News Release gscx061110c

4. Non-Consolidated Comparative Statements of Cash Flows

Significant Matters Pertaining to the Preparation of Non-Consolidated Financial Statements

1.	Valuation of certain assets

(1)	Securities
	[1]	Investments in subsidiaries and affiliated companies Investments in subsidiaries and affiliated companies are stated at cost, which are determined by the moving average method.
	[2]	Other securities
		a.	Marketable securities The securities whose fair value 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 net assets. The cost of securities sold is determined by the moving average method.
		b.	Non-marketable securities The securities whose fair value are not readily determinable are stated at cost, which are determined by the moving average method.
(2)	Inventories Supplies are stated at cost, which are determined by the last purchase cost method.

2.	Depreciation and amortization of fixed assets

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. Their estimated useful lives and residual value are determined on the basis provided by 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 their estimated useful lives within five years.

3.	Allowances

(1) Allowance for doubtful accounts
To cover expected losses from bad debts, estimated amounts to be uncollectible are accrued, for general claims, computing on historical bad-debt ratios, and for specific claims including doubtful accounts, considering their own recoverability. No allowance is accrued as of the end of this six-month period.
(2) Liability for employees' retirement benefits
To provide for employees' pension benefits, based on estimated benefit obligations and plan assets as of the end of this fiscal year, a liability is accrued in the estimated amounts as of the end of this six-month period. Prior service cost is amortized on a straight-line basis over the average remaining service periods at the time of recognition. Actuarial net gain or loss is amortized on a straight-line basis over the average remaining services periods at the time of recognition.

4.	Leases

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.

5.	Hedging Activities

(1)	Accounting for Hedging Activities
Hedging activities are principally accounted for under "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" (Accounting Standards for Financial Instruments, Footnote 14).
(2)	Hedging Instruments and Hedged Items
	[1] Hedging Instruments
		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 combinations of the above.
	[2] Hedged Items
		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.
(3)	Hedging Policy
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.
(4)	Assessment of Hedge Effectiveness
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 and duration are identical between hedging instruments and hedged items.

6.	Consumption Taxes

Consumption tax is separately accounted for by excluding it from each transaction amount.

Changes in Accounting Treatment Method

1.	Accounting Standard for Presentation of Net Assets in the Balance Sheet Effective from the current interim fiscal period, NTT adopted the "Accounting Standard for Presentation of Net Assets in the Balance Sheet" (Accounting Standards Board of Japan, 2005.12.9, Corporate Accounting Standard No. 5) and "Implementation Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet" (Accounting Standards Board of Japan, 2005.12.9, Corporate Accounting Standard Implementation Guidance No. 8). The amount corresponding to the previous "Shareholders' Equity" is 5,047,094 millions of yen. "Net Assets" in the interim balance sheet for the current interim fiscal period is presented in accordance with the new rules for interim financial statements following the revision thereof.
2.	Accounting Standard for Directors' Bonus Effective from the current interim fiscal period, NTT adopted the "Accounting Standard for Directors' Bonus" (Accounting Standards Board of Japan, 2005.11.29, Corporate Accounting Standard No. 4). This change had no impact on NTT's earnings.
3.	Accounting Standard for Financial Instruments and Accounting for Deferred Assets Effective from the current interim fiscal period, NTT adopted the "Accounting Standard for Financial Instruments" (Accounting Standards Board of Japan, 2006.8.11, Corporate Accounting Standard No. 10). In addition, effective from the current interim fiscal period, NTT adopted the "Tentative Measures on Accounting for Deferred Assets" (Accounting Standards Board of Japan, 2006.8.11, Practical Solutions No. 19). Due to the foregoing, discount on bonds stated as a deferred asset in the previous interim balance sheets is now reflected by deducting such amounts from the amount of the relevant bonds in the liability section. This change had no impact on NTT's earnings.
4.	Partial Revision of Accounting Standard for Treasury Shares and Appropriation of Legal Reserves Effective from the current interim fiscal period, NTT adopted the revised "Accounting Standard for Treasury Shares and Appropriation of Legal Reserves" (Accounting Standards Board of Japan, 2006.8.11, Revised Corporate Accounting Standard No. 1) and "Implementation Guidance on Accounting Standard for Treasury Shares and Appropriation of Legal Reserves" (Accounting Standards Board of Japan, 2006.8.11, Revised Corporate Accounting Standard Implementation Guidance No. 2). This change had no impact on NTT's earnings. The changes regarding the description of balance sheet items resulting from the revision of the rules for interim financial statements is as follows. "Treasury Shares" stated at the end of the "Shareholders' Equity" section as a deductible item against shareholders' equity both in the previous interim fiscal periods and previous fiscal years is stated at the end of the "Shareholders' Equity" subsection as a deductible item against shareholders' equity from the current interim fiscal period.

Notes to Non-Consolidated Balance Sheets

Accumulated depreciation on property, plant and equipment:

March 31, 2006:		230,882 million yen
September 30, 2006:		237,598 million yen

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.

Outstanding guarantees:

March 31, 2006:		64,000 million yen
September 30, 2006:		3,000 million yen

Notes to Non-Consolidated Statements of Income

1.	Major components of operating revenues:

1. Major components of operating revenues:

2.	Research & Development expenses included in operating expenses:

Notes to Non-Consolidated Statements of Changes In Shareholders' Equity and Other Net Assets