Nippon COMSYS Corporation Annual Report 1999
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ANNUAL REPORT 1999 Fiscal Year Ended March 31, 1999 COMSYS — For Excellence in Telecommunications Profile Financial Highlights • Nippon COMSYS Corporation • • Years ended March 31, 1998 and 1999 • • • • • Thousands of Nippon COMSYS Corporation was founded in 1951 to assume the duties of the Millions of yen U.S. dollars Change 1998 1999 1999 (%) Construction Division of Nippon Telegraph and Telephone Public Corporation (NTT). Contract backlog at beginning of the year ¥ 57,684 ¥ 68,458 $ 570,483 18.7% Since its establishment, the Company has been a leader in the telecommunications New orders received during the year 234,877 228,838 1,906,983 –2.6% Net sales 224,103 219,764 1,831,366 –1.9% engineering field. A specialist in communications and computer technology, Contract backlog at end of year 68,458 77,532 646,100 13.3% COMSYS, is striving to grow its business to meet the 21st century, and to make a Net income ¥ 7,611 ¥ 5,075 $ 42,292 –33.3% contribution to the development of the information-based society. We are fostering Total assets 160,561 166,002 1,383,350 3.4% a corporate culture characterized by fresh thinking and open communication, in Shareholders’ equity 90,101 96,635 805,292 7.3% which each employee can take pride, each employee can thrive, and each employee Ye n U.S. dollars can give full expression to his talents and capabilities. We are a creative organization, Per share: Net income ¥ 60.96 ¥ 38.78 $ 0.32 –36.4% working toward a better future. Cash dividends 14.25 10.00 0.08 –29.8% Note: Yen figures have been converted from U.S. dollars at the rate of ¥120.00=US$1, rounded, for convenience only, from an Contents approximate exchange rate of ¥120.55 to the dollar on March 31, 1999. • • • • • Financial Highlights 1 Letter from the Management 2 Net Sales Net Income New Orders Received (¥ Billions) (¥ Billions) (¥ Billions) Toward the 21st Century—Our Vision of the Future 4 Corporate Citizenship 6 Review of Operations 7 7.6 234.9 224.1 228.8 NTT Construction 8 219.8 225.1 220.6 Domestic Construction and Engineering 10 6.3 5.1 186.2 International Operations 12 180.6 Information Systems 16 152.2 3.7 3.6 143.0 Management 18 Financial Section 19 Organization Chart 34 Corporate Information 35 95 96 97 98 99 95 96 97 98 99 95 96 97 98 99 Corporate Directory 36 1 Letter from the Management • • • • Environment increase in orders in the Domestic Con- growth in NTT’s total capital investments. of buying back and retiring our issued to new Y2K compliant software by uring this term, the Japanese gov- struction and Engineering sector. This Looking at non-NTT markets, there stock shares. In the following fiscal year, November 1999. Divisional systems and D ernment made strenuous efforts to increase, however, was insufficient to is a rush to offer the electronic commerce we plan to pay dividends of ¥10 per share, peripheral equipment will be compliant bring the economy out of recession absorb the declines in the NTT Construc- and graphical services that are projected and to set aside a further ¥5 per share for by June 1999, and all systems needed for through changes in financial policies and tion and Overseas Construction sectors, to be the wave of the 21st century. These the retirement of issued shares. dealing with clients will be compliant by stabilization of the financial system. and total orders received declined 2.6 markets will only grow as we enter the Funds from internal reserves were July 1999. We have already completed Despite these measures, the persistent percent to ¥228.8 billion (US$1,907 mil- multimedia era. As COMSYS enters new used this year to further reinforce our the inspection of our products (chiefly slump in consumer spending and sluggish lion). fields, and as our customer base becomes business base and to expand our training software) for Y2K compliance. In addition, capital investment kept the economy in Total revenues displayed the same more diverse, we will be striving to in- facilities in furtherance of the growth of we have established a Contingency Man- what is being called the worst recession trends as did orders received: revenues crease our non-NTT business, by placing our operations. In addition, we replaced agement Plan to handle any unanticipated of the post-war era. in the Domestic Construction and Engi- increased emphasis on CC Box, LAN, a number of tools and instruments for problems. The operating environment sur- neering sector showed solid growth, while and other multimedia communications purposes of safety and to remain abreast Since March 31, 1996, the Com- rounding the telecommunications the NTT Construction and Overseas Con- projects, and through energetic efforts to of technological advances, and made pany has invested a total of ¥650 million industry has been adversely affected by struction sectors were weak. As a result, win contracts overseas. Of course, the capital investments in construction bases (US$5 million) in these Y2K compliance these economic doldrums, but is forging total revenues slid 1.9 percent to ¥219.8 most important issue facing the Company for the purpose of improving the work programs and is scheduled to invest a ahead with the building of a world-class billion (US$1,831 million). is to increase total orders received. environment. further ¥750 million (US$6 million) in communications network to take us into The Company’s long-standing To allow the Company to respond the coming term. This will bring our the 21st century. At the same time, this operational-efficiency enhancement in a timely manner to the rapid changes Capital Investment and Fund total Y2K investments to ¥1.4 billion summer’s restructuring of NTT has Pictured: (left) President Hironobu Takeuchi and programs have brought the establishment in today’s markets, COMSYS must fur- Acquisition (US$12 million). The bulk of this amount altered the nature of competition. Where Chairman Shozo Iwasaki of internal systems and controls, reduc- ther reinforce its marketing capabilities, uring this term, COMSYS executed was allocated to planned revaluation of D before the industry was engaged in tions in construction project costs, the its technological expertise, and reduce capital investments of ¥5.04 billion information systems in connection with straight cost competition, we must now salary system for upper management, and implementation and strengthening of a expenses in order to bolster its cost-com- (US$42 million). Significant investments the improvement of operational capabili- compete to offer better services and qual- has established a stock option system that subcontracting system, the prudent and petitiveness. included the purchase of real estate and ties, so these investments should have no ity. Competition among domestic and extends not only to executives and top profitable investment of the Company’s structural rights in connection with the significant effect on the Company’s per- international telecommunications firms management, but down to the project funds, and other measures designed to Dividends Higashi Gotanda Redevelopment Building. formance or cash flows. to win clients has become fiercer yet, mangers who are the on-site core of our increase profitability. Despite these efforts, ividend policy is one of the most We also acquired land for the construction Nippon COMSYS Corporation D while mergers and tie-ups among firms construction operations. To strengthen though, operating income declined 1.3 important issues with which any of the COMSYS Omiya Building (provisional will employ its technological capabili- scrambling for survival are increasing. our ability to arrive at management deci- percent to ¥13.9 billion (US$116 million), firm must deal. As the foundation for con- name) which will include our Kantonaka ties and foresight in identifying and Nippon COMSYS Corporation is sions in a timely fashion, to enhance our and net income dropped 33.3 percent to tinued expansion, we are strengthening Branch, the Omiya Technostation, and an challenging new fields. We request the meeting the challenges posed by these management oversight capabilities, and ¥5.1 billion (US$42 million). This decline our financial structure and improving return Education and Training Center. We also continued support of the Company’s dramatic changes in the market, as well to reinforce corporate governance, we in net income was primarily the result of on equity. At the same time, we strive to made investments in the construction of our clients, shareholders, and employees in as by the diversification of customer have drastically altered the composition the Asian economic crisis. There is con- offer shareholders the best possible divi- Tohoku branch, which commenced in July this time of troubled economic conditions. needs, through strengthening of systems of the Board of Directors, and have es- cern that customers of our overseas dends consistent with the Company’s 1998, and our Tokai branch, which broke and organizations, and by requiring each tablished the new position of corporate affiliates may default on payments due in performance and ability to pay dividends. ground in January 1999. No bonds or other branch to achieve ISO certifications. By executive officer. The Company will con- connection with construction orders, Looking at dividends during the instruments were issued during this term. meeting global standards, we intend not tinue to seek ways to utilize human and we are transferring funds to reserves current term, in accordance with the only to expand our business with NTT resources at maximum efficiency and to in anticipation that we will have to make policy described above, the Company The Y2K Problem and the companies of the NTT group, but inject vigor into our organization. good the loans that we guaranteed for declared a midterm dividend of ¥5 per OMSYS considers the millennium C also to grow our CC Box, software de- them in connection with these construc- share, and a year-end dividend of another bug to be the most important man- velopment, and other lines.