| Financial Statement for the Fiscal Year Ended in March 1999 | ||
| [Press Release 1999-026] | May 21, 1999 |
| 1. | Financial Statement | ||||||||||||||||||||||||||||||||||
| (1) | Overview The Japanese economy during this period has fallen into greater recession, characterized by unresolved financial crisis with continued stagnation in personal consumption and significant reductions in plant and equipment investment, which has been placing the country under tremendously difficult economic conditions. American and European economies, on the other hand, attained a stable growth in general while Asian economies suffered a great slowdown due to financial or monetary crisis. Telecommunications industry is facing the winds of reorganization; progressing domestic and international deregulation associated with severer competition is urging the entities toward alliances or mergers on a worldwide scale. Under these circumstances, KDD has merged with Teleway Japan Corporation with a view to acquiring sufficient management scale and efficiency well enough to compete with other Japanese and foreign megacarriers. Operating revenues fell to 313,100 million yen, which was a 1.0% decrease from the year-ago level. In operating revenues, the telephone revenue lost 5.9% to 236,600 million yen mainly due to a decline in the international telephone traffic, IDD rate reductions (December 1998), prevailed discount services, and the revised international accounting scheme, in spite of revenue increases in 0070 domestic long-distance telephone service brought by the merger with Teleway, the start of 001 domestic long-distance telephone service, increasing use of international telephone from cellular phones, and the boosted sale of Super World Cards. By contrast, multimedia-related revenues,* which are expected to be a mainstream of the next generation, showed a steady growth with a gain by 16.6% to 27,900 million yen. Operating expenses, although forced to swell due to the merger, was suppressed to a 0.8% increase or 307,800 million yen, owing mainly to cost reductions through efforts toward management efficiency and to a synergistic effect brought by the merger. Ordinary income fell by 43.8% to 9,400 million yen, and net income turned out 14.0% down to 7,200 million yen, resulting in decreases in both revenues and income over three consecutive years. Plant and equipment investment amounted to 118,200 million yen, out of which 77,800 million yen was spent on multimedia-related investments. * Multimedia-related revenues: Total revenues from the Internet, ATM, Frame Relay, High-Speed Leased Circuit, ISDN, etc. | ||||||||||||||||||||||||||||||||||
| (2) | Forecast (Fiscal Year Ending in March 2000) KDD expects that the international telephone traffic will remain almost level in minutes and the domestic long-distance telephone traffic will be doubled in the fiscal year ending in March 2000. Financial forecasts include 366,000 million yen for operating revenues, 260,000 million yen from telephone services, 5,000 million yen for ordinary income, and 2,500 million yen for net income. Plant and equipment investment will be 63,000 million yen, out of which 50,000 million yen will be for multimedia-related investment. | ||||||||||||||||||||||||||||||||||
| 2. | Consolidated Results | ||||||||||||||||||||||||||||||||||
| (1) | Overview Operating revenues gained 11.2% to 405,700 million yen, operating expenses rose 13.6% to 399,600 million yen, and ordinary income fell by 75.4% to 3,800 million yen, mainly due to addition of consolidated subsidiaries. However, a 1,900 million yen loss was appropriated in the final settlement for this period. | ||||||||||||||||||||||||||||||||||
| (2) | Forecast (Fiscal Year Ending in March 2000) Financial results for the fiscal year ending in March 2000 are expected to be 580,000 million yen for operating revenues, 7,000 million yen for ordinary income, and 3,000 million yen for net income. | ||||||||||||||||||||||||||||||||||
| 3. | Management Policies for the Future | ||||||||||||||||||||||||||||||||||
| KDD will continue to make every effort to expand its share in the domestic telephone market and to maintain its revenues from the international telephone business, while trying to transform its business structure into a new one with IP businesses as a mainstream. Also, efforts will be made to enhance its corporate strength by introducing a virtual company system for improved management efficiency and higher productivity. | |||||||||||||||||||||||||||||||||||
| [Summary of financial results] | |||||||||||||||||||||||||||||||||||
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Note: The figures are rounded down to the nearest hundred million yen (the same applies to the tables below) | |||||||||||||||||||||||||||||||||||
| [Summary of consolidated financial results] | |||||||||||||||||||||||||||||||||||
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