
As of April 1, 2016, certain of NTT’s consolidated subsidiaries changed their fiscal year ends
from December 31 to March 31, thereby eliminating a three-month lag between their fiscal year ends and NTT’s fiscal year end in NTT’s quarterly consolidated financial statements. The elimination of this lag was applied as a
change in accounting policy. NTT did not make any retrospective adjustments to its financial statements as these changes did not have a material impact on the consolidated financial statements for the nine months ended December 31, 2015 or the
year ended March 31, 2016. As a result of this change, NTT’s retained earnings, accumulated other comprehensive income (loss) and noncontrolling interests have decreased by ¥214 million, ¥1,454 million and
¥1,408 million, respectively, as of the beginning of the current fiscal year. In addition, the change in cash and cash equivalents resulting from this change in fiscal year end is presented in the consolidated statements of cash flows under
“Increase (decrease) in cash and cash equivalents due to change in fiscal year end of consolidated subsidiaries.”
(3) Earnings per
Share
Basic earnings per share (“EPS”) is computed based on the average number of shares outstanding during the period. Diluted EPS
assumes the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock. Since NTT did not issue dilutive securities for the nine months
ended December 31, 2015 and 2016, there is no difference between basic EPS and diluted EPS.
In addition, NTT carried out a
two-for-one
stock split on July 1, 2015. The adjusted figures reflecting the impact of the stock split are included in NTT’s EPS figures for the nine months ended
December 31, 2015.
(4) Reclassifications
Beginning April 1, 2016, other intangible asset impairments previously classified under “Goodwill and other intangible asset impairments” have been reclassified into “Impairment losses
— Other,” and goodwill impairments previously classified under “Goodwill and other intangible asset impairments” have been reclassified into “Impairment losses — Goodwill”. In accordance with this reclassification,
impairment losses of property, plant and equipment and software previously classified under “Impairment losses” have been reclassified into “Impairment losses — Other.”
Certain items for prior periods’ financial statements have been reclassified to conform to the presentation for the nine months ended
December 31, 2016.
– 10
–
(5) Recently Issued Accounting Standards
Revenue from Contracts with Customers —
On May 28, 2014, the FASB issued ASU
2014-09
“Revenue from Contracts with Customers,” which requires an entity to recognize the amount to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU
will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
The FASB also issued ASU
2016-08
“Principal versus Agent Considerations (Reporting Revenue Gross versus Net),”
ASU2016-10
“Identifying Performance Obligations and Licensing,”
ASU2016-12
“Narrow-Scope Improvements and Practical Expedients,”
ASU2016-20
“Technical Corrections and Improvements to Topic 606, Revenue from Contracts with
Customers,” in March, April, May and December 2016, respectively, to amend ASU
2014-09
partially.
On August 12, 2015, the FASB issued ASU
2015-14
“Revenue from Contracts with Customers: Deferral of the
Effective Date,” and deferred the effective date of ASU
2014-09
by one year. Consequently, the standard is expected to take effect for NTT Group on April 1, 2018. Early adoption of the standard as of
April 1, 2017 would also be permitted.
NTT has not yet selected a transition method and is currently evaluating the effect that the ASU
will have on NTT Group’s consolidated financial statements and related disclosures.
Recognition and Measurement of Financial Assets
and Financial Liabilities —
On January 5, 2016, the FASB issued ASU
2016-01
“Recognition and Measurement of Financial Assets and Financial Liabilities,” which significantly changes the income statement impact of equity investments held by an entity, and the recognition of changes in fair value of financial
liabilities when the fair value option is elected. The new standard is expected to take effect for NTT Group on April 1, 2018. NTT is currently evaluating the effect of adopting the ASU.
Leases —
On February 25, 2016, the FASB issued ASU
2016-02
“Leases,” which requires all lessees to recognize
right-of-use
assets and lease liabilities, principally. The new
standard is expected to take effect for NTT Group on April 1, 2019. NTT is currently evaluating the effect of adopting the ASU.
2.
Inventories:
Inventories at March 31 and December 31, 2016 comprised the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2016
|
|
|
|
|
|
|
Telecommunications equipment to be sold and materials
|
|
¥
|
153,463
|
|
|
¥
|
138,454
|
|
|
Projects in progress
|
|
|
142,845
|
|
|
|
183,648
|
|
|
Supplies
|
|
|
118,273
|
|
|
|
114,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
414,581
|
|
|
¥
|
436,893
|
|
|
|
|
|
|
|
|
|
|
|
– 11
–
3. Goodwill:
As a result of the annual impairment test conducted for the fiscal year ending March 31, 2017, a goodwill impairment loss of ¥48,823 million was recognized during the nine months ended
December 31, 2016 for goodwill attributable to the Dimension Data reporting unit in the long distance and international communications business segment. The fair value of the reporting unit was determined using the discount cashflow method.
– 12
–
4. Equity:
Outstanding shares and treasury stock —
Changes in NTT’s shares of common stock
and treasury stock for the fiscal year ended March 31, 2016 and for the nine months ended December 31, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in shares
|
|
|
|
|
Issued
shares
|
|
|
Treasury
stock
|
|
|
Balance at March 31, 2015
|
|
|
1,136,697,235
|
|
|
|
78,097,606
|
|
|
Effect of stock split
|
|
|
1,136,697,235
|
|
|
|
78,104,609
|
|
|
Acquisition of treasury stock under resolution of the board of directors
|
|
|
—
|
|
|
|
21,000,000
|
|
|
Acquisition of treasury stock through purchase of
less-than-one-unit
shares
|
|
|
—
|
|
|
|
58,082
|
|
|
Resale of treasury stock to holders of
less-than-one-unit
shares
|
|
|
—
|
|
|
|
(5,028
|
)
|
|
Cancellation of treasury stock under resolution of the board of directors
|
|
|
(177,000,000
|
)
|
|
|
(177,000,000
|
)
|
|
Balance at March 31, 2016
|
|
|
2,096,394,470
|
|
|
|
255,269
|
|
|
Acquisition of treasury stock under resolution of the board of directors
|
|
|
—
|
|
|
|
61,158,800
|
|
|
Acquisition of treasury stock through purchase of
less-than-one-unit
shares
|
|
|
—
|
|
|
|
27,766
|
|
|
Resale of treasury stock to holders of
less-than-one-unit
shares
|
|
|
—
|
|
|
|
(1,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
|
2,096,394,470
|
|
|
|
61,440,547
|
|
|
|
|
|
|
|
|
|
|
|
On May 15, 2015, the board of directors of NTT authorized a
two-for-one
stock split of its common stock, with a record date of June 30, 2015 and an effective date of July 1, 2015. On July 1, 2015, each share of common stock held by shareholders as of
the record date was split into two shares. Per share information for the nine months ended December 31, 2015 reflects the impact of the stock split.
On August 5, 2015, the board of directors of NTT resolved that NTT may acquire up to 21 million shares of its outstanding common stock for an amount in total not exceeding ¥100 billion
from August 6, 2015 through October 30, 2015. Based on this resolution, NTT repurchased 21 million shares of its common stock for a total purchase price of ¥93,589 million between August 2015 and October 2015, and concluded
the repurchase of its common stock authorized by board of directors’ resolution.
On November 6, 2015, the board of directors
resolved that NTT may cancel 177 million shares currently held as treasury stock on November 13, 2015, and as a result of such cancellation conducted on November 13, 2015, additional
paid-in
capital decreased by ¥8 million, and retained earnings decreased by ¥590,679 million.
On May 13, 2016, the board of
directors resolved that NTT may acquire up to 68 million shares of its outstanding common stock for an amount in total not exceeding ¥350 billion from May 16, 2016 through March 31, 2017. Based on this resolution, NTT
repurchased 59,038,100 shares of its common stock at ¥267,384 million on June 14, 2016 using the
ToSTNeT-3,
and concluded the repurchase of its common stock authorized by board of directors’
resolution.
On December 12, 2016, the board of directors resolved that NTT may acquire up to 33 million shares of its outstanding
common stock for an amount in total not exceeding ¥150 billion from December 13, 2016 through June 30, 2017. Based on this resolution, NTT repurchased 2,120,700 shares of its common stock for a total purchase price of
¥10,442 million in December 2016.
NTT also repurchased 7,861,900 shares of its common stock for a total purchase price of
¥39,558 million in January 2017.
– 13
–
Dividends —
Cash dividends paid during the nine months ended December 31, 2016 were as follows:
|
|
|
|
|
Resolution
|
|
The shareholders’ meeting on June 24, 2016
|
|
Class of shares
|
|
Common stock
|
|
Source of dividends
|
|
Retained earnings
|
|
Total cash dividends paid
|
|
¥125,768 million
|
|
Cash dividends per share
|
|
¥60
|
|
Record date
|
|
March 31, 2016
|
|
Date of payment
|
|
June 27, 2016
|
|
|
|
|
Resolution
|
|
The board of directors’ meeting on November 11, 2016
|
|
Class of shares
|
|
Common stock
|
|
Source of dividends
|
|
Retained earnings
|
|
Total cash dividends paid
|
|
¥122,225 million
|
|
Cash dividends per share
|
|
¥60
|
|
Record date
|
|
September 30, 2016
|
|
Date of payment
|
|
December 12, 2016
|
– 14
–
Changes in equity —
Changes in total equity, NTT shareholders’ equity and equity attributable to noncontrolling interests for the nine months ended December 31, 2015 and 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
NTT shareholders’
equity
|
|
|
Noncontrolling
interests
|
|
|
Total
equity
|
|
|
Balance at March 31, 2015
|
|
¥
|
8,681,860
|
|
|
¥
|
2,367,950
|
|
|
¥
|
11,049,810
|
|
|
Adjustments due to change in fiscal year end of consolidated subsidiaries (Note 1)
|
|
|
(9,002
|
)
|
|
|
(595
|
)
|
|
|
(9,597
|
)
|
|
Balance at March 31, 2015 (as adjusted)
|
|
|
8,672,858
|
|
|
|
2,367,355
|
|
|
|
11,040,213
|
|
|
Dividends paid to NTT Shareholders
|
|
|
(200,182
|
)
|
|
|
—
|
|
|
|
(200,182
|
)
|
|
Dividends paid to noncontrolling interests
|
|
|
—
|
|
|
|
(105,086
|
)
|
|
|
(105,086
|
)
|
|
Acquisition of treasury stock
|
|
|
(93,838
|
)
|
|
|
—
|
|
|
|
(93,838
|
)
|
|
Resale of treasury stock
|
|
|
19
|
|
|
|
—
|
|
|
|
19
|
|
|
Other equity transactions
|
|
|
1,440
|
|
|
|
(11,166
|
)
|
|
|
(9,726
|
)
|
|
Net income
|
|
|
604,064
|
|
|
|
206,190
|
|
|
|
810,254
|
|
|
Other comprehensive income (loss)
|
|
|
(80,256
|
)
|
|
|
(13,801
|
)
|
|
|
(94,057
|
)
|
|
Unrealized gain (loss) on securities
|
|
|
(16,880
|
)
|
|
|
(4,799
|
)
|
|
|
(21,679
|
)
|
|
Unrealized gain (loss) on derivative instruments
|
|
|
(2,845
|
)
|
|
|
131
|
|
|
|
(2,714
|
)
|
|
Foreign currency translation adjustments
|
|
|
(61,065
|
)
|
|
|
(9,395
|
)
|
|
|
(70,460
|
)
|
|
Pension liability adjustments
|
|
|
534
|
|
|
|
262
|
|
|
|
796
|
|
|
Balance at December 31, 2015
|
|
¥
|
8,904,105
|
|
|
¥
|
2,443,492
|
|
|
¥
|
11,347,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
NTT shareholders’
equity
|
|
|
Noncontrolling
interests
|
|
|
Total
equity
|
|
|
Balance at March 31, 2016
|
|
¥
|
8,833,806
|
|
|
¥
|
2,406,276
|
|
|
¥
|
11,240,082
|
|
|
Adjustments due to change in fiscal year end of consolidated subsidiaries (Note 1)
|
|
|
(1,668
|
)
|
|
|
(1,408
|
)
|
|
|
(3,076
|
)
|
|
Balance at March 31, 2016 (as adjusted)
|
|
|
8,832,138
|
|
|
|
2,404,868
|
|
|
|
11,237,006
|
|
|
Dividends paid to NTT Shareholders
|
|
|
(247,993
|
)
|
|
|
—
|
|
|
|
(247,993
|
)
|
|
Dividends paid to noncontrolling interests
|
|
|
—
|
|
|
|
(112,680
|
)
|
|
|
(112,680
|
)
|
|
Acquisition of treasury stock
|
|
|
(277,958
|
)
|
|
|
—
|
|
|
|
(277,958
|
)
|
|
Resale of treasury stock
|
|
|
6
|
|
|
|
—
|
|
|
|
6
|
|
|
Other equity transactions
|
|
|
(11,161
|
)
|
|
|
(114,050
|
)
|
|
|
(125,211
|
)
|
|
Net income
|
|
|
668,728
|
|
|
|
226,721
|
|
|
|
895,449
|
|
|
Other comprehensive income (loss)
|
|
|
(80,422
|
)
|
|
|
(9,665
|
)
|
|
|
(90,087
|
)
|
|
Unrealized gain (loss) on securities
|
|
|
(1,960
|
)
|
|
|
3,077
|
|
|
|
1,117
|
|
|
Unrealized gain (loss) on derivative instruments
|
|
|
(1,693
|
)
|
|
|
(722
|
)
|
|
|
(2,415
|
)
|
|
Foreign currency translation adjustments
|
|
|
(83,652
|
)
|
|
|
(13,310
|
)
|
|
|
(96,962
|
)
|
|
Pension liability adjustments
|
|
|
6,883
|
|
|
|
1,290
|
|
|
|
8,173
|
|
|
Balance at December 31, 2016
|
|
¥
|
8,883,338
|
|
|
¥
|
2,395,194
|
|
|
¥
|
11,278,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in the redeemable noncontrolling interest are not included in the table.
– 15
–
Accumulated other comprehensive income (loss) —
Changes in accumulated other comprehensive income (loss), net of applicable taxes, for the nine and three months ended December 31, 2015 and 2016 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended December 31
|
|
Millions of yen
|
|
|
|
Unrealized
gain (loss) on
securities
|
|
|
Unrealized
gain (loss) on
derivative
instruments
|
|
|
Foreign
currency
translation
adjustments
|
|
|
Pension
liability
adjustments
|
|
|
Total
|
|
|
Balance at March 31, 2015
|
|
¥
|
134,112
|
|
|
¥
|
(4,809
|
)
|
|
¥
|
224,432
|
|
|
¥
|
(85,503
|
)
|
|
¥
|
268,232
|
|
|
Adjustments due to change in fiscal year end of consolidated subsidiaries (Note 1)
|
|
|
1
|
|
|
|
(354
|
)
|
|
|
(9,349
|
)
|
|
|
—
|
|
|
|
(9,702
|
)
|
|
Balance at March 31, 2015 (as adjusted)
|
|
|
134,113
|
|
|
|
(5,163
|
)
|
|
|
215,083
|
|
|
|
(85,503
|
)
|
|
|
258,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassification
|
|
|
(9,752
|
)
|
|
|
(2,571
|
)
|
|
|
(70,026
|
)
|
|
|
32
|
|
|
|
(82,317
|
)
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(11,927
|
)
|
|
|
(143
|
)
|
|
|
(263
|
)
|
|
|
764
|
|
|
|
(11,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
(21,679
|
)
|
|
|
(2,714
|
)
|
|
|
(70,289
|
)
|
|
|
796
|
|
|
|
(93,886
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less — Comprehensive income attributable to noncontrolling interests
|
|
|
(4,799
|
)
|
|
|
131
|
|
|
|
(9,224
|
)
|
|
|
262
|
|
|
|
(13,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
¥
|
117,233
|
|
|
¥
|
(8,008
|
)
|
|
¥
|
154,018
|
|
|
¥
|
(84,969
|
)
|
|
¥
|
178,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended December 31
|
|
Millions of yen
|
|
|
|
Unrealized
gain (loss) on
securities
|
|
|
Unrealized
gain (loss) on
derivative
instruments
|
|
|
Foreign
currency
translation
adjustments
|
|
|
Pension
liability
adjustments
|
|
|
Total
|
|
|
Balance at March 31, 2016
|
|
¥
|
109,211
|
|
|
¥
|
(10,272
|
)
|
|
¥
|
119,053
|
|
|
¥
|
(275,047
|
)
|
|
¥
|
(57,055
|
)
|
|
Adjustments due to change in fiscal year end of consolidated subsidiaries (Note 1)
|
|
|
—
|
|
|
|
107
|
|
|
|
(1,591
|
)
|
|
|
30
|
|
|
|
(1,454
|
)
|
|
Balance at March 31, 2016 (as adjusted)
|
|
|
109,211
|
|
|
|
(10,165
|
)
|
|
|
117,462
|
|
|
|
(275,017
|
)
|
|
|
(58,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassification
|
|
|
11,964
|
|
|
|
(1,896
|
)
|
|
|
(98,032
|
)
|
|
|
(392
|
)
|
|
|
(88,356
|
)
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(10,847
|
)
|
|
|
(519
|
)
|
|
|
505
|
|
|
|
8,565
|
|
|
|
(2,296
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
1,117
|
|
|
|
(2,415
|
)
|
|
|
(97,527
|
)
|
|
|
8,173
|
|
|
|
(90,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less — Comprehensive income attributable to noncontrolling interests
|
|
|
3,077
|
|
|
|
(722
|
)
|
|
|
(13,875
|
)
|
|
|
1,290
|
|
|
|
(10,230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
¥
|
107,251
|
|
|
¥
|
(11,858
|
)
|
|
¥
|
33,810
|
|
|
¥
|
(268,134
|
)
|
|
¥
|
(138,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– 16
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31
|
|
Millions of yen
|
|
|
|
Unrealized
gain (loss) on
securities
|
|
|
Unrealized
gain (loss) on
derivative
instruments
|
|
|
Foreign
currency
translation
adjustments
|
|
|
Pension
liability
adjustments
|
|
|
Total
|
|
|
Balance at September 30, 2015
|
|
¥
|
113,266
|
|
|
¥
|
(6,240
|
)
|
|
¥
|
187,956
|
|
|
¥
|
(84,816
|
)
|
|
¥
|
210,166
|
|
|
Other comprehensive income before reclassification
|
|
|
13,330
|
|
|
|
(2,009
|
)
|
|
|
(38,129
|
)
|
|
|
9
|
|
|
|
(26,799
|
)
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(10,853
|
)
|
|
|
144
|
|
|
|
—
|
|
|
|
(320
|
)
|
|
|
(11,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
2,477
|
|
|
|
(1,865
|
)
|
|
|
(38,129
|
)
|
|
|
(311
|
)
|
|
|
(37,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less — Comprehensive income attributable to noncontrolling interests
|
|
|
(1,490
|
)
|
|
|
(97
|
)
|
|
|
(4,191
|
)
|
|
|
(158
|
)
|
|
|
(5,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
¥
|
117,233
|
|
|
¥
|
(8,008
|
)
|
|
¥
|
154,018
|
|
|
¥
|
(84,969
|
)
|
|
¥
|
178,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31
|
|
Millions of yen
|
|
|
|
Unrealized
gain (loss) on
securities
|
|
|
Unrealized
gain (loss) on
derivative
instruments
|
|
|
Foreign
currency
translation
adjustments
|
|
|
Pension
liability
adjustments
|
|
|
Total
|
|
|
Balance at September 30, 2016
|
|
¥
|
95,022
|
|
|
¥
|
(11,820
|
)
|
|
¥
|
(28,452
|
)
|
|
¥
|
(270,166
|
)
|
|
¥
|
(215,416
|
)
|
|
Other comprehensive income before reclassification
|
|
|
19,447
|
|
|
|
(635
|
)
|
|
|
80,841
|
|
|
|
39
|
|
|
|
99,692
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(28
|
)
|
|
|
229
|
|
|
|
505
|
|
|
|
2,322
|
|
|
|
3,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
19,419
|
|
|
|
(406
|
)
|
|
|
81,346
|
|
|
|
2,361
|
|
|
|
102,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less — Comprehensive income attributable to noncontrolling interests
|
|
|
7,190
|
|
|
|
(368
|
)
|
|
|
19,084
|
|
|
|
329
|
|
|
|
26,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
¥
|
107,251
|
|
|
¥
|
(11,858
|
)
|
|
¥
|
33,810
|
|
|
¥
|
(268,134
|
)
|
|
¥
|
(138,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– 17
–
Reclassifications out of accumulated other comprehensive income (loss) for the nine and three months ended
December 31, 2015 and 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended December 31
|
|
Millions of yen
|
|
|
Amounts reclassified from
accumulated other
comprehensive income (loss)
|
|
|
Affected line items in
consolidated statements of
income
|
|
|
2015
|
|
|
2016
|
|
|
|
Unrealized gain (loss) on securities
|
|
¥
|
17,471
|
|
|
¥
|
15,571
|
|
|
Other, net
|
|
|
|
|
(5,793
|
)
|
|
|
(4,786
|
)
|
|
Income tax benefit (expense)
|
|
|
|
|
249
|
|
|
|
62
|
|
|
Equity in earnings (losses) of affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
11,927
|
|
|
¥
|
10,847
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on derivative instruments
|
|
¥
|
252
|
|
|
¥
|
814
|
|
|
Other, net
|
|
|
|
|
(76
|
)
|
|
|
(242
|
)
|
|
Income tax benefit (expense)
|
|
|
|
|
(33
|
)
|
|
|
(53
|
)
|
|
Equity in earnings (losses) of affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
143
|
|
|
¥
|
519
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
¥
|
263
|
|
|
¥
|
—
|
|
|
Other, net
|
|
|
|
|
—
|
|
|
|
265
|
|
|
Income tax benefit (expense)
|
|
|
|
|
—
|
|
|
|
(770
|
)
|
|
Equity in earnings (losses) of affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
263
|
|
|
¥
|
(505
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability adjustments
|
|
¥
|
(1,200
|
)
|
|
¥
|
(12,430
|
)
|
|
*
|
|
|
|
|
436
|
|
|
|
3,865
|
|
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
(764
|
)
|
|
¥
|
(8,565
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
11,569
|
|
|
¥
|
2,296
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts reclassified from pension liability adjustments are included in the computation of net
periodic pension cost.
|
|
|
|
|
For the three months ended December 31
|
|
Millions of yen
|
|
|
Amounts reclassified from
accumulated other
comprehensive income (loss)
|
|
|
Affected line items in
consolidated statements of
income
|
|
|
2015
|
|
|
2016
|
|
|
|
Unrealized gain (loss) on securities
|
|
¥
|
16,122
|
|
|
¥
|
69
|
|
|
Other, net
|
|
|
|
|
(5,269
|
)
|
|
|
(41
|
)
|
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
10,853
|
|
|
¥
|
28
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on derivative instruments
|
|
¥
|
(205
|
)
|
|
¥
|
(313
|
)
|
|
Other, net
|
|
|
|
|
68
|
|
|
|
102
|
|
|
Income tax benefit (expense)
|
|
|
|
|
(7
|
)
|
|
|
(18
|
)
|
|
Equity in earnings (losses) of affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
(144
|
)
|
|
¥
|
(229
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
¥
|
—
|
|
|
¥
|
265
|
|
|
Income tax benefit (expense)
|
|
|
|
|
—
|
|
|
|
(770
|
)
|
|
Equity in earnings (losses) of affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
—
|
|
|
¥
|
(505
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability adjustments
|
|
¥
|
212
|
|
|
¥
|
(3,362
|
)
|
|
*
|
|
|
|
|
108
|
|
|
|
1,040
|
|
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¥
|
320
|
|
|
¥
|
(2,322
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
11,029
|
|
|
¥
|
(3,028
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts reclassified from pension liability adjustments are included in the computation of net
periodic pension cost.
|
– 18
–
Equity transactions with noncontrolling interests —
On February 5, 2016, the board of directors of NTT DOCOMO, INC. (“NTT DOCOMO”), a subsidiary of NTT, resolved to launch a tender offer to
acquire up to 137,578,616 shares of its outstanding common stock from February 8, 2016 through March 7, 2016. Based on this resolution, NTT DOCOMO repurchased a total of 120,867,062 of its shares for an aggregate amount of
¥307,486 million, 117,924,500 shares of which NTT Group sold back to NTT DOCOMO. Due to NTT DOCOMO’s repurchase transactions, NTT’s ownership interest in NTT DOCOMO decreased from 66.7% to 65.7%. As a result, “Additional
paid-in
capital” increased by ¥42,150 million in the consolidated balance sheet as of March 31, 2016.
On April 28, 2016, the board of directors of NTT DOCOMO resolved that NTT DOCOMO may acquire up to 99,132,938 shares of its outstanding common stock for an amount in total not exceeding
¥192,514 million from May 2, 2016 through December 31, 2016. Based on this resolution, NTT DOCOMO repurchased 9,021,000 shares of its common stock at ¥24,433 million using the
ToSTNeT-3
on May 18, 2016, and also repurchased 47,010,000 shares of its common stock at ¥125,174 million by way of market purchases based on the discretionary dealing contract until December 31,
2016. As a result, NTT’s ownership interest in NTT DOCOMO increased from 65.7% to 66.7%. Primarily due to these transactions, “Additional
paid-in
capital” decreased by ¥5,972 million in
the consolidated balance sheet as of December 31, 2016.
– 19
–
5. Fair value measurements:
The inputs to valuation techniques used to measure fair value are required to be categorized by the fair value hierarchy. The fair value hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
|
•
|
|
Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access
at the measurement date.
|
|
•
|
|
Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly.
|
|
•
|
|
Level 3 — Inputs are unobservable inputs for the asset or liability.
|
Assets and liabilities measured at fair value on a recurring basis as of March 31 and December 31, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
March 31, 2016
|
|
|
|
|
Fair value measurements using
|
|
|
|
|
Total
|
|
|
Level 1
(*1)
|
|
|
Level 2
(*2)
|
|
|
Level 3
(*3)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equity securities
|
|
¥
|
197,613
|
|
|
¥
|
197,613
|
|
|
¥
|
—
|
|
|
¥
|
—
|
|
|
Foreign equity securities
|
|
|
131,817
|
|
|
|
131,817
|
|
|
|
—
|
|
|
|
—
|
|
|
Domestic debt securities
|
|
|
49,478
|
|
|
|
218
|
|
|
|
49,087
|
|
|
|
173
|
|
|
Foreign debt securities
|
|
|
37,499
|
|
|
|
10
|
|
|
|
37,489
|
|
|
|
—
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
2,578
|
|
|
|
—
|
|
|
|
2,578
|
|
|
|
—
|
|
|
Interest rate swap agreements
|
|
|
107
|
|
|
|
—
|
|
|
|
107
|
|
|
|
—
|
|
|
Currency swap agreements
|
|
|
61,703
|
|
|
|
—
|
|
|
|
61,703
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
12,148
|
|
|
|
—
|
|
|
|
12,148
|
|
|
|
—
|
|
|
Interest rate swap agreements
|
|
|
6,110
|
|
|
|
—
|
|
|
|
6,110
|
|
|
|
—
|
|
|
Currency swap agreements
|
|
|
13,838
|
|
|
|
—
|
|
|
|
13,838
|
|
|
|
—
|
|
|
Currency option agreements
|
|
|
2,414
|
|
|
|
—
|
|
|
|
2,414
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Quoted prices for identical assets or liabilities in active markets
|
|
(*2)
|
Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived
principally from observable market data
|
There were no transfers
between Level 1 and Level 2.
Level 3 reconciliation is not disclosed, since the amounts in Level 3 are immaterial.
– 20
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
December 31, 2016
|
|
|
|
|
Fair value measurements using
|
|
|
|
|
Total
|
|
|
Level
1
(*1)
|
|
|
Level
2
(*2)
|
|
|
Level
3
(*3)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equity securities
|
|
¥
|
198,482
|
|
|
¥
|
198,482
|
|
|
¥
|
—
|
|
|
¥
|
—
|
|
|
Foreign equity securities
|
|
|
126,209
|
|
|
|
126,209
|
|
|
|
—
|
|
|
|
—
|
|
|
Domestic debt securities
|
|
|
58,752
|
|
|
|
215
|
|
|
|
58,369
|
|
|
|
168
|
|
|
Foreign debt securities
|
|
|
43,425
|
|
|
|
9
|
|
|
|
43,178
|
|
|
|
238
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
1,364
|
|
|
|
—
|
|
|
|
1,364
|
|
|
|
—
|
|
|
Interest rate swap agreements
|
|
|
233
|
|
|
|
—
|
|
|
|
233
|
|
|
|
—
|
|
|
Currency swap agreements
|
|
|
83,714
|
|
|
|
—
|
|
|
|
83,714
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
2,500
|
|
|
|
—
|
|
|
|
2,500
|
|
|
|
—
|
|
|
Interest rate swap agreements
|
|
|
4,324
|
|
|
|
—
|
|
|
|
4,324
|
|
|
|
—
|
|
|
Currency swap agreements
|
|
|
9,212
|
|
|
|
—
|
|
|
|
9,212
|
|
|
|
—
|
|
|
Currency option agreements
|
|
|
998
|
|
|
|
—
|
|
|
|
998
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Quoted prices for identical assets or liabilities in active markets
|
|
(*2)
|
Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived
principally from observable market data
|
There were no transfers
between Level 1 and Level 2.
Level 3 reconciliation is not disclosed, since the amounts in Level 3 are immaterial.
Available-for-sale
securities —
Available-for-sale
securities comprise marketable equity securities and
debt securities, and financial instruments classified as
available-for-sale
securities. If active market prices are available, fair value is measured by quoted prices
for identical assets in active markets, which is classified as Level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is
classified as Level 2. In cases in which fair value is measured by inputs derived from unobservable data, it is classified as Level 3.
Derivatives
—
Derivatives comprise forward exchange contracts, interest rate
swap agreements, currency swap agreements and currency option agreements. Fair value of derivatives is measured by inputs derived principally from observable market data provided by financial institutions, which is classified as Level 2.
– 21
–
Assets and liabilities measured at fair value on a nonrecurring basis for the nine months ended
December 31, 2015 are immaterial.
Assets and liabilities measured at fair value on a nonrecurring basis for the nine months ended
December 31, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
For the nine months ended December 31, 2016
|
|
|
|
|
Fair value measurements using
|
|
|
|
|
Total
|
|
|
Level
1
(*1)
|
|
|
Level
2
(*2)
|
|
|
Level
3
(*3)
|
|
|
Impairment
losses
(before
tax)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
¥
|
227,871
|
|
|
¥
|
—
|
|
|
¥
|
—
|
|
|
¥
|
227,871
|
|
|
¥
|
53,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Quoted prices for identical assets or liabilities in active markets
|
|
(*2)
|
Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived
principally from observable market data
|
Assets and liabilities
measured at fair value on a nonrecurring basis for the three months ended December 31, 2015 are immaterial.
Assets and liabilities
measured at fair value on a nonrecurring basis for the three months ended December 31, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
For the three months ended December 31, 2016
|
|
|
|
|
Fair value measurements using
|
|
|
|
|
Total
|
|
|
Level 1
(*1)
|
|
|
Level 2
(*2)
|
|
|
Level 3
(*3)
|
|
|
Impairment
losses
(before
tax)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
¥
|
213,198
|
|
|
¥
|
—
|
|
|
¥
|
—
|
|
|
¥
|
213,198
|
|
|
¥
|
48,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Quoted prices for identical assets or liabilities in active markets
|
|
(*2)
|
Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs derived
principally from observable market data
|
Goodwill —
The fair value of the reporting units is determined by using various evaluation models based on inputs that are unobservable in the market
such as discounted cash flow projections, which are classified as Level 3. For the nine and three months ended December 31, 2016, the weighted average cost of capital and the permanent growth rate amounted to 10.0% and 2.3%, respectively.
Goodwill impairment losses are recorded in the long distance and international communications business segment.
– 22
–
6. Segment information:
Operating segments are components of the NTT Group 1) that engage in business activities, 2) whose operating results are regularly reviewed by NTT Group’s chief operating decision maker to make
decisions on the allocation of financial resources and to evaluate business performance, and 3) for which discrete financial information is available. Accounting policies used to determine segment profit/loss are consistent with those used to
prepare the consolidated financial statements in accordance with accounting principles generally accepted in the United States.
The regional
communications business segment principally comprises revenues from fixed voice related services, IP/packet communications services, sales of telecommunications equipment, and other operating revenues.
The long distance and international communications business segment principally comprises revenues from fixed voice related services, IP/packet
communications services, system integration services, and other operating revenues.
The mobile communications business segment principally
comprises revenues from mobile voice related services, IP/packet communications services, and sales of telecommunications equipment.
The data
communications business segment comprises revenues from system integration services.
The other segment principally comprises operating
revenues from such activities as building maintenance, real estate rental, systems development, leasing, and research and development.
– 23
–
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the nine months ended December 31
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
Regional communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
¥
|
2,154,156
|
|
|
¥
|
2,019,725
|
|
|
Intersegment
|
|
|
366,079
|
|
|
|
415,117
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,520,235
|
|
|
|
2,434,842
|
|
|
|
|
|
|
Long distance and international communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
1,612,558
|
|
|
|
1,500,011
|
|
|
Intersegment
|
|
|
62,892
|
|
|
|
70,630
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,675,450
|
|
|
|
1,570,641
|
|
|
|
|
|
|
Mobile communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
3,350,876
|
|
|
|
3,432,054
|
|
|
Intersegment
|
|
|
32,625
|
|
|
|
37,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,383,501
|
|
|
|
3,469,248
|
|
|
|
|
|
|
Data communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
1,076,347
|
|
|
|
1,088,781
|
|
|
Intersegment
|
|
|
71,441
|
|
|
|
75,857
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,147,788
|
|
|
|
1,164,638
|
|
|
|
|
|
|
Other —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
301,423
|
|
|
|
319,926
|
|
|
Intersegment
|
|
|
571,319
|
|
|
|
569,995
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
872,742
|
|
|
|
889,921
|
|
|
Elimination
|
|
|
(1,104,356
|
)
|
|
|
(1,168,793
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
¥
|
8,495,360
|
|
|
¥
|
8,360,497
|
|
|
|
|
|
|
|
|
|
|
|
– 24
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the three months ended December 31
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
Regional communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
¥
|
713,006
|
|
|
¥
|
667,608
|
|
|
Intersegment
|
|
|
126,659
|
|
|
|
146,801
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
839,665
|
|
|
|
814,409
|
|
|
|
|
|
|
Long distance and international communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
555,991
|
|
|
|
504,408
|
|
|
Intersegment
|
|
|
22,219
|
|
|
|
27,388
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
578,210
|
|
|
|
531,796
|
|
|
|
|
|
|
Mobile communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
1,157,153
|
|
|
|
1,167,597
|
|
|
Intersegment
|
|
|
11,320
|
|
|
|
13,615
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,168,473
|
|
|
|
1,181,212
|
|
|
|
|
|
|
Data communications business —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
375,703
|
|
|
|
375,191
|
|
|
Intersegment
|
|
|
26,372
|
|
|
|
27,391
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
402,075
|
|
|
|
402,582
|
|
|
|
|
|
|
Other —
|
|
|
|
|
|
|
|
|
|
External customers
|
|
|
104,549
|
|
|
|
121,365
|
|
|
Intersegment
|
|
|
200,433
|
|
|
|
200,948
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
304,982
|
|
|
|
322,313
|
|
|
Elimination
|
|
|
(387,003
|
)
|
|
|
(416,143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
¥
|
2,906,402
|
|
|
¥
|
2,836,169
|
|
|
|
|
|
|
|
|
|
|
|
– 25
–
Segment profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the nine months ended December 31
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
Segment profit:
|
|
|
|
|
|
|
|
|
|
Regional communications business
|
|
¥
|
232,179
|
|
|
¥
|
330,463
|
|
|
Long distance and international communications business
|
|
|
82,225
|
|
|
|
18,696
|
|
|
Mobile communications business
|
|
|
683,021
|
|
|
|
839,336
|
|
|
Data communications business
|
|
|
74,032
|
|
|
|
67,063
|
|
|
Other
|
|
|
46,164
|
|
|
|
59,310
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment profit
|
|
|
1,117,621
|
|
|
|
1,314,868
|
|
|
Elimination
|
|
|
8,961
|
|
|
|
3,686
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
¥
|
1,126,582
|
|
|
¥
|
1,318,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the three months ended December 31
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
Segment profit:
|
|
|
|
|
|
|
|
|
|
Regional communications business
|
|
¥
|
77,568
|
|
|
¥
|
98,216
|
|
|
Long distance and international communications business
|
|
|
34,625
|
|
|
|
(23,484
|
)
|
|
Mobile communications business
|
|
|
221,855
|
|
|
|
255,598
|
|
|
Data communications business
|
|
|
35,847
|
|
|
|
31,175
|
|
|
Other
|
|
|
18,529
|
|
|
|
29,619
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment profit
|
|
|
388,424
|
|
|
|
391,124
|
|
|
Elimination
|
|
|
4,694
|
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
¥
|
393,118
|
|
|
¥
|
392,070
|
|
|
|
|
|
|
|
|
|
|
|
As indicated in “(1) Change in Accounting Procedures for Consolidated Quarterly Financial Results” in the
“Note 1: Summary of significant accounting policies:”, effective April 1, 2016, NTT and its subsidiaries in Japan adopted the straight-line method of depreciation and made changes to the residual carrying amount of property, plant,
and equipment where necessary.
As a result of the change in depreciation method, segment profit on a consolidated basis for the nine months
ended December 31, 2016 increased by ¥66,632 million for “Regional communications business,” ¥5,788 million for “Long distance and international communications business,” ¥109,236 million for
“Mobile communications business,” ¥3,977 million for “Other,” decreased by ¥311 million for “Data communications business,” and increased by ¥185,322 million for “total.” Segment
profit on a consolidated basis for the three months ended December 31, 2016 increased by ¥15,411 million for “Regional communications business,” ¥1,434 million for “Long distance and international communications
business,” ¥39,806 million for “Mobile communications business,” ¥218 million for “Data communications business,” ¥1,790 million for “Other,” and ¥58,659 million for
“total.”
Transfers between operating segments are based on the values that approximate
arm’s-length
prices. Operating income is operating revenue less costs and operating expenses.
– 26
–
Segment assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2016
|
|
|
Segment assets:
|
|
|
|
|
|
|
|
|
|
Data communications business
|
|
¥
|
1,981,578
|
|
|
¥
|
2,233,465
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended December 31, 2016, total assets in the data communications business segment increased by
¥251,887 million. This is mainly due to the acquisitions of Dell Systems Corporation and other companies and IT services-related assets. The goodwill in accordance with these acquisitions is recorded in the data communications business
segment. For details on these acquisitions, see note 10.
Other significant items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the nine months ended December 31
|
|
2015
|
|
|
2016
|
|
|
Impairment losses — Other:
|
|
|
|
|
|
|
|
|
|
Long distance and international communications business
|
|
¥
|
—
|
|
|
¥
|
53,294
|
|
|
Consolidated Total
|
|
¥
|
—
|
|
|
¥
|
53,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
For the three months ended December 31
|
|
2015
|
|
|
2016
|
|
|
Impairment losses — Other:
|
|
|
|
|
|
|
|
|
|
Long distance and international communications business
|
|
¥
|
—
|
|
|
¥
|
48,823
|
|
|
Consolidated Total
|
|
¥
|
—
|
|
|
¥
|
48,823
|
|
|
|
|
|
|
|
|
|
|
|
For goodwill impairment, see note 3.
There were no operating revenues from transactions with a single external customer amounting to 10% or more of NTT Group’s revenues for the nine and three months ended December 31, 2015 and
2016.
– 27
–
7. Research and development expenses:
Research and development expenses are charged to income as incurred, and such amounts charged to income for the nine months ended December 31, 2015 and 2016 were ¥151,621 million and
¥146,013 million, respectively. Such amounts charged to income for the three months ended December 31, 2015 and 2016 were ¥51,321 million and ¥43,311 million, respectively.
8. Financing receivables:
NTT Group has
certain “Financing receivables,” including loans and lease receivables. These financing receivables are mainly held by the financial subsidiaries of NTT. NTT manages these financing receivables by classifying them into “Installment
sales receivable,” “Lease receivable,” “Loans receivable,” “Credit receivable” and “Others.”
The
allowance for doubtful accounts against financing receivables collectively evaluated for impairment is computed based on each historical bad debt experience. The allowance for doubtful accounts against financing receivables individually evaluated
for impairment is computed based on the estimated uncollectible amount based on an analysis of certain individual accounts. In addition, financing receivables that are determined to be uncollectible due to, among other factors, the condition of the
debtor are written off at the time of determination.
Rollforward of allowance for doubtful accounts and recorded investment in financing
receivables for the nine months ended December 31, 2015 and 2016, and the changes in doubtful accounts for the nine months ended December 31, 2015 and 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
Installment
sales
receivable
|
|
|
Lease
receivable
|
|
|
Loans
receivable
|
|
|
Credit
receivable
|
|
|
Others
|
|
|
Total
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2015
|
|
¥
|
5,658
|
|
|
¥
|
6,210
|
|
|
¥
|
961
|
|
|
¥
|
6,920
|
|
|
¥
|
4,688
|
|
|
¥
|
24,437
|
|
|
Provision
|
|
|
(268
|
)
|
|
|
225
|
|
|
|
208
|
|
|
|
8,852
|
|
|
|
(301
|
)
|
|
|
8,716
|
|
|
Charge off
|
|
|
(83
|
)
|
|
|
(1,267
|
)
|
|
|
(253
|
)
|
|
|
(5,903
|
)
|
|
|
—
|
|
|
|
(7,506
|
)
|
|
Recovery
|
|
|
2
|
|
|
|
44
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
48
|
|
|
Balance at December 31, 2015
|
|
|
5,309
|
|
|
|
5,212
|
|
|
|
916
|
|
|
|
9,871
|
|
|
|
4,387
|
|
|
|
25,695
|
|
|
Collectively evaluated for impairment
|
|
|
5,136
|
|
|
|
2,154
|
|
|
|
349
|
|
|
|
9,871
|
|
|
|
27
|
|
|
|
17,537
|
|
|
Individually evaluated for impairment
|
|
|
173
|
|
|
|
3,058
|
|
|
|
567
|
|
|
|
—
|
|
|
|
4,360
|
|
|
|
8,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
|
1,027,138
|
|
|
|
392,712
|
|
|
|
79,418
|
|
|
|
322,876
|
|
|
|
4,829
|
|
|
|
1,826,973
|
|
|
Collectively evaluated for impairment
|
|
|
1,026,878
|
|
|
|
389,213
|
|
|
|
77,928
|
|
|
|
322,876
|
|
|
|
391
|
|
|
|
1,817,286
|
|
|
Individually evaluated for impairment
|
|
¥
|
260
|
|
|
¥
|
3,499
|
|
|
¥
|
1,490
|
|
|
¥
|
—
|
|
|
¥
|
4,438
|
|
|
¥
|
9,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– 28
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
|
Installment
sales
receivable
|
|
|
Lease
receivable
|
|
|
Loans
receivable
|
|
|
Credit
receivable
|
|
|
Others
|
|
|
Total
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2016
|
|
¥
|
5,174
|
|
|
¥
|
4,359
|
|
|
¥
|
940
|
|
|
¥
|
11,006
|
|
|
¥
|
4,303
|
|
|
¥
|
25,782
|
|
|
Provision
|
|
|
(433
|
)
|
|
|
381
|
|
|
|
3
|
|
|
|
13,561
|
|
|
|
(488
|
)
|
|
|
13,024
|
|
|
Charge off
|
|
|
(27
|
)
|
|
|
(534
|
)
|
|
|
(21
|
)
|
|
|
(10,404
|
)
|
|
|
—
|
|
|
|
(10,986
|
)
|
|
Recovery
|
|
|
1
|
|
|
|
58
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
62
|
|
|
Balance at December 31, 2016
|
|
|
4,715
|
|
|
|
4,264
|
|
|
|
922
|
|
|
|
14,166
|
|
|
|
3,815
|
|
|
|
27,882
|
|
|
Collectively evaluated for impairment
|
|
|
4,639
|
|
|
|
1,592
|
|
|
|
442
|
|
|
|
14,166
|
|
|
|
52
|
|
|
|
20,891
|
|
|
Individually evaluated for impairment
|
|
|
76
|
|
|
|
2,672
|
|
|
|
480
|
|
|
|
—
|
|
|
|
3,763
|
|
|
|
6,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
|
1,021,189
|
|
|
|
424,660
|
|
|
|
99,771
|
|
|
|
397,139
|
|
|
|
4,349
|
|
|
|
1,947,108
|
|
|
Collectively evaluated for impairment
|
|
|
1,021,102
|
|
|
|
421,480
|
|
|
|
98,192
|
|
|
|
397,139
|
|
|
|
527
|
|
|
|
1,938,440
|
|
|
Individually evaluated for impairment
|
|
¥
|
87
|
|
|
¥
|
3,180
|
|
|
¥
|
1,579
|
|
|
¥
|
—
|
|
|
¥
|
3,822
|
|
|
¥
|
8,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Contingent liabilities:
Contingent liabilities at December 31, 2016, composed of loan guarantees and other contingencies, amounted to ¥80,991 million.
As of December 31, 2016, NTT Group had no material litigation or claims outstanding, pending or threatened against it, which would be expected to have a material adverse effect on NTT’s
consolidated financial position or results of operations.
10. Business combinations:
Acquisitions of Dell Systems Corporation and Other Companies and IT Services-Related Assets
On November 2, 2016 (U.S. time), NTT DATA CORPORATION (“NTT DATA”), a subsidiary of NTT, acquired 100% of the outstanding shares of Dell
Systems Corporation, Dell Technology & Solutions Limited, and Dell Services Pte. Ltd., and 100% of the equity interests of U.S. Services L.L.C., from Dell Inc., through three of its subsidiaries including NTT DATA, Inc., and such companies
became its consolidated subsidiaries. In addition, NTT DATA acquired Dell Group’s IT services-related assets, mainly located in North America (“NTT DATA Services department”), through three of its subsidiaries including NTT DATA, Inc.
The total acquisition cost for these acquisitions was ¥311,561 million in cash.
Through these acquisitions, NTT DATA intends to
expand its business in various industries in North America and enhance its cloud services and BPO services using cutting-edge technology.
The
costs associated with this acquisition in the amount of ¥3,583 million are included in “Selling, general and administrative expenses” in the consolidated statements of income.
These acquisitions will be recorded in accordance with the acquisition method. However, as the initial accounting for the business combination has not
been completed, NTT tentatively recorded ¥146,375 million of goodwill in the consolidated financial statements. This goodwill represents a reasonable estimate of the expected synergies of the NTT DATA Services department from its future
business expansion and is recorded in the data communications business segment.
In addition, only the balance sheet as of the date of the
acquisition is consolidated for the nine months ended December 31, 2016.
– 29
–
11. Subsequent events:
For information on NTT’s repurchase of its common stock, see note 4.
– 30
–