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Significant Matters Pertaining to the Preparation
of Non-Consolidated Financial Statements |
1. Securities |
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(1) Investments in subsidiaries and affiliated companies
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Investments in subsidiaries and affiliated companies are stated
at cost, which is determined by the moving average method.
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(2) Other securities
[1] Marketable securities |
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The securities whose fair values are readily determinable are stated at fair value
as of balance sheet date with unrealized gains and losses directly reported as
a separate component of shareholders' equity. The cost of securities sold is determined
by the moving average method.
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[2] Non-marketable securities |
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The securities whose fair values are not readily determinable are stated at cost,
which is determined by the moving average method. |
2. Supplies |
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Supplies are stated at cost, which is determined by the last purchase cost method. |
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3. Depreciation and amortization of fixed assets |
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Property, plant, and equipment are depreciated by using the declining-balance
method with the exception of buildings for which the straight-line method is used.
Intangible assets are amortized on a straight-line basis. The estimated useful
lives and residual value of fixed assets are determined pursuant to the Corporate
Income Tax Laws.
Buildings, after having been depreciated over the depreciable periods based on
the Corporate Income Tax Laws, keep depreciated up to the end of their actual
useful lives.
Internal-use software is amortized on a straight-line basis over its estimated
useful life within five years. |
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4. Deferred Assets |
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Discount on bonds payable is amortized on a straight-line basis over the redemption
period. As to bond issue cost, its total amount is expensed at the time of payment. |
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5. Allowances |
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(1) Allowance for doubtful accounts |
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To cover expected losses from bad debts, estimated uncollectible amounts are
accrued, for general claims, on the basis of historical bad-debt ratios, and for
specific claims including doubtful accounts, on the basis of their own recoverability.
No allowance is accrued as of this year-end. |
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(2) Liability for employees' severance payments |
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To provide for employees' pension benefits, benefit obligations and plan assets
are estimated and accrued as of year-end.
Prior service cost is amortized from the time of recognition on a straight-line
basis over the average remaining service periods at the time of recognition.
Actuarial net gain or loss is amortized from the next period on a straight-line
basis over the average remaining services periods at the time of recognition. |
6. Leases |
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Finance leases other than those deemed to transfer the title of leased assets
to lessees are accounted for in a similar manner as operating leases.
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7. Hedging Activities |
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(1) Accounting for Hedging Activities |
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Hedging activities are principally accounted for under the "deferral hedge
accounting." Designation ("Furiate-shori") is applied to forward exchange contracts
and other foreign exchange contracts, and designated "exceptional accounting"
("Tokurei-shori") to interest-rate swaps that qualify for "exceptional
accounting" (Footnote 14, Accounting Standards for Financial Instruments).
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(2) Hedging Instruments and Hedged Items |
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Hedging Instruments |
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Hedging instruments include forward exchange contracts, currency swaps, coupon swaps (i.e. currency swap of interest portion only), interest-rate swaps, interest-rate options, and the combinations of the above. |
[2] |
Hedged Items |
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Hedged items are assets (securities, loans, receivables, etc.) and liabilities (corporate bonds, borrowings, payables, etc.) exposed to variability of fair value or future cash flows derived from fluctuations of the exchange rate, interest rate, etc. |
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(3) Hedging Policy |
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To hedge the foreign exchange risks regarding assets and liabilities exposed
to foreign exchange risks, forward exchange contracts, currency swaps, and other
instruments are employed in compliance with internal rules. To hedge the interest-rate
risks regarding assets and liabilities exposed to interest-rate risks, interest-rate
swaps and other instruments are employed in compliance with internal rules. |
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(4) Assessment of Hedge Effectiveness |
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At the end of each quarter, hedge effectiveness is assessed on each hedging
transaction. This quarterly assessment excludes any transaction where important
terms and conditions such as principal, interest-rate, duration are identical
between hedging instruments and hedged items. |
8. Consumption Taxes |
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Consumption taxes are separately accounted for by excluding it
from each transaction amounts. |
Notes to Non-Consolidated Balance Sheets
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| 1. |
Accumulated depreciation on property, plant and equipment: |
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| March 31, 2004: |
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207,819 million yen |
| March 31, 2003: |
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202,895 million yen |
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| 2. |
In compliance with the provisions of Article 9 of the Law Concerning Nippon Telegraph and Telephone Corporation, Etc., the total assets of NTT have been pledged as general collateral for corporate bonds issued. In accordance with the provisions of Article 9 of the Supplementary Provisions to the Law Concerning Partial Revision to the Nippon Telegraph and Telephone Corporation Law (law No. 98 of 1997), NTT is jointly responsible with Nippon Telegraph and Telephone East Corporation, Nippon Telegraph and Telephone West Corporation, and NTT Communications Corporation for corporate bonds issued prior to June 30, 1999 and the total assets of the four companies above have been pledged as general collateral for the said bonds. |
3. |
Outstanding guarantees: |
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| March 31, 2004: |
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102,950 million yen |
| March 31, 2003: |
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104,750 million yen |
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Notes to Non-Consolidated Statements of Income
Research & Development expenses included in operating expenses: |
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| Year ended March 31, 2004: |
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154,043 million yen |
| Year ended March 31, 2003: |
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188,587 million yen |
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