Idea Transcript
II. BUSINESS CAPABILITIES AND PLAN D12. The second section of the Registry Operator's Proposal (after the "General Information" section) is a description of the registry operator's Business Capabilities and Plan. This section must include a comprehensive, professional-quality business plan that provides detailed, verified business and financial information about the registry operator. The topics listed below are representative of the type of subjects that will be covered in the Business Capabilities and Plan section of the Registry Operator's Proposal. D13. The Business Capabilities and Plan section should consist of at least the following: D13.1. Detailed description of the registry operator's capabilities. This should describe general capabilities and activities. This description also offers the registry operator an opportunity to demonstrate the extent of its business and managerial expertise in activities relevant to the operation of the proposed registry. The following items should, at a bare minimum, be covered: D13.1.1. Company information. Date of formation, legal status, primary location, size of staff, formal alliances, references, corporate or other structure, ownership structure. 1.KDD Internet Solutions Co., Ltd. Date of formation : June 6, 2000 Legal status : Corporation Primary location(Head Office) : 1-8-1 Otemachi, Chiyoda-ku, Tokyo, 100-8186, Japan Size of staff : 4 Capital : 100,000,000 CEO : Tohru Asami Ownership structure : KDD 100% 2.KDD Corporation(As of March 31, 2000) Date of formation : April 1, 1953 Legal status : Corporation Primary location : Head Office : KDD Bldg., 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan Size of staff : 5,289 Capital : 61,777,196,000 President : Tadashi Nishimoto Ownership Structure Principal Stockholders (Top 10) 1. Ministry of Posts and Telecommunications Mutual Aid Association : 8.79% 2. Toyota Motor Corporation : 8.00% 3. Nippon Telegraph and Telephone Corp. : 8.00% 4. Singapore Telecommunications, Ltd. : 4.99% 5. Nippon Life Insurance Company : 4.62% 6. The Dai-ichi Mutual Life Insurance Company : 2.50% 7. The Industrial Bank of Japan, Ltd. : 2.21% 8. The Sakura Bank, Ltd. : 2.18% 9. The Dai-Ichi Kangyo Bank, Ltd. : 2.14% 10. The Bank of Tokyo-Mitsubishi, Ltd. : 2.12% KDDs Latest Financial Data: 1. Consolidated business results (Note: The figures are rounded down to the nearest million yen.)
Fiscal year ended March 2000
Operating revenues
Fiscal year ended March 1999
Unit
597,305
405,721
million yen
47.2
11.2
%
8,875
6,023
million yen
47.4
- 53.4
%
23,112
3,831
million yen
503.3
- 75.4
%
Net income
7,309
- 1,928
million yen
---
---
%
94.24
- 28.26
yen
---
---
yen
Return on stockholders equity
1.9
- 0.5
Ordinary income/Total assets
2.1
0.4
Ordinary income/sales
3.9
0.9
Operating income
Ordinary income
Net income per share Net income per share after making adjustments for latest shares
Note 1: Profit and loss on securities under the equity method Year ended March 2000 : 362 million yen Year ended March 1999 : 595 million yen Note 2: Appraisal profit and loss : 159,713 million yen Derivative dealing appraisal profit and loss : - 1,030 million yen Note 3: The accounting method was changed. Note 4: Percentage representation of sales, operating income, ordinary income and net income shows increase or decrease in percentage terms over previous fiscal year.
2.Consolidated financial status
Fiscal year ended March 2000
Total assets
Fiscal year ended March 1999
Unit
1,139,347
1,045,532
million yen
423,754
359,743
million yen
37.2
34.4
%
5,281.37
4,719.59
yen
Stockholders equity Stockholders equity ratio Stockholders equity per share
3. State of consolidated cash flow
Fiscal year ended March 2000
Cash flow resulted from operating activities Cash flow resulted from investment activities
Unit
45,756
---
million yen
- 70,726
---
million yen
54,067
---
million yen
217,527
---
million yen
Cash flow resulted from financial activities Outstanding amount of cash and cash equivalent at year end
Fiscal year ended March 1999
4. Particulars relating to scope of consolidation and application of equity method Number of consolidated subsidiaries : 31 Number of equity non-consolidated subsidiaries under equity method : 0 Number of affiliated companies under equity method : 4 5. Change in scope of consolidation and application of equity method Consolidated: (new) 7, (excluded) 0 Equity method: (new) 1, (excluded) 0 6. Consolidated forecast for the fiscal year ended March 2001 (April 1, 2000 - March 31, 2001)
Mid-term
End of term Unit
(Sept. 30, 01) Operating revenues
(Mar. 31, 01)
333,000
---
million yen
Ordinary income
7,000
---
million yen
Net income
3,000
---
million yen
(Reference) Estimated net income per share (for the whole fiscal year): --- yen. (Note)This company is due to merge with DDI CORPORATION and IDO CORPORATION on October 1, 2000. 7. Consolidated financial statements (As of March 31, 2000) (1) Comparative consolidated balance sheet (Unit: millions of yen) Assets
Current
Preceding Term
Increase/
Term
Decrease
1. Fixed assets
667,240
673,143
- 5,903
Tangible fixed assets
471,276
525,124
- 53,848
Mechanical facilities
93,733
92,414
1,319
Submarine cable facilities
81,151
43,399
37,751
Buildings and structures
117,221
116,279
942
Land
32,949
38,377
- 5,428
Construction in progress
29,166
114,150
- 84,984
Others
117,055
120,504
- 3,448
Intangible fixed assets
63,474
57,415
6,058
Software
39,320
27,567
11,752
Consolidated adjustment account
2,884
3,756
- 871
Others
21,268
26,091
- 4,882
Investments, etc.
132,489
90,603
41,886
Investment in securities
109,185
62,994
46,190
Deferred tax assets
18,461
---
18,461
Others
21,270
28,140
- 6,869
Allowance for doubtful debts
(-) 831
(-) 531
(-) 300
Reserve for loss from investment
(-) 15,596
---
(-) 15,596
2
Current assets
Cash
469,125
371,755
97,369
42,805
71,893
- 29,088
Note and account receivable
165,904
122,864
43,039
Marketable securities
210,604
139,373
71,231
Others
55,034
41,791
13,242
Allowance for doubtful debts
(-) 5,223
(-) 4,167
(-) 1,055
3. Deferred tax assets
353
633
- 280
2,627
---
2,627
1,139,347
1,045,532
93,814
4. Exchange conversion adjustment account
Total assets
Liabilities
Current
Preceding Term
Increase/
Term
Decrease
1. Fixed liabilities
422,958
442,866
- 19,907
Bonds payable
250,000
250,000
---
Long-term loans payable
105,029
123,392
- 18,362
Allowance for retirements benefits
46,402
50,008
- 3,606
Others
21,526
19,465
2,060
2. Current liabilities
288,129
233,734
54,394
Accounts payable
120,270
74,410
45,859
Others
167,858
159,323
8,534
3. Exchange conversion adjustment account
Total liabilities
---
270
- 270
711,087
676,871
34,216
Minority Interests
Current Term
Preceding Term
Increase/ Decrease
1.
Minority interest
4,504
Minority interests total
8,917
- 4,413
4,505
8,917
- 4,413 Shareholders equity
Current Term
Preceding Term
Increase/ Decrease
1. Capital stock
61,777
40,502
21,274
2. Capital reserve
38,243
16,973
21,270
323,741
302,274
21,466
(-) 7
(-) 6
(-) 0
3. Consolidated surplus 4. Treasury stock
Total shareholders equity
Total liabilities, Minority interests and
423,754
359,743
64,011
1,139,347
1,045,532
93,814
shareholders equity (2) Comparative Consolidated Income and Expense Statement (Unit: millions of yen)
Current Term
Preceding Term
Increase/
(4/01/99 -3/31/00) (4/01/98 - 3/31/99)
Decrease
Ordinary income and expenses
(Operating income and expenses)
Operating revenues
597,305
405,721
191,584
Telecommunications operating revenues
381,468
317,419
64,048
157,844
67,015
90,828
57,993
21,286
36,707
Operating expenses
588,430
399,698
188,731
Telecommunications operating expenses
382,051
314,515
67,535
156,735
65,527
91,208
49,642
19,655
29,987
8,875
6,023
2,852
Communications facilities construction business revenues Other businesses revenues
Communications facilities construction business expenses Other businesses expenses Operating income
(Non-operating income and expenses)
Non-operating revenues
42,198
12,408
29,790
Non-operating expenses
27,962
14,599
13,362
Ordinary income
23,112
3,831
19,280
Extraordinary income and expenses
Extraordinary income
43,536
15,386
28,150
2,193
1,402
791
36,262
13,983
22,278
5,080
---
5,080
60,984
13,775
47,208
Depreciation of R & D assets, etc.
---
2,016
- 2,016
Loss on liquidated affiliated companies
---
1,008
- 1,008
Loss on affiliates support
---
3,960
- 3,960
Management structure improvement
21,626
---
21,626
Transfer to investment loss reserve
15,596
---
15,596
18,468
---
18,468
Special retirement pay
5,292
6,790
- 1,497
Net income before adjustment of taxes, etc.
5,664
5,441
223
Corporate tax, etc.
11,540
7,423
4,116
Adjustment of corporate tax, etc.
- 5,899
---
- 5,899
Loss on minority interests
7,285
53
7,231
Net income or loss
7,309
- 1,928
9,238
Proceeds from sale of land Profit on investment securities sold Profit on equity change Extraordinary loss
Installment for qualified retirement annuity past service cost
(3) Comparative Consolidated Statement of Surplus
Current Term
Preceding Term
Increase/
(4/01/99 -3/31/00)
(4/01/98 -3/31/99)
Decrease
Consolidated surplus at beginning of year
320,225
307,799
12,425
Consolidated surplus at beginning of year
302,274
---
302,274
Other surplus at beginning of year
---
300,273
- 300,273
Profit reserve at beginning of year
---
7,525
- 7,525
17,950
---
17,950
116
273
- 157
6
67
- 60
Increase upon increase of companies under equity method
---
206
- 206
Increase upon merger, etc., of consolidated subsidiaries
110
---
110
Decrease in consolidated surplus
3,910
3,870
40
Dividend
3,715
3,213
501
Officers bonus
11
70
- 59
(of this payment to Auditors)
(-)
( 5)
(- 5)
40
585
- 545
143
---
143
7,309
- 1,928
9,238
323,741
302,274
21,466
Past year tax effect adjustment Increase in consolidated surplus Increase upon increase of consolidated subsidiaries
Decrease upon increase of consolidated subsidiaries, etc. Decrease upon revisions to surplus of consolidated subsidiaries at beginning of year Net income or loss Consolidated surplus at year end (4) Consolidated Statement of Cash Flow (Unit: millions of yen)
Current Term (4/01/99 -3/31/00)
Cash flow resulted from operating activities Net income before adjustment of taxes, etc.
5,664
Depreciation
75,196
Loss from elimination of tangible fixed assets
43,334
Increase in investment loss reserve
15,596
Decrease in retirement allowance reserve
- 3,606
Profit on change in equity
- 5,080
Profit from sales of securities
- 64,898
Loss incurred by appraisal of securities
12,019
Increase in receivable
- 41,000
Increase in inventory turnover
- 7,596
Increase in purchase liability
46,200
Decrease in advance received
- 15,003
Others
- 2,762 (Sub-total)
58,064
Interest and dividend received
3,663
Payment for interest
- 10,905
Payment for corporate tax, etc.
- 5,065
Cash flow resulted from operating activities
45,756
Cash flow resulted from investment activities Expenditure for acquisition of securities
- 11,729
Proceeds from sales of securities
29,548
Expenditure for acquisition of tangible and intangible assets
- 108,401
Proceeds from sales of tangible and intangible assets
30,241
Expenditure for acquisition of investment securities
- 57,697
Proceeds from sales of investment securities
42,587
Others
4,724
Cash flow resulted from investment activities
- 70,726
Cash flow resulted from financial activities Increase or decrease in short-term borrowing
17,328
Proceeds from long-term borrowing
4,080
Expenditure for repayment of long-term borrowing
- 15,426
Proceeds from stock issue
42,545
Proceeds from stock issue to minority shareholders
7,840
Dividends paid by parent company
- 3,715
Others
1,415
Cash flow resulted from financial activities
54,067
Conversion differences relating to cash and cash equivalent
- 1,012
Increase in cash and cash equivalent
28,084
Cash and cash equivalent at year end
187,475
Cash and cash equivalent of new consolidated subsidiaries at beginning of year
1,966
Cash and cash equivalent at year end
217,527
Outline of Individual Financial Statements for Year Ended March 2000 1. Business results (Note: The figures are rounded down to the nearest million yen.)
Fiscal year ended March 2000
Operating revenues
Fiscal year ended March 1999
Unit
395,399
313,160
million yen
26.3
- 1.0
%
9,215
5,321
million yen
73.2
- 51.7
%
25,268
9,425
million yen
168.1
- 43.8
%
Net income
3,927
7,269
million yen
- 46.0
- 14.0
%
Net income per share
50.63
106.50
yen
---
---
yen
Return on stockholders equity
1.0
2.0
Ordinary income/Total assets
2.7
1.2
Ordinary income/sales
6.4
3.0
Operating income
Ordinary income
Net income per share after making adjustments for latest shares
Note 1:Average number of shares during the term: Fiscal year ended March 2000 : 77,562,090 Fiscal year ended March 1999 : 68,256,823 Note 2:The accounting method was changed. Note 3: Percentage representation of sales, operating income, ordinary income and net income shows increase or decrease in percentage terms over previous fiscal year. 2. Stock dividend
Fiscal year ended March 2000
Cash dividends applicable to the year per share
Fiscal year ended March 1999
Unit
50.00
50.00
yen
25.00
25.00
yen
25.00
25.00
yen
3,911
3,416
Million yen
99.6
47.0
%
0.9
0.9
%
(Mid-term) (End of term) Total annual dividends Dividend propensity Dividend/Stockholders equity
Note:Breakdown of dividends for the fiscal year ended March 2000.(yen) Memorial dividend : 00.00 Special dividend : 00.00 3. Financial status
Fiscal year ended March 2000
Fiscal year ended March 1999
Unit
Total assets
943,844
924,733
million yen
Stockholders equity
424,112
371,258
million yen
44.9
40.1
%
5,285.77
4,870.57
yen
Stockholders equity ratio Stockholders equity per share Note 1:Number of stocks issued: Fiscal year ended March 2000 : 80,236,623 Fiscal year ended March 1999 : 76,224,823
4. Forecast for the fiscal year ended March 2001 (April 1, 2000 - March 31, 2001)
Mid-term
End of term
(Sept. 30, 00)
(Mar. 31, 01)
Operating revenues
Unit
191,000
---
million yen
Ordinary income
5,000
---
million yen
Net income
2,000
---
million yen
Dividend per share
25.00
---
total 25.00
yen
(Reference)Estimated net income per share (for the whole fiscal year): --.-- yen. (Note)This company is due to merge with DDI CORPORATION and IDO CORPORATION on October 1, 2000. 5. Individual Financial Statements (As of March 31, 2000) (1)Balance Sheet(Unit: millions of yen) Assets
Current
Preceding Term
Increase/
Term
Decrease
1.
Fixed assets
633,234
641,417
- 8,183
Telecommunications operation fixed assets
435,141
493,389
- 58,248
Tangible fixed assets
377,056
441,912
- 64,855
Mechanical facilities
91,843
91,508
335
Antenna facilities
3,370
10,005
- 6,635
Terminal facilities
856
847
8
Transmission line facilities
29,413
35,435
- 6,021
Civil engineering facilities
39,170
38,722
448
Submarine cable facilities
85,818
44,813
41,005
Buildings
58,483
60,168
- 1,684
Structures
4,470
6,181
- 1,710
Machinery and equipment
3,296
4,251
- 955
Vehicles
99
158
- 59
Tools, instruments, and supplies
11,955
9,286
2,669
Land
24,352
28,728
- 4,375
Construction in progress
23,924
111,805
- 87,881
Intangible fixed assets
58,084
51,477
6,607
Submarine cable usage right
3,105
1,362
1,742
Satellite usage right
4,053
11,745
- 7,691
Facility usage right
4,606
4,275
330
Software
38,362
27,244
11,117
Leasehold
473
536
- 62
Other intangible fixed assets
7,482
6,311
1,171
Non-telecommunication operation fixed asset
22,156
22,510
- 354
Tangible fixed assets
22,149
22,496
- 346
Intangible fixed assets
7
14
- 7
Investments, etc.
175,936
125,517
50,419
Investment in securities
77,919
32,325
45,593
Investment
598
1,654
- 1,056
Investment-affiliated companies
59,552
58,265
1,287
Long-term loan receivable
1,390
2
1,388
In-company long-term loan receivable
6,345
7,439
- 1,094
Long-term loans to affiliated companies
15,916
15,925
- 8
Long-term prepaid expenses
5,506
4,960
546
Deferred tax assets
13,010
---
13,010
Other investments
5,659
5,542
117
Allowance for doubtful debts
(-) 883
(-) 598
(-) 285
(-) 9,080
---
(-) 9,080
310,650
283,315
27,335
Reserve for loss from investment in affiliated companies 2
Current assets
Cash
23,993
47,103
- 23,110
Accounts receivable
73,269
72,245
1,024
Accrued income
21,089
18,546
2,543
Marketable securities
184,948
133,198
51,749
Treasury stock
7
6
0
Stores
3,782
2,585
1,196
Prepaid expenses
951
403
547
Short-term loans to affiliated companies
---
8,612
- 8,612
Deferred assets
3,263
---
3,263
Other current assets
4,327
4,572
- 244
Allowance for doubtful debts
(-) 4,981
(-) 3,959
(-) 1,022
Total assets
943,884
924,733
19,151
Preceding Term
Increase/
Liabilities
Current Term
Decrease
1.
Fixed liabilities
388,058
408,541
- 20,482
Bonds payable
250,000
250,000
---
Long-term loans payable
90,923
106,918
- 15,995
Long-term loans payable to affiliated companies
---
446
- 446
Allowance for retirements benefits
46,087
49,864
- 3,776
Other fixed liabilities
1,047
1,311
- 264
2.
Current liabilities
131,714
144,933
- 13,219
Fixed assets payable within one year
15,455
12,309
3,146
Accounts payable
30,223
32,658
- 2,434
Short-term borrowings
---
11,395
- 11,395
Accrued amount payable
25,595
18,360
7,234
Accrued corporate tax payable, etc.
23,470
14,379
9,090
Accrued expenses
8,942
340
8,601
Advances received
15,870
30,675
- 14,804
Deposits payable
3,811
1,102
2,709
Employee savings deposits
8,149
9,692
- 1,542
Short-term loans to affiliated companies
---
13,242
- 13,242
Other current liabilities
194
777
- 582
Total liabilities
519,772
553,474
- 33,702
Shareholders equity
Current
Preceding Term
Increase/
Term
Decrease
1.
Capital stock
61,777
40,502
21,274
2.
Legal reserves
46,468
24,826
21,642
Capital reserve
38,243
16,973
21,270
Retained earnings reserve
8,224
7,853
371
3.
Capital surplus
315,866
305,929
9,937
Accelerated depreciation reserve
2,130
4,082
- 1,952
Accumulated fund for fixed assets advanced depreciation
2,129
1,588
540
1,117
603
514
291,950
291,950
---
Inappropriate retained earnings at the end of this term
18,538
7,704
10,834
(of which is income from in term)
(3,927)
(7,269)
(- 3,342)
Total liabilities equity
424,112
371,258
52,853
Total liabilities and shareholders equity
943,884
924,733
19,151
special account Reserves for advanced depreciation for fixed assets
Other reserves
(2)Comparative Income Statement(Unit: millions of yen)
Current
Preceding Term
Increase/
Term
Decrease
Ordinary income and expenses
(Operating income and expenses)
Telecommunications business
Operating revenues
353,246
306,219
47,027
Voice transmission revenues
275,016
248,134
26,882
Data transmission revenue
19,310
10,074
9,236
Leased circuit revenue
28,590
26,697
1,892
144
388
- 243
30,183
20,924
9,259
Operating expenses
355,987
303,400
52,587
Sales expenses
120,618
81,528
39,089
8,323
9,979
- 1,656
30,403
27,157
3,245
Overhead expenses
2,984
4,118
- 1,134
Administrative expenses
9,808
13,435
- 3,627
Research and development expenses
8,366
2,388
5,978
60,709
49,636
11,073
877
1,882
- 1,004
109,479
110,012
- 532
4,416
3,260
1,155
- 2,741
2,818
- 5,560
Telegram revenue Other revenues
Operation expenses Maintenance expenses
Depreciation expenses Fixed assets retirement expenses Communication network charges Taxes Telecommunications operating income or loss (-)
Operating income and expenses from other businesses
Operating revenues
42,153
6,941
35,211
Operating expenses
30,196
4,438
25,757
Operating income from other businesses
11,957
2,502
9,454
9,215
5,321
3,893
Operating income
(Non-operating income and expenses)
Non-operating revenues
40,449
16,525
23,924
Interest income and discounts
973
1,404
- 431
Interest on marketable securities
892
821
71
2,003
119
1,883
---
6,150
- 6,150
28,541
---
28,541
---
2,265
- 2,265
Miscellaneous revenues
8,038
5,763
2,275
Non-operating expenses
24,397
12,421
11,976
Interest paid and discounts
4,200
2,028
2,171
Interest on bond
5,875
5,085
789
10,653
331
10,322
3,667
4,975
- 1,307
25,268
9,425
15,842
Dividends received Dividends from affiliated companies Profit from sale of securities Profit on transfer of circuit use rights
Decrease in marketable securities Miscellaneous expenses Ordinary income
Extraordinary income and expenses
Extraordinary income
38,004
12,162
25,842
1,742
4,204
- 2,461
Profit on investment securities sold
36,262
7,958
28,304
Extraordinary loss
56,001
13,775
42,225
Depreciation of R & D assets, etc.
---
2,016
- 2,016
Loss on liquidated affiliated companies
---
1,008
- 1,008
Loss on affiliates support
---
3,960
- 3,960
23,159
---
23,159
9,080
---
9,080
18,468
---
18,468
Special retirement pay
5,292
6,790
- 1,497
Net income before tax
7,271
7,812
- 540
Corporate tax, etc.
9,520
542
8,977
- 6,176
---
- 6,176
Net income
3,927
7,269
- 3,342
Income carried over from last term
2,717
2,202
514
10,097
---
10,097
3,893
---
3,893
1,905
1,606
298
190
160
29
18,538
7,704
10,834
Proceeds from sale of land
Management structure improvement Reserve for loss from investment in affiliated companies Transferred Installment for qualified retirement annuity past service cost
Adjustment of corporate tax, etc.
Past year tax effect adjustment Disposition of voluntary reserve upon application of tax effect Accounting Interim dividend Profit reserve for interim dividend Inappropriate earnings for current term (3)Comparative Proposed Appropriations of Retained Earnings(Unit: millions of yen) Item
Current Term
Inappropriate retained earnings for current term
18,538
7,704
517
902
2,129
1,588
123
70
21,309
10,266
201
181
2,005
b1,809
Reversal of special depreciation reserve Reversal of special account for reduced-value fixed assets Reversal of accumulated fund for reduced-value fixed assets Total The company plans to appropriate this amount as follows: Profit reserve Stockholders dividends
(25 stock)
Preceding Term
per
(25 per stock) (17per absorption share)
592
Special depreciation reserve
new 492
1,003
Accumulated fund for special account for reduced-value fixed assets
3,671
1,708
Accumulated fund for reduced-value fixed assets
1,394
13,000
General reserve
--2,797
Amount carried over to next term
2,717
Note: 1.Dividends paid to shareholders of absorption new shares are calculated on a pro rata basis from the initial date in reckoning. Fraction of yen resulting from the calculation are rounded up to the next whole yen. 2.Dispositions from and accumulations to special depreciation reserve, accumulated fund for fixed assets value reduction special account, and accumulated fund for fixed assets value reduction were made in accordance with the exceptions to Tax Laws Act, and exclude the amount equivalent to deferred tax liability. l
KDDs Philosophy
Bringing People Together KDDs foremost focus on our customers underpins our commitment as a global communications company to advance our industry and create a better world with services of superior quality. l
KDDs Mission
Your Message, Our Mission. To meet the growing and ever-changing communication needs of our customers with innovative services and expert consultation. The World, Within Your Reach. To bring more people in closer touch with one another worldwide by building a high-quality , low-cost global network. Your Imagination, Realized To help our customers turn their communication dreams into reality by providing fully integrated and seamless services, pioneering next-generation services, and conducting research and development at the cutting edge of technology. l
KDDs Corporate Structure(please see attachment KDD annual report page 23
)
3. KDDs affiliates 3.1.Internet-related business 3.1.1.KDD Okinawa Service Co., Ltd. Homepage URL : http://www.kdd-ok.ne.jp/ Head Office Location : KDD Naha Bldg. 5F, 4-1 Higashi-machi, Naha-shi, Okinawa, 900-0034, Japan Telephone Number : +81-98-865-3322 Fax Number : +81-98-865-3397 Summary of business undertakings: - The management and administration of land, buildings, and appurtenant facilities - The collection by proxy of communications charges, fees, etc. - The sale of portable and cellular telephone terminals - The maintenance and operation of telephone terminal facilities, communications and other facilities - The resale of international and domestic telephones - Provision of utilities and services for the purpose of telephone audio and video, and data transmission - Internet connection services (dedicated-line IP connection) - Internet dial-up connection services (US military bases) - Internet telephone services - In-company LAN construction services - Antenna facility maintenance services (registered company to carry out authorized inspections of wireless facilities) - Television conferencing services (registered with US Sprint, Affinity) Corporate profile: (Established) September 25, 1995 (Capital) Yen 80 million (President) Harumi Mima (Employees) 46 (KDD investment contributions) KDD 100% Description of main areas of business: KDD Okinawa Service Co., Ltd. (KDD-OK) receives across-the-board consignments from KDD for the work involved in the management and administration of the primary facilities within Okinawa Prefecture, the maintenance and operation of Okinawa-based communications facilities, and the sale of communications services in Okinawa. In such a way, KDD-OK successfully maintains a level of business activities that are closely knit with the regional community. Established four years ago, KDD-OK brings to bear the accumulated know-how of KDD to engage in international and domestic telephone resale and the sale of portable and cellular telephones, while also positively taking on the challenge of new business initiatives, notably Internet-related business. 3.1.2. KDD Communications Inc. Homepage URL : http://www.kcom.ne.jp/ Head Office Location : (On the premises of the KDD Otemachi Building) 1-8-1 Otemachi, Chiyoda-ku, Tokyo 100-8186, Japan Telephone Number : +81-3-3351-7420 Fax Number : +81-3-3351-7499 Summary of business undertakings: - Internet connection services - The Internet telephone service "KDD Super Economy Phone" - WWW server rental service - Internet engineering services - Network operation and maintenance (video communications and data communications) - International television conferencing, video image delivery service - The administration of KDD Hall and the staging of video/graphics events - "Account Plus," a service offering the management of international telephone charges on a per-extension and a per-corporate section basis - "Hello Phone," an international rental telephone service - Domestic and international telephone resale service - "Mobile Express," a portable/cellular telephone rental service for overseas travelers - "C-HAS," a financial settlement network service Corporate profile: (Established) May 1990 (Capital) Yen 1,820 million (President) Toshiyuki Akutsu (Employees) Approx.250 (KDD investment contribution) KDD100% Description of main areas of business: KDD Communications Inc. (KCOM) principal business activity is to provide a wide variety of communications-related services. Not only does the company provide the familiar Internet connection services and super-bargain Internet telephone service, but it also cater to a wide variety of other requirements in the form of money-saving domestic and international telephone services, international television conferencing, telegrams expressing congratulations or condolences, an inexpensive cellular telephone rental service for travelers abroad, a financial settlement network service (C-HAS), and remote access to Infonet services from mobile terminals, to name just some of its contributions to the world of communications. 3.1.3. KDD MediaNet Inc. Homepage URL : http://www.kmn.co.jp/ Head Office Location : Uchisaiwai-cho Dai Bldg. 1F,1-3-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan Telephone Number : +81-3-3539-1400 Fax Number : +81-3-3539-1411 Summary of business undertakings: - Cable Internet business - Consulting services relating to cable Internet business - The systems development involved in cable - Internet business - Other related undertakings Corporate profile: (Established) June 10, 1998 (Capital) Yen 490 million (President) Ryosuke Yamazoe (Employees) 13 (KDD investment contribution) KDD100% Description of main areas of business: Fueled by communications know-how and abundant experience of joint experiments in numerous locations, KDD MediaNet Inc. provides total support ranging from the planning of CATV Internet projects in alliance with CATV companies, all the way to network construction and operating. 3.1.4. Japan Internet Exchange Co., Ltd. Homepage URL : http://www.jpix.co.jp/ Head Office Location : 1-8-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan Telephone Number : +81-3-3243-9579 Fax Number : +81-3-3243-9597 Summary of business undertakings: -Internet exchange services Corporate Profile: (Established) July 10, 1997 (Capital) Yen 250 million (President) Hiroshi Kobayashi (Employees) 8 (KDD investment contribution) KDD 24% Description of main areas of business: Internet exchange (IX) consists of creating interconnectivity among the networks of numerous Internet service providers (ISPs) for the exchange of communications traffic. Japan Internet Exchange Co., Ltd. was established in July 1997 as a company invested in by 16 concerns such as national-standard ISPs for the purpose of conducting IX business under the control of a neutral consortium-type business. With the IX exchange facilities located in KDD's Otemachi Building, services came into operation in November 1997. The company is engaged in safe, high-quality, high-reliability operations, inspired by a commitment to enhancing convenience for Japanese Internet users and to developing a sound, healthy Internet industry. 3.2.Research and development of cutting edge technology 3.2.1. OSI Plus Corporation Homepage URL : http://www.osiplus.co.jp/ Head Office Location : KDD Meguro Bldg. 4F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-8932, Japan Telephone Number : +81-3-3794-8411 Fax Number : +81-3-3794-8415 Summary of business undertakings: - The development, design, manufacture, an sale of communications software and related communications systems - The planning, management, surveying and inspection work, and consulting pertaining to the above - The sale of data communications equipment and devices - All categories of work related and appurtenant to the above Corporate profile: (Established) September 28, 1987 (Capital) Yen 490 million (President) Masazumi Mori (Employees) 44 (KDD investment contribution) KDD 89.8% Description of main areas of business: As a data communications frontier responsible for the creation and building up of open-network environments and advanced multimedia environments, OSI Plus Corporation is an expert group that provides diverse systems and products. OSI Plus aims to be an "enterprise that contributes to the information-oriented society" with the provision of next-generation technology, notably Internet telephone (VoIP) system, CTI servers, and voice recognition systems. 3.2.2. KDD Research and Development Laboratories Inc. Homepage URL : http://www.kddlabs.co.jp Head Office Location : 2-1-15 Ohara, Kamifukuoka-shi, Saitama 356-8502, Japan Telephone Number : +81-492-78-7445 Fax Number : +81-492-78-7510 Summary of business undertakings: - The research and development of new technologies and the sale of products developed - The undertaking on consignment of surveying and research - The technological transfer of the successful results of research and development - The provision of licenses - Education, training, technical support, and consulting Corporate profile: (Established) April 1, 1998 (Capital) Yen 2,000 million (President) Shigeyuki Akiba (Employees) 159as of October 1,1999 (KDD investment contribution) KDD100% 3.2.3. KDD Technology Corporation Homepage URL : http://www.kddtech.co.jp/ Head Office Location : KDD Meguro Bldg. 1F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan Telephone Number : +81-3-3794-8371 Fax Number : +81-3-3794-7600 Summary of business undertakings: -Software development -Network and systems creation Corporate profile: (Established) August 3, 1988 (Capital) Yen 294 million (President) Toshiharu Saito (Employees) 40 (KDD investment contribution) KDD100% 3.3.Data communications engineering 3.3.1.KDD WinStar Corporation Homepage URL : http://www.kddwinstar.co.jp/ Head Office Location : KDD Nihonbashi Building, 1-5-11 Nihonbashi Honmachi, Chuo-ku, Tokyo 103-0023, Japan Telephone Number : +81-3-3517-2510 Fax Number : +81-3-3517-2515 Summary of business undertakings: - Telecommunications and other undertakings for the installation and provision of access lines linking members and type I telecommunications carriers with the use of fixed wireless access (FWA) Corporate profile: (Established) December 28, 1998 (Capital) Yen 1,000 million (President) Muneo Abe (Employees) 39 (KDD investment contribution) KDD 55% Description of main areas of business: Fixed wireless access (FWA) is a new service that entails providing low-cost network accessing lines via wireless facilities installed on the roof of customer premises. KDD WinStar came into being as the result of a merger between KDD and WinStar. The combination of KDD's vast know-how in the field of network construction and operation, harnessed to its long and successful worldwide track record in wireless communication technology, and WinStar's pioneering FWA record that boasts the top market share in America, the world's frontrunner in FWA technology, enables KDD WinStar to assure its customers of access lines ideally suited to the creation and building up of optimum FWA networking environments. Harnessing the superlative reliability and quality of KDD network services with the access lines provided by KDD WinStar has enabled us to make available to its customers communications services at a price that is lower than ever before. 3.3.2. Telecomet International Inc. Homepage URL : http://www.telecomet.co.jp Head Office Location : Center Office 22F, Bunkyo Green Court, 2-28-8 Honkomagome, Bunkyo-ku, Tokyo 113-0021, Japan Telephone Number : +81-3-5978-8560 Fax Number : +81-3-5978-8590 Summary of business undertakings: - Systems integration services in the construction of data communications networks - The development, manufacture, sale, renting, installation and maintenance of hardware / software related to data communications systems - Consulting relating to data communications systems, networking Corporate profile: (Established) November 1, 1984 (Capital) Yen 1,440 million (President) Masanori Amano (Employees) 219 (KDD investment contribution) KDD 80% Description of main areas of business: Telecomet International Inc. offers total solutions in a wide spectrum of areas from data communications network design and construction to customer support by marshaling abundant lines of the latest networking products and systems from major manufacturers both at home and abroad, and by bringing to bear its long years of data communications know-how and network integration technology to cater to a wide diversity of customer needs. Its cutting-edge global network integration service has proved particularly popular with customers, offering as it does coordination with the communications carriers around the world, support services linking principal centers worldwide, 24-hour maintenance, and other benefits. 3.4.Network construction, operation, and maintenance 3.4.1.KDD Submarine Cable Systems Inc. Homepage URL : http://www.kddscs.co.jp/ Head Office Location : Shinjuku Park Tower Bldg., 3-7-1 Nishi-Shinjuku, Shinjuku-ku Tokyo 163-1033, Japan Telephone Number : +81-3-5908-3790 Fax Number : +81-3-5908-3929 Summary of business undertakings: - Technological development of and consulting services for optical fiber submarine cable systems, construction contracting Corporate profile: (Established) May 1992 (Capital) Yen 5,686.25 million (President) Yasuhiko Niiro (Employees) 270 (KDD investment contribution) KDD 66.23% Description of main areas of business: These days, it is high-volume optical fiber submarine cable systems that play the greatest role as a transmission route for the support of data communications as they increasingly assume international dimensions. As a world-representative company specializing in the construction of optical fiber submarine cable systems, KDD Submarine Cable Systems Inc. (KDD-SCS) has contributed to the building of the world's communications infrastructure with its unique technology and highly experienced human resources. In order to meet the demands of the present day for data communications and the rapid spread of the Internet, KDD-SCS is committed to the positive furtherance of projects for the construction of optical fiber submarine cable systems, fueled as the company is by the desire to contribute to the creation of an environment for the international information-oriented era that the 21st century is bound to usher in. 3.4.2. KDD TELECOM NETWORK Co., Ltd. Head Office Location : KDD Bldg. 22F, 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan Telephone Number : +81-3-3347-6111 Fax Number : +81-3-3347-5970 Summary of business undertakings: - The operation, maintenance, and management of data communications facilities and communications networks - Consulting - Training relating to data communications facilities - The design, development, sale, and installation of data communications equipment, systems, software, etc. Corporate profile: (Established) June 1, 1998 (Capital) Yen 490 million (President) Nobuo Nezu (Employees) 396 (as of September 1999) (KDD investment contribution) KDD 100% Description of main areas of business: Amid the increasing demand for multimedia communications in recent years, KDD TELECOM NETWORK Co., Ltd. is an organization that specializes in the operating and management of transmission networks such as KDD's optical fiber submarine cable network, digital satellite communications systems, and others, as well as those of telephone and ISDN exchange network. As just such a specialist body, the company was established for the purpose of devoting its energies to the administration of communications networks with a view to finding more efficient operating solutions. From the springboard of the network operation skills and technology built up by KDD over many years, collaboration with communications carriers from all over the world, database management, and other such expertise, it looks to providing the kind of engineering ideally tailored to customer needs in the form of the operating maintenance, etc. of communications networks and data communications systems, where there is so much demand for integrated management and globalization, as well as to providing comprehensive support in the form of technical training and other guidance relating to networks. 3.4.3.Japan Telecommunications Engineering Service Co., Ltd. Head Office Location : KDD Bldg, 2-3-2 Nishi-Shinjuku, Shinjuku-ku,Tokyo 163-8003, Japan Telephone Number : +81-3-3347-8101 Fax Number : +81-3-3347-8099 Summary of business undertakings: - The design, development, and construction of data communications facilities, and the contracting out of such work - The design, development, manufacture, sale, and installation of data communications equipment and devices, and the design, development, sale, and installation of data communications systems etc. - Operation and maintenance involved in data communications facilities and communications networks, and operating management thereof - Consulting services relating to data communications facilities and communications networks - Electrical engineering work, telecommunications engineering, civil engineering, the design, implementation, and supervision of construction work, and the contracting out of such work, etc. Corporate profile: (Established) June 1, 1999 (Capital) Yen 320 million (President) Yutaka Shouno (Employees) 130 (KDD investment contribution) KDD 80% Description of main areas of business: KDD Highway Telecommunications Service Co., Ltd. (KHT) operates principally from network centers located in 12 major cities nationwide to engage in the maintenance of the approximately 9,000 kilometers of domestic optical fiber network that constitutes KDD's backbone transmission routes nationwide. These optical fiber channels run along the nations major expressways all the way from Hokkaido to Kyushu. Not only this, but KHT is also responsible, among other important areas, for the laying of overland optical communications networks, and the construction and technical consulting involved in the creation of related facilities. Taking full advantage of KDD's long-accumulated know-how, it caters extensively to diversifying customer needs. 3.4.4. Kokusai Marine Engineering Corporation Homepage URL : http://www.k-marine.co.jp/ Head Office Location : 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan Telephone Number : +81-3-3794-8347 Fax Number : +81-3-3794-8340 Summary of business undertakings: - Marine research and surveying - Marine civil engineering works - Engineering consulting Corporate profile: (Established) November 10, 1988 (Capital) Yen 50 million (President) Yuichi Shirasaki (Employees) 9 (KDD investment contribution) KDD 70% Description of main areas of business: Kokusai marine Engineering Corporation is engaged in a wide spectrum of activities that range from marine surveying, construction work through engineering, and all the way to consulting. In its marine surveying operations, the company uses the latest submarine measurement systems and underwater robots for high-precision, yet economical surveying. We cater to a wide range of needs, including the surveying and measurement involved in construction work, academic marine surveys, and environmental surveys, to name just a few of its areas of work. Bringing to bear its vast experience and expertise in the laying, maintenance, and repair of submarine cable, it performs marine, coastal, and land-based construction and maintenance projects both at home and abroad, while also engaging in diverse consulting and multifaceted engineering work such as marine and land-based construction work, among many other operations. 3.4.5. KOKUSAI CABLE SHIP Co., Ltd. Head Office Location : KDD Meguro Bldg. 2F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan Telephone Number : +81-3-3794-8250 Fax Number : +81-3-3794-8258 Summary of business undertakings: - Submarine cable-laying and maintenance - The conveyance of submarine cable - Marine surveying and research - Operations appurtenant to those described above Corporate profile: (Established) March 1966 (Capital) Yen100 million (President) Hiroyuki Oshida (Employees) approx. 60 (KDD investment contribution) KDD 100% Description of main areas of business: KOKUSAI CABLE SHIP Co., Ltd (KCS) possesses the cable-laying and cable-repair vessels the KDD OCEAN-LINK (approximately 9,600 tons) and the KDD PACIFIC-LINK (approximately 8,000 tons), with the help of which it has engaged for many years in the laying and repair of submarine cable. KCS's has won a high degree of acclaim over the years both at home and abroad for its technological prowess and its long track record of tasks brought to a successful conclusion. The demand for optical submarine cable is expected to continue to boom in the years ahead owing to the growth and progress in multimedia communications, most notably the Internet. KCS looks to honing its technological prowess in the field of the laying and maintenance of optical submarine cable in order to meet this demand and to remain at the cutting edge of world technology. 3.5.Mobile communications business 3.5.1. KDD MOBILE Inc. Homepage URL : http://www.kddmobile.co.jp Head Office Location : 2-1-23 Naka-meguro, Meguro-ku, Tokyo 153-0061, Japan Telephone Number : +81-3-3794-8275 Fax Number : +81-3-3794-8487 Summary of business undertakings: - The sale and renting of portable satellite communications terminals - The construction, operation, and maintenance involved in communications facilities - Radio wave inspections involved in to INMARSAT satellite communications - The development, facility design, construction, operating, and maintenance of INMARSAT services - The administration of telecommunications projects and consulting services relating thereto Corporate profile Corporate profile: (Established) April 1998 (Capital) Yen 300 million (President) Yutaka Goto (Employees) 101(as of September 30, 1999) (KDD investment contribution) KDD 100% Description of main areas of business: In addition to the efficient and across-the-board implementation of the entire range of operations involved in INMARSAT satellite communications services, KDD MOBILE Inc. is also engaged in multifaceted areas of the mobile communications business. Besides radio-wave on-the-spot inspections, licensing management, terminal sales, facility installation, and other operations relating to the INMARSAT satellite communications services provided by KDD, KDD Mobile also performs the development, facility design, construction, and operating maintenance of INMARSAT services. In addition to being responsible for absolutely every stage of the provision of INMARSAT services from start to finish, the company is also active as a comprehensive engineering company in the field of mobile communications, handling a broad spectrum of work that ranges from the operating and maintenance of state-of-the-art middle and low earth orbit satellite services like ICO and Orbcomm, all the way to communications consulting services. 3.6 Telemarketing business 3.6.1. KDD Telemarketing Inc. Homepage URL : http://www1.kcom.ne.jp/telema/ Head Office Location : KDD Bldg., Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan Telephone Number : +81-3-3347-8143 Fax Number : +81-3-3347-6100 Summary of business undertakings: - Telemarketing - Telemarketing-related services - Support with the running of call centers - International telephone operator related work Corporate profile: (Established) May 30, 1996 (Capital) Yen 200 million (President) Shozo Murase (Employees) Staff: approx. 400 Telemarketing personnel: approx. 2,500 (KDD investment contribution) KDD 70% Description of main areas of business: - Bringing to bear KDD's know-how accumulated in the field of international telephone operations, KDD Telemarketing Inc. assists companies with their marketing activities, while guaranteeing the strictest security. The company uses the telephone to conduct client coverage on behalf of companies to open up markets at low cost, enhance customer satisfaction, and gain other business advantages. Its principal business activities include the following. - The acquisition of new customers, provision of product information, sales reception services - The maintenance of existing clients, campaign activities for augmented business - Communication and intermediary services with clients speaking foreign languages (linguistic support) - Market research such as telephone questionnaire surveys etc. - Narrowing down of potential customers, arrangement of appointments for visits from sales personnel - Payment guidance and debt reminder The company also provide the following services as a result of harnessing the capacity to provide services described above with information systems. - Support with liaison and communications between companies and their personnel stationed overseas or on business trip in Japan or abroad, in times of emergency - Automatic reception and information provision with recorded messages and fax - Call center construction consulting, systems administration support - Enveloping and dispatch of bills, invoices, direct mail, etc.; client data input support - Internet help desk 3.6.2. KDD Telemarketing Okinawa Inc. Head Office Location : 1-32-7 Chuo, Okinawa-shi, Okinawa 904-0004, Japan Telephone Number : +81-98-921-0500 Fax Number : +81-98-921-0516 Summary of business undertakings: -Telemarketing (Inbound, Outbound) -Data entry -Help desk operations for internet etc. Corporate profile: (Established) June 7, 1999 (Capital) Yen 50 million (President) Harumi Mima (Employees) Telemarketing personnel:50 (KDD investment contribution) KDD 70% Description of main areas of business: KDD Telemarketing Okinawa Inc. works in contact centers (call centers) equipped with the latest communications and computer facilities to provide "call center business," "networking solutions business," and "toll-free telephone sales" in a format ideally suited to the particular requirements of the customer. The company is in an excellent position to meet the outsourcing demands of a broad spectrum of companies. 3.7. Research consulting 3.7.1. KDD Research Institute, Inc. Homepage URL : http://www.kdd-ri.co.jp/ Head Office Location : 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8550, Japan Telephone Number : +81-3-3347-9110 Fax Number : +81-3-3347-9123 Summary of business undertakings: - Information gathering, surveying, and research principally pertaining to domestic and overseas telecommunications business - The preparation and analysis of statistical reference data principally pertaining to telecommunications business - The summary, organization, management, and storage of reference data etc. - The editing and issue of publications principally pertaining to telecommunications business - Other operations related to and appurtenant to each of the items listed above Corporate profile: (Established) October 16, 1990 (Capital) Yen 450 million (President) Tsunekazu Matsudaira (Employees) 22 (KDD investment contribution) KDD 100% Description of main areas of business: Bringing to bear the databases and information relating to worldwide data communications business that KDD has accumulated over long years of experience, KDD Research Institute, Inc. serves as a think-tank where this amassed information and data are studied, analyzed, and processed into statistics for the purpose of extracting ideas and proposals. The principal services offered by KDD Research Institute are surveying and research, market research, the furnishing of tariff information, the publication of "KDD Research Institute R & A," the gathering, preparation, and processing of statistics, and reference data management, among other activities. As a professional group engaged in the surveying and analysis of the field of data communications, the company has won a high degree of acclaim for our work. For all this, however, we are intent on further augmenting our surveying and analysis capacities by promoting collaboration and alliances with other surveying and consulting companies both at home and abroad. 4. Merger of KDD, DDI and IDO. KDD Corporation (President: Tadashi Nishimoto; principal office: Tokyo), DDI CORPORATION (President: Yusai Okuyama; principal office: Tokyo) and IDO CORPORATION (President: Satoshi Nakagawa; principal office: Tokyo) hereby announce they have signed an agreement to merge on October 1, 2000. Details of merger is as follows. 4.1 Outline of merger
Merger timetable: Board meeting to approve merger agreement)April 5, 2000 Signing of merger agreement) April 5, 2000 General meeting of shareholders to approve merger agreement) DDI:June 28, 2000 KDD: June 29, 2000 IDO: June 30, 2000 Date of merger) October 1, 2000 Registration of merger) October 2, 2000 Surviving company: DDI CORPORATION Merger share ratios: Company
DDI
KDD
(Par value per share: 5,000)
(Par value per share: 500)
9.21
1
Merger ratio
Company
DDI
IDO
(Par value per share: 5,000)
(Par value per share: 50,000)
29
1
Merger ratio
Note: Par value of shares in each company is converted to same value.
Proportional allocation of shares: One share in DDI (par value per share: 5,000) will be issued per [92.1] shares in KDD (par value per share: 500). One share in DDI (par value per share: 5,000) will be issued per 2.9 shares in IDO (par value per share: 50,000). (Reasons for merger ratios) The merger ratio for DDI and KDD was calculated based on the average closing price on the TSE over the six months up to December 15, 1999 of shares issued by each company. The ratio in the case of IDO was determined based on the results of calculations by a third-party agency, and finalized by agreement among the parties to the merger. (Number of new shares issued through merger) Par value ordinary shares: 1,345,260.60 (par value per share: 5,000) (Calculated on the basis of the capital stock of KDD and IDO as of March 31, 2000.) Money delivered due to merger: In place of the interim dividend for the interim period from April 1 to September 30, 2000, the shareholders or pledges recorded in the final register of shareholders of KDD as of the date prior to the date of merger will be paid by DDI, without delay after the date of merger, a merger compensation of 25 per KDDs share or its pledge held by such shareholders or pledges. The amount of the merger compensation may be changed, however, upon consultation among the three companies, depending on the KDDs status of assets on the date of merger. 4.2. Outline of parties to the merger Trade name
DDI CORPORATION
KDD Corporation
IDO CORPORATION
Incorporation
June 1, 1984
March 24, 1953
March 9, 1987
Principal office
8, Ichiban-cho, Chiyoda-ku, Tokyo
2-3-2, Nishi-shinjuku, Shinjuku-ku, Tokyo
6, Rokuban-cho, Chiyodaku, Tokyo
Representative
Yusai Okuyama
Tadashi Nishimoto
Satoshi Nakagawa
Capital
72,634 million
40,502 million
68,740 million
Capital stock
2,274,442 shares
76,224,823 shares
1,374,804 shares
(5,000)
(500)
(50,000)
Shareholders' equity
278,360 million
370,601 million
42,220 million
Total assets
807,969 million
884,218 million
459,931 million
Employees
3,101
5,593
1,022
(par value)
Main shareholders and shareholdings
Kyocera Corp. 25.16%
Ministry of Posts & Telecommunications
The Sumitomo Trust & Banking Co., Ltd . 3.97% IBJ Trust and Banking Co., Ltd.* 4.16%
Mutual Aid Association 9.26%
Tokyo Electric Power Co., Ltd. 11.78%
Toyota Motor Corp. 8.42% Nippon Telegraph and Telephone Corp. 8.42%
The Chase Manhattan Bank, N.A., London 3.60%
Toyota Motor Corp. 62.83%
Chubu Electric Power Co., Ltd. 7.57% KDD Corp. 2.40%
Nippon Life Insurance Co. 4.86%
Note: Data correct as of September 30, 1999. * IBJ Trust and Banking's stake is the trust property of Sony Corp.
Financial results over past three years Accounting period
DDI (surviving company)
KDD
IDO
Year ending Mar. 1997
Year ending Mar. 1998
Year ending Mar. 1999
Year ending Mar. 1997
Year ending Mar. 1998
Year ending Mar. 1999
Year ending Mar. 1997
Year ending Mar. 1998
Year ending Mar. 1999
557,839
535,882
605,510
322,458
316,413
313,160
267,440
338,825
410,710
Ordinary profit (m)
67,756
39,503
33,648
20,807
16,761
9,425
-5,889
-38,553
26,938
Net income (m)
37,783
23,740
16,867
10,165
8,451
7,269
-5,919
-38,583
7,509
17,376.07
10,876.41
7,416.01
158.16
131.50
106.50
-12,918.15
-81,949.68
5,461.93
1,790.00
1,790.00
1,790.00
50.00
50.00
50.00
113,939.39
134,341.24
139,938.22
5,493.98
5,573.70
4,870.57
11,158.14
8,987.77
14,449.70
Sales (m)
Net income per share () Dividend per share () Shareholders' equity per share ()
4.3. Status after merger Trade name : DDI CORPORATION Logo mark: : KDDI Line of business : Type I telecommunications carrier Principal office : 8 Ichiban-cho, Chiyoda-ku, Tokyo Representative : Yusai Okuyama (President) Capital : 139,363 million (72,634million, the capital as of March 31, 2000 plus 60,001million, the amount of capital increase by allocation to third parties, and 6,726million, the capital added by the merger) Total assets : 2.1521 trillion(combined total assets of each company as of September 30, 1999) Accounting period : March 31 4.4. Purpose of merger With the Japanese telecommunications market growing increasingly competitive on a global scale as a result of deregulation and technological developments, DDI, KDD and IDO have been vigorously negotiating to build a secure position for themselves as a core telecommunications carrier, and as a result have reached agreement as equals on the following basic points. They have now signed the agreement: - Becoming a comprehensive telecommunications carrier capable of offering seamless mobile, domestic and international telecom services will realize synergies enabling DDI, KDD and IDO to provide services more effectively and thereby compete more efficiently against the NTT group. By enhancing their capital base, DDI, KDD and IDO will be able to accelerate moves to expand the scope of their businesses. - Through improving operating efficiency and competitiveness and expanding their scope of business, DDI, KDD and IDO will be able to offer world-leading services and aggressively expand marketing operations to capture the support of a wide customer base ranging from individuals to mega-companies both in Japan and abroad. - By concentrating management resources on one merged company and harmonizing the business objectives of personnel at all three firms in line with a unified business strategy, DDI, KDD and IDO aim to become a powerful business entity with the strength to compete against the dominant carriers in Japan and overseas.
In addition to becoming increasingly cutthroat, the market is also seeing a rapid shift from voice to data communications, and from fixed to mobile communications. Being able to offer seamless service by developing both mobile and IP networks has thus grown to be of vital importance. Merging will enable DDI, KDD and IDO to respond to this changing environment, allowing them to pool their accumulated know-how, develop and expand an integrated backbone and provide a seamless nationwide mobile phone service, and become a leading player in developing next-generation mobile communications services.
Focusing as it will on mobile and IP network services and making more effective use of management resources, the global and comprehensive telecommunications carrier that the merger will create will greatly benefit the Japanese public and make a genuine contribution to the development of the economy as a whole.
4.5. Information of merged companies 4.5.1. DDI Corporation (pre-merger) Headquarters : 8 Ichiban-cho, Chiyoda-ku, Tokyo, 102-8401 JAPAN Established : 1 June 1984 Capitalization : Yen 72,635 million Officers : Founder and Chairman Emeritus: Kazuo Inamori Chairman: Jiro Ushio President: Yusai Okuyama Group Enterprises: DDI CELLULAR GROUP DDI POCKET TELEPHONE GROUP A conspicuous feature of trends in the telecommunications market was the rapid growth of demand for mobile telephone services. There was also further diversification of consumer needs, including increased demand for Internet access and other data communications services. The focus of the market continued to shift from fixed-line to wireless communications, and from voice to data communications. In this market environment, DDI focused on the expansion of its long-distance, inter-national, cellular telephone, PHS. DDIs non-consolidated profit in fiscal year 1999 was affected by a reduction in long-distance telephone charges in February 1998, and by the growing popularity of discount ser-vices. Operating revenues rose by 13.0% over the previous year's level to 605,510 million, and recurring profit declined by 23.3% to 33,648 million. Net income was 29.0% lower at 16,867 million. On a consolidated basis, operating revenues increased by 5.8% to 1,246,582 million, while recurring profit declined by 20.0% to 50,866 million. Net income was 105.3% higher at 17,061 million. Long-Distance Services: DDI worked to enhance its competitiveness primarily through pricing strategies, including the introduction of new discounts to make services more accessible to existing users, especially in the area of voice calls. The expansion of the Internet was reflected in increased demand for data communications services. DDI responded by cutting charges for its Frame Relay Service and launching a new Cell Relay Service to support high-volume data communications. It further enhanced its competitiveness in the high-growth field of data communications by adding new service options to its DION Internet connection system. The improvement of network infrastructure continued. DDI acquired the Japan Information Highway (JIH) system, a large-capacity submarine cable encircling the entire Japanese archipelago. It also continued to convert its network to fiber optic cable. These enhancements will further reinforce network reliability while ensuring that DDI is able to keep pace with future growth in the demand for telecommunications services. Cellular-Phone Services: The DDI CELLULAR Group achieved steady growth in its subscriber base, which increased by 22.4% to 5,298,900 as of March 31, 1999. In July 1998 KANSAI CELLULAR TELEPHONE Co., KYUSHU CELLULAR TELEPHONE Co. and OKINAWA CELLULAR TELEPHONE Co. launched a new service based on the cdmaOne technology, which is superior to the PDC system in terms of both voice quality and suitability for data communications. The new service was subsequently introduced by CHUGOKU CELLULAR TELEPHONE, HOKURIKU CELLULAR TELEPHONE and SHIKOKU CELLULAR TELEPHONE in March 1999, and by HOKKAIDO CELLULAR TELEPHONE Co. and TOHOKU CELLULAR TELEPHONE Co. in April 1999. Seamless nationwide coverage was established in April 1999, when IDO launched cdmaOne services in the Tokyo and Tokai regions. To improve the competitiveness of existing services, DDI made a number of changes to its system of charges. It launched a new plan that combines a basic charge with a certain amount of free call time and also introduced discount services. C-Mail, a mail service for cellular telephones, and the EZweb service, which allows Internet access from cdmaOne telephones, were introduced in April 1999. PHS Services: The advantages of PHS relative to cellular-telephone services are shrinking in terms of charges and functions. In an effort to expand its user base, DDI introduced new charging plans and ser-vices and continued to improve the functionality of its network. However, the business environment was extremely harsh, and other PHS operators made major changes in their operations. The number of subscribers registered with the Pocket Telephone companies reached a peak of 3,617,000 in July 1998. This was followed by net declines each month until February 1999. DDI sought to halt this trend by introducing a number of innovations, including the P-Mail DX (P-Mail Deluxe) telephone with enhanced mail functions, and the Moji Denwa (Text Phone), which was specially designed to take advantage of the data communications capabilities of PHS. These measures brought a return to net growth, and by March 1999 the total number of subscribers was only 0.8% below the previous years level at 3,457,000. Group Integration to Match Market Needs: DDI is converting its network to fiberoptic technology and building an IP network to support data communications. These enhancements will enable it to respond flexibly to the demand for high-speed, large-capacity services. As customer needs become more sophisticated and diverse, DDI will also enhance its ability to market its services through a consulting approach as a provider of comprehensive solutions that include the design of corporate communications systems. In April 1999 it established DDI Network Systems to handle its solutions business. Members of the DDI Group have joined forces to develop and provide the EZweb service, which was launched in April 1999. EZweb allows users to access Internet information from a cellular telephone. Access is via DION, an Internet connection service operated by DDI. Reducing Reliance on the NTT Network: Until now DDI has connected to the NTT network via relay exchanges. It is now moving closer to users by introducing group center (GC) connections at local exchanges. This will lower DDI's reliance on the NTT network and reduce the amount of access charges paid to NTT. DDI also plans to reduce the reliance of the CELLULAR TELEPHONE companies on the NTT network by enabling them to use group connections via the DDI network. This change, which has already been implemented for the PHS companies, will also bring savings in the amount of access charges paid to NTT. Group connections are expected to enhance the earnings of all group companies. History: 1984 - Established 1986 - Launch of leased circuit service 1987 - Launch of long-distance service 1989 - Launch of cellular service 1993 - Establishment of NIPPON IRIDIUM CORPORATION 1994 - Start of Tu-Ka cellular service(1.5 GHz digital service for Tokyo and Chubu areas) 1995 - Launch of PHS service 1997 - Business tie-up with IDO 1998 - Launch of cdmaOne service - Launch of International Telephone service - Launch of IRIDIUM service 4.5.2. IDO CORPORATION Capital : Paid-up Capital: Yen 68,740.2 million Major Stockholders : Toyota Motor Corporation (63.2%) Tokyo Electric Power Co., Inc. (11.8%) Chubu Electric Power Co., Inc. (7.6%) Total 48 companies Sales and Services Areas : Tokyo and Kanagawa, Chiba, Saitama, Ibaraki, Tochigi, Gunma, Yamanashi, Aichi, Gifu, Mie, Shizuoka and Nagano prefectures Companies Financed by IDO Capital : Toyota Media Station Incorporated Satellite Phone Japan, Ltd.. ATIS Corporation Strategy for the future:
IDO has a Steadfast Commitment to Meeting Future Challenges and Implementing New Technologies Introducing Revolutionary "cdmaOne" service for the 21st Century. The April 1999 launch of "cdmaOne" service marked a milestone in cellular industry history. "cdmaOne" is a completely new digital telecommunications technology based on CDMA (Code Division Multiple Access), a technology developed in the U.S. It offers outstanding voice and high-speed data transmission capabilities and represents the future in the continually advancing world of telecommunications. Countries around the world are moving toward the future in cellular phone technology by adopting "cdmaOne." Gaining High Acclaim for its Digital Network Service: Since the company began operations in 1994, the companys digital network service Personal Digital Cellular system (PDC) has been highly rated by its customers. With a coverage of approximately 99% of the population, it now has 3 million subscribers who appreciate both the coverage and quality of its network. Furthermore, because of its roaming agreements with the DDI Cellular Group, customers can use its digital network service throughout Japan. In 1997, it developed the Digital G series of handsets capable of data transmission speeds of 9.6Kbps. The new G series, which is lighter than previous models and offers functions such as text message services, increases the convenience and usefulness of its digital network service Continuous R&D Is Enhancing Network Reliability: Latest Developments in Mobile Communications Technology Even when viewed against the background of the rapidly changing telecommunications industry, the latest advances in mobile multimedia communications technology are particularly striking. IDO employs the latest technology from all over the world to build a stable and reliable communications network. In the future, the company plans to continue augmenting its own R&D with other technical advances to continue providing convenient and attractive services to its customers. Completely Digitized Intelligent Network: When users cross multiple wireless zones at high speeds, being able to use their cellular phones requires advanced high-speed transmission technologies built into their receivers. IDO's service area is finely divided into zones where a number of base stations are installed. These stations are connected to digital switches with fiber-optic cables. The digital switch circuits and connections also operate on digital signaling for ultrafast processing and, through a dedicated computer, form an intelligent network that delivers robust high-speed services. Introduction of Latest Network Monitoring System : IDO developed and installed the network monitoring system I-NOS to allow its many networks to be managed as a single unit. The system enables the real-time comprehension of transmission load amounts and the status of equipment, such as base stations, switches and transmitters, and allows for flexible network management. With this system, IDO can offer reliable, stable services around the clock. 5. Strategic Partnership with Singapore Telecom KDD and Singapore Telecom (SingTel) today announced that the two companies will form a strategic partnership to better serve their corporate customers in Asia and around the world. Reflecting their strong commitment to the partnership, KDD and SingTel have agreed to undertake a share swap. Under the agreement, KDD will issue 4,011,800 new shares, or approximately 5% of its enlarged share capital, to SingTel. At the same time, SingTel will issue to KDD 221,310,898 new shares, representing 1.43% of the enlarged SingTel share capital. The pricing of the share swap was arrived at following negotiations on a willing buyer and a willing seller basis. 5.1. Formation of joint venture In conjunction with the partnership, KDD and SingTel have signed an Agreement-In-Principle with the intent to form an equally-owned joint venture (JV) that will provide premium seamless and managed end-to-end telecommunications services to multinational corporations and business customers. These services include Asynchronous Transfer Mode (ATM), frame relay, international leased circuits and services based on Internet Protocol. Although KDD and SingTel presently have their own networks in the Asia Pacific, the two companies intend for the JV to provide services on a common platform. To meet this objective, the JV will develop an integrated ATM backbone in the Asia Pacific region with connectivity to North America and Europe. The backbones initial nodes will be located in Singapore, Tokyo and Hong Kong. KDD and SingTel will contribute assets such as submarine cables and equipment as well as second personnel to the JV. Ownership of the ATM backbone will provide the JV with operational flexibility and enable it to better manage its cost structure so that it can offer services that are competitively priced. Total amount of investment of the JV over the five years will be in the region of US$350 million. Presently, KDD and SingTel work with other carriers to provide global service to their customers. Where necessary, the JV will do likewise to distribute its services. It will provide comprehensive back office support including consolidated billing, clearing house, product development and network management functions. Customers will have a single point of contact and a single contract with the JV. The services provided by the JV will be useful to other carriers who are keen to serve their customers with managed end-to-end services. KDD and SingTel expect to sign a definitive agreement on the JV by end of February 2000 with the incorporation of the JV scheduled for April 2000. 5.2. Strengthening of a partnership KDD President, Mr. Tadashi Nishimoto, said: The new equity relationship between SingTel and KDD is definitely a new step in our long-standing and tested partnership that will enable solid expansion of our business especially in the Asian region. The two of us standing shoulder to shoulder will remodel the Asian telecommunications market. The true purpose of our alliance and our agreement to establish a joint venture, said Mr. Nishimoto, is for the customers to benefit from abundant opportunities to enjoy premium quality, seamless end-to-end managed products and services based on an integrated ATM backbone. It is my strong belief that SingTel and KDD will continue to be the leaders in the Asian region in the new millennium. SingTel President and CEO, Brigadier General Lee Hsien Yang, said: SingTel is pleased to welcome KDD, an established and well-regarded telecommunications company, as a strategic partner. The share swap reflects the strong and significant commitment of KDD and SingTel to the partnership and cements the already close relationship of our two companies. KDD and SingTel have had a long history of working together. We were founder members of the WorldPartners alliance and we have also collaborated closely in the planning of many submarine cable systems in the region. This strengthening of our partnership will ensure that both companies continue to play leading roles in the region even as the telecommunications industry continues to consolidate. About Singapore Telecom:
Singapore Telecom is a world-class provider of domestic, international and mobile telecommunications as well as postal services. Turnover and net profit for the Group in 1998/99 were S$4.88 billion and S$1.96 billion respectively. Publicly listed in October 1993, Singapore Telecom is Singapores largest company in terms of market capitalization. The Singapore Telecom Group has invested more than S$2.5 billion in telecommunications-related projects around the world, especially in the Asia Pacific. It owns interests in 54 ventures and operations in 19 countries including the Philippines, Thailand and Belgium. It has representative offices in 18 cities in Asia, North America and Europe. 6. Others KDD has telecommunication service agreements and cooperative relationships with carriers of over 200 countries.