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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nippon Tel.& T. | LSE:NPN | London | Ordinary Share | JP3735400008 | NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3,910.3704 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Nippon Telegraph and Telephone Corp
30 June 2005
PART 3
ITEM 6-DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
The overall direction of the affairs of NTT is the responsibility of its board
of directors. The board of directors currently consists of 12 members, of whom
10 are also executive officers of NTT. Directors are elected for a two-year
term. Elections are conducted at NTT's annual meeting, the most recent of which
was held on June 28, 2005.
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On June 28, 2005, the registrant held an ordinary general meeting of
shareholders. At the meeting, shareholders approved appropriation of
unappropriated retained earnings for the fiscal year ended March 31, 2005, a
Share repurchase, the election of three directors and a corporate auditor, and
the payment of certain retirement benefits for retiring directors and a
corporate auditor.
The following is a list of the directors (including executive officers of NTT)
and corporate auditors of NTT as of June 30, 2005:
Name Title Principal occupation Date of Date Shares Date
and Birth Current Owned First
other Term (1) Appointed
responsibilities Ends
Representative
Directors
Norio Wada President Chief Executive Aug. 16, June 38.24 June 1992
Officer 1940 2006
Satoshi Miura Senior Executive In charge of Apr. 3, June 20.20 June 2005
Vice President business strategy, 1944 2006
Director of
Corporate Management
Strategy Division
and Chief Financial
Officer
Ryuji Yamada Senior Executive In charge of May 5, June 14.02 June 2004
Vice President technical strategy 1948 2006
and resonant
promotion and
Director of Nippon
Venture Capital Co.,
Ltd. and Advanced
Telecommunication
Research Institute
International
Directors
Yuji Inoue Senior Vice In charge of Oct. 19, June 8.04 June 2002
President Intellectual 1948 2006
Property and
Director of
Department III
Shin Hashimoto Senior Vice Director of Sep. 6, June 12.02 June 2002
President Department II, 1949 2006
NIPPON INFORMATION
AND COMMUNICATION
CORPORATION, NTT
COMWARE CORPORATION
and NTT Resonant
Inc.
Hiroo Unoura Senior Vice Director of Jan. 13, June 14.00 June 2002
President Department IV and 1949 2006
NTT West
Ken Yagi Senior Vice Director of Aug. 17, June 6.00 June 2004
President Department IV and 1948 2006
President of NTT
Capital (U.K.)
Limited
Akira Arima Senior Vice In charge of Aug. 25, June 10.00 June 2005
President Corporate Management 1949 2006
Strategy
Kiyoshi Kousaka Senior Vice Director of Mar. 28, June 11.04 June 2005
President Department I, NTT 1951 2006
East, Infocom
Research Inc. and
Corporate Auditor of
NTT Resonant Inc.
Haruki Matsuno Chief Executive - Jan. 24, June 28.00 June 2000
Counselor, Member of 1937 2006
the Board
Takashi Imai Director Chairman Emeritus Dec. 23, June 4.02 July 1999
and Executive 1929 2006
Counselor of Nippon
Steel Corporation
Yotaro Kobayashi Director Chairman and Apr. 25, June * July 1999
Director of Fuji 1933 2006
Xerox Co., Ltd.
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Name Title Principal occupation Date of Date Shares Date
--- and Birth Current Owned First
other responsibilities Term (1) Appointed
Ends
Corporate Auditors
Masamichi Tanabe Full-time Corporate - July 29, June 10.12 June 2004
Auditor 1940 2007
Johji Fukada(2) Full-time Corporate - Apr 21, June 10.00 June 2005
Auditor 1943 2007
Masao Iseki Corporate Auditor Corporate Auditor of Sep. 24, June 17.00 June 2001
NTT Resonant Inc. 1938 2007
Yoshio Miwa Corporate Auditor Corporate Auditor of Feb. 11, June 14.00 June 2003
NTT FACILITIES, INC. 1940 2007
Yasuchika Negoro(2) Corporate Auditor Lawyer July 31, June 14.00 June 2003
1932 2007
Presidents of Principal
Subsidiaries
Toyohiko Takabe President, NTT East - Jan. 9, June 33.08 June 2005
1947 2006
Shunzo Morishita President, NTT West - Apr. 8, June 20.14 June 2002
1945 2006
Hiromi Wasai President, NTT Director of Verio Inc. Aug. 25, June 21.00 June 2004
Communications 1946 2006
Masao Nakamura President, NTT DoCoMo - Nov. 11, June 3.02 June 1998
1944 2006
Tomokazu Hamaguchi President, NTT DATA - Apr. 20, June * June 2003
1944 2007
--------
(1) NTT Shares owned as of June 30, 2005.
(2) Outside Corporate Auditor.
* Denotes no ownership of NTT Shares.
Norio Wada joined NTT in April 1964. He became a Senior Vice President and
General Manager of Tohoku Regional Communications Sector of NTT in June 1992. In
June 1996, he became a Senior Vice President and Senior Executive Manager of
Affiliated Business Development Headquarters of NTT. In July 1996, he became a
Senior Vice President and Senior Executive Manager of Affiliated Business
Headquarters of NTT. In June 1997, he became an Executive Vice President and
Senior Executive Manager of Affiliated Headquarters of NTT. In June 1998, he
became an Executive Vice President and Senior Executive Manager of Affiliated
Business Development Headquarters and Executive Manager of NTT Holdings
Organizational Office. In January 1999, he became an Executive Vice President
and Senior Executive Manager of NTT Holdings Provisional Headquarters of NTT. In
July 1999, he became a Senior Executive Vice President of NTT. In June 2002, he
was elected the President of NTT.
Satoshi Miura joined NTT in April 1967. He became a Vice President and Executive
Manager of Personnel Department of NTT in June 1994. In June 1996, he became a
Senior Vice President and Executive Manager of Personnel Department of NTT. In
July 1997, he became a Senior Vice President and Executive Manager of Personnel
Industrial Relations Department of NTT. In June 1998, he became an Executive
Vice President and Executive Manager of Personnel Industrial Relations
Department of NTT. In January 1999, he became an Executive Vice President and
Deputy Senior Executive Manager of NTT East Provisional Headquarters of NTT. In
July 1999, he became a Senior Executive Vice President of NTT East. In June
2002, he became a president of NTT East. In June 2005, he was elected a Senior
Executive Vice President of NTT.
Ryuji Yamada joined NTT in April 1973. He became a Senior Manager of
Reorganization Planning Office of NTT in April 1997. In June 1998, he became a
Senior Manager of NTT West Provisional Headquarters of NTT. In January 1999, he
became an Executive Manager of Plant Planning Department of NTT West Provisional
Headquarters of NTT. In July 1999, he became an Executive Manager of Plant
Planning Department of NTT West Provisional Headquarters of NTT. In July 2000,
he became a Vice President and Executive Manager of Plant Planning Department of
NTT West. In June 2001, he became a Senior Vice President and Executive Manager
of Plant Planning Department of NTT West. In June 2002, he became an Executive
Vice President and Senior Executive Manager of Marketing and Support Solutions
Headquarters of NTT West. In June 2004, he was elected a Senior Executive Vice
President of NTT.
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Yuji Inoue joined NTT in April 1973. He became a Senior Vice President of NTT
DATA in January 2001. In June 2001, he became a Senior Vice President and Senior
Executive Manager of Development Headquarters of NTT DATA. He became a Senior
Vice President and Senior Executive Manager of Technical Development
Headquarters of NTT DATA in April 2002. In June 2002, he was elected a Senior
Vice President and Director of Department III of NTT.
Shin Hashimoto joined NTT in April 1973. He became an Executive Manager of Plant
Planning Department of NTT East Provisional Headquarters of NTT in January 1999.
He became an Executive Manager of Plant Planning Department of NTT East in July
1999. In June 2001, he became a Senior Vice President and Executive Manager of
Plant Planning Department of NTT East. In June 2002, he was elected a Senior
Vice President and Director of Department II of NTT.
Hiroo Unoura joined NTT in April 1973. He became a Senior Manager of Department
V of NTT Holdings Provisional Headquarters of NTT in January 1999. In July 1999,
he became a Senior Manager of Department V of NTT. He became a Deputy General
Manager of Tokyo Branch of NTT East in September 2000. In June 2002, he was
elected a Senior Vice President and Director of Department I of NTT. In June
2005, he became a Senior Vice President and Director of Department IV of NTT.
Ken Yagi joined the MOF in July 1971. In June 1998, he became a Deputy Director
General of the International Bureau of the MOF. In July 2001, he became an
Executive Director for Japan at the International Monetary Fund. In June 2004,
he joined NTT and became a Senior Vice President and Director of Department IV
of NTT.
Akira Arima joined NTT in April 1973. In January 1996, he became a General
Manager of Tokyo Chiyoda Branch of NTT. In January 1999, he became a General
Manager of Department I of NTT Holding Provisional Headquarters of NTT. In July
1999, he became a General Manager of Department I of NTT. In June 2002, he
became a Senior Vice President and Executive Manager of Corporate Strategy
Planning Department of NTT East. In June 2005, he was elected a Senior Vice
President of NTT.
Kiyoshi Kousaka joined NTT in April 1974. In October 1997, he became a General
Manager of Kyoto Branch of NTT. In July 1999, he became a General Manager of
Kyoto Branch of NTT West. In September 2000, he became a General Manager of
Department V of NTT. In July 2002, he became an Executive Manager of Personnel
Department of NTT West. In June 2003, he became a Senior Vice President and
Executive Manager of Personnel Department of NTT West. In June 2005, he was
elected a Senior Vice President and Director of Department I of NTT.
Haruki Matsuno joined the MPT in April 1960. He became a Vice-Minister of the
MPT in July 1994. In July 1996, he became the Chairman of the Japan Computer
Communications Association. In August 1997, he became the Chairman of the Postal
Savings Promotion Society. In June 2000, he joined NTT and became a Senior
Executive Vice President of NTT. In June 2004, he was elected a Chief Executive
Counselor, Member of the Board of NTT.
Takashi Imai joined Fuji Steel Corporation in April 1952. In April 1998, he
became the Chairman of Nippon Steel Corporation. In April 2003, he became a
Senior Vice President and the Chairman Emeritus and Executive Counselor of
Nippon Steel Corporation. Since June 2003, he has been the Chairman Emeritus and
Executive Counselor of Nippon Steel Corporation. He joined NTT as a Director in
July 1999.
Yotaro Kobayashi joined Fuji Photo Film Co., Ltd. in October 1958. He joined
Fuji Xerox Co., Ltd. in September 1963. In January 1992, he became the Chairman
and Representative Director of Fuji Xerox Co., Ltd. He joined NTT as a Director
in July 1999. Since June 2004, he has been the Chairman and Director of Fuji
Xerox Co., Ltd.
Masamichi Tanabe joined NTT in April 1964. He became a Vice President and Senior
Executive Manager of Packet Network Service Headquarters of NTT in July 1992. In
February 1994, he became a Vice President and
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Deputy Executive Manager of Multimedia Planning and Promotion Office of NTT. In
June 1994, he became a Senior Vice President and Deputy Executive Manager of
Multimedia Planning and Promotion Office of NTT. In July 1995, he became a
Senior Vice President and Executive Manager of Multimedia Service Department of
NTT. In December 1996, he became a Senior Vice President and General Manager of
OCN Division of NTT. In June 1997, he became a Senior Executive Vice President
of NTT Learning Systems Corporation. In June 1998, he became the President of
NTT Learning Systems Corporation. In June 2002, he became the President of NTT
Advertising, Inc. In June 2004, he was elected a full-time Corporate Auditor of
NTT.
Johji Fukada joined the Board of Audit of Japan in April 1967. In June 1998, he
became a Deputy Secretary General of the Board of Audit of Japan. In December
1999, he became an Advisor to the Board of Audit of Japan. In December 2002, he
became a Special Advisor to Kitanogumi Corporation. In June 2005, he was elected
a full-time Corporate Auditor of NTT.
Masao Iseki joined NTT in April 1961. He became a Vice President and Senior
Manager of Affiliated Companies Headquarters of NTT in June 1988 and a Vice
President and Deputy Senior Executive Manager of Research and Development
Headquarters of NTT in April 1989. He became a Vice President and Deputy Senior
Executive Manager of Telecommunications Business Support Headquarters of NTT in
July 1990. In February 1991, he became a Vice President and Executive Manager of
Telecommunications Service Department of NTT, and in June 1991, he became a
Senior Vice President and Executive Manager of Telecommunications Service
Department of NTT. He became a Senior Vice President and Executive Manager of
Service Management Department of NTT in July 1993. He became the President of
NTT Telemarketing, Inc. (now NTT Solco Corporation) in June 1994. In June 2001,
he was elected a full-time Corporate Auditor of NTT. In June 2004, he became a
Corporate Auditor of NTT.
Yoshio Miwa joined NTT in April 1963. He became a Vice President and General
Manager of Kanagawa Telecommunications Service Region of NTT in June 1990 and a
Vice President of Integrated Communications System Headquarters of NTT in July
1991. In June 1992, he became a Senior Vice President and Senior Executive
Manager of Telecommunications Service Development Headquarters, and he became a
Senior Vice President and Executive Manager of Telecommunications Service
Development Headquarters of NTT in July 1993. In June 1994, he became a Senior
Vice President and Senior Executive Manager of Network Service Department, and
he became the President and Representative Director of NTT Teleca Corporation in
June 1995. In June 2000, he became a Senior Executive Vice President and
Representative Director of JSAT Corporation, and he became a Representative
Senior Vice President and CAO of JSAT Corporation in June 2002. In June 2003, he
was elected a full-time Corporate Auditor of NTT. In June 2005, he became a
Corporate Auditor of NTT.
Yasuchika Negoro joined the Ministry of Justice in April 1958. He became a
Vice-Minister of the Ministry of Justice in June 1990 and a Vice-Minister of the
Tokyo High Public Prosecutors Office in December 1993. He became a registered
lawyer of the Daiichi Tokyo Bar Association in September 1995. In August 1996,
he became the Chairman of The Japan Fair Trade Commission. Since August 2002, he
has reactivated his status as a registered lawyer of the Daiichi Tokyo Bar
Association. In June 2003, he was elected a Corporate Auditor of NTT.
Compensation
Directors and corporate auditors are compensated in accordance with a
compensation system that places emphasis on the interests of NTT's shareholders
as the principal stakeholders by linking compensation in part to NTT's business
performance. In accordance with customary Japanese business practices and
subject to the approval of the shareholders at a general meeting of
shareholders, NTT pays retirement bonuses to retiring/resigning directors and
corporate auditors. Due in part to tax considerations, retirement bonuses are
considered compensation for past service. Directors and corporate auditors do
not receive any perquisites after leaving their positions.
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In fiscal 2005, NTT paid aggregate compensation of Y269 million to 14 directors
(Y251 million to the twelve internal directors and Y18 million to the two
outside directors). In addition, an aggregate amount of Y60 million was paid to
12 directors as bonuses and Y287 million was paid to three directors as
retirement bonuses. NTT paid a total of Y79 million during fiscal 2005 to six
individuals who served as corporate auditors. Bonuses in the total amount of Y18
million were also paid to six corporate auditors and a retirement bonus of Y31
million was paid to one corporate auditor.
Board Practices
Board of Directors
NTT's board of directors is currently composed of 12 members, two of whom are
outside directors whose presence serves to strengthen the board's ability to
monitor the fairness of business operations.
NTT's Articles of Incorporation provide that the board of directors shall have
no more than 15 members. The board of directors nominates candidates for the
board of directors, who are elected by resolution adopted by a majority vote of
shareholders present at a general meeting of shareholders representing in the
aggregate one-third or more of the voting rights of all shareholders. Under
NTT's Articles of Incorporation, the term of office of a director expires at the
conclusion of the general meeting of shareholders held to settle accounts for
the fiscal year last ending within two years from the director's appointment.
Directors may be reappointed upon expiration of their term of office. By
resolution, the board of directors may designate, from among its members, one
president and one or more representative directors, who have authority to
represent the Company generally in the conduct of its affairs. NTT's board of
directors may appoint one chairman and one or more senior executive vice
presidents and executive vice presidents. Directors may be removed from office
by resolution adopted by two-thirds or more of the votes of shareholders present
at a general meeting of shareholders representing in the aggregate one-third or
more of the voting rights of all shareholders.
The board of directors is responsible for decisions regarding important
management issues and for supervising the directors' execution of their duties.
As a general rule, the board of directors meets once a month. Under the
Commercial Code, board members are prohibited from engaging in any transaction
in competition with any of NTT's businesses for themselves or on behalf of any
third party, and from engaging in certain other transactions involving a
conflict with NTT's interests, unless the transaction is approved by a board
resolution. No board member may vote on a proposal in which that board member is
deemed to be materially interested. In addition, the Commercial Code requires a
resolution of the board of directors for NTT to acquire or dispose of material
assets, to borrow substantial amounts of money, to employ or discharge important
employees such as general managers, and to establish, change or abolish material
corporate organizations such as a branch office.
Board of directors' resolutions are passed by a majority vote of directors
present at a meeting attended by a majority of directors present and entitled to
vote.
With regard to matters concerning the appointment and compensation of directors,
in order to improve objectiveness and transparency, NTT has established the
Appointment and Compensation Council, a group of four directors, including two
outside directors. The Appointment and Compensation Council deliberates on
matters concerning the appointment and compensation of directors before the
board of directors' meetings in which final determinations of such matters are
made.
Board of Audit
NTT maintains a board of audit, which is composed of five members, referred to
as corporate auditors, of whom two are independent corporate auditors. Each
corporate auditor attends board of directors and other important meetings.
Through this and other means, the corporate auditors monitor the execution of
NTT's business and operations and the condition of its assets, as appropriate.
The corporate auditors are assisted by their own organization and staff
maintained for such purposes. NTT's board of audit works in collaboration with
corporate auditors from NTT Group companies in carrying out its audit functions.
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NTT's Articles of Incorporation provide that there shall be no more than five
corporate auditors on NTT's board of audit. NTT's corporate auditors and their
respective terms of office are identified in "Directors and Senior Management"
above. As a general rule, NTT's corporate auditors are nominated by the board of
directors with the consent of the board of audit and are elected by resolution
adopted by a majority vote of shareholders present at a general meeting of
shareholders representing in the aggregate one-third or more of the voting
rights of all the shareholders. Under NTT's Articles of Incorporation, the board
of audit appoints one or more members who serve on a full-time basis. At least
one of the corporate auditors must not have been a director, an executive
officer, a general manager or other employee of NTT or any of its subsidiaries
in the five years prior to appointment (from the completion of the annual
general meeting to be held in June 2006, at least half of the corporate auditors
will be required to be persons who have never been a director, executive
officer, general manager or other employee of NTT or any of its subsidiaries),
and no corporate auditor can concurrently be a director, a general manager or
other employee of NTT or any of its subsidiaries or consolidated entities or an
executive officer of any of NTT's subsidiaries or consolidated entities. In
accordance with the Commercial Code of Japan and NTT's Articles of
Incorporation, the term of office of a corporate auditor expires at the
conclusion of the general meeting of shareholders held to settle accounts for
the fiscal year last ending within four years from the corporate auditor's
appointment. Corporate auditors may be removed from office by resolution adopted
by two-thirds or more of the votes of shareholders present at a general meeting
of shareholders representing in the aggregate one-third or more of the voting
rights of all shareholders. Corporate auditors may state their opinions at a
general meeting of shareholders in relation to the removal of a corporate
auditor.
Corporate auditors are obligated to audit the execution by the directors of
their duties and carry out an accounting audit. Corporate auditors must also
examine the agenda and related documents to be submitted by the board of
directors to a general meeting of shareholders and report their opinion at the
general meeting of shareholders in respect of any violations of relevant laws or
NTT's Articles of Incorporation or other improprieties. Corporate auditors are
required to attend and, if necessary, state their opinions at meetings of the
board of directors, and, if the corporate auditors become aware of any
violations by the directors of relevant laws or NTT's Articles of Incorporation
that could result in significant harm to NTT, the corporate auditors have the
right to demand that the directors discontinue the violation.
Under the Commercial Code Regarding Corporate Audits (Law No. 149 of 2002, the "
Commercial Code Special Provisions Law"), "large companies" (such as NTT) are
required to maintain a board of audit comprised of all corporate auditors and,
in addition to the audit by the corporate auditors, are required to undergo an
accounting audit by an independent auditor appointed at a general meeting of
shareholders. The board of audit has a statutory duty to prepare and submit to
the board of directors its report on matters set forth in the independent
auditor's audit report, and send a certified copy of the same to the independent
auditor. A corporate auditor may note an opinion in the board of audit's report
if the corporate auditor's opinion is different from the opinions of the board
of audit expressed in the report. Under the Commercial Code Special Provisions
Law, the board of audit of a large company may, by resolution of the board of
audit, establish audit principles, the procedures for the board of audit's
examination of NTT's business and operations and the condition of its assets,
and other matters relating to the execution by the corporate auditors of their
duties.
Rule 10A-3 under the Securities Exchange Act of 1934 (the "Exchange Act") in
principle requires that each non-U.S. company whose securities are listed on the
NYSE maintain an audit committee composed solely of independent directors.
However, if a non-U.S. company with a board of audit meets the requirements of
paragraph (c)(3) of Rule 10A-3 under the Exchange Act, the independent audit
committee requirement does not apply. NTT currently maintains a board of audit
in accordance with home country regulations which board of audit meets the
requirements of paragraph (c)(3) of Rule 10A-3.
Differences in Corporate Governance from Practices Required of U.S. Domestic
Companies by the NYSE
The NYSE has adopted amendments to its corporate governance listing standards
for U.S. domestic issuers concerning the role of independent directors,
committees under the board of directors, corporate governance
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guidelines, codes of business conduct and ethics, shareholder approval of equity
compensation plans and annual certification by principal executive officers. NTT
follows corporate governance practices that are different from those required
for U.S. domestic listed companies in the following respects:
* Boards of directors of U.S. domestic listed companies must have a majority of independent directors,
non-management directors of U.S. domestic listed companies must meet at regularly scheduled executive
sessions without management and U.S. domestic listed companies must have nominating/corporate governance and
compensation committees composed entirely of independent directors. There are no such requirements under
Japanese law.
* U.S. domestic listed companies must have an audit committee with a minimum of three members each of whom
must be independent and financially literate in accordance with Rule 10A-3 under the Exchange Act and NYSE
rules, and at least one member must have accounting or related financial management expertise. NTT maintains
a board of audit under home country practice as described above, and currently does not have a financial
expert on its board of audit.
* U.S. domestic listed company audit committees must also (1) discuss earnings press releases, as well as
financial information and earnings guidance provided to analysts and rating agencies and (2) set clear
hiring policies for past and present employees of the independent auditors. There is no such requirement for
Japanese boards of audit.
* U.S. domestic listed companies must adopt and disclose corporate governance guidelines discussing specified
subjects, such as director qualifications and responsibilities, responsibilities of key board committees,
director compensation, and director training and continuing education. While NTT does not have such
corporate governance guidelines and is not required to adopt such guidelines under Japanese law, some of
these matters are stipulated by the Commercial Code or NTT's internal company rules.
* U.S. domestic listed companies must adopt a code of business conduct and ethics for directors, officers and
employees covering specified subjects and promptly disclose waivers of the code. While there is no such
obligation under Japanese law, NTT has adopted a code of ethics covering all its officers and employees
applying principles that are generally consistent with those applicable to U.S. domestic companies.
* U.S. domestic listed companies must obtain shareholder approval with respect to any equity compensation plan
for any employee, director or service provider for compensation for services. U.S. domestic listed companies
must also obtain shareholder approval (subject to certain exceptions) prior to the issuance of common stock
or securities convertible into or exercisable for common stock (1) to a director, an officer, a substantial
security holder or a party related to any of them if the number of shares of common stock which are to be
issued or are issuable upon conversion exceeds 1% of the number of shares of common stock or voting power
outstanding before the issuance, (2) in any transaction or series of transactions, if the voting power of
the common stock is equal to or exceeds 20% of the voting power outstanding before the issuance or if the
number of shares of the common stock is equal to or exceeds 20% of the number of shares outstanding before
the issuance, and (3) that will result in a change of control of the issuer. NTT follows Japanese law which
requires shareholder approval only for the issuance of common stock, bonds with subscription rights or share
subscription rights under "specially favorable" conditions.
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Employees
NTT and its consolidated subsidiaries had approximately 201,500 employees at
March 31, 2005. Almost all employees, excluding supervisory staff, are members
of the NTT Rodo Kumiai (All NTT Workers Union of Japan; the "Union"), which is a
member of the Nippon Rodo Kumiai So Rengokai (Japanese Trade Union
Confederation). NTT Group maintains favorable labor relations with the Union and
has experienced no significant strikes by the Union over the past ten years.
Total Employees
As of March 31,
2003 2004 2005
Regional communications services 130,959 127,603 123,910
Long distance communications and international services 10,710 10,669 10,314
Wireless services 20,792 21,241 21,527
Data communications services 15,598 17,010 18,308
Other 29,304 28,765 27,427
Consolidated total 207,363 205,288 201,486
On November 17, 1999, NTT East and NTT West announced that the companies would
reduce the number of employees by an aggregate of approximately 21,000 by the
end of fiscal 2003. Of this number, it was expected that approximately 4,000
employees would be transferred to other NTT Group companies. The retirement
program was subsequently expanded to contemplate the transfer of approximately
6,500 employees. Approximately 6,750 employees have been transferred pursuant to
the program.
In September 2000, NTT, NTT East and NTT West decided to implement a voluntary
early retirement program covering a total of approximately 4,000 employees in
fiscal 2001 and fiscal 2002 as part of a rationalization of their management.
This rationalization is a response to adverse business conditions resulting from
intense competition and other factors in the telecommunications industry. In
fiscal 2001 and fiscal 2002, approximately 21,000 employees applied for this
program, of whom approximately 4,400 retired in fiscal 2003.
Share Ownership
As of March 31, 2005, the members of the board of directors of NTT as a group
owned 164.48 Shares (less than 0.1% of outstanding Shares).
The NTT Directors' Shareholding Association is an association for the directors
and corporate auditors of NTT, NTT East, NTT West and NTT Communications.
Through this association, directors and corporate auditors of the respective
companies periodically contribute a fixed amount of money for the purchase of
NTT stock. NTT DoCoMo and NTT DATA also have a similar directors' shareholding
association for the purchase of NTT DoCoMo and NTT DATA stock, respectively.
The NTT Employee Shareholding Association is an association for employees of
NTT, NTT East, NTT West and NTT Communications and other NTT Group companies.
Through this association, employees of the respective companies periodically
contribute a fixed amount of money for the purchase of NTT stock. The companies
contribute matching funds equivalent to 8% of the amount contributed. NTT DoCoMo
and NTT DATA also have a similar employee shareholding association for the
purchase of NTT DoCoMo and NTT DATA stock, respectively.
ITEM 7-MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
The Government, acting through the Minister, also regulates the activities of
NTT and certain of its subsidiaries and approval by the Minister is required for
the issuance of new Shares subject to consultation with
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the Minister of Finance. See "Item 4-Information on the Company-Regulations."
NTT Group transacts business with various departments and agencies of the
Government as separate customers on an arm's-length basis. The Government, in
its capacity as shareholder, votes at shareholder meetings of NTT and, by virtue
of its position as the largest shareholder, theoretically has the power to exert
considerable influence over most decisions taken at such meetings, although the
Government has not used this power to direct the management of NTT. The
Government also has the power to take certain actions with respect to the
networks of Japanese telecommunications carriers including NTT and certain of
its subsidiaries in the interests of national security and international
relations. See "Item 4-Information on the Company-Relationship with the Japanese
Government."
As of March 31, 2005, the Government owned 6,431,810.26 Shares or approximately
40.86% of the issued Shares (approximately 43.1% of outstanding Shares). See
Note 1 to the Consolidated Financial Statements.
As of March 31, 2005,
Title of Class Identity of Person Amount of Percent
--------- of
or Group Shares Owned
Class
Common stock Government of Japan 6,431,810.26 40.86 %
*
(Minister of
Finance)
Common stock Directors and 164.48 - *
officers *
(11 persons)
--------
* 43.05% of outstanding Shares.
** Less than 0.1% of outstanding Shares.
On March 31, 2005, approximately 69,320,500 ADSs (equivalent to 346,603 Shares,
or approximately 2.3% of the total number of Shares outstanding on that date)
were outstanding and were held by 272 record holders of ADRs (including 261
record holders in the United States holding 69,319,227 ADSs).
Related Party Transactions
Details of transactions between NTT Group and other affiliated companies
NTT and its subsidiaries have entered into a number of different types of
transactions with other affiliated companies, the most significant of which are
sales of telecommunications terminal equipment, purchases of terminal equipment
and materials and the receipt of certain services.
Transactions with affiliated companies for each of the three years in the
periods ended March 31, 2005 and the related balances at March 31, 2004 and 2005
were as follows:
Years ended March 31,
2003 2004 2005 2005
(millions of yen) (millions
of
U.S.
dollars)
Sales Y 31,018 Y 26,353 Y 33,449 $ 313
Purchases Y 217,887 Y 184,040 Y 226,496 $ 2,117
Receivables Y 9,061 Y 23,592 $ 220
Payables Y 45,205 Y 41,625 $ 389
Dividends from affiliated companies accounted for by the equity method for the
years ended March 31, 2003, 2004 and 2005 were Y872 million, Y384 million and Y
988 million ($9 million), respectively.
Details of transactions between NTT Group companies and other related parties
In fiscal 2005, NTT West paid Y2 million as office rental fee of Cyber Tekijuku
Support Committie, whose chairman, Mr. Michitomo Ueno is also a member of the
board of directors of NTT West.
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In fiscal 2005, NTT DATA paid an annual fee of Y1 million to Akasaka Natural
Vision Research Center, whose chairman, Mr. Shinobu Umino, is also a member of
the board of directors of NTT DATA, and Y3 million to Japan Debit Card Promotion
Association, whose chairman, Mr. Tomokazu Hamaguchi, is also a member of the
board of directors of NTT DATA. Income from Japan Debit Card Promotion
Association was Y32 million for the year ended March 31, 2005.
NTT DoCoMo has entered into cost-sharing and construction and maintenance
contracts with In-Tunnel Cellular Association, the Chairman (as of June 22,
2005) of which, Fumio Iwasaki, is also a member of the board of directors of NTT
DoCoMo. He replaced Chairman Harunari Futatsugi, who is also a member of the
board of directors of NTT DoCoMo. After a resolution of NTT DoCoMo's board of
directors, the contracts were entered into on terms similar to those made with
third parties. Income from such contracts was Y14,797 million for the year ended
March 31, 2005.
ITEM 8-FINANCIAL INFORMATION
Consolidated Financial Information
See "Item 18-Financial Statements" and pages F-1 through F-60.
Other Financial Information
Legal Proceedings
In the normal course of business, NTT Group is subject to proceedings, lawsuits
and other claims including claims relating to contract matters, labor relations
and intellectual property. However, based upon the information currently
available to both NTT Group and its legal counsel, management believes that
damages from such lawsuits, if any, would not have a material effect on NTT's
Consolidated Financial Statements.
Dividend Policy
NTT believes it is critically important to reinforce its financial standing and
to serve the best interests of its shareholders over the long run. As such, NTT
has adopted as its basic principle the payment of stable dividends with due
regard to trends in NTT's operating performance, NTT's financial condition and
other factors, while also acting to secure necessary levels of internal
reserves.
While utilizing its internal reserves for strengthening its financial standing,
NTT also intends to repurchase its own shares in order to implement a capital
policy that takes into account the supply and demand conditions of NTT's Shares.
See also "Item 3-Key Information-Dividends."
Significant Changes
Except as otherwise disclosed herein, there has been no significant change in
NTT's financial position since March 31, 2005, the date of the registrant's last
audited financial statements.
ITEM 9-THE OFFER AND LISTING
Trading Markets
The primary market for the Shares of NTT is the TSE. The Shares have been traded
on the First Section of that exchange since February 1987 and are also listed on
the Osaka, Nagoya, Fukuoka and Sapporo stock exchanges in Japan.
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The following table sets forth for the periods indicated the reported high and
low sale prices of the Shares on the TSE. It also sets forth the closing highs
and lows of two TSE stock indices. The Tokyo Stock Price Index ("TOPIX"), which
is published by the TSE, is a weighted index of the market value of all stocks
listed on the First Section of the TSE. As of June 1, 2005, stocks of 1,679
companies were traded on the First Section of the TSE. The Nikkei Stock Average
is a widely followed unweighted arithmetic average of 225 selected stocks traded
on the First Section.
TSE Average Closing Closing Nikkei
daily
Price per Share TOPIX Stock Average
trading
High Low High Low High Low
volume
(yen) (yen) (number (points) (points) (yen) (yen)
of
shares)
Fiscal Period
2001 1,630,000 691,000 17,624.32 1,732.45 1,161.97 20,833.21 11,433.88
2002 902,000 375,000 23,852.57 1,440.97 922.51 14,556.11 9,382.95
2003 596,000 393,000 21,443.13 1,139.43 770.62 11,979.85 7,862.43
2004 592,000 400,000 19,751.08 1,179.23 773.10 11,161.71 7,607.88
2005
2004 Quarterly Periods
First Quarter 491,000 400,000 18,691.78 904.32 773.10 9,137.14 7,607.88
Second Quarter 553,000 475,000 19,423.52 1,075.73 915.91 11,033.32 9,265.56
Third Quarter 546,000 440,000 23,319.44 1,105.59 953.19 11,161.71 9,614.60
Fourth Quarter 592,000 467,000 17,615.07 1,179.23 1,022.61 11,103.10 10,365.40
2005 Quarterly Periods
First Quarter 634,000 498,000 17,657.03 1,217.87 1,053.77 12,163.89 10,505.05
Second Quarter 598,000 418,000 23,115.73 1,188.42 1,084.64 11,896.01 10,687.81
Third Quarter 483,000 437,000 19,820.30 1,149.63 1,073.20 11,488.76 10,659.15
Fourth Quarter 481,000 419,000 19,608.48 1,203.26 1,132.18 11,966.69 11,238.37
2005 Monthly Periods
January 461,000 422,000 17,922.16 1,157.30 1,132.18 11,539.99 11,238.37
February 462,000 419,000 21,898.11 1,177.41 1,145.51 11,740.60 11,360.40
March 481,000 449,000 19,087.45 1,203.26 1,169.11 11,966.69 11,565.88
April 486,000 422,000 21,746.10 1,201.30 1,109.49 11,874.75 10,938.44
May 452,000 430,000 17,968.05 1,152.48 1,109.19 11,276.59 10,825.39
June (through June 24) 475,000 438,000 15,050.78 1,174.02 1,138.75 11,576.75 11,160.88
On June 24, 2005, the last traded price of the Shares on the TSE was Y465,000
per Share, and the closing TOPIX and Nikkei Stock Averages on that date were Y
1,173.46 and Y11,537.03, respectively.
ADSs are listed on the NYSE. 200 ADSs represent 1 Share and are evidenced by
ADRs issued by the Depositary.
On December 18, 1998, the Government sold 1,000,000 Shares to a variety of
individual and institutional investors in a global offering in the form of
981,560 Shares and 3,688,000 ADSs (representing 18,440 Shares). A portion of the
global offering was registered with the SEC.
On November 12, 1999, the Government sold 952,000 Shares to a variety of
individual and institutional investors in a global offering in the form of
935,549 Shares and 3,290,200 ADSs. A portion of the global offering was
registered with the SEC.
On October 23, 2000, the Government sold 1,000,000 Shares, and NTT issued and
sold 300,000 new Shares, to a variety of individual and institutional investors
in a global offering in the form of 1,263,597 Shares and 7,280,600 ADSs
(representing 36,403 Shares). A portion of the global offering was registered
with the SEC.
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On March 31, 2005, approximately 69,320,500 ADSs (equivalent to 346,603 Shares,
or approximately 2.3% of the total number of Shares outstanding on that date)
were outstanding and were held by 272 record holders of ADRs (including 261
record holders in the United States holding 69,319,227 ADSs). The following
table sets forth for the periods indicated the high and low sales price of the
ADSs as set forth on the NYSE:
NYSE Average
daily
Price per ADS
trading
High Low volume
(U.S. (U.S.
dollars) dollars)
Fiscal Periods
---------
2001 77.50 28.50 179,740
2002 37.35 14.01 236,200
2003 23.49 16.06 143,760
2004 28.37 16.63 143,680
2005 30.20 19.30 171,730
2004 Quarterly Periods
First quarter 20.55 16.63 171,140
Second quarter 23.39 19.75 136,140
Third quarter 25.28 20.39 130,090
Fourth quarter 28.37 22.51 192,460
2005 Quarterly Periods
First quarter 30.20 21.52 193,680
Second quarter 27.01 19.30 127,750
Third quarter 23.16 19.85 170,270
Fourth quarter 23.30 20.05 197,110
2005 Monthly Periods
January 22.69 20.56 173,160
February 22.16 20.05 238,850
March 23.30 21.54 182,830
April 22.55 19.85 211,870
May 21.40 20.09 160,490
June (through June 24) 21.87 20.48 164,860
The Shares are also listed on the LSE.
At the annual general meeting of shareholders of NTT held on June 29, 1999, a
resolution was proposed and approved authorizing NTT to buy back up to a total
of 120,000 of its Shares at a total acquisition cost not to exceed Y120 billion
in the period from the conclusion of that meeting until the next annual general
meeting of shareholders in 2000. In accordance with this resolution, NTT
acquired 77,410 Shares at a total acquisition cost of Y119,999 million in the
period from July 1999 to February 2000. During fiscal 2000, all 77,410 of these
acquired Shares were cancelled.
On October 23, 2000, NTT issued and sold to a variety of individual and
institutional investors 300,000 new Shares in a global offering registered with
the SEC in the form of Shares or ADRs.
At the annual general meeting of shareholders of NTT held on June 27, 2002, a
resolution was proposed and approved authorizing NTT to buy back up to a total
of 200,000 of its Shares at a total cost not to exceed Y100 billion in the
period from the conclusion of that meeting until the next annual general meeting
of shareholders in 2003. In accordance with this resolution, NTT acquired
200,000 of its own Shares for a total price of Y86,200 million on October 8,
2002. Based on a decision of the board of directors at a meeting held on March
25, 2003, 202,145 of NTT's treasury Shares (purchased at a total cost of Y87,182
million) were cancelled.
At the annual general meeting of shareholders of NTT held on June 27, 2003,
approval was again received to buy back an additional 200,000 of NTT's own
Shares at a total cost not to exceed Y100 billion in the period
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from the conclusion of that meeting until the next annual general meeting of
shareholders in 2004. In accordance with this resolution, NTT acquired a total
of 190,460 of its own Shares at a total acquisition cost of Y99,999 million in
the period from October to December 2003. Based on a decision of the board of
directors at a meeting held on March 30, 2004, 191,236 of NTT's treasury Shares
(purchased at a total cost of Y100,391 million) were cancelled.
At the annual general meeting of shareholders of NTT held on June 29, 2004,
approval was again received to buy back an additional 1,000,000 of NTT's own
Shares at a total cost not to exceed Y600 billion in the period from the
conclusion of that meeting until the next annual general meeting of shareholders
in 2005. In accordance with this resolution, NTT acquired a total of 800,145 of
its own Shares at a total acquisition cost of Y366,466 million on November 26,
2004.
At the annual general meeting of shareholders of NTT held on June 28, 2005,
approval was again received to buy back an additional 1,250,000 of NTT's own
Shares at a total cost not to exceed Y600 billion in the period from the
conclusion of that meeting until the next annual general meeting of shareholders
in 2006.
For a discussion of the tax treatment of dividends paid to U.S. holders of ADSs,
see \"Item 10-Additional Information-Taxation."
ITEM 10-ADDITIONAL INFORMATION
Memorandum and Articles of Association
Information relating to the provisions of NTT's Articles of Incorporation and
NTT's Share Handling Regulations, which are incorporated by reference as
exhibits to this annual report on Form 20-F, and of the Japanese Commercial Code
and the NTT Law are described under the caption "Description of the Shares" in
NTT's Registration Statement on Form F-3 (Regulation No. 333-46912). Such
description is hereby incorporated by reference into this annual report on Form
20-F.
The Law Amending the Commercial Code, Etc. (Law No. 79 of 2001) ("Law No. 79")
abolished the systems of par value shares and fractional share certificates. In
addition, the rights accorded to fractional shareholders as previously stated in
the Articles of Incorporation became recognized under the Commercial Code. In
line with these amendments to the Commercial Code, the shareholders of NTT at
the general meeting of shareholders held on June 27, 2002, approved the
necessary amendments to the Articles of Incorporation to remove the various
stipulations governing par value shares, fractional share certificates, the
rights of fractional shareholders and so on. Law No. 79 also changed the basis
for determining a quorum for the purposes of resolutions for the election of
directors and corporate auditors from the total number of issued shares to the
number of voting rights of all the shareholders. In line with such amendments to
the Commercial Code, amendments to the Articles of Incorporation were also
adopted to specify the necessary stipulations concerning the election of
directors and corporate auditors (Articles 6, 11, 18, 24 and 30). Law No.79 also
enabled NTT to purchase Shares for any purpose, so long as it satisfies certain
requirements provided in the Commercial Code, including those with respect to
the aggregate purchase price and purchase procedures, and to hold the Shares
purchased in compliance with such requirements.
The Law Amending the Commercial Code, Etc. (Law No. 128 of 2001) ("Law No. 128")
stipulated that the register of shareholders and the register of fractional
shares may be recorded using electromagnetic recording. In line with this
amendment, the shareholders of NTT also adopted amendments to the Articles of
Incorporation to modify the parts of the Articles of Incorporation governing the
register of shareholders and the register of fractional shares. Law No. 128 also
modified convertible bonds into bonds with subscription rights, and recognized
the power of the Board of Directors to determine the effective date of the
issuance of new stock in relation to dividends and interim dividends associated
with the exercise of subscription rights. In line with this amendment to the
Commercial Code, the adopted amendments to the Articles of Incorporation removed
the stipulations governing the conversion of convertible bonds and dividends and
interim dividends (Articles 7, 9, 10, 29, 30 and 31).
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In addition, on June 27, 2002, the shareholders of NTT also approved various
changes to the Articles of Incorporation required by the re-numbering of some
Articles and the removal of certain supplementary provisions to the Articles of
Incorporation dating from the time of the company's establishment, together with
the names and addresses of the promoters for the purpose of incorporation.
During fiscal 2003, in accordance with Article 212 of the Commercial Code, NTT
cancelled 202,145 Shares of treasury stock. In line with this action, at the
general meeting of shareholders held on June 27, 2003, the shareholders of NTT
approved the necessary amendment to the Articles of Incorporation to reflect the
total number of authorized Shares (Article 5).
The Law Amending the Commercial Code, Etc. (Law No. 44 of 2002) ("Law No. 44")
established a new system of nullification procedure for share certificates. In
line with this amendment to the Commercial Code, at the general meeting of
shareholders held on June 27, 2003, the shareholders of NTT approved the
necessary amendments to the Articles of Incorporation to incorporate the new
system of nullification of Shares. Law No. 44 also allowed the relaxation of the
quorum requirement for a special resolution at a general meeting of shareholders
by provision in the Articles of Incorporation. In line with this amendment to
the Commercial Code, an amendment to the Articles of Incorporation was also
adopted to ensure that such quorum requirement (a two-thirds majority vote of
shareholders present at a meeting at which shareholders present hold Shares
representing in the aggregate one-third or more of the total number of voting
rights of shareholders) for a special resolution is more consistently satisfied
(Articles 6, 9 and 12).
The Law Amending the Commercial Code and the Law of Special Exceptions to the
Commercial Code Regarding Corporate Audits (Law No. 149 of 2002) took effect and
the term of the office of a corporate auditor has been extended from three years
to four years. In accordance with this change, the shareholders of NTT approved
at the general meeting of shareholders held on June 27, 2003, the necessary
amendment to the Articles of Incorporation to reflect the new term of office of
the corporate auditors. In addition, with respect to the number of corporate
auditors, NTT proposed to raise the maximum number of corporate auditors from
four to five to strengthen and improve its auditing systems. Accordingly, the
shareholders of NTT approved at the general meeting of shareholders held on June
27, 2003, the necessary amendment to the Articles of Incorporation to reflect
the new number of corporate auditors (Articles 21 and 23).
During fiscal 2004, in accordance with Article 212 of the Commercial Code, NTT
cancelled 191,236 Shares of treasury stock. In line with this action, at the
general meeting of shareholders held on June 29, 2004, the shareholders of NTT
approved an amendment to the Articles of Incorporation to reflect the current
total number of authorized Shares (Article 5).
Exchange Controls and Other Limitations Affecting Security Holders
General
The Foreign Exchange and Foreign Trade Law of Japan, as amended, and the cabinet
orders and ministerial ordinances issued thereunder (collectively, the "Foreign
Exchange Regulations") govern certain matters relating to the acquisition and
holding of shares of equity securities of Japanese corporations by "
non-residents of Japan" and "foreign investors" (each as defined below). For
purposes of determining ownership interests, the Depositary is the deemed owner
of shares underlying ADRs.
"Non-residents of Japan" are defined as individuals who are not resident in
Japan and corporations whose principal offices are located outside Japan.
Generally, branches and other offices of Japanese corporations located outside
Japan are regarded as non-residents of Japan, but branches and other offices of
non-resident corporations located within Japan are regarded as residents of
Japan. "Foreign investors" are defined to be (i) individuals not resident in
Japan, (ii) corporations which are organized under the laws of foreign countries
or whose principal offices are located outside Japan, and (iii) corporations not
less than 50% of the shares of which are held by (i) and/or (ii) or a majority
of the officers (or officers having the power of representation) of which are
non-resident individuals.
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Acquisition of Shares
Acquisition by a non-resident of Japan of shares of stock of a Japanese
corporation from a resident of Japan generally used to require prior
notification by the acquiring person to the Minister of Finance. An amendment to
the Foreign Exchange Regulations was enacted and took effect as from April 1,
1998. This amendment abolished the prior notification requirement and was
substituted by a subsequent reporting requirement. Such subsequent reporting by
the non-resident of Japan is not required where (i) the amount of the purchase
transaction of shares is Y100 million or less; or (ii) the purchase transaction
is effected by certain financial institutions acting as the agent or
intermediary, as prescribed by the Foreign Exchange Regulations.
Notwithstanding the foregoing, if the proposed transaction falls within the
category of "inward direct investment," the transaction is subject to different
regulations. The term "inward direct investment" in relation to transactions in
shares means in relevant part: acquisition of shares of a listed corporation by
a foreign investor (whether from a resident, a non-resident or any other foreign
investor) the result of which would be such investor's holding, directly or
indirectly, 10% or more of the total outstanding shares of such corporation or
(if such foreign investor already holds 10% or more of the total outstanding
shares of such corporation) acquisition of additional shares in such
corporation.
Whenever Shares of NTT are acquired in a transaction which at such time falls
within the category of an inward direct investment requiring prior notification,
the foreign investor who makes such investment must file a prior notification
with the Minister of Finance and the Minister 30 days prior to such transaction.
When a prior notification is required, the said ministries may recommend the
modification or abandonment of the proposed acquisition and, if the
recommendation is not accepted, order its modification or prohibition.
The acquisition of shares by non-resident shareholders by way of a stock split
is not subject to any notification requirements.
American Depositary Shares
Neither the deposit of Shares by a non-resident of Japan, the issuance of ADRs
evidencing the ADSs created by such deposit in exchange therefor nor the
withdrawal of the underlying Shares upon surrender of ADRs is subject to any
formalities or restrictions referred to under "Acquisition of Shares" above,
except where as a result of such deposit or withdrawal the aggregate number of
Shares held by the Depositary or the holder surrendering ADRs, as the case may
be, would be 10% or more of the total outstanding Shares, in which event prior
notification may be required as noted under "Acquisition of Shares" above.
Dividends and Proceeds of Sale
Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of
sales in Japan of, Shares held by non-residents of Japan may in general be
converted into any foreign currency and repatriated abroad.
Reporting of Substantial Shareholdings
The Securities and Exchange Law of Japan requires any person who has become,
beneficially and solely or jointly, a holder of more than 5% of the total issued
shares of a company listed on any Japanese stock exchange to file with a local
finance bureau of the MOF a report concerning such shareholdings within five
business days. The local finance bureau of the MOF is authorized to review such
filing. A similar report must also be made in respect of any subsequent change
of 1% or more in any such holding. For this purpose, shares issuable to such
person upon conversion of convertible securities or exercise of share
subscription rights are taken into account in determining both the number of
shares held by such holder and the issuer's total issued share capital. Copies
of each such report must also be furnished to the issuer of such shares and all
Japanese stock exchanges on which the shares are listed.
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Restrictions on Foreign Ownership
Pursuant to an amendment to the NTT Law which became effective as of August 1,
1992, foreign nationals and foreign corporations, which were previously
prohibited from owning Shares, have been allowed to own Shares. Currently, the
aggregate amount of NTT's voting rights which may be owned by:
(i) any person who is not of Japanese nationality;
(ii) any foreign government or any of its representatives;
(iii) any foreign juridical person or association; and
(iv) any juridical person or association:
(x) which owns 10% or more of NTT's voting rights; and
(y) 10% or more of the voting rights of which are owned by the persons or bodies listed in (i) through
(iii) above
(the proportion of NTT's voting rights in this case is determined by multiplying
the proportion expressed in (x) by that expressed in (y)) must be less than
one-third of NTT's total voting rights. In November 2001, the NTT Law was
amended and relaxed restrictions limiting foreign ownership of NTT Shares from
one-fifth of the total to one-third. NTT is prohibited from registering
ownership of Shares by such persons in excess of such limit. As of February 28,
2005, foreign ownership of NTT's Shares was 17.07%.
Taxation
Japanese Taxation
The following is a summary, prepared by Anderson Mori & Tomotsune, of the
principal Japanese tax consequences to an owner of Shares or ADSs who is an
individual not resident in Japan or a non-Japanese corporation. The statements
regarding Japanese tax laws set forth below are based on the laws in force and
as interpreted by the Japanese taxation authorities as of the date hereof and
are subject to changes in the applicable Japanese laws or double taxation
conventions occurring after that date. This summary is not exhaustive of all
possible tax considerations which may apply to a particular investor and
potential investors are advised to satisfy themselves as to the overall tax
consequences of the acquisition, ownership and disposition of Shares or ADSs,
including specifically the tax consequences under Japanese law, the laws of the
jurisdiction of which they are resident, and any tax treaty between Japan and
their country of residence, by consulting their own tax advisors.
Generally, a non-resident of Japan (whether an individual or a corporation) is
subject to Japanese withholding tax on dividends paid by Japanese corporations.
Stock splits are not subject to Japanese income tax.
The rate of Japanese withholding tax applicable to dividends paid by NTT to a
non-resident holder of Shares is 20%, subject to any applicable income tax
treaty. However, with respect to dividends paid on listed shares issued by a
Japanese corporation (such as the Shares) to any corporate or individual
shareholders (including those shareholders who are non-resident individuals or
non-Japanese corporations), except for any individual shareholder who holds 5%
or more of the outstanding total of the shares issued by the relevant Japanese
corporation, the 20% withholding tax rate is reduced to (i) 7% for dividends due
and payable on or after January 1, 2004, but on or before March 31, 2008, and
(ii) 15% for dividends due and payable on or after April 1, 2008.
Under the Convention between the United States of America and Japan for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Tax on Income dated November 6, 2003 (the "Convention"), which is applicable
to dividends paid on or after July 1, 2004, the maximum rate of Japanese
withholding tax which may be imposed on dividends paid to a United States
resident or corporation not having a "permanent establishment" (as defined
therein) in Japan is limited to 10% for most qualified portfolio investors and
5% if the beneficial owner is a qualified company that owns, directly or
indirectly, on the date on which
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entitlement to the dividend is determined, at least 10% (but not more than 50%)
of the voting stock of the issuing company. The Convention provides that no
Japanese tax will be imposed on dividends paid to a qualified pension fund that
is a United States resident, if such dividends are not derived from the carrying
on of a business, directly or indirectly, by such pension fund.
For purposes of the Convention and Japanese tax law, U.S. holders of ADRs will
be treated as owners of the Shares underlying the ADSs evidenced by the ADRs.
At the date of this annual report, Japan has other income tax treaties,
conventions or agreements with, inter alia, Australia, Belgium, Canada, China,
Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands,
New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. However, in such treaties, conventions or agreements, the Japanese
withholding tax rate on dividends is in most cases 15% for portfolio investors,
which is not lower than the rate generally applicable to any shareholder of
listed shares as described in the third paragraph of this Section.
Gains derived from the sale outside Japan of Shares or ADSs by a non-resident of
Japan, or from the sale of Shares within Japan by a non-resident of Japan not
having a permanent establishment in Japan, are generally not subject to Japanese
income tax.
Japanese inheritance and gift taxes at progressive rates may be payable by an
individual who has acquired Shares or ADSs as legatee, heir or donee even though
neither the individual nor the deceased nor donor is a Japanese resident.
United States Taxation
The following discussion is based on the advice of Milbank, Tweed, Hadley &
McCloy LLP, United States counsel to NTT, with respect to United States federal
income tax laws presently in force. The discussion summarizes the principal
United States federal income tax consequences of an investment in ADSs or
Shares, but it is not a full description of all tax considerations that may be
relevant to a decision to purchase ADSs or Shares. In particular, the discussion
is directed only to U.S. holders that will hold ADSs or Shares as capital assets
and that have the United States dollar as their functional currency. It does not
address the tax treatment of U.S. holders that are subject to special tax rules,
such as banks, dealers, traders who elect to mark to market, insurance
companies, tax-exempt entities, persons holding an ADS or Share as part of a
straddle, hedging, conversion or constructive sale transaction and holders of
10% or more of the voting shares of NTT. NTT believes, and the discussion
therefore assumes, that it is not and will not become a passive foreign
investment company for United States federal income tax purposes. HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS ABOUT THE UNITED STATES FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR
SHARES.
As used herein, "U.S. holder" means a beneficial owner of ADSs or Shares that is
a United States individual citizen or resident, a domestic corporation or
partnership, a trust subject to the control of a U.S. person and the primary
supervision of a U.S. court, or an estate the income of which is subject to
United States federal income taxation regardless of its source. The term "
non-U.S. holder" refers to any beneficial owner of ADSs or Shares other than a
U.S. holder. If the obligations contemplated by the Deposit Agreement are
performed in accordance with its terms, holders of ADSs (or ADRs evidencing
ADSs) will be treated for United States federal income tax purposes as the
owners of the Shares represented by those ADSs.
Cash dividends (including the amount of any Japanese taxes withheld) paid with
respect to the Shares represented by ADSs generally must be included in the
gross income of a U.S. holder as ordinary income when the dividends are received
(i) by the Depositary in the case of a U.S. holder holding ADSs or (ii) by the
U.S. holder in the case of a U.S. holder holding Shares. Dividends paid in yen
must be included in gross income at a United States dollar amount based on the
exchange rate in effect on the day of receipt by the Depositary or, in the
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case of Shares, the U.S. holder. Any gain or loss recognized upon a subsequent
sale or conversion of the yen for a different amount will be United States
source ordinary income or loss. New tax legislation signed into law on May 28,
2003, provides for a maximum 15% U.S. tax rate on the dividend income of a
non-corporate U.S. holder who satisfies certain holding period requirements with
respect to dividends paid by a domestic corporation or "qualified foreign
corporation." A qualified foreign corporation generally includes a foreign
corporation if (i) its shares are readily tradable on an established securities
market in the U.S. or (ii) it is eligible for benefits under a comprehensive
U.S. income tax treaty. Clause (i) will apply with respect to ADRs if such ADRs
are readily tradable on an established securities market in the U.S. Applying
these criteria, NTT expects that it should be treated as a qualified foreign
corporation with respect to dividend payments to its ADR holders and, therefore,
dividends paid to an individual U.S. holder of ADRs should be taxed at a maximum
rate of 15%. The maximum 15% tax rate is effective with respect to dividends
included in income for the six-year period that commences on January 1, 2003,
and ends December 31, 2008. A U.S. holder that is a corporation will not be
eligible for the dividends-received deduction. Distributions to U.S. holders of
additional Shares or preemptive rights with respect to Shares that are made as
part of a pro rata distribution to all shareholders of NTT generally will not be
subject to United States federal income tax. However, such distributions of
additional Shares or preemptive rights generally will be subject to federal
income tax if, for example, a U.S. holder can elect to receive cash in lieu of
Shares or preemptive rights or if the distribution of Shares or preemptive
rights is not proportionate.
Japanese withholding tax paid by or for the account of any U.S. holder may be
used, subject to generally applicable limitations and conditions, as a credit
against the U.S. holder's U.S. federal income tax liability or as a deduction in
computing the U.S. holder's gross income. Dividends generally will be foreign
source income and, under current law, generally will be treated separately,
together with other items of "passive income" (or in the case of certain
holders, "financial services income") for foreign tax credit limitation
purposes. In the case of a U.S. non-corporate holder for whom the reduced 15%
rate of U.S. tax on dividends applies, limitations and restrictions on claiming
foreign tax credits will appropriately take into account the rate differential
under rules similar to section 904(b)(2)(B) of the Internal Revenue Code. The
American Jobs Creation Act of 2004 (the "JOBS Act"), which was signed into law
on October 22, 2004, reduces the income categories for purposes of determining a
U.S. person's foreign tax credit limitation with respect to taxable years
beginning after December 31, 2006. Under the JOBS Act, most taxpayers will
continue to treat dividends as "passive income," however, taxpayers entitled to
treat dividends as "financial services income" will generally be able to
categorize such dividends as "general category income" which includes all income
of the taxpayer other than passive source income.
A non-U.S. holder generally will not be subject to United States federal income
or withholding tax on dividends paid with respect to Shares or Shares
represented by ADSs, unless that income is effectively connected with the
conduct by the non-U.S. holder of a trade or business within the United States
(and is attributable to a permanent establishment maintained in the United
States by such non-U.S. holder, if an applicable income tax treaty so requires).
U.S. holders generally will recognize capital gain or loss on the sale or other
disposition of ADSs or Shares (or preemptive rights with respect to such Shares)
held by the U.S. holder or by the Depositary. Generally, gain or loss will be a
long-term capital gain or loss if the U.S. holder's holding period for such
Shares or Shares represented by ADSs exceeds one year. Long-term capital gain
for an individual U.S. holder is generally subject to a reduced rate of tax.
With respect to sales occurring on or after May 6, 2003, but before January 1,
2009, the maximum long-term capital gain tax rate for an individual U.S. holder
is 15%. For sales occurring after December 31, 2008, under current law the
maximum long-term capital gain rate for an individual U.S. holder is 20%. U.S.
holders will not recognize gain or loss on deposits or withdrawals of Shares in
exchange for ADSs or on the exercise of preemptive rights. Gain recognized by a
U.S. holder generally will be treated as United States source income.
Consequently, in the case of a disposition of shares or ADSs, the U.S. holder
may not be able to use the foreign tax credit for any Japanese tax imposed on
the gain unless it can apply the credit against U.S. federal income tax due on
other income from foreign sources. Loss recognized by a U.S. holder generally
will be treated as United States source loss. A U.S. holder may, however, be
required to treat all or any part of such loss
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as foreign source loss in certain circumstances, including if (i) NTT has paid
dividends within the 24-month period preceding the loss and (ii) the U.S. holder
included the dividends in the "financial services income" basket for foreign tax
credit limitation purposes. If such a loss were treated as foreign source for
foreign tax credit purposes, the amount of the U.S. holder's allowable foreign
tax credit may be reduced.
A non-U.S. holder of ADSs or Shares will not be subject to United States federal
income or withholding tax on gain from the sale or other disposition of ADSs or
Shares unless (i) such gain is effectively connected with the conduct of a trade
or business within the United States (and is attributable to a permanent
establishment maintained in the United States by such non-U.S. holder, if an
applicable income tax treaty so requires) or (ii) the non-U.S. holder is an
individual who is present in the United States for at least 183 days during the
taxable year of the disposition and certain other conditions are met.
Dividends in respect of the ADSs or Shares and the proceeds from the sale,
exchange, or redemption of the ADSs or Shares may be reported to the United
States Internal Revenue Service if paid to non-corporate holders. A 28% backup
withholding tax also may apply to amounts paid to non-corporate holders unless
they provide an accurate taxpayer identification number, a properly executed
U.S. Internal Revenue Service Form W-8 or W-9 or otherwise establish a basis for
exemption. The amount of any backup withholding from a payment to a holder will
be allowed as a credit against the holder's United States federal income tax
liability.
Documents on Display
NTT is subject to the informational requirements of the Exchange Act, as
amended. In accordance with these requirements, NTT files annual reports and
submits other information to the SEC. These materials, including this Form 20-F
and the exhibits thereto, may be inspected and copied at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
SEC's regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and at 233 Broadway, New York, New York 10279. Copies of the materials
may be obtained from the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The public may obtain
information on the operation of the SEC's Public Reference Room by calling the
SEC in the United States at 1-800-SEC-0330. The SEC also maintains a web site at
http://www.sec.gov that contains reports, proxy statements and other information
regarding registrants that file electronically with the SEC. Form 20-F reports
and the other information submitted by NTT to the SEC may be accessed through
this website.
ITEM 11-QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Quantitative and Qualitative Disclosures about Market Risk
The financial instruments that NTT Group holds are continuously exposed to
fluctuations in markets, such as currency exchange rates, interest rates and
stock prices of investments.
NTT Group from time to time enters into derivative financial instruments, such
as forward exchange contracts, interest rate swap agreements, currency swap
agreements and interest rate option contracts, in order to limit its major
exposure to loss in relation to underlying debt instruments or assets that may
result from adverse fluctuations in foreign currency exchange rates and interest
rates. NTT Group does not use derivative financial instruments for trading
purposes. The use of derivative financial instruments is based on specific
internal rules and is subject to controls at the relevant department of the head
offices of NTT and its subsidiaries. In most cases, derivative instruments are
integrated as part of debt transactions or financial assets and are entered into
at the beginning date of those transactions and have the same maturity as the
underlying debt or assets.
No specific hedging activities are taken against the price fluctuations of
stocks held by NTT Group as marketable securities.
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Equity Price Risk
NTT Group holds available-for-sale securities and held-to-maturity securities
included in marketable securities and other investments. In general,
highly-liquid and low risk instruments are preferred in the portfolio.
Available-for-sale securities are held as long term investments. NTT Group does
not hold marketable securities for trading purposes.
Maturities and fair values of available-for-sale securities and held-to-maturity
securities were as follows at March 31, 2005:
2005
Carrying Fair
amount value(1)
(millions of yen)
Available-for sale securities Y 221,623 Y 347,772
Held-to-maturity securities Y 16,271 Y 16,332
--------
(1) Information for reference.
Details of maturities and fair values of held-to-maturity securities were as
follows:
2005
Carrying Fair
amount value(1)
(millions of yen)
Due within 1 year Y 11,207 Y 11,253
Due after 1 year through 5 years 1,064 1,075
Due after 5 years through 10 years 4,000 4,004
Due after 10 years - -
--------
(1) Information for reference.
Foreign Exchange Risk
NTT Group from time to time enters into forward foreign exchange contracts and
currency swap agreements to hedge the risk of fluctuations in foreign currency
exchange rates associated with long-term debt issued by NTT Group denominated in
foreign currencies. Such contracts and agreements have the same maturity as the
underlying debt.
Amounts of NTT Group's financial instruments that are sensitive to foreign
currency exchange rates were not material at March 31, 2005.
Amounts related to forward foreign exchange contracts or currency swap
agreements entered into in connection with long-term debt denominated in foreign
currencies which eliminate all foreign currency exposures are shown in the table
under "Interest Rate Risk."
Interest Rate Risk
NTT Group's exposure to market risk for changes in interest rates relates
principally to its debt obligations. NTT Group has long-term debt primarily with
fixed rates. Interest rate swap agreements are entered into from time to time to
convert floating rate underlying debt or assets into fixed rate debt or assets,
or vice versa. Interest rate option contracts are entered into from time to time
to hedge the risk of a rise in the interest rate of underlying debt.
The following tables provide information about NTT Group's financial instruments
that are sensitive to changes in interest rates including debt obligations and
interest rate swaps.
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For the debt obligations, the table presents principal cash flows by expected
maturity dates, related weighted average interest rates and fair values of
financial instruments.
For interest rate swaps, the table presents notional amounts and weighted
average interest rates by expected maturity dates and fair value of the swap at
the reporting date. Notional amounts are used to calculate the contractual
payments to be exchanged under the contract. Weighted average floating rates are
based on the interest rates which were applicable on March 31, 2005.
The information is presented in Japanese yen equivalents, which is NTT Group's
reporting currency. The instruments' actual cash flows are denominated in both
Japanese yen and foreign currencies, as indicated.
Average Carrying amount and maturity date (year ending March 31)
Interest Fair
Rate value
2006 2007 2008 2009 2010 Thereafter Total
Millions of Yen
Long-term debt including
Current portion
Japanese yen
bonds and
notes: 1.4 % Y (311,126) Y (334,713) Y (374,330) Y (340,077) Y (297,887) Y (1,017,516) Y (2,675,649 ) Y (2,685,484 )
U.S.
dollar
notes: 5.6 % 36 36 (127,764 ) 0 0 0 (127,692 ) (130,971 )
Swiss
franc
bonds: 5.1 % (8,146 ) 0 0 0 0 0 (8,146 ) (8,427 )
Euro
notes: 3.9 % 96 (105,262 ) 0 0 0 (70,185 ) (175,351 ) (178,974 )
Indebtedness to banks-
Japanese
yen
loans: 1.3 % (430,391 ) (369,578 ) (311,730 ) (271,093 ) (242,893 ) (415,943 ) (2,041,628 ) (2,075,940 )
U.S.
dollar
loans: 3.0 % (29,667 ) (5,995 ) (11,920 ) (18,149 ) (8,752 ) 0 (74,483 ) (79,376 )
Subtotal (779,198 ) (815,512 ) (825,744 ) (629,319 ) (549,532 ) (1,503,644 ) (5,102,949 ) (5,159,172 )
Forward
exchange
contracts (211 ) 0 0 0 0 0 (211 ) (211 )
Currency
swap
agreements 141 11,645 (25,644 ) 0 (31 ) 4,959 (8,930 ) (8,930 )
Total Y (779,268 ) Y (803,867 )Y (851,388 ) Y (629,319 )Y (549,563 ) Y (1,498,685 ) Y (5,112,090 ) Y (5,168,313 )
Notional amount and average interest rate
(year ending March 31)
2006 2007 2008 2009 2010 Thereafter Fair value
Millions of Yen
Interest rate swap agreements
Floating to Fixed
(Japanese yen) Y 87,425 Y 48,425 Y 44,525 Y 21,525 Y 21,000 Y 21,000 Y (1,020 )
Average pay rate 0.8 % 0.8 % 0.8 % 1.3 % 1.3 % 1.3 %
Average receive rate 0.1 % 0.1 % 0.1 % 0.0 % 0.0 % 0.0 %
Fixed to Floating
(Japanese yen) Y 167,000 Y 127,000 Y 126,000 Y 126,000 Y 126,000 Y 126,000 Y 4,517
Average pay rate 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Average receive rate 1.9 % 1.5 % 1.4 % 1.4 % 1.4 % 1.4 %
Floating to
Floating
(Japanese yen) Y 22,700 Y 22,000 Y 21,000 Y 21,000 Y 21,000 Y 21,000 Y 323
Average pay rate 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Average receive rate 0.8 % 0.8 % 0.7 % 0.7 % 0.7 % 0.7 %
ITEM 12-DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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PART II
ITEM 13-DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14-MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable.
ITEM 15-CONTROLS AND PROCEDURES
NTT Group maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in its Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to the management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applied its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control objectives. NTT
Group also has investments in certain unconsolidated entities, both in Japan and
in various foreign countries. As NTT Group does not control or manage these
entities, the disclosure controls and procedures with respect to such entities
are necessarily more limited than those NTT Group maintains with respect to its
consolidated subsidiaries.
NTT's Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the design and operation of NTT Group's
disclosure controls and procedures as of March 31, 2005. Based on that
evaluation, under the supervision and with the participation of NTT's
management, the Chief Executive Officer and Chief Financial Officer have
concluded that these disclosure controls and procedures were effective as of
March 31, 2005, to provide reasonable assurance that information required to be
disclosed in the reports NTT files and submits under the Exchange Act is
recorded, processed, summarized and reported as and when required.
ITEM 16A-AUDIT COMMITTEE FINANCIAL EXPERT
Item 16A requires that a member of the board of audit of a foreign private
issuer such as NTT that has securities listed on the NYSE and that prepares its
financial statements which it files with the SEC on the basis of U.S. GAAP must
have expertise in U.S. GAAP in order to be considered a financial expert.
Japanese law does not require corporate auditors to have expertise in U.S. GAAP
and the availability of qualified persons who have expertise in U.S. GAAP and
are also familiar with Japanese GAAP and otherwise suitable to serve as a
corporate auditor for NTT is limited.
Accordingly, NTT's board of audit has determined that it does not have a
financial expert meeting the requirements of Item 16A. However, when NTT reviews
the selection, application and disclosure of its critical accounting policies,
meetings are attended not only by directors of NTT, the board of auditors, and
ChuoAoyama PricewaterhouseCoopers ("PWC"), NTT's principal auditor, but also by
KPMG AZSA & Co. ("KPMG"), the auditor for certain of NTT's principal
subsidiaries, and the opinions of KPMG are taken into account as part of the
board of audit's performance of its supervisory functions in relation to PWC's
audit. In addition, NTT's board of audit obtains advice on matters related to
U.S. GAAP and assistance in evaluating NTT's U.S. GAAP financial statements from
these two auditing firms.
ITEM 16B-CODE OF ETHICS
NTT Group has adopted a code of ethics covering all its officers, including its
principal executive officer and principal financial officer, and all of its
employees. NTT hereby undertakes to provide without any charge a copy of
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the code to any person upon request. Any such request should be made to Investor
Relations in Department IV (Address: 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo
100-8116, Japan /Phone number: 81-3-5205-5584).
ITEM 16C-PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees
NTT's principal auditor is PWC. KPMG is an auditor of certain of NTT's principal
subsidiaries.
The aggregate fees billed for each of fiscal 2004 and fiscal 2005 for
professional services rendered to NTT and its subsidiaries by PWC and its
affiliates are as follows:
Fiscal Fiscal
2005 2004
(in millions of yen)
Audit Fees Y 753 Y 713
Audit-Related Fees - 7
Tax Fees 31 27
All Other Fees 14 52
Total Fees Y 798 Y 799
The aggregate fees billed for each of fiscal 2004 and fiscal 2005 for
professional services rendered to NTT and its subsidiaries by KPMG and its
affiliates are as follows:
Fiscal Fiscal
2005 2004
(in millions of yen)
Audit Fees Y 828 Y 828
Audit-Related Fees - -
Tax Fees 142 171
All Other Fees 3 40
Total Fees Y 973 Y 1,039
Audit Fees were billed for professional services rendered by these accountants
for the audit of NTT's and its subsidiaries' annual financial statements and
services that are normally provided by them in connection with statutory and
regulatory filings or engagements for those fiscal years.
Audit-Related Fees were billed for assurance and related services rendered by
these accountants that are reasonably related to the performance of the audit or
review of NTT's and its subsidiaries' financial statements, such as due
diligence services in connection with potential business acquisitions that are
not reported under Audit Fees.
Tax Fees were billed for professional services rendered by these accountants for
tax returns and tax consultation services.
All Other Fees were billed for services provided by these accountants such as
information systems review and consultation related to environmental matters,
other than services reported in Audit Fees, Audit-Related Fees or Tax Fees.
Pre-approval Policies and Procedures that were approved by the Company's Board
of Directors and the Board of Audit
Any contract of NTT and/or its subsidiaries with PWC and/or KPMG and their
respective affiliates must be approved by NTT's board of directors and the board
of audit before the engagement of the relevant accountants.
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With respect to tax returns and services related thereto in connection with
interfacing with the tax authorities, NTT's board of directors and the board of
audit have pre-approved NTT and/or its subsidiaries entering into contracts for
specific services with PWC and/or KPMG, and NTT's board of directors and the
board of audit are to be informed of each such service.
All of the services provided by each of PWC and KPMG and each of their
respective affiliates were approved by NTT's board of directors and the board of
audit pursuant to the pre-approval policies and procedures described above, and
none of such services were approved pursuant to the procedures described in Rule
2-01(c)(7)(i)(C) of Regulation S-X, which waives the general requirement for
pre-approval with respect to the provision of services other than audit, review
or attest services in certain circumstances.
ITEM 16D-EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
NTT is relying on the general exemption from certain requirements under Rule
10A-3 under the Exchange Act related to the independence of audit committee
members and responsibilities of the audit committee which exemption is available
to non-U.S. issuers which maintain a qualifying board of audit as provided in
Rule 10A-3(c)(3). NTT believes that reliance on this exemption does not
materially adversely affect the ability of NTT's board of audit to satisfy the
other requirements of Rule 10A-3. See "Item 6-Directors, Senior Management and
Employees" for a discussion of NTT's board of audit.
ITEM 16E-PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Issuer Purchases of Equity Securities
Period (a) Total (b) (c) Total (d) Maximum
---- Number Average Numbers Number (or
of Shares Price of Shares Approximate
(or Units Paid per (or Dollar
Purchased) Share Units) Value) of
See (1) (or Purchased Shares (or
and (2) Units) as Part Units)
of that May
Publicly Yet Be
Announced Purchased
Plans Under
or the Plans
Programs or
Programs
(2)
April 1, 2004 to April 30, 2004 88.25 Y 601,313 0 9,540
May 1, 2004 to May 31, 2004 35.30 Y 547,990 0 9,540
June 1, 2004 to June 30, 2004 50.21 Y 551,909 0 1,000,000
July 1, 2004 to July 31, 2004 160.98 Y 566,750 0 1,000,000
August 1, 2004 to August 31, 2004 81.46 Y 531,177 0 1,000,000
September 1, 2004 to September 30, 2004 76.27 Y 467,184 0 1,000,000
October 1, 2004 to October 31, 2004 99.53 Y 446,032 0 1,000,000
November 1, 2004 to November 30, 2004 800,289.34 Y 458,001 800,145 199,855
December 1, 2004 to December 31, 2004 298.36 Y 457,133 0 199,855
January 1, 2005 to January 31, 2005 113.06 Y 445,130 0 199,855
February 1, 2005 to February 28, 2005 73.81 Y 440,191 0 199,855
March 1, 2005 to March 31, 2005 75.80 Y 468,191 0 199,855
--------
(1) On June 27, 2003, NTT's shareholders approved the repurchase by NTT of up to 200,000 shares of NTT's common stock
at a cost not to exceed Y100 billion in the period from the conclusion of that meeting until the next ordinary
general meeting of shareholders in 2004. On June 29, 2004, NTT's shareholders approved the repurchase of up to
1,000,000 shares of NTT's common stock at a total cost not to exceed Y600 billion in the period from the
conclusion of that meeting, until the next ordinary general meeting of shareholders in 2005.
(2) Shares purchased include fractional shares.
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PART III
ITEM 17-FINANCIAL STATEMENTS
Not applicable.
ITEM 18-FINANCIAL STATEMENTS
The Reports of Independent Accountants, Consolidated Balance Sheets of NTT at
March 31, 2004 and 2005, Consolidated Statements of Income, Consolidated
Statements of Shareholders' Equity and Consolidated Statements of Cash Flows of
NTT for each of the three years ended March 31, 2003, 2004 and 2005 and the
Notes to the Consolidated Financial Statements, and Schedule II-Valuation and
Qualifying Accounts, appear as pages F-1 through F-60.
ITEM 19-EXHIBITS
(a) Financial Statements
See accompanying index to the Consolidated Financial Statements.
(b) Exhibits
Exhibit Description
Number -------
-----
1.1 Amended Articles of Incorporation of NTT (English translation thereof) (incorporated by reference to
NTT's Form 20-F filed June 30, 2004).
1.2 Amended Share Handling Regulations of NTT (English translation thereof) (incorporated by reference
to NTT's Form 20-F filed July 3, 2003).
1.3 Amended Regulations of Board of Directors (English translation thereof) (incorporated by reference
to NTT's Form 20-F filed July 3, 2003).
8.1 List of Subsidiaries.
12.1 Chief Executive Officer's Certification Pursuant to Rule 13a-14(a) under the U.S. Securities
Exchange Act of 1934.
12.2 Chief Financial Officer's Certification Pursuant to Rule 13a-14(a) under the U.S. Securities
Exchange Act of 1934.
13.1 * Chief Executive Officer's Certification Pursuant to Rule 13a-14(b) under the U.S. Securities
Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
13.2 * Chief Financial Officer's Certification Pursuant to Rule 13a-14(b) under the U.S. Securities
Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
14.1 Consent of Independent Registered Public Accounting Firm.
14.2 Consent of Independent Registered Public Accounting Firm.
--------
* Deemed to be furnished to the SEC.
NTT agrees to furnish to the SEC upon request a copy of any instrument which
defines the rights of holders of long-term debt of NTT and its consolidated
subsidiaries.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NIPPON TELEGRAPH AND TELEPHONE CORPORATION
By: /s/ NORIO WADA
Norio Wada
President
Chief Executive Officer
Date: June 30, 2005
113
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