NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of presentation:
The accompanying quarterly
consolidated financial statements of NTT DOCOMO, INC. and its subsidiaries (DOCOMO) were prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Certain disclosures required by U.S. GAAP have
been omitted. Since DOCOMOs American Depositary Shares were listed on the New York Stock Exchange in March 2002, DOCOMO has prepared its consolidated financial statements pursuant to the terminology, forms and preparation methods required in
order to issue American Depositary Shares, which are registered with the Securities and Exchange Commission of the United States of America.
2. Summary of significant accounting and reporting policies:
(a) Reclassifications
Certain reclassifications have been
made to the prior periods consolidated financial statements to conform to the presentation used for the six months ended September 30, 2016.
(b) Change in Accounting Procedures for Consolidated Quarterly Financial Results
Change in depreciation method
Previously, DOCOMO principally used the declining-balance method for calculating depreciation of property, plant, and equipment. Effective April 1, 2016, DOCOMO adopted the straight-line method of
depreciation. Data traffic has recently grown due to increased use of smartphones. As a way of addressing the rising data traffic, DOCOMO provides LTE-Advanced services, using the carrier aggregation technology which enables higher speeds and
capacities for the LTE services. With the introduction of the carrier aggregation technology, DOCOMO is able to use its frequencies more efficiently, bringing stability to DOCOMOs operation of its wireless telecommunications equipment. As a
result, DOCOMO 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 the Financial Accounting Standards Board (FASB) Accounting Standards Codification 250, Accounting Changes and Error Corrections.
The change in depreciation method caused a decrease in Depreciation and amortization by ¥69,430 million
and ¥36,049 million for the six months ended September 30, 2016 and for the three months ended September 30, 2016, respectively. Net income attributable to NTT DOCOMO, INC. increased by ¥47,490 million and ¥24,657
million for the six months ended September 30, 2016 and for the three months ended September 30, 2016, respectively. Basic and Diluted earnings per share attributable to NTT DOCOMO, INC. increased by ¥12.69 and ¥6.61
for the six months ended September 30, 2016 and for the three months ended September 30, 2016, respectively.
5
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(c) Recently issued accounting standards
Revenue from Contracts with Customers
On May 28, 2014, the FASB issued Accounting Standards Update (ASU)
2014-09
Revenue from Contracts with Customers (Topic 606), 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 and
ASU2016-12
Narrow-Scope
Improvements and Practical Expedients in March, April and May 2016, respectively, to partially amend ASU
2014-09.
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 DOCOMO on April 1, 2018. Early adoption of the standard as of April 1, 2017 would also be permitted.
DOCOMO has not yet selected a transition method and is currently evaluating the effect that the ASU will have
on DOCOMOs 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 effective for DOCOMO on April 1, 2018. DOCOMO is currently evaluating the effect of adopting the ASU.
Lease
On February 25, 2016, the FASB issued ASU
2016-02
Lease, which requires all lessees to recognize the right-of-use asset and lease liability,
principally. The new standard is effective for DOCOMO on April 1, 2019. DOCOMO is currently evaluating the effect of adopting the ASU.
6
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
3. Equity:
(a) Dividends
The Companies Act of Japan (the
Companies Act) provides that (i) dividends of earnings require approval at a general meeting of shareholders, (ii) interim cash dividends can be distributed upon the approval of the Board of Directors, if the articles of incorporation
provide for such interim cash dividends and (iii) an amount equal to 10% of the decrease in retained earnings, as a result of a dividend payment, shall be contributed to a legal reserve that can be funded up to an amount equal to 25% of capital
stock. The legal reserve is available for distribution upon approval of the shareholders. In accordance with (ii) above, a provision in NTT DOCOMO, INC.s articles of incorporation stipulates that NTT DOCOMO, INC. may, pursuant to a
resolution of the Board of Directors, pay interim dividends with a record date as of September 30th of the relevant year.
In the general meeting of shareholders held on June 16, 2016, the shareholders approved cash dividends of ¥131,622 million or ¥35 per share, payable to shareholders of record as of
March 31, 2016, which were declared by the Board of Directors on April 28, 2016. The source of such dividends was Retained earnings. NTT DOCOMO, INC. started paying the dividends on June 17, 2016.
On October 28 2016, the Board of Directors declared interim cash dividends of ¥148,810 million or ¥40 per
share, payable to shareholders of record as of September 30, 2016. The source of such dividends will be Retained earnings. NTT DOCOMO, INC. plans to start paying the interim cash dividends on November 22, 2016.
(b) Issued shares and treasury stock
With regard to the acquisition of treasury stock, Companies Act provides that (i) it can be executed according to a resolution of the general meeting of shareholders, and (ii) the acquisition of treasury
stock through open market transactions can be done according to a resolution of the Board of Directors, if the articles of incorporation contain such a provision. In accordance with (ii) above, a provision in NTT DOCOMO, INC.s articles of
incorporation stipulates that NTT DOCOMO, INC. may repurchase treasury stock through open market transactions, by a resolution of the Board of Directors, for the purpose of improving capital efficiency and implementing flexible capital policies in
accordance with the business environment.
On January 29, 2016, the Board of Directors resolved that NTT
DOCOMO, INC. may repurchase up to 220,000,000 outstanding shares of its common stock for an amount in total not exceeding ¥500,000 million from February 1, 2016 through December 31, 2016.
7
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
The changes in the number of issued shares and treasury stock were as
follows. NTT DOCOMO, INC. has not issued shares other than shares of its common stock.
|
|
|
|
|
|
|
|
|
|
|
Number of
issued
shares
|
|
|
Number of
treasury
stock
|
|
As of March 31, 2015
|
|
|
4,085,772,000
|
|
|
|
204,288,145
|
|
|
|
|
|
|
|
|
|
|
Acquisition of treasury stock through purchase of less-than-one-unit shares
|
|
|
|
|
|
|
43
|
|
As of September 30, 2015
|
|
|
4,085,772,000
|
|
|
|
204,288,188
|
|
|
|
|
|
|
|
|
|
|
Acquisition of treasury stock based on the resolution of the Board of Directors
|
|
|
|
|
|
|
120,867,062
|
|
Retirement of treasury stock
|
|
|
(127,229,000
|
)
|
|
|
(127,229,000
|
)
|
|
|
|
|
|
|
|
|
|
As of March 31, 2016
|
|
|
3,958,543,000
|
|
|
|
197,926,250
|
|
|
|
|
|
|
|
|
|
|
Acquisition of treasury stock based on the resolution of the Board of Directors
|
|
|
|
|
|
|
40,361,000
|
|
Acquisition of treasury stock through purchase of less-than-one-unit shares
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
|
3,958,543,000
|
|
|
|
238,287,350
|
|
|
|
|
|
|
|
|
|
|
On February 5, 2016, the Board of Directors resolved that NTT DOCOMO, INC. may
acquire up to 137,578,616 outstanding shares of its common stock by way of tender offer at an amount in total not exceeding ¥350,000 million from February 8, 2016 through March 7, 2016. Based on this resolution, NTT DOCOMO, INC.
repurchased 120,867,062 shares of its common stock for a total purchase price of ¥307,486 million between February 2016 and March 2016.
On April 28, 2016, the Board of Directors resolved that NTT DOCOMO, INC. may acquire up to 99,132,938 outstanding shares of its common stock by way of the Tokyo Stock Exchange Trading Network Off-Auction
Own Share Repurchase Trading System
(ToSTNeT-3)
and market purchases in accordance with the discretionary dealing contract, at an amount in total not exceeding ¥192,514 million from May 2,
2016 through December 31, 2016.
Based on this resolution, NTT DOCOMO, INC. repurchased 9,021,000 shares
of its common stock at ¥24,433 million using the
ToSTNeT-3
on May 18, 2016, and has also repurchased 31,340,000 shares of its common stock for a total purchase price of ¥84,749 million by way of
market purchases in accordance with the discretionary dealing contract as of September 30, 2016. NTT DOCOMO, INC. also repurchased 2,006,600 shares of its common stock for a total purchase price of ¥5,113 million by way of market purchases
in accordance with the discretionary dealing contract during October 2016.
The aggregate number and price of
shares repurchased from our parent company, NIPPON TELEGRAPH AND TELEPHONE CORPORATION, were 117,924,500 shares and ¥300,000 million for the fiscal year ended March 31, 2016. NTT DOCOMO, INC. did not repurchase any shares from NIPPON
TELEGRAPH AND TELEPHONE CORPORATION for the six months ended September 30, 2016.
NTT DOCOMO, INC. also
carried out compulsory acquisition of less-than-one-unit shares upon request.
8
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
On March 25, 2016, the Board of Directors resolved that NTT DOCOMO,
INC. would retire 127,229,000 shares held as treasury stock on March 31, 2016 and the share retirement on March 31, 2016 resulted in decreases of Retained earnings by ¥260,872 million.
The aggregate number and price of shares repurchased for the six months ended September 30, 2015 and 2016 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
Share/Millions of yen
|
|
|
|
Six months
ended
September 30, 2015
|
|
|
Six months
ended
September 30, 2016
|
|
Aggregate number of shares repurchased
|
|
|
43
|
|
|
|
40,361,100
|
|
Aggregate price of shares repurchased
|
|
¥
|
0
|
|
|
¥
|
109,182
|
|
|
The aggregate number and price of shares repurchased for the
three months ended September 30, 2015 and 2016 were as follows:
|
|
|
|
Share/Millions of yen
|
|
|
|
Three months
ended
September 30, 2015
|
|
|
Three months
ended
September 30, 2016
|
|
Aggregate number of shares repurchased
|
|
|
|
|
|
|
20,272,500
|
|
Aggregate price of shares repurchased
|
|
¥
|
|
|
|
¥
|
54,540
|
|
9
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(c) Accumulated other comprehensive income (loss)
Changes in accumulated other comprehensive income (loss)
Changes in accumulated other comprehensive income (loss), net of applicable taxes, for the six months ended
September 30, 2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months ended September 30, 2015
|
|
|
|
Unrealized holding
gains (losses) on
available-for-sale
securities
|
|
|
Unrealized gains
(losses) on
cash
flow hedges
|
|
|
Foreign currency
translation
adjustment
|
|
|
Pension liability
adjustment
|
|
|
Total
|
|
Balance as of March 31, 2015
|
|
¥
|
67,620
|
|
|
¥
|
(101
|
)
|
|
¥
|
16,871
|
|
|
¥
|
(31,791
|
)
|
|
¥
|
52,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(6,729
|
)
|
|
|
(60
|
)
|
|
|
(718
|
)
|
|
|
(582
|
)
|
|
|
(8,089
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
(308
|
)
|
|
|
17
|
|
|
|
(263
|
)
|
|
|
349
|
|
|
|
(205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(7,037
|
)
|
|
|
(43
|
)
|
|
|
(981
|
)
|
|
|
(233
|
)
|
|
|
(8,294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: other comprehensive (income) loss attributable to noncontrolling interests
|
|
|
(6
|
)
|
|
|
|
|
|
|
(61
|
)
|
|
|
|
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2015
|
|
¥
|
60,577
|
|
|
¥
|
(144
|
)
|
|
¥
|
15,829
|
|
|
¥
|
(32,024
|
)
|
|
¥
|
44,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months ended September 30, 2016
|
|
|
|
Unrealized holding
gains (losses) on
available-for-sale
securities
|
|
|
Unrealized gains
(losses) on cash
flow hedges
|
|
|
Foreign currency
translation
adjustment
|
|
|
Pension liability
adjustment
|
|
|
Total
|
|
Balance as of March 31, 2016
|
|
¥
|
61,624
|
|
|
¥
|
(218
|
)
|
|
¥
|
6,281
|
|
|
¥
|
(52,799
|
)
|
|
¥
|
14,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(4,332
|
)
|
|
|
(82
|
)
|
|
|
(31,813
|
)
|
|
|
(531
|
)
|
|
|
(36,758
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
(984
|
)
|
|
|
24
|
|
|
|
77
|
|
|
|
1,171
|
|
|
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(5,316
|
)
|
|
|
(58
|
)
|
|
|
(31,736
|
)
|
|
|
640
|
|
|
|
(36,470
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: other comprehensive (income) loss attributable to noncontrolling interests
|
|
|
5
|
|
|
|
|
|
|
|
420
|
|
|
|
|
|
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2016
|
|
¥
|
56,313
|
|
|
¥
|
(276
|
)
|
|
¥
|
(25,035
|
)
|
|
¥
|
(52,159
|
)
|
|
¥
|
(21,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
Changes in accumulated other comprehensive income (loss), net of
applicable taxes, for the three months ended September 30, 2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months ended September 30, 2015
|
|
|
|
Unrealized holding
gains
(losses)
on
available-for-sale
securities
|
|
|
Unrealized gains
(losses)
on cash
flow hedges
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Pension liability
adjustment
|
|
|
Total
|
|
Balance as of June 30, 2015
|
|
¥
|
69,350
|
|
|
¥
|
(124
|
)
|
|
¥
|
10,124
|
|
|
¥
|
(31,817
|
)
|
|
¥
|
47,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(8,767
|
)
|
|
|
(28
|
)
|
|
|
5,998
|
|
|
|
(383
|
)
|
|
|
(3,180
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
8
|
|
|
|
(263
|
)
|
|
|
176
|
|
|
|
(79
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(8,767
|
)
|
|
|
(20
|
)
|
|
|
5,735
|
|
|
|
(207
|
)
|
|
|
(3,259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: other comprehensive (income) loss attributable to noncontrolling interests
|
|
|
(6
|
)
|
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2015
|
|
¥
|
60,577
|
|
|
¥
|
(144
|
)
|
|
¥
|
15,829
|
|
|
¥
|
(32,024
|
)
|
|
¥
|
44,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months ended September 30, 2016
|
|
|
|
Unrealized holding
gains
(losses)
on
available-for-sale
securities
|
|
|
Unrealized gains
(losses) on
cash
flow hedges
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Pension liability
adjustment
|
|
|
Total
|
|
Balance as of June 30, 2016
|
|
¥
|
49,806
|
|
|
¥
|
(290
|
)
|
|
¥
|
(1,622
|
)
|
|
¥
|
(52,658
|
)
|
|
¥
|
(4,764
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
6,506
|
|
|
|
1
|
|
|
|
(23,708
|
)
|
|
|
(88
|
)
|
|
|
(17,289
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
(1
|
)
|
|
|
13
|
|
|
|
77
|
|
|
|
587
|
|
|
|
676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
6,505
|
|
|
|
14
|
|
|
|
(23,631
|
)
|
|
|
499
|
|
|
|
(16,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: other comprehensive (income) loss attributable to noncontrolling interests
|
|
|
2
|
|
|
|
|
|
|
|
218
|
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2016
|
|
¥
|
56,313
|
|
|
¥
|
(276
|
)
|
|
¥
|
(25,035
|
)
|
|
¥
|
(52,159
|
)
|
|
¥
|
(21,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
Reclassifications out of accumulated other comprehensive income (loss) to net income
Amounts reclassified out of accumulated other comprehensive income (loss) to net income and affected line
items in the consolidated statements of income for the six months ended September 30, 2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
Amounts reclassified out of accumulated other comprehensive income
(loss)(*1)
|
|
|
Six months
ended September 30,
2015
|
|
|
Six months
ended September 30,
2016
|
|
|
Affected line items in the consolidated
statements of income
|
Unrealized holding gains (losses) on
available-for-sale
securities
|
|
¥
|
219
|
|
|
¥
|
1,373
|
|
|
Other, net of Other income (expense)
|
|
|
|
249
|
|
|
|
62
|
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
468
|
|
|
|
1,435
|
|
|
Pre-tax amount
|
|
|
|
(160
|
)
|
|
|
(451
|
)
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
308
|
|
|
|
984
|
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
(25
|
)
|
|
|
(35
|
)
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
|
|
(35
|
)
|
|
Pre-tax amount
|
|
|
|
8
|
|
|
|
11
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
|
|
(24
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
263
|
|
|
|
|
|
|
Other, net of Other income (expense)
|
|
|
|
|
|
|
|
(111
|
)
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
263
|
|
|
|
(111
|
)
|
|
Pre-tax amount
|
|
|
|
|
|
|
|
34
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
263
|
|
|
|
(77
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability adjustment
|
|
|
(519
|
)
|
|
|
(1,707
|
)
|
|
(*2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(519
|
)
|
|
|
(1,707
|
)
|
|
Pre-tax amount
|
|
|
|
170
|
|
|
|
536
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(349
|
)
|
|
|
(1,171
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassified amounts
|
|
¥
|
205
|
|
|
¥
|
(288
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Amounts in parentheses indicate decreased effects on net income.
|
(*2)
|
Amounts reclassified out of pension liability adjustment are included in the computation of net periodic pension cost.
|
12
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
Amounts reclassified out of accumulated other comprehensive income
(loss) to net income and affected line items in the consolidated statements of income for the three months ended September 30, 2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
Amounts reclassified out of accumulated other comprehensive income
(loss)(*1)
|
|
|
Three months
ended September 30,
2015
|
|
|
Three months
ended September 30,
2016
|
|
|
Affected line items in the consolidated
statements of income
|
Unrealized holding gains (losses) on available-for-sale securities
|
|
¥
|
|
|
|
¥
|
1
|
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Pre-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0
|
)
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
(12
|
)
|
|
|
(19
|
)
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
(19
|
)
|
|
Pre-tax amount
|
|
|
|
4
|
|
|
|
6
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
(13
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
263
|
|
|
|
|
|
|
Other, net of Other income (expense)
|
|
|
|
|
|
|
|
(111
|
)
|
|
Equity in net income (losses) of affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
263
|
|
|
|
(111
|
)
|
|
Pre-tax amount
|
|
|
|
|
|
|
|
34
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
263
|
|
|
|
(77
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability adjustment
|
|
|
(262
|
)
|
|
|
(855
|
)
|
|
(*2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(262
|
)
|
|
|
(855
|
)
|
|
Pre-tax amount
|
|
|
|
86
|
|
|
|
268
|
|
|
Tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(176
|
)
|
|
|
(587
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassified amounts
|
|
¥
|
79
|
|
|
¥
|
(676
|
)
|
|
Net-of-tax amount
|
|
|
|
|
|
|
|
|
|
|
|
(*1)
|
Amounts in parentheses indicate decreased effects on net income.
|
(*2)
|
Amounts reclassified out of pension liability adjustment are included in the computation of net periodic pension cost.
|
13
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
4. Segment information:
DOCOMOs chief operating decision maker (the CODM) is its Board of Directors. The CODM evaluates the
performance and makes resource allocations of its segments based on the information provided by DOCOMOs internal management reports.
DOCOMO has three operating segments, which consist of telecommunications business, smart life business and other businesses.
The telecommunications business includes mobile phone services (LTE(Xi) services and FOMA services), optical-fiber
broadband service, satellite mobile communications services, international services and the equipment sales related to these services. The smart life business includes video and music distribution, electronic books and other services offered through
DOCOMOs dmarket portal, as well as finance/payment services, shopping services and various other services to support our customers daily lives. The other businesses primarily includes Mobile Device Protection
Service, as well as development, sales and maintenance of IT systems.
Accounting policies used to
determine segment operating revenues and operating income (loss) are consistent with those used to prepare the consolidated financial statements in accordance with U.S. GAAP.
14
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months
ended
September 30, 2015
|
|
|
Six months
ended
September 30, 2016
|
|
Telecommunications business-
|
|
|
|
|
|
|
|
|
External customers
|
|
¥
|
1,806,391
|
|
|
¥
|
1,856,239
|
|
Intersegment
|
|
|
617
|
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,807,008
|
|
|
|
1,856,623
|
|
Smart life business-
|
|
|
|
|
|
|
|
|
External customers
|
|
|
240,533
|
|
|
|
243,488
|
|
Intersegment
|
|
|
5,778
|
|
|
|
6,880
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
246,311
|
|
|
|
250,368
|
|
Other businesses-
|
|
|
|
|
|
|
|
|
External customers
|
|
|
168,063
|
|
|
|
188,617
|
|
Intersegment
|
|
|
5,453
|
|
|
|
4,788
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
173,516
|
|
|
|
193,405
|
|
|
|
|
|
|
|
|
|
|
Segment total
|
|
|
2,226,835
|
|
|
|
2,300,396
|
|
Elimination
|
|
|
(11,848
|
)
|
|
|
(12,052
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
¥
|
2,214,987
|
|
|
¥
|
2,288,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months
ended
September 30, 2015
|
|
|
Three months
ended
September 30, 2016
|
|
Telecommunications business-
|
|
|
|
|
|
|
|
|
External customers
|
|
¥
|
928,017
|
|
|
¥
|
961,580
|
|
Intersegment
|
|
|
367
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
928,384
|
|
|
|
961,699
|
|
Smart life business-
|
|
|
|
|
|
|
|
|
External customers
|
|
|
125,018
|
|
|
|
121,327
|
|
Intersegment
|
|
|
2,906
|
|
|
|
3,792
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
127,924
|
|
|
|
125,119
|
|
Other businesses-
|
|
|
|
|
|
|
|
|
External customers
|
|
|
85,088
|
|
|
|
96,767
|
|
Intersegment
|
|
|
2,552
|
|
|
|
1,827
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
87,640
|
|
|
|
98,594
|
|
|
|
|
|
|
|
|
|
|
Segment total
|
|
|
1,143,948
|
|
|
|
1,185,412
|
|
Elimination
|
|
|
(5,825
|
)
|
|
|
(5,738
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
¥
|
1,138,123
|
|
|
¥
|
1,179,674
|
|
|
|
|
|
|
|
|
|
|
15
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
Segment operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months
ended
September 30, 2015
|
|
|
Six months
ended
September 30, 2016
|
|
Telecommunications business
|
|
¥
|
420,169
|
|
|
¥
|
524,737
|
|
Smart life business
|
|
|
33,441
|
|
|
|
36,975
|
|
Other businesses
|
|
|
8,964
|
|
|
|
23,885
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
¥
|
462,574
|
|
|
¥
|
585,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months
ended
September 30, 2015
|
|
|
Three months
ended
September 30, 2016
|
|
Telecommunications business
|
|
¥
|
207,748
|
|
|
¥
|
254,327
|
|
Smart life business
|
|
|
16,565
|
|
|
|
19,772
|
|
Other businesses
|
|
|
2,865
|
|
|
|
12,207
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
¥
|
227,178
|
|
|
¥
|
286,306
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss) is segment operating revenues less segment operating
expenses.
As indicated in Note 2. (b) Change in Accounting Procedures for Consolidated Quarterly
Financial Results, previously, DOCOMO principally used the declining-balance method for calculating depreciation of property, plant, and equipment. Effective April 1, 2016, DOCOMO adopted the straight-line method of depreciation. As a
result, compared with the depreciation method used prior to April 1, 2016, operating income for the Telecommunications business segment, Smart life business segment, and Other businesses segment for the six months ended September 30, 2016
increased by ¥69,329 million, ¥52 million and ¥49 million, respectively. Operating income for the Telecommunications business segment, Smart life business segment, and Other businesses segment for the three months ended
September 30, 2016 increased by ¥35,978 million, ¥40 million and ¥31 million, respectively.
DOCOMO does not disclose geographical information because the amounts of operating revenues generated outside Japan are
immaterial.
16
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
5. Contingencies:
(a) Litigation
DOCOMO is involved in litigation and
claims arising in the ordinary course of business. DOCOMO believes that none of the litigation or claims outstanding, pending or threatened against DOCOMO would have a materially adverse effect on DOCOMOs results of operations, financial
position or cash flows.
(b) Guarantees
DOCOMO enters into agreements in the normal course of business that provide guarantees for counterparties. These counterparties include subscribers, related parties, foreign wireless telecommunications
service providers and other business partners.
DOCOMO provides subscribers with guarantees for product
defects of cellular phone handsets sold by DOCOMO, but DOCOMO is provided with similar guarantees by the handset vendors and no liabilities were recognized for these guarantees.
Though the guarantees or indemnifications provided in transactions other than those with the subscribers are different in
each contract, the likelihood of almost all of the performance of these guarantees or indemnifications are remote and amount of payments DOCOMO could be claimed for is not specified in almost all of the contracts. Historically, DOCOMO has not made
any significant guarantee or indemnification payments under such agreements. DOCOMO estimates the fair value of the obligations related to these agreements is not significant. Accordingly, no liabilities were recognized for these obligations.
17
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
6. Fair value measurements:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value according to observability. The inputs are described as
follows:
Level 1quoted prices in active markets for identical assets or liabilities
Level 2inputs other than quoted prices included within Level 1 that are observable for the asset or liability
Level 3unobservable inputs for the asset or liability
DOCOMO also distinguishes assets and liabilities measured at fair value every period on a recurring basis from those
measured on a nonrecurring basis in certain circumstances.
(a) Assets and liabilities measured at fair value on a recurring basis
DOCOMOs assets and liabilities measured at fair value on a recurring basis include
available-for-sale securities and derivatives.
DOCOMOs assets and liabilities that were measured at
fair value on a recurring basis at March 31, 2016 and September 30, 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
March 31, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities (domestic)
|
|
¥
|
86,530
|
|
|
¥
|
86,530
|
|
|
¥
|
|
|
|
¥
|
|
|
Equity securities (foreign)
|
|
|
83,947
|
|
|
|
83,947
|
|
|
|
|
|
|
|
|
|
Debt securities (foreign)
|
|
|
5
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available-for-sale securities
|
|
|
170,482
|
|
|
|
170,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
16
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
|
16
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
170,498
|
|
|
¥
|
170,482
|
|
|
¥
|
16
|
|
|
¥
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency option contracts
|
|
¥
|
2,415
|
|
|
¥
|
|
|
|
¥
|
2,415
|
|
|
¥
|
|
|
Foreign exchange forward contracts
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
|
2,420
|
|
|
|
|
|
|
|
2,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
2,420
|
|
|
¥
|
|
|
|
¥
|
2,420
|
|
|
¥
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers between Level 1 and Level 2.
18
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
September 30, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities (domestic)
|
|
¥
|
80,110
|
|
|
¥
|
80,110
|
|
|
¥
|
|
|
|
¥
|
|
|
Equity securities (foreign)
|
|
|
82,979
|
|
|
|
82,979
|
|
|
|
|
|
|
|
|
|
Debt securities (foreign)
|
|
|
5
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available-for-sale securities
|
|
|
163,094
|
|
|
|
163,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
163,094
|
|
|
¥
|
163,094
|
|
|
¥
|
0
|
|
|
¥
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency option contracts
|
|
¥
|
4,558
|
|
|
¥
|
|
|
|
¥
|
4,558
|
|
|
¥
|
|
|
Foreign exchange forward contracts
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
|
4,559
|
|
|
|
|
|
|
|
4,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
¥
|
4,559
|
|
|
¥
|
|
|
|
¥
|
4,559
|
|
|
¥
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers between Level 1 and Level 2.
Available-for-sale securities
Available-for-sale securities include marketable equity securities and debt securities, which are valued using quoted prices in active markets for identical assets. Therefore, these securities are
classified as Level 1.
Derivatives
Derivative instruments are foreign currency option contracts and foreign exchange forward contracts, which are valued based on observable market data. Therefore, these derivatives are classified as Level
2.
19
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(b) Assets and liabilities measured at fair value on a nonrecurring basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances.
DOCOMO may be required to measure fair value of receivables held for sale, long-lived assets, equity securities whose
fair values are not readily determinable, and other assets or liabilities on a nonrecurring basis.
DOCOMOs assets that were measured at fair value on a nonrecurring basis for the six months ended September 30,
2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months ended September 30, 2015
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains (losses)
(before
taxes)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables held for sale
|
|
¥
|
651,419
|
|
|
¥
|
|
|
|
¥
|
651,419
|
|
|
¥
|
|
|
|
¥
|
(6,825
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Six months ended September 30, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains (losses)
(before
taxes)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables held for sale
|
|
¥
|
646,101
|
|
|
¥
|
|
|
|
¥
|
646,101
|
|
|
¥
|
|
|
|
¥
|
(7,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOCOMOs assets that were measured at fair value on a nonrecurring basis for the
three months ended September 30, 2015 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months ended September 30, 2015
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains (losses)
(before
taxes)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables held for sale
|
|
¥
|
485,944
|
|
|
¥
|
|
|
|
¥
|
485,944
|
|
|
¥
|
|
|
|
¥
|
(6,059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of yen
|
|
|
|
Three months ended September 30, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains (losses)
(before
taxes)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables held for sale
|
|
¥
|
500,890
|
|
|
¥
|
|
|
|
¥
|
500,890
|
|
|
¥
|
|
|
|
¥
|
(6,278
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables held for sale
Receivables held for sale are measured at the lower of cost or fair value.
Receivables held for sale are classified as Level 2. DOCOMO measures the fair value of the receivables held for sale by discounting, at LIBOR-based discount rates, estimated future cash flows while taking
into account factors such as default probabilities and loss severity of similar trade receivables.
20
NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
7. Subsequent event:
During October 2016, NTT DOCOMO, INC. repurchased its common stock. Related information is disclosed in Note 3
Equity.
21