Edgar Filing: NTT DOCOMO INC

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Form 6-K

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 August, 2015

Commission File Number: 001-31221

Total number of pages: 17

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 x 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.

Information furnished in this form:

1.	Report filed on August 4, 2015 with the Director of the Kanto Local Finance Bureau of Japan pursuant to the Financial Instruments and Exchange Act of Japan

NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MARCH 31, 2015 and JUNE 30, 2015


	Millions of yen
	March 31, 2015			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	¥	105,553		¥	126,345
Short-term investments		243,757			243,756
Accounts receivable		264,591			181,632
Receivables held for sale		897,999			903,707
Credit card receivables		234,412			245,254
Other receivables		327,275			334,402
Allowance for doubtful accounts		(14,100	)		(14,986	)
Inventories		186,275			209,561
Deferred tax assets		61,512			60,361
Prepaid expenses and other current assets		108,102			121,628

Total current assets		2,415,376			2,411,660

Property, plant and equipment:
Wireless telecommunications equipment		5,027,390			5,039,270
Buildings and structures		890,382			892,012
Tools, furniture and fixtures		508,810			506,607
Land		200,736			200,785
Construction in progress		193,497			178,914
Accumulated depreciation and amortization		(4,309,748	)		(4,357,781	)

Total property, plant and equipment, net		2,511,067			2,459,807

Non-current investments and other assets:
Investments in affiliates		439,070			435,808
Marketable securities and other investments		195,047			198,099
Intangible assets, net		636,319			625,104
Goodwill		266,311			262,736
Other assets		445,723			444,981
Deferred tax assets		237,427			234,472

Total non-current investments and other assets		2,219,897			2,201,200

Total assets	¥	7,146,340		¥	7,072,667


LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	¥	203		¥	200
Short-term borrowings		2,048			95,522
Accounts payable, trade		811,799			617,808
Accrued payroll		54,955			42,025
Accrued income taxes		68,563			68,179
Other current liabilities		176,734			199,133

Total current liabilities		1,114,302			1,022,867

Long-term liabilities:
Long-term debt (exclusive of current portion)		220,400			220,370
Accrued liabilities for point programs		89,929			81,760
Liability for employees’ retirement benefits		173,872			175,717
Other long-term liabilities		129,632			128,204

Total long-term liabilities		613,833			606,051

Total liabilities		1,728,135			1,628,918

Redeemable noncontrolling interests		15,589			15,751

Equity:
NTT DOCOMO, INC. shareholders’ equity
Common stock		949,680			949,680
Additional paid-in capital		339,783			339,767
Retained earnings		4,397,228			4,430,160
Accumulated other comprehensive income (loss)		52,599			47,533
Treasury stock		(359,218	)		(359,218	)
Total NTT DOCOMO, INC. shareholders’ equity		5,380,072			5,407,922
Noncontrolling interests		22,544			20,076

Total equity		5,402,616			5,427,998

Commitments and contingencies

Total liabilities and equity	¥	7,146,340		¥	7,072,667

See accompanying notes to consolidated financial statements (unaudited).

NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED JUNE 30, 2014 and 2015

Consolidated Statements of Income


	Millions of yen
	Three Months Ended June 30, 2014			Three Months Ended June 30, 2015
Operating revenues:
Telecommunications services	¥	703,467		¥	675,255
Equipment sales		206,987			201,345
Other operating revenues		164,848			200,264

Total operating revenues		1,075,302			1,076,864

Operating expenses:
Cost of services (exclusive of items shown separately below)		265,587			288,904
Cost of equipment sold (exclusive of items shown separately below)		177,255			175,531
Depreciation and amortization		167,183			145,572
Selling, general and administrative		255,637			231,462

Total operating expenses		865,662			841,469

Operating income		209,640			235,395

Other income (expense):
Interest expense		(280	)		(312	)
Interest income		404			179
Other, net		2,710			5,349

Total other income (expense)		2,834			5,216

Income before income taxes and equity in net income (losses) of affiliates		212,474			240,611

Income taxes:
Current		63,801			70,293
Deferred		9,722			2,328

Total income taxes		73,523			72,621

Income before equity in net income (losses) of affiliates		138,951			167,990

Equity in net income (losses) of affiliates (including impairment charges of investments in affiliates)		(3,557	)		1,619

Net income		135,394			169,609

Less: Net (income) loss attributable to noncontrolling interests		987			(825	)

Net income attributable to NTT DOCOMO, INC.	¥	136,381		¥	168,784


Per Share Data
Weighted average common shares outstanding — Basic and Diluted		4,146,760,100			3,881,483,829

Basic and Diluted earnings per share attributable to NTT DOCOMO, INC.	¥	32.89		¥	43.48

Consolidated Statements of Comprehensive Income


	Millions of yen
	Three Months Ended June 30, 2014			Three Months Ended June 30, 2015
Net income	¥	135,394		¥	169,609
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale securities, net of applicable taxes		3,900			1,730
Unrealized gains (losses) on cash flow hedges, net of applicable taxes		27			(23	)
Foreign currency translation adjustment, net of applicable taxes		(6,678	)		(6,716	)
Pension liability adjustment, net of applicable taxes		22			(26	)

Total other comprehensive income (loss)		(2,729	)		(5,035	)

Comprehensive income		132,665			164,574

Less: Comprehensive (income) loss attributable to noncontrolling interests		1,049			(856	)

Comprehensive income attributable to NTT DOCOMO, INC.	¥	133,714		¥	163,718

See accompanying notes to consolidated financial statements (unaudited).

NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED JUNE 30, 2014 and 2015


	Millions of yen
	Three Months Ended June 30, 2014			Three Months Ended June 30, 2015
Cash flows from operating activities:
Net income	¥	135,394		¥	169,609
Adjustments to reconcile net income to net cash provided by operating activities–
Depreciation and amortization		167,183			145,572
Deferred taxes		9,722			2,328
Loss on sale or disposal of property, plant and equipment		9,849			6,379
Equity in net (income) losses of affiliates (including impairment charges of investments in affiliates)		3,557			(1,619	)
Changes in assets and liabilities:
(Increase) / decrease in accounts receivable		80,189			81,894
(Increase) / decrease in receivables held for sale		(1,619	)		(5,708	)
(Increase) / decrease in credit card receivables		(1,392	)		(6,224	)
(Increase) / decrease in other receivables		(3,968	)		(7,179	)
Increase / (decrease) in allowance for doubtful accounts		(2,992	)		893
(Increase) / decrease in inventories		(7,938	)		(24,058	)
(Increase) / decrease in prepaid expenses and other current assets		(12,087	)		(16,365	)
(Increase) / decrease in non-current receivables held for sale		(4,334	)		3,278
Increase / (decrease) in accounts payable, trade		(67,295	)		(85,782	)
Increase / (decrease) in accrued income taxes		(113,900	)		(307	)
Increase / (decrease) in other current liabilities		15,533			26,887
Increase / (decrease) in accrued liabilities for point programs		(13,351	)		(8,169	)
Increase / (decrease) in liability for employees’ retirement benefits		1,184			1,865
Increase / (decrease) in other long-term liabilities		10,156			679
Other, net		(7,426	)		(10,175	)

Net cash provided by operating activities		196,465			273,798

Cash flows from investing activities:
Purchases of property, plant and equipment		(150,785	)		(130,531	)
Purchases of intangible and other assets		(60,336	)		(72,028	)
Purchases of non-current investments		(491	)		(1,359	)
Proceeds from sale of non-current investments		340			1,054
Purchases of short-term investments		(26,982	)		(1,684	)
Redemption of short-term investments		11,699			1,621
Other, net		(9,264	)		(5,518	)

Net cash used in investing activities		(235,819	)		(208,445	)

Cash flows from financing activities:
Proceeds from short-term borrowings		10,478			143,798
Repayment of short-term borrowings		(10,245	)		(50,146	)
Principal payments under capital lease obligations		(465	)		(379	)
Dividends paid		(122,434	)		(134,332	)
Other, net		(5,301	)		(2,784	)

Net cash provided by (used in) financing activities		(127,967	)		(43,843	)

Effect of exchange rate changes on cash and cash equivalents		(937	)		(718	)

Net increase (decrease) in cash and cash equivalents		(168,258	)		20,792
Cash and cash equivalents as of beginning of period		526,920			105,553

Cash and cash equivalents as of end of period	¥	358,662		¥	126,345

Supplemental disclosures of cash flow information:
Cash received during the period for:
Income tax refunds	¥	4		¥	653
Cash paid during the period for:
Interest, net of amount capitalized		266			265
Income taxes		175,655			74,492

See accompanying notes to consolidated financial statements (unaudited).

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of presentation:

The accompanying quarterly consolidated financial statements of NTT DOCOMO, INC. and its subsidiaries (“DOCOMO”) were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain disclosures required by U.S. GAAP have been omitted. Since 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. Summary of significant accounting and reporting policies:

(a) Reclassifications

Certain reclassifications have been made to the prior period’s consolidated financial statements to conform to the presentation used for the three months ended June 30, 2015.

(b) Recently issued accounting standards

Revenue from contracts with customers —

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers (Topic 606)”, which requires an entity to recognize the amount to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.

On July 9, 2015, the FASB decided to delay the effective date of the ASU by one year. Consequently, the standard is expected to take effect for DOCOMO on April 1, 2018. Early adoption of the standard as of April 1, 2017 would also be permitted. DOCOMO has not yet selected a transition method and is currently evaluating the effect that the ASU will have on its consolidated financial statements and related disclosures.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

3. Equity:

(a) Dividends

The Companies Act of Japan (the “Companies Act”) provides that (i) dividends of earnings require approval at a general meeting of shareholders, (ii) interim cash dividends can be distributed upon the approval of the board of directors, if the articles of incorporation provide for such interim cash dividends and (iii) an amount equal to 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 18, 2015, the shareholders approved cash dividends of ¥135,852 million or ¥35 per share, payable to shareholders of record as of March 31, 2015, which were declared by the board of directors on April 28, 2015. The source of dividends was “Retained earnings.” NTT DOCOMO, INC. started paying the dividends on June 19, 2015.

(b) Issued shares and treasury stock

With regard to the acquisition of treasury stock, Companies Act 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. In accordance with the (ii) above, the provision that NTT DOCOMO, INC. may repurchase treasury stock through open market transactions by a resolution of the board of directors is stipulated in NTT DOCOMO, INC.’s articles of incorporation in order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment.

On April 25, 2014, the board of directors resolved that NTT DOCOMO, INC. may repurchase up to 320 million outstanding shares of its common stock for an amount in total not exceeding ¥500,000 million during the period from April 26, 2014 through March 31, 2015. NTT DOCOMO, INC. also carries out compulsory acquisition of less-than-one-unit shares upon request.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

The changes in the number of issued shares and treasury stock were as follows. NTT DOCOMO, INC. has not issued shares other than shares of its common stock.


	Number of issued shares			Number of treasury stock
As of March 31, 2014		4,365,000,000			218,239,900

As of June 30, 2014		4,365,000,000			218,239,900

Acquisition of treasury stock based on the resolution of the board of directors		—			265,276,121
Acquisition of treasury stock through purchase of less-than-one-unit shares		—			124
Retirement of treasury stock		(279,228,000	)		(279,228,000	)

As of March 31, 2015		4,085,772,000			204,288,145

Acquisition of treasury stock through purchase of less-than-one-unit shares		—			43

As of June 30, 2015		4,085,772,000			204,288,188

On August 6, 2014, the board of directors resolved that NTT DOCOMO, INC. may repurchase up to 206,489,675 outstanding shares of its common stock for an amount in total not exceeding ¥350,000 million from during the period from August 7, 2014 through September 3, 2014. Based on this resolution, NTT DOCOMO, INC. repurchased 181,530,121 shares of its common stock for a total purchase price of ¥307,694 million between August 2014 and September 2014.

On October 31, 2014, the board of directors resolved that NTT DOCOMO, INC. may repurchase up to 138,469,879 outstanding shares of its common stock for an amount in total not exceeding ¥192,306 million from during the period from November 1, 2014 through March 31, 2015. Based on this resolution, NTT DOCOMO, INC. repurchased 83,746,000 shares of its common stock for a total purchase price of ¥165,342 million between November 2014 and March 2015.

The aggregate number and price of shares repurchased from NTT DOCOMO, INC. parent company, NIPPON TELEGRAPH AND TELEPHONE CORPORATION, were 176,991,100 shares and ¥300,000 million, respectively for the fiscal year ended March 31, 2015.

On March 27, 2015, the board of directors resolved that NTT DOCOMO, INC. would retire 279,228,000 shares held as treasury stock on March 31, 2015 and the share retirement on March 31, 2015 resulted in decreases of “Additional paid-in capital” by ¥393,092 million and “Retained earnings” by ¥97,894 million.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

The aggregate number and price of shares repurchased for the three months ended June 30, 2014 and 2015 were as follows:


	Shares/Millions of yen
	Three months ended June 30, 2014		Three months ended June 30, 2015
Aggregate number of shares repurchased		—		43
Aggregate price of shares repurchased	¥	—	¥	0

(c) Accumulated other comprehensive income (loss)

Changes in accumulated other comprehensive income (loss) —

Changes in accumulated other comprehensive income (loss), net of applicable taxes, for the three months ended June 30, 2014 and 2015 were as follows:


	Millions of yen
	Three months ended June 30, 2014
	Unrealized holding gains (losses) on available-for-sale securities			Unrealized gains (losses) on cash flow hedges			Foreign currency translation adjustment			Pension liability adjustment			Total
Balance as of March 31, 2014	¥	45,038		¥	(97	)	¥	(12,437	)	¥	(22,914	)	¥	9,590

Other comprehensive income (loss) before reclassifications		3,900			38			(6,678	)		26			(2,714	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(11	)		—			(4	)		(15	)

Other comprehensive income (loss)		3,900			27			(6,678	)		22			(2,729	)

Less: other comprehensive (income) loss attributable to noncontrolling interests		(0	)		—			62			—			62

Balance as of June 30, 2014	¥	48,938		¥	(70	)	¥	(19,053	)	¥	(22,892	)	¥	6,923

NTT DOCOMO, INC. AND SUBSIDIARIES

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


	Millions of yen
	Three months ended June 30, 2015
	Unrealized holding gains (losses) on available-for-sale securities			Unrealized gains (losses) on cash flow hedges			Foreign currency translation adjustment			Pension liability adjustment			Total
Balance as of March 31, 2015	¥	67,620		¥	(101	)	¥	16,871		¥	(31,791	)	¥	52,599

Other comprehensive income (loss) before reclassifications		2,038			(33	)		(6,716	)		(200	)		(4,911	)
Amounts reclassified from accumulated other comprehensive income (loss)		(308	)		10			—			174			(124	)

Other comprehensive income (loss)		1,730			(23	)		(6,716	)		(26	)		(5,035	)

Less: other comprehensive (income) loss attributable to noncontrolling interests		(0	)		—			(31	)		—			(31	)

Balance as of June 30, 2015	¥	69,350		¥	(124	)	¥	10,124		¥	(31,817	)	¥	47,533

Reclassifications out of accumulated other comprehensive income (loss) to net income —

Amounts reclassified out of accumulated other comprehensive income (loss) to net income and affected line items in the consolidated statements of income for the three months ended June 30, 2014 and 2015 were as follows:


	Millions of yen
	*Amounts reclassified out of accumulated other comprehensive income (loss)(1)**
	Three months ended June 30, 2014			Three months ended June 30, 2015			Affected line items in the consolidated statements of income
Unrealized holding gains (losses) on available-for-sale securities	¥	—		¥	219		“Other, net” of “Other income (expense)”
		—			249		“Equity in net income (losses) of affiliates”

		—			468		Pre-tax amount
		—			(160	)	Tax benefit (expense)

		—			308		Net-of-tax amount

Unrealized gains (losses) on cash flow hedges		16			(14	)	“Equity in net income (losses) of affiliates”

		16			(14	)	Pre-tax amount
		(5	)		4		Tax benefit (expense)

		11			(10	)	Net-of-tax amount

Pension liability adjustment		7			(259	)	(*2)

		7			(259	)	Pre-tax amount
		(3	)		85		Tax benefit (expense)

		4			(174	)	Net-of-tax amount

Total reclassified amounts	¥	15		¥	124		Net-of-tax amount

(*1)	Amounts in parentheses indicate decreased effects on net income.

(*2)	Amounts reclassified out of pension liability adjustment are included in the computation of net periodic pension cost.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

4. Segment information:

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 provided by DOCOMO’s internal management reports.

DOCOMO realigned its three former operating segments, which had consisted of its mobile communications business, smart life business and other businesses, into three new operating segments, which consist of its telecommunications business, smart life business and other businesses from the fourth quarter of the fiscal year ended March 31, 2015, as a result of realignment of the way DOCOMO manages the telecommunications related services triggered by the launch of optical-fiber broadband services. Accordingly, telecommunications services which had been included in other businesses under DOCOMO’s three former operating segments are reclassified to the telecommunications business.

The telecommunications business includes mobile phone services (LTE(Xi) services and FOMA services), optical-fiber broadband service, satellite mobile communications services, international services and the equipment sales related to these services. The smart life business includes video and music distribution, electronic books and other services offered through DOCOMO’s “dmarket” portal, as well as finance/payment services, shopping services and various other services to support our customers’ daily lives. The other businesses primarily includes “Mobile Device Protection Service,” as well as development, sales and maintenance of IT systems.

In connection with this realignment, segment information for the three months ended June 30, 2014 has been restated to conform to the presentation for the three months ended June 30, 2015.

Accounting policies used to determine segment operating revenues and operating income (loss) are consistent with those used to prepare the consolidated financial statements in accordance with U.S. GAAP.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

Segment operating revenues:


	Millions of yen
	Three months ended June 30, 2014			Three months ended June 30, 2015
Telecommunications business-
External customers	¥	906,203		¥	878,374
Intersegment		192			250

Subtotal		906,395			878,624
Smart life business-
External customers		96,104			114,261
Intersegment		3,542			2,872

Subtotal		99,646			117,133
Other businesses-
External customers		72,995			84,229
Intersegment		2,940			2,901

Subtotal		75,935			87,130

Segment total		1,081,976			1,082,887
Elimination		(6,674	)		(6,023	)

Consolidated	¥	1,075,302		¥	1,076,864

Segment operating income (loss):


	Millions of yen
	Three months ended June 30, 2014			Three months ended June 30, 2015
Telecommunications business	¥	203,203		¥	212,420
Smart life business		6,588			16,440
Other businesses		(151	)		6,535

Consolidated	¥	209,640		¥	235,395

Segment operating income (loss) is segment operating revenues less segment operating expenses.

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

NTT DOCOMO, INC. AND SUBSIDIARIES

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

5. Contingencies:

(a) Litigation

DOCOMO is involved in litigation and claims arising in the ordinary course of business. DOCOMO believes that none of the litigation or claims outstanding, pending or threatened against DOCOMO would have a materially adverse effect on DOCOMO’s results of operations, financial position or cash flows.

(b) Guarantees

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

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

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

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 in certain circumstances.

(a) 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, 2015 and June 30, 2015 were as follows:


	Millions of yen
	March 31, 2015
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities
Equity securities (domestic)	¥	88,675	¥	88,675	¥	—	¥	—
Equity securities (foreign)		93,149		93,149		—		—
Debt securities (foreign)		6		6		—		—

Total available-for-sale securities		181,830		181,830		—		—

Derivatives
Foreign currency option contracts	¥	474	¥	—	¥	474	¥	—

Total derivatives		474		—		474		—

Total	¥	182,304	¥	181,830	¥	474	¥	—

Liabilities:
Derivatives
Foreign currency option contracts	¥	80	¥	—	¥	80	¥	—
Foreign exchange forward contracts		0		—		0		—

Total derivatives		80		—		80		—

Total	¥	80	¥	—	¥	80	¥	—

There were no transfers between Level 1 and Level 2.

NTT DOCOMO, INC. AND SUBSIDIARIES

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


	Millions of yen
	June 30, 2015
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities
Equity securities (domestic)	¥	91,769	¥	91,769	¥	—	¥	—
Equity securities (foreign)		92,844		92,844		—		—
Debt securities (foreign)		6		6		—		—

Total available-for-sale securities		184,619		184,619		—		—

Derivatives
Foreign currency option contracts	¥	410	¥	—	¥	410	¥	—
Foreign exchange forward contracts		4		—		4		—

Total derivatives		414		—		414		—

Total	¥	185,033	¥	184,619	¥	414	¥	—

Liabilities:
Derivatives
Foreign currency option contracts	¥	210	¥	—	¥	210	¥	—
Foreign exchange forward contracts		2		—		2		—

Total derivatives		212		—		212		—

Total	¥	212	¥	—	¥	212	¥	—

There were no transfers between Level 1 and Level 2.

Available-for-sale securities

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

Derivatives

Derivative instruments are foreign currency option contracts and foreign exchange forward contracts, which are valued based on observable market data. Therefore, these derivatives are classified as Level 2.

NTT DOCOMO, INC. AND SUBSIDIARIES

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

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

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances.

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

DOCOMO’s assets that were measured at fair value on a nonrecurring basis for the three months ended June 30, 2014 and 2015 were as follows:


	Millions of yen
	Three months ended June 30, 2014
	Total		Level 1		Level 2		Level 3		Gains (losses) (before taxes)
Assets:
Receivables held for sale	¥	439,469	¥	—	¥	439,469	¥	—	¥	(5,889	)


	Millions of yen
	Three months ended June 30, 2015
	Total		Level 1		Level 2		Level 3		Gains (losses) (before taxes)
Assets:
Receivables held for sale	¥	465,521	¥	—	¥	465,521	¥	—	¥	(6,093	)

Receivables held for sale

Receivables held for sale are measured at the lower of cost or fair value.

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

NTT DOCOMO, INC. AND SUBSIDIARIES

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

7. Derivative instruments:

As of June 30, 2015, derivative instruments held for foreign exchange risk management purpose are considered both as important to our operations and having changed significantly compared to the amounts held as of March 31, 2015. Derivative instruments which are designated as hedging instruments are excluded from the data for derivative instruments presented below.

(a) Derivatives not designated as hedging instruments

To hedge the risk of fluctuations in interest rates and foreign exchange rates, DOCOMO enters into interest rate swap agreements, foreign currency option contracts, non-deliverable forward contracts (NDF) and foreign exchange forward contracts. DOCOMO did not designate such derivative instruments as hedging instruments.

The contract amounts of derivative instruments not designated as hedging instruments as of March 31, 2015 and June 30, 2015 were as follows:


	Millions of yen
Instruments	March 31, 2015		June 30, 2015
Foreign currency option contracts	¥	48,740	¥	75,825
Foreign exchange forward contracts		100		327

Total	¥	48,840	¥	76,152

(b) The effect on the consolidated balance sheets

The locations and fair values of derivative instruments not designated as hedging instruments as of March 31, 2015 and June 30, 2015 recorded in the consolidated balance sheets, were as follows:


Asset derivatives
		Millions of yen
Instruments	Locations	March 31, 2015		June 30, 2015
Derivatives not designated as hedging instruments
Foreign currency option contracts	Other assets	¥	474	¥	378
Foreign exchange forward contract	Prepaid expenses and other current assets		—		4

Total		¥	474	¥	382

NTT DOCOMO, INC. AND SUBSIDIARIES

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


Liability derivatives
		Millions of yen
Instruments	Locations	March 31, 2015		June 30, 2015
Derivatives not designated as hedging instruments
Foreign currency option contracts	Other long-term liabilities	¥	80	¥	210
Foreign exchange forward contracts	Other current liabilities		0		2

Total		¥	80	¥	212

The fair values of derivative instruments not designated as hedging instruments were valued and validated periodically based on observable market data and represent the amount that DOCOMO could have settled with the counterparties to terminate the contracts outstanding as of March 31, 2015 and June 30, 2015.

(c) The effect on the consolidated statements of income

The locations and gain (loss) amounts of derivative instruments not designated as hedging instruments for the three months ended June 30, 2014 and June 30, 2015 recognized in the consolidated statements of income, were as follows:


Amount of gain (loss) recognized in income on derivative
		Millions of yen
Instruments	Locations	Three months ended June 30, 2014			Three months ended June 30, 2015
Derivatives not designated as hedging instruments
Foreign currency option contracts	Other, net*	¥	108		¥	27
Foreign exchange forward contracts	Other, net*		(32	)		(22	)

Total		¥	76		¥	5

*	“Other, net” was included in “Other income (expense).”

8. Subsequent event:

There were no significant subsequent events to be disclosed.

NTT DOCOMO, INC.

Date: August 4, 2015

/S/ KATSUYUKI TAKAGI

Katsuyuki Takagi

Head of Investor Relations