VIC TOKAI’s Future Development Strategies

Toward a More Communicative Society Society
Total Communication

December 7, 2007
VIC TOKAI CORPORATION (2306)
Representative Director and President Hiroshi Hayakawa

Company Overview （As of September 30, 2007）
Company Name

VIC TOKAI CORPORATIONFoundedMarch 18, 1977

Capital2,209,020,000 yen

Total Number of Issued
SharesShareholders

Consolidated Subsidiaries

Employees

40,118,850
3,850
Ichihara Community Network Television Corp.

（Ichihara, Chiba Prefecture）

Atsugi Isehara Cable Network Corp.

（Atsugi, Kanagawa Prefecture）

Kumagaya Cable Television Corp.

(Kumagaya, Saitama Prefecture)

East Communications Co.,Ltd.

（Midori-ku, Chiba City）

Gotemba Cablemedia Corp.

(Gotemba, Shizuoka Prefecture)

Consolidated 1,202
Unconsolidated 1,091

1Mid-Term Management Vision

Our Mid-Term Management Vision “Total
Communication for the Best 2007-2011” means
the challenge to realize the rich and reliable
information society making the best use of ourtechnology in information processing,telecommunication and broadcasting．
Our management and its staff will endeavor toachieve this goal.
2

Total Communication for the Best 2007-2011”
By combining the VIC TOKAI group’s technical and development
capabilities with its planning and marketing capabilities, our groupwill contribute to local communities as a “total communication” partner thatis counted on and trusted by customers.
■ To continue to grow in the future and win satisfaction and trust from all
stakeholders, our group aims to achieve the following.

“Medium-term profit goal”『10 billion yen in recurring profit on a single-year basis』“Status goal”『Go public on the Tokyo Stock Exchange』■ To fulfill CSR, efforts will be made to thoroughly strengthen the internal
control system, compliance, and corporate governance.
3

Fiber Optic Network
Two routes of fiber optic network
 Achieve to create loops (redundancy) in all areas covered by the networks
held by the TOKAI group and strengthen competitiveness as a carrier byimproving reliability and safety Improve competitiveness of the new data center by strengthening networks

Expansion of business operations andimprovement of profitability
Contribution to expansion of the newdata center businessz TOKAI Group’s Fiber Optic Network
Existing Lines

1,924kmDeveloping Lines

188km

17

Suwa

Total Length 2,112km
The dashed line is a line leased from another company.

Kiso

Ogaki

20

Toki
Kyoto
1

Minakuchi

23
Yokkaichi Nagoya

25

Yaizu
Toyokawa
Hamamatsu

1

4
Sowa

6

Omiya

Tsuchiura

Iruma
Kofu Uenohara

Nakatsugawa

Iwase

50
Gyoda

19

Osaka

Ashikaga

Chuo Route: 200 Cores (TOKAI)

Kashiwa
SetagayaSoka

16

OtemachiAtsugi
Yokohama
Gotemba 246
1
Hiratsuka
Fuji
OdawaraNumazuShizuoka

Kakegawa

Relay stations
Candidate relay
stations

1100
00 CoresTOKAI）
Cores （（TOKAI）
100
VIC TOKAI）
100 Cores
Cores （（VIC
TOKAI）

Image of the New Data Center

Tomei
VIC TOKAI
Tomei Route
Route 300
300 Cores
Cores ((VIC
TOKAI))200
TOKAI）
200 toto 300300 Cores
Cores （（TOKAI）
4

Road Map Image
Corporate Event
Road Map Image

Change in Operating Profit
Operating Profit

Tokyo Stock Exchange
2008: The new data center
begins operations.

（Unit: million yen）

Earnings forecasts for FY2007【Consolidated】 4,510
Actual earnings results for FY2006【Consolidated】 4,415

2007: The central
route is completed.
2006: The mobile telecommunications business
and CATV-FTTH business began.
February 2006: The company was designated asa “J-Stock” issue by JASDAQ.
October 2005: Merger by absorption with TOKAI COM
October 2003: Certification under the ISMS Conformity
Assessment Schedule was acquired for the IDC(Internet Data Center) business.
June 2002: Our company went public on JASDAQ.
From 2001: The ISO9001:2000 international quality
management certification was obtained.

Actual earnings results for FY2005【Consolidated】 2,710
October 2005: Merger by absorption with TOKAI COM

Actual earnings results for FY2004【Unconsolidated】 1,713
Actual earnings results for FY2002【Unconsolidated】 1,519
Actual earnings results for FY2000【Unconsolidated】 967
5

Introduction of the VIC TOKAI Group’s Business Operations(ISP Brand)

CATV (Cable Television) Business
Provide CATV broadcasting services and Internet, telephone,and other information and telecommunication services on
CATV networks and sell portable terminals

CS (Communication Service) BusinessSell circuits by wholesale as an Internet service provider or atelecommunication carrier, rent core circuits, and provide datatransmission services

SIS (System Innovation Service) Business
Software development business, system integration business,and data center business

6

Image of Sales by Segment(Billions of yen)
CATV

50

CS
SIS

Total sales
33.9
10.9

12.5

Total sales
37.3

12.4

13.2

10.5

11.6

FY2007.3

FY2008.3(E)FY2009.3(E)FY2010.3(E)FY2011.3(E)FY2012.3(E)7Image of Operating Profit by Segment, Recurring Profit and Net Profit(Billions of yen)

12000
CATV
Recurring profit

CS

10

5

SIS

10000

Net profit

Recurring profit
4.1

Recurring profit
4.2

Net profit
4.1

Net profit
2.2

80000

Operating profit
Operating profit
4.4
4.5
Eliminated or
Eliminated orunallocated amounts unallocated amounts
-1.0
-1.0

60000

40000

1.7

1.5

1.8

2.3

1.6

1.6

FY2007.3

FY2008.3(E)20000

FY2009.3(E)FY2010.3(E)FY2011.3(E)FY2012.3(E)08Changes in Capital Investment and Free Cash Flow
(Billions of yen)

12.6

Capital Investment
FCF
Money Borrowed

New Data Center
CATV-FTTH

105.2

FY2007.3

FY2008.3(E) FY2009.3(E)Base Expansion Period
CATV-FTTH
The new data center begins operations.
M&A activities

FY2010.3(E) FY2011.3(E) FY2012.3(E)Period of Growth
Provision of high-quality total services
through the use of the new base
Improvement of customer satisfaction
Securing of stable earnings

For Further Growth9

CATV (Cable Television)
Business10

25th Service Industry Survey (CATV)

Our CATV Business Including
Consolidated Subsidiaries
Sales Is 10,900Million Yen.

Yearlygrowthpercentage(%)

Account
closingmonth

RankingCompany nameHead office

Department
revenues(million yen)

1

Jupiter Telecom (J:COM)

Tokyo G

102,803

20.6

12

2

Fukuoka Cable Network

Fukuoka

10,0208.3

123

Its Communications

Kanagawa

9,111

3.9

3

4

Bay Communications

Osaka

7,953

6.7

3

5

VIC TOKAI

Shizuoka G

7,736

5.8

3

6

Starcat Cable Network

Aichi

6,702

1.8

3

7

K Cable Television

Osaka

5,062

57.1

3

8

ZTV

Mie

4,824

8.4

3

9

Nihon Network Service(Kofu CATV)

Yamanashi

4,414

-3.1

3

10

Himawarinetwork

Aichi

3,710

5.8

3

11

Chubu Cable Network

Aichi

3,574

13.1

3

12

Katch Network

Aichi

2,919

6.6

3

13

Fureai Channel

Hiroshima

2,915

42.8

3

(from a story in the Nikkei Marketing Journal on November 21, 2007)
11

Policies for CATV-FTTH Business■ The Target Number of Subscribers for CATV-FTTH* Business
Aim at 100,000 Subscribers in Three Yearsfrom Fiscal 2007 to Fiscal 2009 *CATV-FTTH
CATV-FTTH is our FTTH service throughour own CATV fiber optic network.

■ Amount of Capital Spending(accumulated total from fiscal 2006 to fiscal 2009)（yen）

Investment: 13.6 billion yen
Lease: 2.9 billion yen

5 billion
4.3 billion

Total: 16.5 billion yen

3 billion
2 billion■ Operating Profit Target
by FY2011

1.5 billion

Projectionfor
FY2007

Projectionfor
FY2008

Projectionfor
FY2009Projectionfor
FY2010

Projectionfor
FY201112

Outline of CATV-FTTH Networks
Following the realization of CATV-FTTH services,
We have substantiated new business models that make the maximum
use of our fiber optic networks and have high profitability.
《1Gbps》
CATV-FTTH Network
Our CATV Fiber Optic Network
Total Length: 838km (as of September 2007)
Digital broadcasting
distributor

Corporation

Optical Access LineCATV Fiber Optic Cable

Center(head end)

O/E

General CATV network(metal)《100Mbps》《100Mbps》

Optical Access Line

Optical Access Line

Optical Primary Telephony

Optical Primary Telephony

User’s home
（Use of Existing Facilities）（Development of New Networks）(Platform Similar to That of NTT)
Speed: Best effort maximum speed

13Services for CATV-FTTH
100Mbps Send / Receive Capabilities

Optical Primary Telephony Substituted forStandard Telephony

FTTH Internet for single-dwelling units“Hikari-de-net”

FTTH Internet for multi-dwelling units“Mansion Ｆ”

Optical Internet

Optical Primary telephony

6,825 yen/month (including optical

VIC TOKAI
TOKAI
VIC

telephony and Primary telephony)

NTT East

7,644 yen/month (including opticaltelephony and Primary telephony)

NTT West

7,318.5 yen/month (including opticaltelephony and Primary telephony)01,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

Optical Internet

VIC TOKAI
VIC
TOKAI

4,515 yen/month (including opticaltelephony and Primary telephony)

NTT East

5,071.5 yen/month (including opticaltelephony and Primary telephony)

NTT West

5,029.5 yen/month (including opticaltelephony and Primary telephony)
0・ Free for up to two months
・ Special price for 10 months (tax inclusive)
Optical Primary telephonyTotal

4,410 yen
525 yen4,935 yen

Optical Primary telephony

1,000

2,000

3,000

4,000

5,000

・ Free for the first month・ At least four houses are expected tosubscribe to the service, “F4” (tax inclusive) 3,990 yen
Optical Primary telephony
525 yen
Total

4,515 yen

【FTTH Internet】
Provision of 3 e-mail addresses for free and virus checks and blocking of spam messages for free
【Optical Primary Telephony】 Provision of a phone number starting with 050 for free, emergency calls, and the option to continue to use
the current phone number※ The monthly price for the FTTH Internet for single-dwelling units at NTT East and NTT West is for the OCN Hikari with FLET’S Family (with Dot-phone) as of May 2007.
※ The monthly price for the FTTH Internet for multi-dwelling units at NTT East and NTT West is for the OCN Hikari with FLET’S Mansion (with Dot-phone) Mansion Plan 1 (VDSL method) as of May
2007.

14

Increase of Subscribers for CATV-FTTH【Subscribers of CATV-FTTH Services】* For the whole of the VIC TOKAI group29,00030,000■ Number of subscribers to FTTH Internet services■ Number of subscribers to optical primary telephone services

20,00016,00013,0007,700

10,0001,100 400

3,600 1,800

7,200

4,200

0
Period Ended in
December 2006

FTTH
Internet

Period Ended in March Period Ended in June
2007
2007

Period Ended in
September 2007

Projections for the
Period Ending March
2008

Period Ended
Period Ended Period Ended
Period Ended
in Marchin S eptember
in December
in June 2007
2007
2007
2006

Projections for the
Period Ending
March 2008

Net Increase (Quarterly)

1,100

2,500

4,100

5,300

16,000

Number of Subscribers

1,100

3,600

7,700

13,00029,000Net Increase (Quarterly)

400

1,400

2,400

3,000

8,800

400

1,800

4,200

7,200

16,000

36%

50%

55%

55%

55%

Optical Number of Subscribers
primary
telephone Percentage of Internet
Subscribers

15

ARPU for CATV BusinessChange in ARPU (monthly average usage revenue per contract)* VIC TOKAI’s unconsolidated results

(yen)
4000

3500

3000
Period Ended Period Ended Period Ending
March 2007 September March 2008
（ Actual Results ） 2007
（ Projections ）ActualResults（）

ARPU for CATV Business (y en)

Period ending
March 2009
(projections)

Period ending
March 2010
(projections)

Actual Results for the P eriod

Actula Results for the P eriod

P eriod Ending March 2008

Ended March 2007

Ended September 2007

(P rojections)

3,098

3,139

3,200

・ The ARPU for CATV Subscribers Will Increase with an
Expansion of CATV-FTTH Services.
※ Definition of ARPU: Total monthly usage revenue / (Total number of households subscribing to broadcasting services＋ Number of households subscribing only to Internet services)16

Image of Future Services That Use CATV-FTTH Networksz Provide safe and comfortable services based on next-generation networks by using IPv6,
QoS, and other technologies
z Fusion of broadcasting and telecommunications
z Fusion of fixed and wireless networks

Remote Medical Care

Next-generation networks
QoS (quality control)
IPv6 (development into home information
appliances and security measures)Home Information Appliances

FMC

High-Speed
Wireless VPN

IT Digital TV
17

CS Business18

25th Service Industry Survey (Internet Service Provider)

Ranking

Our sales is 12,425million
yen,which increases
38.8% compared to theprevious year.

Company nameHead office

Department
revenues(million yen)

Yearly growth
percentage(%)

Account
closingmonth

1

NTT Communications (OCN)Tokyo

142,2162.9

3

2

Nifty (@nifty)Tokyo

72,44021.7

3

3

NEC Biglobe (BIGLOBE)Tokyo

61,0003.2

34

Jupiter Telecom

Tokyo G

58,121

22.6

12

5

So-net Entertainment (So-net)

Tokyo G

32,387

－

3

6

USEN

Tokyo

20,12742.5

3

7NTTPC Communications (InfoSpher)Tokyo

16,270-0.6

38Dream Train Internet

Tokyo

15,98725.4

3

9Internet Initiative (IIJ)

Tokyo G

13,208

-0.7

3

10

VIC TOKAI(@T COM)

Shizuoka G

12,425

38.8

3

11

TOKAI
(TOKAI Network Club)

Shizuoka

7,727

1.3

3

12

Panasonic Network Services (hi-ho)

Tokyo

5,487

-4.2

3

13

Its Communications (iTSCOM.net)

Kanagawa

4,655

-5.9

3

(from a story in the Nikkei Marketing Journal on November 21, 2007)
19

ISP Business (@TCOM)
Other ISP

Internet

Other ISP
Other ISP

Our self-developed
content services areprovided at the sametime.

ISP (Internet Service Provider)
Carriers That VIC TOKAI Accesses

Broadband Access• NTT East

• NTT West

• FTTH• TOKAI• KDDI• ADSL, etc.

• Softbank• eAccessCustomer’s
computer

Provide broadband Internet services tocustomers by using the access lines of major
telecommunication carriers
20Development of ISP Business(Change in the Number of Broadband Subscribers)z The number of subscribers increased due to our excellent marketing abilities.
The number of subscribers as of the end of the current fiscal year is expected
to greatly exceed the projections.
(Unit: 1,000)

256

Number of FTTH subscribers

250

240

Number of ADSL subscribers

209

201
200

185

114

83

51

5

164

f AMPUotnemeizationImprov
d
n
a
b
d
broa
ervicessthrough
f
o
t
n
ichme
and enr

2

145

150

33

21

11

222

217

1
162

144

190

180

188

184

171

157

142

08
h
rc

Ma

r2
be

n
io
t
c
je
o
Pr

of newtnemhs
Establi
rough
h
t
s
l
e
d
mo
income
ntent
o
c
h
t
i
w
linkageservices

Se

pt
em

20

00

7

07
h
rc

Ma

r2
be

pt
em
Se

20

00

6

06
h

rc
Ma

r2
be

pt
em

20

00

5

05
20
h

Ma

rc
Se

Se

pt
em

be

rc

h

r2

20

00

4

04

100

Ma

ment of
e
v
o
r
p
Im
ith an
w
y
t
i
l
i
b
profitamber of
u
n
e
h
t
in
increase
er s
subscrib

21

Development of the Content BusinessNov. 2005
Begin offering“Mina-kuru Home,”
an avator SNS

Apr. 2007

Sept. 2007

Begin offering storage services

Aim to Achieve
1 Million Subscribers
for the Community Sites“Mina-kuru Pet Banzai,” a site totransmit information on pets
Start a tie-up with Petoffice Inc.

and PIM* for @TCOM

Number of Subscribers

Apr. 2006
Begin offering“Mina-kuru Stage,”a music community

June 2007

Release a new function to
enable cellular phone accessfor My@TCOM

Aug. 2006
Begin offering“Mina-kuru Video,”
a video posting community

Dec. 2007 (schedule)

アットティーコム

June 2007
Begin offering storage

Begin offering storage
services and PIM for
CATV-FTTH customers

Future Prospects
Secure new operating revenue, including
advertisement revenue and sales of digitalcontents

350,000 subscribers

services and PIM for other
ISP subscribers on an ASP basis

Enrich site functions by strengthening mobility
functions etc.

240,000 subscribers

Sept. 2006
Begin encouraging @TCOM
subscribers to join
“Mina-kuru” communities

Projections
270,000 subscribers

Contribute more to the company’s own ISP
business by improving the ARPU throughprovision of value-added services etc.

140,000 subscribers

March 2007

September 2007

Develop and maintain an environment thatenables users to carry out activities withoutanxiety by monitoring illegal contents etc.

March 200822

SIS Business23

Outline of SIS Business
1. EA (Enterprise Application) Business
Entrusted development of software with high capability and reliability
by making good use of our high technical capabilities

2. SI (System Integration) Business
Provision of total information systems services from design,development, and management to maintenance by making good use of
our packages, services, networks, and data center

3. Data Center Business
Provision of high-level system management and most appropriate
solutions by making good use of our data center, which has excellent
facilities and system management and monitoring systems
24

Growth of SIS Business■Ratio of PKG and stock sales tototal sales in SI business■Sales and operating profit goals
for SIS business(yen)
10,000

(yen)
3,000
2,800

9,000

3.9 billion

2,600

8,000
7,000

Sales

2,400
2,200

6.2 billion 6.7 billion

3.3 billion

2,000

6,000

1,800
1,600

5,000
4,000

1,400

5.0 billion
4.3 billion

1,200
1,000

3,000

800

2,000

600

an
Exp

400

1,000

200
0

0

07.03期実績 FY2008.3(E)08.03期予想
FY2007.3

12.03期
FY2012.3(E)

ＥＡ事業 売上
ＥＡ事業 営業利益

ＳＩ事業＋ﾃﾞｰﾀｾﾝﾀｰ 売上
ＳＩ事業＋ﾃﾞｰﾀｾﾝﾀｰ 営業利益

EA business Sales
EA business Operating profit

SI business + Date center Sales
SI business + Date center Sales

sio

a
KG
P
f
no

a
ck s
o
t
s
nd

les

07.03期

08.03期予想

12.03期

FY2007.3

FY2008.3(E)FY2012.3(E)

ストック売上Stock Sales

PKG販売

PKG Sales

その他売上高（単位：百万円）
Other
Sales

25

EA Business That Aims to Continually GrowthOver 350 System Engineers in EA Business（Over 600 System Engineers in the Whole of Our Company）
 We are entrusted software development projects by our business partners, major
systems integrators. For example, there are Nomura Research Institute, NTT Data,
Itochu Techno-Solutions, Hewlett-Packard Japan, Daiwa Institute of Research.
Software Development Revenues

6,157
5,242
流
通
系

4,124

計
FY2005.3

FY2006.3

FY2007.3(Unit: million yen)

6,600H17

H16

z Securing and development of human resources

397
64
154
187
163
259
62

294 z Increase of new recruits and enhancement of
157
intermediate recruitment
119
136 z Development of project managers and leaders58
224 z Strengthening of relations with cooperative companies
103z Securing of new cooperative companies
211
82 z Strengthening of relations with existing cooperative
1286 1384
companies
FY2008.3(E)26

Examples of Software Development
 We Have Developed Information Systems for Major Convenience StoreOperators for a Long Period of Time.
1. POS systems at convenience stores
2. Data transmission between the head office and stores
3. Order data between the head office and client companies
4. Automatic daily processing of the series of operations
5. Other systems for EC sites, convenience store-based banks, and group companies
Information Systems for Convenience Stores

Store System

Portable Computer
PHS Data Communication
Dedicated Line

EC SiteConvenience Store-Based Bank

Regional
OfficeJoint Distribution
CenterManufacturer/Client Company

Head
Host Computer
OfficeOrder, Sales, and Accounting Data
(Network)
Distribution

Electronic Money

Systems for Group Companies
27

Development of SIS Business

Provision of solutions centeredon infrastructure technologies

Network

Our high-quality networks

Data center

Our highly reliable IDC

synergy effects

Infrastructure
Solution

Outsourcing business,

High-quality, low-price
ASP
services that make good use of（Application Service）
our resources

which is beneficial
to customers and is highly stable for our company, by taking
advantage of our strength

High technical capabilities
accumulated throughentrusted development

High value-added System integration throughSoftwareDevelopment

28

Examples of Outsourced Projects for the Interim Period
Systems for Shuttle Bus Operators
 Development of security systems for each businessestablishment and maintenance and operation of IC card
systemsz Software and system developmentz Network developmentz System management and monitoring of servers

In-Vehicle Unit

IC CardOur past record of being outsourced by shuttle bus operators received
recognition, and then we were outsourced by express bus operators tohandle systems-related operations.

Systems for Express Bus Operators

Data Provision Center(VIC TOKAI) Development, maintenance, and operation of seatreservation systems for express busses
z System developmentz Provision of networks and housingz System operation and help desks
29

Outline of the New Data Center
Expansion of the Data Center Business
1996: The ISP business began.
2000: The data center business began.
2001: “ISO9001:2000” certificate
was obtained.
2003: Certification under ISMS Conformity
Assessment Scheme was obtained.
2005: Registration in the LGWAN(Local Government Wide Area Network)-ASP service list
October 2006: Construction of the new data
center began.
April 2008: The new data center will begin
services.
The Next Generation Data Centerof the High Standard

Features of Our Data Center
Facilities
High standard and high reliability

ISO9001

ISMS

NetworksServices

High speed and high capacity

24-hour manned services andample accomplishments

We have own lines, and superior lines are
directly connected to an IX

Gross Floor Space

8,026㎡

Structure

RC (reinforced concrete) structure:
Quake-absorbing structure, five-story building

Number of Racks
Included

Up to 825 racks

Floor Load Capacity

1,250kg/㎡ (Loading of servers: About 600kg/rack)Floor Load Capacity

Biometric recognition functions, non-contact IC cards,
and numeric keypad devices
30

Construction of the New Data Center

The new data center is under construction as scheduled 31

Business Concept of the Data Center
Characteristics of Housing Services◆ Top 20 data centers in terms of total Internet throughput◎ High-Standard Facilities

・ Highest-level load capacity in the industry
・ With a maximum power of 8KVA per rack, the facilities can be used by heavy users.
VIC TOKAI
BroadCenter

NTT West
Data Center
Solution

Bit-isle
Data Center

Floor load
capacity

1,250kg/㎡

600kg/㎡

1,500kg/㎡

Power

Up to 8KVA

4KVA (standard)

3KVA(standard)Comparison offacilities

＠TokyoDATACITY

SAKURA
Internet
Data Center

FRT
Data-norakuen
1,000kg/㎡

9KVA（past record）

Up to 4KVA

◎ Connectibility

1

SAKURA Internet

102Gbps2

K-opti.com

71Gbps3

BIGLOBE

65Gbps3

Softbank IDC

65Gbps5

Bit-isle

58Gbps6

BBT

57Gbps7

MEX

50Gbps7

WebARENA Symphony

50Gbps9SRI

40Gbps10

Dream Train

33Gbps11

Softbank Telecom

29Gbps12

NTT BizLink

28Gbps13

KDDI

24Gbps14

BroadCenter（VIC TOKAI）

15

Nomura Research Institute19Gbps16

MultiFEED Service

18Gbps17

ZAQ

12Gbps18

Fujitsu

11Gbps19

NTT Smart Connect

10Gbps20

MIND

10GbpsUp to 4KVA

３０Gbps・ The company has its own optical lines between Tokyo and Osaka, and superiorlines are directly connected to an IX.
・ The company offers a broadband Internet connection service by making good useof its strength as a carrier.
・ The company has secured backbone redundancy and two line routes to the center.
・ In addition to the existing shared Internet lines, the company has set up lowpriced exclusive lines. （10Mbps and 100Mbps）

The total Internet throughput was ３０Gbps as of April 2007.
BroadCenter is one of the top domestic data centers(ranked 14th* in terms of total Internet throughput).
It can be regarded as a top-level domestic outsourcing business operator,
excluding carrier-based IDCs

20Gbps※ From the Autumn 2006 edition of the Internet Data Center Complete Guide 32

Financial Results for theInterim Period of the Fiscal
Year Ending March 200833

Financial Results for the Interim Period of the Fiscal Year Ending March 2008
（ Consolidated ）(Unit: million yen)

（Unit:million yen）

Actual Result

Comaprisonswith Reported
Projections

Sales
16,882
Operating Profit
1,728
Recurring Profit
1,665Interim Net Profit
749
3,844
EBITDA

97.4%
103.5%
108.1%
125.0%
103.6%※ReferenceYear-on-year
Comparison

EBUTDA

105.6%（Reported in
May 2007)

Intermediate Consolidated Income Statement

Sales
Cost of Sales
Gross Profit on Sales(17,340) Operating Profit
Nonoperating Income(1,670) Nonoperating Expenses(1,540)Recurring Profit
Extraordinary Profit(600) Extraordinary Loss
(3,710)(Same Perioda Year Ago)

(3,640)Net Profit before Tax
Corporate Tax,Resident Tax,andEnterprise Tax
Adjustments for Corporate andOther Taxes
Profit or Loss of Minority
Shareholders
Intermediate Net Profit

Interim Period
under Review

PreviousInterim Period

16,882
10,621
6,260
1,728
52
115
1,665
22
268
1,419

15,859
9,640
6,218
1,802
18
137
1,683
40
84
1,639

43

28

620

-74

5

10

749

1,675

* EBITDA = Recurring Profit － Interest Received ＋ Interest Paid ＋ Depreciation Cost

Our sales increased 6.5%compared toPrevious interim period
34Effects of Changes in Accounting Procedures etc. on Consolidated Financial Results for
the Interim Period【Tax Effect】
Our company incurred adjustments to deferred income taxes of 620 million yen,following elimination of losses carried forward for tax purposes etc.
【Reserves for Retirement Benefits for Executives】
Starting the interim period, our company began including retirement benefits for
executives in necessary payments at period-end based on the our group’s internal
regulations. Therefore, reserves of 205 million yen were recorded.
【Depreciation Method】
Following a revision of the corporation tax system, our company switched to adepreciation method based on the revised corporation tax system in the interim period.
There were only slight effects on financial results.

35

Financial Results for the Interim Period of the Fiscal Year Ending March 2008
（ by Segment ）（Unit: million yen）

Sales
（Comparison with the
Projection Reported in
May 2007）

Operating Profit(Comparison with the
Projection Reported in
May 2007)

CATVBusiness

CS
Business

SIS
Business

5,787

6,309

4,814

(97.3%)
692(98.1%)

OthersElimination orCompany-wide20(96.7%) (102.9%)- 48-

Consolidated

16,882(97.4%)

1,104

402

11

- 482

1,728

(101.9%) (110.4%)(78.8%)(114.0%)-(103.5%)*Sales for each segment include internal sales among segments.

Revenues for EachBusiness Operation

PreviousInterim Period

CATV
5,347

CS
6,205
SIS
4,338

Interim Period
under Review

CATV
5,787

CS
6,309

SIS
4,814

36

Financial Results for the Interim Period of the Fiscal Year Ending March 2008
（ Unconsolidated ）million yen)
（Unit:million yen） Intermediate Unonsolidated Income(Unit:
Statement

Comaprisonswith Reported
Projections（Reported in
May 2007)

Sales
15,253Operating Profit
1,763
Recurring Profit
1,706Interim Net Profit
810
3,412
EBITDA

97.7%
103.8%
107.3%
120.9%
103.7%(15,620)※ReferenceYear-on-year
Comparison

EBITDA

106.6%

Actual Result

Interim Period Previous Interim
Periodunder Review
Sales
Cost of Sales
Gross Profit on Sales(1,700)Operating Profit(1,590)Nonoperating Expenses

Nonoperating Income
Recurring Profit(670)(3,290)(Same Perioda Year Ago)

(3,200)Extraordinary Profit
Extraordinary Loss
Net Profit before Tax
Corporate Tax,Resident Tax,andEnterprise Tax
Adjustments for Corporate andOther Taxes
Intermediate Net Profit

15,253
9,489
5,764
1,763
44
101
1,706
22
260
1,467

14,386
8,673
5,713
1,711
12
124
1,599
27
79
1,547

16

14

641

-52

810

1,585

* EBITDA = Recurring Profit － Interest Received ＋ Interest Paid ＋ Depreciation Cost

Our sales increased 6.0% compared toPrevious interim period
37Consolidated Earnings Forecasts for the Full Fiscal Year Ending March 2008
There is no change from the figures reported in May 2007.
(Unit: million yen)【Consolidated】

Sales
Operating Profit
Recurring Profit
Net profit
EBITDA

Projections

Comparisonswith thePrevious Period

37,350110.1%

4,510【Unconsolidated】
Projections

Comparisonswith thePrevious Period(33,924)

33,790109.1%(30,960)

102.1%(4,415)4,580

107.4%(4,266)4,210

100.3%(4,196)4,320

106.2%(4,068)

2,240

54.5%

(4,112)

2,240

56.2%

(3,989)8,750

106.6%(8,209)7,810

107.3%(7,280)(Previous
Period)(Previous
Period)※ EBITDA = Recurring Profit － Interest Received ＋ Interest Paid ＋ Depreciation Cost
Factors that affect net profit for the period in comparison to recurring profit (consolidated)
・ Starting the interim period, our company began providing reserves for retirement benefits for executives for the previous period.
Therefore, an extraordinary loss of 189 million yen was recorded.
・ Our company incurred a total of 1,778 million yen related to income taxes etc. and adjustments to deferred income taxes, following
elimination of losses carried forward for tax purposes, which started in the interim period, and other factors.
38

Return of Profit to Shareholders and Corporate Governance

Return of Profit to Shareholders
Corporate Governance39

Return of Profit to Shareholders■ Our company plans to pay an annual dividend of 25.0 yen per share for the year ending
March 2008, including an interim dividend of 12.5 yen per share.
■ Our company will continue to pay dividends stably in accordance with its performance,
while further strengthening its financial standings and considering future business(yen)development.
30
Commemorative dividend
Year-end dividend
25Interim dividend
Dividend per Share
20
15
10
5
0
FY2004.3

FY2005.3

FY2006.3

FY2007.3

FY2008.3(E)40Efforts to Strengthen Corporate Governance
1. Strengthening of management practices from a long-term perspective
Active recruitment and strengthening of human resources development
3. Efforts are made to strengthen and enrich internal management systems, andthe actual operation of internal control systems began. From now on, efforts
will be made to further strengthen the management of the internal control
systems, aiming to secure reliability of financial reporting.
3. As an information and telecommunication company, efforts will be made toachieve the ISO27001 certification and maintain and improve information
security, aiming to further improve the reliability and security of services.
4. Strengthening of the check functions of the management41

By combining the VIC TOKAI group’s technical and development
capabilities with its planning and marketing capabilities, our group willcontribute to local communities as a “total communication” partner that iscounted on and trusted by customers.

Integration

Triple-Play Service
Digital Multi-Channels

ＩＣＴ
Optical Fiber
BetweenTokyo and Osaka

CATV Optical TrunkLine
Network

ISP Service

Outsourcing
ASP

ＩＤＣ

Data Transmission
Service

Toward a More Communicative Society

Contents Service

Total Communication

Internal Control

Contribution to Society

Personal Information
Protection

Compliance

Information Security42

～ Precautions in Using This Materials～
This materials include future projections. The future projections are based on
judgments of VIC TOKAI’s management from currently available information. The
projections include assumptions or reasons based on assumptions, and assumed facts
or reasons may be different from actual results under certain environments. VIC
TOKAI or VIC TOKAI’s management expresses expectations or convictions for
future results, but there is no guarantee that the expectations or convictions will
actually come true or come nearly true. In addition, by law, VIC TOKAI has no
obligation to update any future projection, unless otherwise stipulated by law.

Toward a More Communicative Society Society
Total Communication