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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR

15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2012

Commission File Number: 001-31221

Total number of pages: 12

 

 

NTT DOCOMO, INC.

(Translation of registrant’s name into English)

 

 

Sanno Park Tower 11-1, Nagata-cho 2-chome

Chiyoda-ku, Tokyo 100-6150

Japan

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  þ            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

				NTT DOCOMO, INC.
Date: November 1, 2012				By:		/s/ MUTSUO YAMAMOTO
						Mutsuo Yamamoto Head of Investor Relations

Information furnished in this form:

 

1.	Report filed on November  1, 2012 with the Director of the Kanto Local Finance Bureau of Japan pursuant to the Financial Instruments and Exchange Act of Japan

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NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MARCH 31, 2012 and SEPTEMBER 30, 2012

 

		Millions of yen
		March 31, 2012				September 30, 2012
ASSETS
Current assets:
Cash and cash equivalents		¥	522,078			¥	320,710
Short-term investments			371,504				391,884
Accounts receivables			963,001				218,600
Receivables held for sale			—				562,330
Credit card receivables			189,163				188,477
Allowance for doubtful accounts			(23,550	)			(26,090	)
Other receivables			47,014				337,020
Inventories			146,563				187,622
Deferred tax assets			76,858				76,395
Prepaid expenses and other current assets			65,630				81,984
Total current assets			2,358,261				2,338,932
Property, plant and equipment:
Wireless telecommunications equipment			5,700,951				5,597,047
Buildings and structures			867,553				874,634
Tools, furniture and fixtures			520,469				524,284
Land			199,802				199,829
Construction in progress			133,068				155,213
Accumulated depreciation and amortization			(4,885,546	)			(4,786,918	)
Total property, plant and equipment, net			2,536,297				2,564,089
Non-current investments and other assets:
Investments in affiliates			480,111				471,986
Marketable securities and other investments			128,389				133,772
Intangible assets, net			680,831				683,033
Goodwill			204,890				222,998
Other assets			255,747				304,723
Deferred tax assets			303,556				285,809
Total non-current investments and other assets			2,053,524				2,102,321
Total assets		¥	6,948,082			¥	7,005,342
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		¥	75,428			¥	62,959
Short-term borrowings			733				7,427
Accounts payable, trade			738,783				629,101
Accrued payroll			55,917				54,475
Accrued interest			767				710
Accrued income taxes			150,327				158,626
Other current liabilities			132,048				142,531
Total current liabilities			1,154,003				1,055,829
Long-term liabilities:
Long-term debt (exclusive of current portion)			180,519				183,586
Accrued liabilities for point programs			173,136				155,064
Liability for employees’ retirement benefits			160,107				165,876
Other long-term liabilities			171,546				155,313
Total long-term liabilities			685,308				659,839
Total liabilities			1,839,311				1,715,668
Equity:
NTT DOCOMO, INC. shareholders’ equity
Common stock			949,680				949,680
Additional paid-in capital			732,592				732,537
Retained earnings			3,861,952				4,031,727
Accumulated other comprehensive income (loss)			(104,529	)			(92,860	)
Treasury stock, at cost			(377,168	)			(377,168	)
Total NTT DOCOMO, INC. shareholders’ equity			5,062,527				5,243,916
Noncontrolling interests			46,244				45,758
Total equity			5,108,771				5,289,674
Commitments and contingencies
Total liabilities and equity		¥	6,948,082			¥	7,005,342

See accompanying notes to consolidated financial statements (unaudited).

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

SIX MONTHS ENDED SEPTEMBER 30, 2011 and 2012

Consolidated Statements of Income

 

		Millions of yen
		Six Months Ended September 30, 2011				Six Months Ended September 30, 2012
Operating revenues:
Wireless services		¥	1,877,776			¥	1,844,952
Equipment sales			235,206				362,368
Total operating revenues			2,112,982				2,207,320
Operating expenses:
Cost of services (exclusive of items shown separately below)			436,585				475,705
Cost of equipment sold (exclusive of items shown separately below)			317,830				374,282
Depreciation and amortization			318,384				324,216
Selling, general and administrative			531,682				562,008
Total operating expenses			1,604,481				1,736,211
Operating income			508,501				471,109
Other income (expense):
Interest expense			(1,680	)			(910	)
Interest income			672				728
Other, net			4,378				(5,341	)
Total other income (expense)			3,370				(5,523	)
Income before income taxes and equity in net income (losses) of affiliates			511,871				465,586
Income taxes:
Current			195,627				164,771
Deferred			11,958				19,388
Total income taxes			207,585				184,159
Income before equity in net income (losses) of affiliates			304,286				281,427
Equity in net income (losses) of affiliates, net of applicable taxes			(5,810	)			(537	)
Net income			298,476				280,890
Less: Net (income) loss attributable to noncontrolling interests			542				4,994
Net income attributable to NTT DOCOMO, INC.		¥	299,018			¥	285,884
PER SHARE DATA
Weighted average common shares outstanding — Basic and Diluted (shares)			41,467,601				41,467,601
Basic and Diluted earnings per share attributable to NTT DOCOMO, INC. (yen)		¥	7,210.88			¥	6,894.15

Consolidated Statements of Comprehensive Income

 

		Millions of yen
		Six Months Ended September 30, 2011				Six Months Ended September 30, 2012
Net income		¥	298,476			¥	280,890
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale securities, net of applicable taxes			(9,379	)			9,022
Change in fair value of derivative instruments, net of applicable taxes			(9	)			13
Foreign currency translation adjustment, net of applicable taxes			(2,201	)			2,446
Pension liability adjustment, net of applicable taxes			234				214
Total other comprehensive income (loss)			(11,355	)			11,695
Comprehensive income			287,121				292,585
Less: Comprehensive (income) loss attributable to noncontrolling interests			557				4,968
Comprehensive income attributable to NTT DOCOMO, INC.		¥	287,678			¥	297,553

See accompanying notes to consolidated financial statements (unaudited).

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2011 and 2012

Consolidated Statements of Income

 

		Millions of yen
		Three Months Ended September 30, 2011				Three Months Ended September 30, 2012
Operating revenues:
Wireless services		¥	943,673			¥	921,515
Equipment sales			122,021				213,524
Total operating revenues			1,065,694				1,135,039
Operating expenses:
Cost of services (exclusive of items shown separately below)			218,134				244,108
Cost of equipment sold (exclusive of items shown separately below)			168,142				216,198
Depreciation and amortization			162,596				166,744
Selling, general and administrative			276,036				299,507
Total operating expenses			824,908				926,557
Operating income			240,786				208,482
Other income (expense):
Interest expense			(774	)			(449	)
Interest income			354				356
Other, net			1,250				(7,617	)
Total other income (expense)			830				(7,710	)
Income before income taxes and equity in net income (losses) of affiliates			241,616				200,772
Income taxes:
Current			103,507				86,030
Deferred			(5,314	)			(3,911	)
Total income taxes			98,193				82,119
Income before equity in net income (losses) of affiliates			143,423				118,653
Equity in net income (losses) of affiliates, net of applicable taxes			(3,636	)			306
Net income			139,787				118,959
Less: Net (income) loss attributable to noncontrolling interests			484				2,626
Net income attributable to NTT DOCOMO, INC.		¥	140,271			¥	121,585
PER SHARE DATA
Weighted average common shares outstanding — Basic and Diluted (shares)			41,467,601				41,467,601
Basic and Diluted earnings per share attributable to NTT DOCOMO, INC. (yen)		¥	3,382.66			¥	2,932.05

Consolidated Statements of Comprehensive Income

 

		Millions of yen
		Three Months Ended September 30, 2011				Three Months  Ended September 30, 2012
Net income		¥	139,787			¥	118,959
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale securities, net of applicable taxes			(9,629	)			10,748
Change in fair value of derivative instruments, net of applicable taxes			(2	)			7
Foreign currency translation adjustment, net of applicable taxes			(8,879	)			(19,290	)
Pension liability adjustment, net of applicable taxes			86				107
Total other comprehensive income (loss)			(18,424	)			(8,428	)
Comprehensive income			121,363				110,531
Less: Comprehensive (income) loss attributable to noncontrolling interests			508				2,665
Comprehensive income attributable to NTT DOCOMO, INC.		¥	121,871			¥	113,196

See accompanying notes to consolidated financial statements (unaudited).

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED SEPTEMBER 30, 2011 and 2012

 

		Millions of yen
		Six Months Ended September 30, 2011				Six Months Ended September 30, 2012
Cash flows from operating activities:
Net income		¥	298,476			¥	280,890
Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation and amortization			318,384				324,216
Deferred taxes			7,127				17,853
Loss on sale or disposal of property, plant and equipment			7,173				11,293
Impairment loss on marketable securities and other investments			129				10,175
Equity in net (income) losses of affiliates			10,565				1,619
Changes in assets and liabilities:
(Increase) / decrease in accounts receivables			57,226				746,920
(Increase) / decrease in receivables held for sale			—				(562,330	)
(Increase) / decrease in credit card receivables			(10,790	)			(5,281	)
Increase / (decrease) in allowance for doubtful accounts			3,393				2,346
(Increase) / decrease in other receivables			15,444				(276,867	)
(Increase) / decrease in inventories			(28,215	)			(29,672	)
(Increase) / decrease in prepaid expenses and other current assets			(10,468	)			(12,306	)
(Increase) / decrease in non-current installment receivables for handsets			(2,764	)			88,075
(Increase) / decrease in non-current receivables held for sale			—				(124,958	)
Increase / (decrease) in accounts payable, trade			(63,925	)			(69,598	)
Increase / (decrease) in accrued income taxes			19,139				7,526
Increase / (decrease) in other current liabilities			17,849				5,992
Increase / (decrease) in accrued liabilities for point programs			(15,661	)			(18,072	)
Increase / (decrease) in liability for employees’ retirement benefits			4,094				4,246
Increase / (decrease) in other long-term liabilities			(12,095	)			(21,412	)
Other, net			9,292				6,344
Net cash provided by operating activities			624,373				386,999
Cash flows from investing activities:
Purchases of property, plant and equipment			(217,795	)			(285,564	)
Purchases of intangible and other assets			(122,357	)			(125,615	)
Purchases of non-current investments			(11,037	)			(6,793	)
Proceeds from sale of non-current investments			2,138				1,344
Acquisitions of subsidiaries, net of cash acquired			—				(18,626	)
Purchases of short-term investments			(551,462	)			(492,620	)
Redemption of short-term investments			241,268				382,279
Proceeds from redemption of short-term bailment for consumption to a related party			—				90,000
Other, net			(2,543	)			(2,593	)
Net cash used in investing activities			(661,788	)			(458,188	)
Cash flows from financing activities:
Repayment of long-term debt			(104,037	)			(15,819	)
Proceeds from short-term borrowings			1,439				7,352
Repayment of short-term borrowings			(702	)			(5,656	)
Principal payments under capital lease obligations			(2,226	)			(1,631	)
Dividends paid			(107,792	)			(116,088	)
Other, net			1,170				1,680
Net cash provided by (used in) financing activities			(212,148	)			(130,162	)
Effect of exchange rate changes on cash and cash equivalents			(60	)			(17	)
Net increase (decrease) in cash and cash equivalents			(249,623	)			(201,368	)
Cash and cash equivalents at beginning of period			765,551				522,078
Cash and cash equivalents at end of period		¥	515,928			¥	320,710
Supplemental disclosures of cash flow information:
Cash received during the period for:
Income tax refunds		¥	228			¥	1,012
Cash paid during the period for:
Interest, net of amount capitalized			1,724				967
Income taxes			176,913				158,081

See accompanying notes to consolidated financial statements (unaudited).

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of presentation:

(1) General

The accompanying quarterly consolidated financial statements of NTT DOCOMO, INC. and its subsidiaries (“DOCOMO”) were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain disclosures required by U.S. GAAP have been omitted. Since DOCOMO’s American Depositary Shares were listed on the New York Stock Exchange in March 2002, DOCOMO has prepared its consolidated financial statements pursuant to the terminology, forms and preparation methods required in order to issue American Depositary Shares, which are registered with the Securities and Exchange Commission of the United States of America.

(2) Receivables held for sale

DOCOMO entered into a contract regarding the transfer of billing claims with NTT FINANCE CORPORATION (NTT FINANCE) in June 2012. Under the contract, DOCOMO agreed with NTT FINANCE that monthly billing claims which would be billed to subscribers mainly for DOCOMO’s telecommunications services and by providing funds for subscribers’ handset purchases on or after July 1, 2012 would be transferred, at fair value, to NTT FINANCE.

Accounts receivables for DOCOMO’s telecommunications services and installment receivables for handsets, which had not been sold to NTT FINANCE and were held for sale as at the balance sheet date, are separately presented as “Receivables held for sale” on the consolidated balance sheets. Meanwhile, DOCOMO presents cash consideration to be received for the transferred billing claims, as at the balance sheet date, as “Other receivables”.

2. Summary of significant accounting and reporting policies:

Reclassifications —

Certain reclassifications have been made to the prior periods’ consolidated financial statements to conform to the presentation used for the six months ended September 30, 2012.

3. Equity:

Effective May 1, 2006, the Corporate Law of Japan provides that (i) dividends of earnings require approval at a general meeting of shareholders, (ii) interim cash dividends can be distributed upon the approval of the board of directors, if the articles of incorporation provide for such interim cash dividends and (iii) an amount equal to at least 10% of decrease in retained earnings by dividends payment be appropriated from retained earnings to a legal reserve up to 25% of capital stock. The legal reserve is available for distribution upon approval of the shareholders.

In the general meeting of shareholders held on June 19, 2012, the shareholders approved cash dividends of ¥116,109 million or ¥2,800 per share, payable to shareholders recorded as of March 31, 2012, which were declared by the board of directors on April 27, 2012. The source of dividends was “Retained earnings.” DOCOMO started paying the dividends on June 20, 2012.

On October 26, 2012, the board of directors declared cash dividends of ¥124,403 million or ¥3,000 per share, payable to shareholders recorded as of September 30, 2012. The source of dividends will be “Retained earnings”. DOCOMO plans to start paying the dividends on November 19, 2012.

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

In order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment, DOCOMO acquires treasury stock.

With regard to the acquisition of treasury stock, the Corporate Law of Japan provides that (i) it can be done according to the resolution of the general meeting of shareholders, and (ii) the acquisition of treasury stock through open market transactions can be done according to the resolution of the board of directors if the articles of incorporation contain such a provision. The provision is stipulated in DOCOMO’s articles of incorporation.

Issued shares and treasury stock —

The changes in the number of issued shares and treasury stock were as follows.

DOCOMO has not issued shares other than shares of its common stock.

 

		Number of issued shares				Number of treasury stock
As of March 31, 2011			43,650,000				2,182,399
As of September 30, 2011			43,650,000				2,182,399
As of March 31, 2012			43,650,000				2,182,399
As of September 30, 2012			43,650,000				2,182,399

DOCOMO did not repurchase shares for the six months ended September 30, 2011 and 2012.

Per share data —

Per share data is as follows:

 

		Yen
		Six months ended September 30, 2011				Six months ended September 30, 2012
Basic and Diluted earnings per share attributable to NTT DOCOMO, INC.		¥	7,210.88			¥	6,894.15
		Yen
		Three months  ended September 30, 2011				Three months  ended September 30, 2012
Basic and Diluted earnings per share attributable to NTT DOCOMO, INC.		¥	3,382.66			¥	2,932.05
		Yen
		March 31, 2012				September 30, 2012
NTT DOCOMO, INC. shareholders’ equity per share		¥	122,083.91			¥	126,458.15

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

4. Segment reporting:

DOCOMO’s chief operating decision maker (“CODM”) is its board of directors. The CODM evaluates the performance and makes resource allocations of its segments based on the information derived from DOCOMO’s internal management reports. Accounting policies used to determine segment profit or loss and segment assets are consistent with those used to prepare the consolidated financial statements in accordance with U.S. GAAP. There were no transactions between the operating segments.

DOCOMO has five operating segments, which consist of mobile phone business, credit services business, home shopping services business, internet connection services business for hotel facilities, and miscellaneous businesses. The mobile phone business includes mobile phone services (Xi services, FOMA services, and mova services), packet communications services, satellite mobile communications services, international services and the equipment sales related to these services. Credit services business primarily includes DCMX services. Home shopping services business includes home shopping services business provided primarily through TV media. Internet connection services business for hotel facilities includes high-speed internet connection services for hotel facilities, which are provided in many countries in the world, mainly Asia and Europe. The miscellaneous businesses primarily includes advertisement services, development, sales and maintenance of IT systems. DOCOMO terminated mova services on March 31, 2012.

Due to its quantitative significance, only the mobile phone business qualifies as a reportable segment and therefore is disclosed as such. The remaining four operating segments are each quantitatively insignificant and therefore combined and disclosed as “all other businesses.”

 

		Millions of yen
Three months ended September 30, 2011		Mobile  phone business				All other businesses				Consolidated
Operating revenues		¥	1,035,034			¥	30,660			¥	1,065,694
Operating expenses			792,469				32,439				824,908
Operating income (loss)		¥	242,565			¥	(1,779	)		¥	240,786
		Millions of yen
Three months ended September 30, 2012		Mobile  phone business				All other businesses				Consolidated
Operating revenues		¥	1,092,873			¥	42,166			¥	1,135,039
Operating expenses			876,898				49,659				926,557
Operating income (loss)		¥	215,975			¥	(7,493	)		¥	208,482
		Millions of yen
Six months ended September 30, 2011		Mobile  phone business				All other businesses				Consolidated
Operating revenues		¥	2,050,844			¥	62,138			¥	2,112,982
Operating expenses			1,537,997				66,484				1,604,481
Operating income (loss)		¥	512,847			¥	(4,346	)		¥	508,501
		Millions of yen
Six months ended September 30, 2012		Mobile  phone business				All other businesses				Consolidated
Operating revenues		¥	2,128,701			¥	78,619			¥	2,207,320
Operating expenses			1,641,921				94,290				1,736,211
Operating income (loss)		¥	486,780			¥	(15,671	)		¥	471,109

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

DOCOMO does not disclose geographical information since the amounts of operating revenues generated outside Japan are immaterial.

5. Contingencies:

Litigation —

DOCOMO is involved in litigation and claims arising in the ordinary course of business. Management believes that no litigation or claims outstanding, pending or threatened against DOCOMO would have a materially adverse effect on its results of operations, cash flows or financial position.

Guarantees —

DOCOMO enters into agreements in the normal course of business that provide guarantees for counterparties. These counterparties include subscribers, related parties, foreign wireless telecommunications service providers and other business partners.

DOCOMO provides subscribers with guarantees for product defects of cellular phone handsets sold by DOCOMO, but DOCOMO is provided with similar guarantees by the handset vendors and no liabilities were recognized for these guarantees.

Though the guarantees or indemnifications provided in transactions other than those with the subscribers are different in each contract, the likelihood of almost all of the performance of these guarantees or indemnifications are remote and amount of payments DOCOMO could be claimed for is not specified in almost all of the contracts. Historically, DOCOMO has not made any significant guarantee or indemnification payments under such agreements. DOCOMO estimates the fair value of the obligations related to these agreements is not significant. Accordingly, no liabilities were recognized for these obligations.

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

6. Fair value measurements:

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value according to observability. The inputs are described as follows:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability

Level 3 — unobservable inputs for the asset or liability

DOCOMO also distinguishes assets and liabilities measured at fair value every period on a recurring basis from those measured on a nonrecurring basis under specific situation.

(1) Assets and liabilities measured at fair value on a recurring basis

DOCOMO’s assets and liabilities measured at fair value on a recurring basis include available-for-sale securities and derivatives.

DOCOMO’s assets and liabilities that were measured at fair value on a recurring basis at March 31, 2012 and September 30, 2012 were as follows:

 

		Millions of yen
		March 31, 2012
		Total				Level 1				Level 2				Level 3
Assets:
Available-for-sale securities
Equity securities (domestic)		¥	51,808			¥	51,808			¥	—			¥	—
Equity securities (foreign)			64,161				64,161				—				—
Debt securities (foreign)			30				30				—				—
Total available-for-sale securities			115,999				115,999				—				—
Total		¥	115,999			¥	115,999			¥	—			¥	—
Liabilities:
Derivatives
Foreign exchange forward contracts		¥	1			¥	—			¥	1			¥	—
Foreign currency option contracts			1,096				—				1,096				—
Total derivatives			1,097				—				1,097				—
Total		¥	1,097			¥	—			¥	1,097			¥	—

There were no transfers between Level 1 and Level 2.

 

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NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

		Millions of yen
		September 30, 2012
		Total				Level 1				Level 2				Level 3
Assets:
Available-for-sale securities
Equity securities (domestic)		¥	51,812			¥	51,812			¥	—			¥	—
Equity securities (foreign)			68,612				68,612				—				—
Debt securities (foreign)			30				30				—				—
Total available-for-sale securities			120,454				120,454				—				—
Total		¥	120,454			¥	120,454			¥	—			¥	—
Liabilities:
Derivatives
Interest rate swap agreements		¥	61			¥	—			¥	61			¥	—
Foreign exchange forward contracts			2				—				2				—
Foreign currency option contracts			904				—				904				—
Interest rate cap contracts			3				—				3				—
Total derivatives			970				—				970				—
Total		¥	970			¥	—			¥	970			¥	—

There were no transfers between Level 1 and Level 2.

Available-for-sale securities

Available-for-sale securities include marketable equity securities and debt securities, which are valued using quoted prices in active markets for identical assets. Therefore, these securities are classified as Level 1.

Derivatives

Derivative instruments are interest rate swap agreements, foreign exchange forward contracts, foreign currency option contracts, and interest rate cap contracts, which are measured using valuation provided by financial institutions based on observable market data. Therefore, these derivatives are classified as Level 2.

 

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Table of Contents

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

 

(2) Assets and liabilities measured at fair value on a nonrecurring basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are not included in the table above. Changes of fair value in such assets and liabilities typically result from impairments.

DOCOMO may be required to measure fair value of long-lived assets, equity securities whose fair values are not readily determinable, and other assets or liabilities on a nonrecurring basis.

DOCOMO’s assets and liabilities that were measured at fair value on a nonrecurring basis for the six and three months ended September 30, 2011 were immaterial.

DOCOMO’s assets that were measured at fair value on a nonrecurring basis for the six and three months ended September 30, 2012 were as follows.

 

		Millions of yen
		Six months ended September 30, 2012
		Total				Level 1				Level 2				Level 3				gains (losses)
Assets:
Receivables held for sale			677,120				—				677,120				—				(9,113	)
		Millions of yen
		Three months ended September 30, 2012
		Total				Level 1				Level 2				Level 3				gains (losses)
Assets:
Receivables held for sale			434,076				—				434,076				—				(8,560	)

Receivables held for sale are measured at the lower of cost or fair value in the consolidated balance sheets.

Receivables held for sale are classified as level 2. DOCOMO measures the fair value of the receivables held for sale by discounting, at LIBOR-based discount rates, future cash flows estimated while taking into account factors such as default probabilities and loss severity of similar trade receivables.

7. Subsequent event:

In October 2012, Philippine Long Distance Telephone Company (“PLDT”), an investee company of DOCOMO, issued voting preferred stock in response to the final resolution by the Supreme Court of the Philippines regarding the computation of Filipino-alien equity requirement of public utilities companies. Accordingly, DOCOMO’s voting interest in PLDT decreased to approximately 9%. As DOCOMO could not exercise significant influence over PLDT, DOCOMO plans to exclude PLDT from the scope of equity method application in and after the financial quarter ending December 31, 2012.

 

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