SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the Interim period ended September 30, 2004
Tokyo, November 10, 2004

FINANCIAL HILIGHTS
1.

Results of Operations(Millions of yen; amounts less than one million yen are omitted.)

Net sales

Operating loss

Ordinary loss

Net lossAmount%Amount%Amount %Amount%Interim period ended
September 30, 2004

¥303,706

34.7¥(6,790)-¥(25,908)-¥(6,045)-

Interim period ended
September 30, 2003

¥225,454

18.0¥(39,357)-¥(53,645)-¥(77,338)-

FY2004
April 2003 throughMarch 2004

¥517,393-¥(54,893)-¥(71,901)-¥(107,094)-

Interim period ended
September 30, 2004
Interim period ended
September 30, 2003
FY2004
April 2003 throughMarch 2004

Net loss per share—
primary (yen)Net loss per share—
diluted (yen)¥(17.20)-¥(229.81)-¥(314.72)-

Notes:
1.

Equity in loss under the equity method
Interim period ended September 30, 2004:
Interim period ended September 30, 2003:
Fiscal year ended March 31, 2004:¥(4,575) million¥(1,358) million¥(2,276) million

2.

Average number of shares issued and outstanding during each fiscal period (consolidated)
Interim period ended September 30, 2004:
351,402,492 sharesInterim period ended September 30, 2003:
336,540,038 sharesFiscal year ended March 31, 2004:
340,407,372 shares

3.

No changes in accounting methods

4.

Percentage changes for net sales, operating loss, ordinary loss and net loss are compared with the corresponding
period of the previous fiscal year.

12.

Financial Condition(Millions of yen; amounts less than one million yen are omitted.)

Total assets

Shareholders'equityEquity ratio (%)

Shareholders' equity
per share (yen)September 30, 2004

¥2,080,360¥231,84611.1¥659.78

September 30, 2003

¥974,456¥217,29622.3¥644.97

FY2004
March 31,2004¥1,421,206¥238,080

16.8¥677.40

Note: Number of shares outstanding (consolidated)
As of September 30, 2004:
As of September 30, 2003:
As of March 31, 2004:
3.

351,400,767 shares
336,907,285 shares
351,404,096 shares

Cash Flows(Millions of yen; amounts less than one million yen are omitted.)

Investing activities

Financing activities¥(5,292)¥(160,211)¥119,221¥397,578¥(53,678)¥65,059¥12,006¥169,734¥(83,829)¥81,878¥306,390¥437,132Interim period ended
September 30, 2004
Interim period ended
September 30, 2003
FY2004
April 2003 throughMarch 2004

4.

Scope of Consolidation at September 30, 2004
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

Cash and cash
equivalents
at the end of the period

Operating activities

198
7
101

Changes in Scope of Consolidation
Consolidated subsidiaries:
Newly added:
29
Excluded:8
Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
9
Excluded:42

Management Policies
1. Fundamental Management Policy
The core management philosophy of the SOFTBANK Group (hereafter “the Group”) is “Endeavoring tobenefit society and the economy by fostering the sharing of wisdom and knowledge gained through the IT
revolution.” By conducting business activities in a creative manner, the Group focuses its energy on bothcontributing to the development of society and increasing its corporate value.
The household penetration rate of broadband connections in Japan is already more than 30%, bringing thecountry closer to the full-fledged advent of the ubiquitous information age and making broadband an integral
element of infrastructures for daily activities.

SOFTBANK CORP. (hereafter “the Company”) isconcentrating on developing Japan’s broadband market with the aim of becoming a lifestyle company that can
provide broadband for every aspect of people’s lives.
The Group concentrated its resources on Internet-related businesses from an early stage of this market’s
development, launching in September 2001 the Yahoo! BB comprehensive broadband service.

The

cumulative number of lines installed in the Group’s Yahoo! BB service exceeded 4.49 million at the end of
September 2004, enabling the Group to retain its leading position in the ADSL service market among Japan’scommunications carriers and ISPs.

The Group also continues to hold an overwhelming lead in the IP

telephony market, where the cumulative lines installed for its BB Phone IP telephony service rose to 4.24
million at the end of September 2004 (based on Company data).
The Group has played a pioneering role in offering ADSL services in Japan, consistently serving as a leader indriving market growth.

In October 2004, the Group launched Yahoo! BB hikari, a new comprehensive

broadband service that uses optical fiber.

In addition to its solid ADSL service operating base, the Group has

created an ultra-fast Internet connection environment with one of the world’s highest speeds by utilizing
optical fiber with a maximum speed of 1 Gbps as a new business development that reflects advances intechnology and changes in the operating environment.

The Group will continue to grow as a comprehensive

communications company that offers ADSL, fiber-optic, fixed-line telephone, IP telephony and other services.
The Group will actively expand its comprehensive broadband services, simultaneously developing
infrastructure and content.
2. Policy Regarding Allocation of Earnings
The fundamental policy of the Company is to increase the profits of shareholders by raising its corporate value
while returning earnings to shareholders and all other stakeholders in a suitable manner.
The Company’s policy is to set dividend payments taking into consideration the need to maintain the properbalance between the demand for funds for future business expansion and actions to bolster the operating baseand maintaining a stable dividend.

At this time, no decision has been made regarding a dividend in thecurrent fiscal year.
3. Medium- and Long-Term Strategies
The Company has positioned the broadband infrastructure business as its core business and thus concentrates
resources in this field.

Hereafter, the Company will expand its comprehensive communications business3

mainly in broadband infrastructure by adding fixed-line telecommunications.

In terms of numerical goals, theCompany is aiming to increase total cumulative number of lines installed for Yahoo! BB ADSL and Yahoo! BB
hikari to more than 6 million by September 2005.

Regarding earnings goals, the Group in September 2004

achieved its goal of generating a consolidated operating profit on a monthly basis during the current fiscal year.
The medium- and long-term strategies are (1) to conduct a comprehensive communications business offering avariety of communication methods in a composite manner and (2) to generate added value in a manner that
captures synergies among Internet-based Group companies.

The objective is to further expand the customer

base of the broadband infrastructure business and the fixed-line telecommunications business and to generate
and maximize stable earnings and cash flows.
(1) Conduct a comprehensive communication business offering a variety of communication methods in acomposite mannerWith the aim of business expansion as a comprehensive communications company, the Company on July 30,
2004 acquired 100% of the issued and outstanding shares of JAPAN TELECOM CO., LTD.

The first step in

capturing synergies following this purchase was the September 2004 announcement of a direct-collection-type(see note) fixed-line telephone service offered by JAPAN TELECOM CO., LTD. and called Otoku Line.

This

service, which utilizes the proprietary communications network and facilities of JAPAN TELECOM CO.,LTD., offers a revolutionary fixed-line telephone service with inexpensive basic fees and calling charges.

Byoffering this service, the Group has established a new source of earnings, entering markets that were served
exclusively by NTT, such as services based on basic charges and optional services such as call-waiting.
October 2004 a new comprehensive broadband service called Yahoo! BB hikari was launched.

In

By using

optical fiber with a maximum speed of 1 Gbps, Yahoo! BB hikari creates one of the world’s fastest giga-levelnetworks.

Taking advantage of optical fiber that can both send and receive signals at a high speed, Yahoo! BB

hikari is to be operated linking with the provision of new content services.
Following the acquisition of JAPAN TELECOM CO., LTD., the Company in October 2004 decided topurchase Cable & Wireless IDC Inc. for the purpose of strengthening its international telecommunications
business and expanding its customer base, chiefly among companies. Already active in the IP telephony and
fixed-line telephone sectors, the Company is bringing the cellular telephone market into view.

The Company

will work on further expansion of its customer base by offering a variety of communications methods in acomposite manner, ranging from inexpensive, high-speed ADSL connection services to ultra-high-speed
communications using fiber-optic cables, in order to meet diversifying market needs.
Note: A direct connection to the homes of users by using dry copper (copper circuits) owned and leased by
NTT and placing the Company’s own switching facilities at NTT central offices.
(2) Generate added value in a manner that captures synergies among Internet-based Group companies
Internet-based Group companies are working on creating a variety of broadband-based content services andexpanding businesses offered on broadband infrastructures.
steadily growing businesses.

Yahoo Japan Corporation has a number of

Examples include an Internet auction business, shopping business, and the joint

operation of an employment information site with Recruit Co., Ltd. SOFTBANK BB Corp. and BB Serve
Inc. announced an exclusive business alliance with game software developer KOEI Co., Ltd. involving
4the planning, development and sale of online game software.

E*TRADE SECURITIES CO., LTD. ranks firstamong online securities companies in terms of the number of securities accounts and stock brokeragetransaction volume for individuals.

In addition to the current ADSL network, BBTV, a cable TV broadcasting

service, will provide a fiber-optic cable broadcasting service that supplies high-fidelity moving images
available only on an ultra-high-speed communications environment.
By continuing to strengthen its broadband-based content services, the Group plans to generate even more
added value and increase average revenue per user (ARPU).
4. Important Management Issues<Enhance Earnings Power in the Broadband Infrastructure Businessand Fixed-line Telecommunications Business>
The Group is expanding the customer base while conducting this business in a manner that places greater
emphasis on increasing earnings power. For example, capital expenditures are being used more efficiently byutilizing existing communications facilities for new businesses and procuring low-cost, high-performanceequipment from overseas.

In addition, through tie-ups with business partners to lessen the Group’s

investment burdens at the initial stage of the business cycle and outsourcing call center operations and otheractivities, the Group is working on the improvement of operating efficiency and cost cutting.

Through thecreation of services with a high degree of added value, the Group is working on raising ARPU while taking
many actions to boost efficiency.

In this way, the Group aims to make the broadband infrastructure businessand fixed-line telecommunications business profitable as soon as possible.
<Changes in Competitive and Regulatory Environments>
The Group is a member of the IT and communications industry, where technological progress is rapid andcompanies are subject to a variety of regulations, such as the need to obtain approval for certain activities.

In

order to take the greatest possible advantage of opportunities to generate earnings, the Group is working hardwith government agencies, companies in the industry and the general public, easing regulations and achievinga fair competitive environment, as well as on responding to shifts in market conditions and the businessenvironment in a flexible and speedy manner.
<Strengthen Management System for Information Security>
With Japan about to begin enforcing a personal information protection law, demands on companies’
information security management systems are rising.

SOFTBANK BB Corp. has already implemented

customer information protection initiatives covering 649 items.

A Group Information Security Department

established in July 2004 has started evaluating risks associated with information security at all Group
companies. The department is in charge of managing the formulation and oversight of the execution ofcountermeasures based on these evaluations.

Efforts will also be made to assist Group companies to obtain

Privacy Mark and Information Security Management System (ISMS) certification.

The Group will continue

to take steps to protect all information resources of the Group, maintaining the highest level of security
management systems.
55. Fundamental Policy and Measures Regarding Corporate Governance
The Company believes that enhancing corporate governance is essential to continuously raising corporate
value. As a pure holding company of the SOFTBANK Group, the Company horizontally manages andcoordinates the Group’s diverse businesses, mainly through its Board of Directors and CEO Conference, while
respecting the independence and specialized knowledge of each Group company and is working to strengthen
its Group management system.

From the standpoint of placing importance on accountability to all

stakeholders, the Company works on the rapid and suitable disclosure of information.
The Company has a corporate auditor system.

Three of the four corporate auditors are from outside theGroup, ensuring objectivity, fairness and transparency. The auditors monitor the performance of directors in
the execution of their duties with regard to all business activities. To provide for decision-making and theoversight of business execution from a broader perspective, the Board of Directors has eight members,
including two from outside the Group.

In addition, the CEO Conference, composed of the Company’s

representative director and the CEOs of each business segment and others, is held each month.

The

conference coordinates Group management policies for the entire group, manages operating results of Group
companies and performs other tasks.

To strengthen corporate governance, a consulting attorney from outside

the Group attends all meetings of the Board of Directors and CEO Conference, providing advice, guidance andother assistance.
To provide an internal control framework, the Internal Audit Department systematically conducts operational
audits covering all management and business activities.

These audits evaluate and verify compliance by theCompany and Group companies with management policies, laws, articles of incorporation, regulations,guidelines and other applicable rules, and results are reported to management.
As a measure to improve corporate governance, a Branding Strategy Department was established in September
2004 to build a uniform SOFTBANK Group brand image and improve the value of the brand.

With thenumber of Group companies growing and business activities becoming more diverse, the role of thisdepartment is to make the public aware of the SOFTBANK management philosophy and its products andservices as well as to establish the SOFTBANK brand as the symbol of a trustworthy company.
6. Other Items
Fundamental Policy Regarding Relationships with Related Parties
There are no applicable items.
Important Items Regarding the Company’s Management
There are no applicable items.

6

Results of Operations and Financial Position
1. Consolidated Results of Operations<Overview of First-half Results> (comparison with the first half of fiscal 2004)
In the first half of fiscal 2005, net sales increased ¥78,251 million, or 35%, to ¥303,706 million.

Steadygrowth in Broadband Infrastructure segment sales continued along with the increase in the number of paying
customers in the Yahoo! BB service.

In addition, net sales increased in the Internet Culture and e-Financesegments.
The operating loss decreased ¥32,566 million to ¥6,790 million compared with the first half of the previous
fiscal year.

The operating loss in the Broadband Infrastructure segment decreased as growth in operating

expenses was held to 27% as net sales rose 79% year on year.

Aggregate operating income for all segments

other than the Broadband Infrastructure segment continued to grow, increasing ¥17,579 million, or 171%, to¥27,888 million, backed by higher operating income in the Internet Culture, e-Finance and e-Commerce
segments.

In addition, the Group in September 2004 achieved a consolidated operating profit on a monthly

base.
The ordinary loss decreased ¥27,736 million to ¥25,908 million.

Net equity in losses under the equity

method increased ¥3,216 million to ¥4,575 million mainly due to the exclusion from the equity method of
Aozora Bank, Ltd., which was sold in September 2003.

There was an exchange loss of ¥5,526 million due tothe yen’s depreciation compared with a gain of ¥3,471 million in the first half of the previous fiscal year.

An

increase in interest-bearing debt caused net interest expense to increase ¥4,594 million to ¥10,231 million.
As a result, there was an increase of ¥4,830 million in net non-operating expenses to ¥19,118 million.
The net loss decreased ¥71,293 million to ¥6,045 million compared with the first half of the previous fiscal
year.

Special income includes a ¥46,314 million gain on the sale of investment securities, including the saleof shares held in BB Call Corp., E*TRADE SECURITIES CO., LTD., and other companies.

Due to this gain

and other items, there was a net special income of ¥39,562 million compared with a net special loss of ¥11,509
million in the first half of the previous fiscal year.
<Changes in Major Subsidiaries during First Half>
On July 30, 2004, the Company purchased 143,855,424 shares of common stock (100% of shares issued) ofJAPAN TELECOM CO., LTD. at a cost of ¥143,330 million.

The acquisition of JAPAN TELECOM CO.,LTD. was made for the purposes of significantly increasing the scale of the Group’s business operations andproviding a comprehensive line of communication services that include consumer and corporate voice, data,
Internet connection, and other services.

As JAPAN TELECOM CO., LTD. is treated as having been

consolidated at the end of the fiscal year’s first half, this company was included in the consolidated balance
sheet as of September 30, 2004 and will be included in the consolidated income statement beginning with thesecond half of this fiscal year.

The Group plans to include the operations of JAPAN TELECOM CO., LTD.

into the newly established Fixed-line Telecommunications segment.
Assets and liabilities associated with the acquisition of JAPAN TELECOM CO., LTD. and its associated 10companies as of September 30, 2004, and the impact on the Company’s cash flows were as follows.
7

Assets and Liabilities(Millions of yen ; amounts less than one million yen are omitted.)
Current assets¥168,604

Current liabilities¥163,973

Property and equipment, net

275,839

Long-term liabilities

152,973

Intangible assets, net

18,257

Minority interest*2

33,954

Investments and other assets

39,321SOFTBANK Corp. interest

189,959

Consolidation adjustment

38,836
Total¥540,859

Total¥540,859*1. Inter-company transactions of JAPAN TELECOM CO., LTD. and 10 other companies were eliminated.
*2. Includes ¥33,908 million of minority shareholder’s preferred shares that were redeemed on October 4,
2004.
Impact on Cash Flows
Acquisition cost of JAPAN TELECOM CO., LTD. and 10 other companies*1¥189,959 million

Loans extended to JAPAN TELECOM CO., LTD. and 10 other companies*2¥29,462 million

Cash and cash equivalents of JAPAN TELECOM CO., LTD. and 10 other companies*3(¥60,584 million)

Cash used for acquisition of JAPAN TELECOM CO., LTD. and 10 other companies¥158,837 million*1 Includes expenses associated with acquisition and additional investments by the deemed acquisition date,
September 30, 2004.
*2 Loans extended up to the deemed acquisition date, September 30, 2004.
*3 Includes ¥33,908 million of cash and cash equivalents used for redemption of preferred shares on October 4,
2004.
<First-half Results by Business Segment> (comparison with the first half of fiscal 2004)
Broadband Infrastructure—Segment sales increased ¥42,445 million, or 79%, to ¥95,994 million. The
monthly churn rate in the Yahoo! BB ADSL service remained low at between 1% and 2% and the number ofpaying customers continued to grow steadily.

Along with growth in the number of customers, there was anincrease in the share of users using value-added services such as more high-speed services and wireless LAN.
The result was strong sales at SOFTBANK BB Corp. and ISP revenue growth at Yahoo Japan Corporation.
The operating loss was ¥34,678 million as customer acquisition costs remained high.

However, steady

improvement in profitability is continuing since this was ¥14,987 million less than in the first half of theprevious fiscal year as the year-on-year increase in operating expenses was held to 27% as net sales rose.
Results in this segment include special income of ¥38,706 million from the gain on the sale of investment
securities resulting from the sale of shares held in BB Call Corp. in August 2004.
e-Commerce—Segment sales increased ¥1,357 million, or 1%, to ¥119,610 million.

Contributing to thisperformance was continuing strength in software sales at SOFTBANK BB Corp., the core business of this8company, backed by Internet sales of highly profitable security-related software and sales of application
software for corporate customers.

In addition, a redeployment of employees to the Broadband Infrastructurebusiness, rationalization of distribution systems, and other measures were taken to improve operating
efficiency. As a result, operating income increased ¥1,447 million, or 128%, to ¥2,580 million.
e-Finance—Segment revenue increased ¥16,010 million, or 108%, to ¥30,771 million.
rose ¥6,320 million, or 775%, to ¥7,135 million.

Operating income

The revenue growth was mainly attributable to theacquisition of a controlling stake in WORLD NICHIEI Securities Co., Ltd. (see note) along with higher
brokerage commission revenue and financial income from interest and dividends at E*TRADE SECURITIESCO., LTD. due to continuing strength in Japan’s stable stock markets.

Also contributing to earnings was astrong performance by the investments of IT funds, mainly SOFTBANK INTERNET TECHNOLOGY FUND,
one of Japan’s largest venture capital funds.

In addition, there was special income of ¥2,909 million from again on the sale of investment securities from the partial sale of shares held in E*TRADE SECURITIES CO.,LTD.
*WORLD NICHIEI Securities Co., Ltd. and SOFTBANK FRONTIER SECURITIES CO., LTD. merged in February 2004 toform WORLD NICHIEI FRONTIER Securities Co., Ltd.

Media & Marketing—Segment sales decreased ¥1,063 million, or 15%, to ¥6,120 million and the operating
loss increased ¥39 million to ¥596 million.

The main causes of the sales decline were the temporary

suspension of publication of a major magazine and falling sales of entertainment magazines, mainly involving
games, at SOFTBANK Publishing Inc.
Broadmedia—Segment sales increased ¥887 million, or 13%, to ¥7,548 million. This was mainly the resultof higher sales at Broadmedia Studios Corporation, to which was transferred the operations of MOVIETELEVISION INC. (see note), a company undergoing the Civil Rehabilitation Law, Japanese Chapter 11
procedures. The operating loss decreased ¥40 million to ¥1,421 million. The operating loss continued at
the BBTV business of BB Cable Corporation related to the growth in start-up expenses involving the full-scalelaunch of the business.

BB Cable Corporation was transferred to SOFTBANK BB Corp. on September 30,

2004 for the purpose of strengthening ties with the BBTV and Yahoo! BB businesses. BB Cable Corporation
will be included in the Broadband Infrastructure segment from the second half of this fiscal year, but theresults for the first half of the fiscal year are included in the Broadmedia segment.
*In July 2004, Broadmedia Studios Corporation, a wholly-owned subsidiary of SOFTBANK Broadmedia Corporation, took over
all operations of MOVIE TELEVISION INC.

Internet Culture—Segment sales increased ¥15,832 million, or 57%, to ¥43,795 million and operating
income was up ¥8,034 million, or 57%, to ¥22,196 million.

Yahoo Japan Corporation posted record-highadvertising revenue as a hot summer in Japan caused strong seasonal demand from beverage companies and as
marketing efforts consolidating sponsorship sites only to Overture Services, Inc. encouraged closer
relationships with venders, boosting advertising sales.

In addition, there was steady growth in sales fromYahoo! RIKUNABI, a recruiting information site launched during the first half through a tie-up with
9

RECRUIT CO., LTD.

Taking steps to aggressively develop new markets, the segment also began operating

Shotworks, a site for hiring short-term workers.
Technology Services—Segment sales increased ¥1,309 million, or 13%, to ¥11,669 million.

The primaryreason was an increase in sales relating to the back-office service on e-commerce sites, network systemdevelopment, operation and maintenance services, security equipment and other products of SOFTBANKTECHNOLOGY CORP. Due to the higher sales, operating income increased ¥260 million, or 164%, to ¥419
million.
2. Financial Position<Balance Sheet Analysis> (comparison with the end of fiscal 2004)
The consolidation of JAPAN TELECOM CO., LTD. increased consolidated assets by ¥540,859 million.
Please refer to the above section titled “Changes in Major Subsidiaries during First Half” for further details.
Current assets increased ¥210,606 million to ¥1,098,547 million.

This increase was mainly due to a¥62,126 million increase in trade notes and accounts receivable associated with the consolidation of JAPANTELECOM CO., LTD. (including ¥62,299 million from JAPAN TELECOM CO., LTD.) and a ¥114,520
million increase in cash segregated as deposits related to securities business and receivables related to margintransactions at E*TRADE SECURITIES CO., LTD. and other companies.

There was a ¥22,861 million

increase in cash and deposits.
Property and equipment increased ¥284,502 million to ¥399,682 million, mainly due to the consolidation ofJAPAN TELECOM CO., LTD.

Telecommunications equipment and service lines increased ¥194,357 million(including ¥196,109 million from JAPAN TELECOM CO., LTD.), buildings and structures increased ¥46,351
million (including ¥45,249 million from JAPAN TELECOM CO., LTD.), and other property and equipment
including land, construction in progress, fixtures and other items increased ¥43,793 million (including ¥34,479
million from JAPAN TELECOM CO., LTD.).
Intangible assets increased ¥62,221 million to ¥79,249 million.

The main reason was an additional

consolidation adjustment of ¥38,836 million associated with the consolidation of JAPAN TELECOM CO.,LTD. and its subsidiaries that caused consolidation adjustments to increase ¥38,499 million compared with theend of the previous fiscal year.
Investments and other assets increased ¥102,286 million to ¥501,288 million, mainly due to a ¥68,237
million increase in investment securities compared with the end of the previous fiscal year, which was causedby growth in the market values of shares held in Yahoo! Inc. and certain other companies.
Total liabilities increased ¥608,628 million to ¥1,698,966 million. The consolidation of JAPAN TELECOM
CO., LTD. and other factors caused the sum of short-term borrowings and long-term debts to10increase ¥250,665 million (including ¥166,058 million from JAPAN TELECOM CO., LTD.). In addition,
there was a ¥95,103 million increase in payables related to margin transactions and guarantee deposits received
from customers related to securities business at E*TRADE SECURITIES CO., LTD. and other companies.
In other current liabilities, there was an increase of ¥60,000 million compared with the end of the previous
fiscal year in cash receipt as collateral under security deposit agreements.

The primary reason for theincrease in other long-term liabilities was a ¥50,542 million increase in derivative liabilities associated with
derivative transactions utilizing Yahoo! Inc. stock as the market value of these shares climbed.
Shareholders’ equity decreased ¥6,233 million to ¥231,846 million.

Net unrealized gain on other securities

increased ¥28,285 million compared with the end of the previous fiscal year because of the increase in themarket value of Yahoo! Inc. stock and other items, while there was an increase of ¥32,210 million in net
unrealized loss on derivative instruments resulting from changes in the market value of derivative transactions
in relation to stock in Yahoo! Inc.

In addition, accumulated deficits increased ¥8,632 million compared withthe end of the previous fiscal year because of the net loss and other factors.
<Cash Flows Analysis>(1)Overview of First-half Results
Cash flows were a negative ¥39,527 million during the first half as cash was used in operating and investing
activities while cash was provided by financing activities.

The main reason was a payment of ¥158,837

million for the acquisition of JAPAN TELECOM CO., LTD. As a result, cash and cash equivalents decreased¥39,554 million to ¥397,578 million compared with the end of the previous fiscal year.

Please refer to theabove section titled “Changes in Major Subsidiaries during First Half” for further details on the effect of theJAPAN TELECOM CO., LTD. acquisition on cash flows.
Net cash used in operating activities was ¥5,292 million, a substantial improvement as this was ¥48,385
million less than cash used in the first half of the previous fiscal year.

Operating cash flows became positivein the second quarter, mainly a reflection of the smaller loss in the Broadband Infrastructure segment and ofsteady growth in the Internet Culture, e-Finance and certain other segments.

In the first half, income before

income taxes and minority interest was ¥13,654 million and depreciation and amortization was ¥18,806
million, but operating cash flows remained negative due to interest payments of ¥8,990 million and income tax
payments of ¥19,334 million.
Net cash used in investing activities was ¥160,211 million.

There were proceeds of ¥39,451 million fromthe sale of stock in BB Call Corp. and other subsidiaries, but a payment of ¥158,205 million for the acquisitionof JAPAN TELECOM CO., LTD. and other subsidiaries and an outflow of ¥30,594 million for purchase ofproperty and equipment and intangibles, mainly telecommunications equipment at SOFTBANK BB Corp.
Net cash provided by financing activities was ¥119,221 million.

This was mainly due to proceeds of¥51,400 million from short-term borrowings and ¥27,400 million from long-term debts and to11

proceeds of ¥60,000 million from cash receipt as collateral under security deposit agreements.

In addition,

there were proceeds of ¥20,529 million from the issuance of convertible bonds by SOFTBANKINVESTMENT CORPORATION and other sources. SOFTBANK CORP. used ¥29,324 million for theredemption of bonds.
(2)Factors That May Have a Material Impact on Cash Flows in the Second Half・Need for Funds to Support Growth in the Group’s Communication Services Business
The Group has for some time been concentrating resources on the Broadband Infrastructure business.

In

addition to an ADSL service, in October 2004 the Group started a new comprehensive broadband service thatuses fiber-optic cables.
telephone service.

In December 2004, the Group will begin offering a direct-collection-type fixed-line

This business expansion will require start-up investments in the form of capital

expenditures as well as expenditures to acquire customers to bolster the customer base.

As a result, operating

cash flows and free cash flows may temporarily become negative.
・Acquisition of Cable and Wireless IDC Inc.
The Company on October 26, 2004 signed a stock purchase contract for the purpose of acquiring Cable andWireless IDC Inc.

The acquisition price will be ¥12.3 billion and the acquisition date is not yet fixed.

・Sales of Equity Stock and Warrants
On October 4, 2004, JAPAN TELECOM CO., LTD. sold 166,670 shares of stock and 11,852 warrants(equivalent to 59,260 shares) held in eAccess Ltd. for ¥18,292 million.
・Loan Agreement and Redemption of Preferred Shares at SORA HOLDINGS JAPAN INC. (“SORA”)
SORA, a wholly owned subsidiary of the Company, entered into a ¥32.5 billion loan agreement (maturity date:June 15, 2011, interest rate: 3.75% per annum) with Deutsche Bank Akitiengesellschaft on October 4, 2004.
All proceeds from the loan agreement were used to redeem preferred shares of SORA held by Vodafone K.K.
SORA is one of the companies associated with the Company’s acquisition of JAPAN TELECOM CO., LTD.
Vodafone K.K. used to own SORA as a holding company to own preferred shares of JAPAN TELECOM CO.,LTD.
As a result of the above transaction, JAPAN TELECOM CO., LTD.’s preferred shares held by Vodafone K.K.
through SORA were completely redeemed.
Note: SORA will continue to exist following redemption of the preferred shares.
・Commitment-line Contract
Upon the end of the term of a commitment line established in the previous fiscal year, the Company on
October 19, 2004 entered into a ¥105,000 million commitment-line contract with eight financial institutions,which was arranged by Mizuho Corporate Bank, Ltd. Borrowings through the commitment line will be madein consideration of the current level of liquidity, the availability of other fund procurement methods and otherfactors.

The Company has not decided whether to continue the contract into fiscal 2006.
12

・Redemption and Issuance of Bonds
As of September 30, 2004, the Group had ¥327,661 million of bonds outstanding. Bond redemptions totaling¥54,945 million are scheduled within one year from September 30, 2004. A straight bond issue at JAPANTELECOM CO., LTD., a wholly owned subsidiary of the Company, was approved at the Board of Directors’
meeting held on November 2, 2004.

The issue terms, such as the amount to be issued, have not yet been

determined. Proceeds from the bond issue will be used to reduce the amount of JAPAN TELECOM CO.,LTD.’s borrowings.
Trends in Cash Flow Indicators
A summary of trends in cash flow indicators is presented below.
Six months

Year ended

Six months

Year ended

ended

March 31,

ended

March 31,

Sept. 30, 2004

2004

Sept. 30, 2003

2003

Equity ratio

11.1％

16.8%

22.3%

27.2%

Equity ratio (Market cap.)

86.3％

120.4%

163.2%

48.9%

Debt repayment period

−

−

−

−

Interest coverage ratio

−

−

−

−

Notes:
1. The above indicators are calculated using the following formulas based on consolidated figures.
Equity ratio

Shareholders’ equity divided by total assets

Equity ratio (Market cap.)

Market capitalization divided by total assets

Debt repayment period

Interest-bearing debt divided by net operating cash in-flows

Debt repayment period at the end of the fiscal Interest-bearing debt divided by (net operating cash in-flows times two)year’s first halfInterest coverage ratio

Net operating cash in-flows divided by interest expenses

2. Market capitalization is calculated by multiplying the closing stock price by the number of shares outstanding, netof treasury stock, as at September 30, 2004.
3. Interest-bearing debt is the sum of all consolidated liabilities on which interest must be paid.
4. Net operating cash in-flows and interest expenses are the corresponding figures shown on the consolidated
statements of cash flows.
5. Negative figures are indicated by a “−” sign.

13

The SOFTBANK GroupAs of September 30, 2004, the SOFTBANK Group comprised 306 companies with operation in nine segments as follows.

Business segment
1.
2.

Broadband
Infrastructure
Fixed-line
telecommunications

Consolidated
subsidiaries

Equity-method
non-consolidated
subsidiaries andaffiliates(Notes 1and 3)

16

6(Note 2)102(Note 1)18

8

ADSL and fiber-optic high-speed Internet connection service; IP
telephony service; provision of content and other operations
Fixed-line telecommunications such as voice transmission service,data transmission service and private leased circuit
Distribution of PC software and such hardware as PCs andperipherals; enterprise solutions; diversified e-commerce businesses,
including business transaction platform (B2B) and consumer-related
e-commerce (B2C)
All-inclusive financial operations, including on-line security
business; management of domestic venture capital funds; incubationof portfolio companies
Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc.; development of web content specialized in IT
Promoting the spread of broadband service such as broadcasting andcommunications; support for procurement of contents
Internet-based advertising operations; broadband portal business;
Internet-based auction business
System solution business; business solution business
U.S.- and Asia-focused global venture capital business with a main
focus on Internet-related companies
Holding company functions for overseas operations; back-officeservices in Japan3.

e-Commerce

4.

e-Finance

51

7

5.

Media & Marketing

10

7

6.

Broadmedia(Note 3)

13

2

7.

Internet Culture(Note 1)

18

6

8.

Technology Services

7

3

9.

Overseas Funds

38

62

10.

Others

17

5

198

108

Total

Principal products and operational content of each businessNotes:
1. SOFTBANK BB Corp. and Yahoo Japan Corporation are included in consolidated subsidiaries of Broadband infrastructure segment and Internet Culture segment,
respectively, while both SOFTBANK BB Corp. and Yahoo Japan Corporation operate multiple businesses, and their operating results are allocated to multiple
segments.
2. The Company has newly consolidated JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”) and its nine subsidiaries at September 30, 2004 as the deemed
acquisition date. Balance sheets of JAPAN TELECOM and its subsidiaries were included in the Company’s consolidated financial statements for the interim period
ended September 30, 2004, and income statements of JAPAN TELECOM and its subsidiaries will be included from the second half of the fiscal year 2005,
accordingly. JAPAN TELECOM and its subsidiaries are included into a newly-established “Fixed-line telecommunications” business segment.
3. BB Cable Corporation (“BB Cable”) is included in the Broadmedia segment in the interim period ended September 30, 2004, while BB Cable was acquired by
SOFTBANK BB Corp. at September 30, 2004. BB Cable will be included in Broadband Infrastructure segment in the second half of the fiscal year 2005.
Broadband Infrastructure［ Overseas ］

Fixed-line
Telecommunications［ Domestic ］
IP REVOLUTION, INC.

Internet Culture

SOFTBANK BB Corp.

JAPAN TELECOM CO., LTD.

e-Finance
SOFTBANK INVESTMENTCORPORATIONYahoo Japan Corporation(Operating Holding
Companies）

E*TRADE SECURITIES CO., LTD.
Morningstar Japan K.K.

Tavigator, Inc. Tavigator, Inc.

SOFTBANKFINANCECORPORATION

e-Shopping! Books CORP.

［ Overseas ］(Operating Holding
Companies）［ Domestic ］

SOFTBANK CORP.
(Pure Holding Company)

Vector Inc.

Finance All Corporation（Operatinng Holding
Companies）［Domestic ］［Overseas ］

SOFTBANK
Holdings Inc.

Dee Corp.

e-Commerce

Morningstar Inc.

WORLD NICHIEI FRONTIER
Securities Co., Ltd.

Overseas Funds

SOFTBANK BB Corp.

SOFTBANK Korea Co., Ltd.

Carview Corporation

SOFTBANK
Broadmedia
Corporation

Club iT Corporation

SOFTBANK Media &Marketing Corp.

(Operating Holding
Companies）

SB CHINA HOLDINGS PTE LTD
SOFTBANK US Ventures VI LP

SOFTBANK Publishing Inc.
Softbank ITmedia Inc.

BB Cable Corporation

cyber communications inc.
SOFTBANK TECHNOLOGY CORP.

［Domstic］
Broadmedia

Media & MarketingTechnology Services［ Overseas ］

・・・・ Segment・・・・ Consolidated subsidiary

14

・・・・ Equity-method subsidiaryor affiliate

SOFTBANK subsidiaries listed on domestic stock exchanges as of September 30, 2004:
Subsidiary

Listed exchange

1.Yahoo Japan Corporation

Tokyo Stock Exchange 1st section

2.SOFTBANK TECHNOLOGY CORP.

JASDAQ

3.Morningstar Japan K.K.

Hercules

4.Vector Inc.

6.Club iT Corporation

HerculesTokyo Stock Exchange 1st section
Osaka Securities Exchange 1st section
Hercules7. Finance All Corporation

Hercules8. WORLD NICHIEI FRONTIER Securities Co., Ltd.

Hercules5.SOFTBANK INVESTMENT CORPORATION

15

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
FY2005 Interim(As of September 30, 2004)

FY 2004(As of March 31, 2004)

AmountAmount%Increase(Decrease)%

FY2004 Interim(As of September 30, 2003)
Amount%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable tradeMarketable securities¥349,884¥327,023¥22,861¥174,814

150,108

87,982

62,12664,78353,084

113,659(60,574)

2,512

Inventories

40,15825,06415,09330,345

Deferred tax assets
Cash segregated as deposits
related to securities business
Receivables related tomargin transactions
Other current assets
Less:
Allowance for doubtful accounts
Total current assets

4,996

5,255

(258)

4,655

137,983

95,53242,45066,093

253,113

181,043

72,07095,022

117,776

64,10553,67064,578(8,559)(11,726)

3,167(8,757)

210,606

494,048

1,098,547

52.8

887,940

62.5

50.7

Non-current assets:
Property and equipment, net
Buildings and structures

50,344

3,992

46,351

2,847

Telecommunications equipment

185,504

91,542

93,961

85,591

Telecommunications service lines

101,084688

100,396

651

Others

62,74818,955

43,793

11,899Total tangible assets

399,682

284,502

100,98919.2

115,179

8.1

10.3

Intangible assets, net:
Consolidation adjustment

38,499-38,4993,811

Other intangibles

40,75017,02823,721

15,284

Total intangible assets

79,24962,221

19,096

3.8

17,0281.2

2.0

Investments and other assets:
Investment securities

331,144

262,906

68,237

221,574

Investments in partnerships

90,17686,654

3,521

94,557

Deferred tax assets

38,39729,303

9,093

28,827

Other assets
Less:
Allowance for doubtful accounts
Total investments
and other assets

51,322

24,461

26,861

16,597(9,751)(4,324)(5,427)(1,480)501,28824.1

399,001

28.1

102,286

360,077

37.0

Deferred charges

1,592

0.1

2,056

0.1

(463)

245

0.0

Total assets¥2,080,360

100.0¥1,421,206

100.0 ¥659,154¥974,456

100.0

16

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)

LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Notes and accounts payable - trade

FY2005 Interim(As of September 30, 2004)

FY 2004(As of March 31, 2004)

AmountAmount%Increase(Decrease)%

FY2004 Interim(As of September 30, 2003)

Amount¥57,063¥47,613¥9,449¥41,591

Short-term borrowings

189,381

88,841

100,539

173,546

Commercial paper
Current portionof corporate bonds
Accounts payable – otherand accrued expenses
Income taxes payable

5,000

11,000(6,000)21,00054,94536,154

18,791

41,984

116,895

66,42050,47554,913

19,27818,858419

13,153

1,218

233

984

106

215,442

160,382

55,05987,683

124,155

84,11140,04360,808

189,914

42,125

147,788

34,935417,551

529,723

Deferred tax liabilities
Payables related tomargin transactions
Guarantee deposits received from
customers related to securities
business
Other current liabilities
Total current liabilities

973,29446.8

555,742

39.1

%

54.4

Long-term liabilities:
Corporate bonds

272,716

297,067(24,351)

89,360Long-term debt

292,602

142,477

150,125

10,243

Deferred tax liabilities

61,041

58,212

2,829

53,900Accrued retirement benefits

15,021

34

14,986

29

-

1,721

(1,721)-Other liabilities

82,27633,711

48,56520,080Total long-term liabilities

723,658

190,434

173,614

Consolidation adjustment

Reserves under special laws:
Reserve for securities
trading liabilities
Reserve for commodities
trading liabilities
Total reserves under special laws

34.8

533,224

37.5

1,884

1,267

616

795

129

103

26

86

17.8

2,013

0.1

1,371

0.1

642

881

0.1

1,698,966

81.7

1,090,337

76.7

608,628704,21972.3

149,546

7.2

92,787

6.5

56,75952,941

5.4

Common stock

162,303

7.8

162,303

11.4-

137,958

14.1

Additional paid-in capital

186,690

9.0

186,690

13.1-

162,354

16.7

Accumulated deficit
Net unrealized gain on othersecurities
Net unrealized loss on derivative
instruments
Translation adjustments(219,257)(10.6)(210,625)(14.8)(8,632)

133,484

6.4

105,198

7.4

28,28586,547

8.9(41,673)(2.0)(9,462)(0.6)(32,210)--

10,382

0.5

4,044

0.3

6,337

11,567

1.2

(82)

(0.0)

(66)

(0.0)

(15)

(52)

(0.0)

231,84611.1

238,080

16.8(6,233)

217,29622.3¥2,080,360

100.0¥1,421,206

100.0¥659,154¥974,456

100.0

Total liabilities
Minority interestin consolidated subsidiaries
Shareholders' equity:

Less: Treasury stock
Total shareholders' equity
Total liabilities andshareholders' equity

17(181,079) (18.6)

CONSOLIDATED STATEMENTS OF OPERATIONS(Millions of yen; amounts less than one million yen are omitted.)

FY2005 Interim(April 2004 throughSeptember 2004)

FY2004 Interim(April 2003 throughSeptember 2003)

Amount%Amount%Net sales
Cost of sales
Gross Profit¥303,706
192,478

100.0
63.4

¥225,454
176,351

100.0
78.2

111,22836.6

49,103

Selling, general and administrative expenses

118,01838.8

88,460Operating loss

(6,790)(2.2)

Interest income
Exchange gain
Income from investments in partnerships
Amortization of consolidation adjustment
Other non-operating income

1,446
980
594
1,612

Non-operating income
Interest expense
Exchange loss
Equity in loss under the equity method
Expenses from investments in partnerships
Valuation loss on inventories
Other non-operating expenses
Non-operating expenses

4,634
10,2315,526

1.5

Increase(Decrease)

FY2004(April 2003 throughMarch 2004)
Amount%¥78,251
16,127¥517,393
384,024

100.0
74.2

21.8

62,124

133,369

25.8

39.2

29,557

188,263

36.4(39,357) (17.4)

32,566(54,893)(10.6)

346
3,471
-

1,100
(3,471)
980
594

799
6,508
1,165
-

1,855

(242)

4,000

(1,038)
4,594
5,526

12,473
12,052
-

5,672
5,636
-

2.5

4,575

1,358

3,216

2,276

3,419

322
10,0522,590(322)(10,052)829

10,0525,100

2.4

23,752

7.8

19,961

8.9

3,791

29,481

5.7

Ordinary loss

(25,908)(8.5)(53,645) (23.8)

27,736(71,901)(13.9)

Gain on sale of investment securities
Other special income

46,314
4,139

18,213
1,965

28,1002,174

37,601
5,185

30,27542,786

Special income
Loss on sale of investment securities
Valuation loss on investment securities
Valuation loss on investment in affiliates
Provision for doubtful accounts
Provision for office relocation expenses
Settlement losses on dispute resolution
Additions to reserves under special laws
Other special losses
Special loss
Income (loss) before income taxes andminority interest
Income taxes:
Current
Deferred
Minority interest
Net loss

50,454

16.6

20,178

9.0

8.3

131
3,493
2,333
1,882
1,099

10,446
4,117
6,712
754
-

(10,315)(624)(6,712)
1,579
1,882
1,099

10,585
5,085
9,188
1,029
-

514
1,436
(10,891)

(3.6)

319
9,337
(31,688)14.1

194(7,900)(20,796)

742
20,996(47,629)(9.2)

13,654

4.5(65,154) (28.9)

78,808(76,744)(14.8)

12,7444.2

13,0285.8(284)

24,5304.8(8,491)(2.8)(4,730)(2.1)(3,760)(9,336)(1.8)

15,446¥(6,045)

5.1
(2.0)

3,886
1.7
¥(77,338) (34.3)

11,560¥71,293

15,156¥(107,094)

2.9(20.7)

Note: SOFTBANK CORP. had presented the results of investments in partnerships on a gross basis in “Income from investments in partnerships” and“Expenses from investments in partnerships” in the consolidated statements of operations. Effective from April 1, 2004, SOFTBANK CORP. haspresented the combined, net results of investments in partnerships in the account of “Income from investments in partnerships” or “Expenses frominvestments in partnerships” in the consolidated statements of operations. The results for the interim period ended September 30, 2003 and the fiscal
year ended March 31, 2004 have been reclassified to the net basis.

18

CONSOLIDATED STATEMENTS OF ADDITIONAL PAID-IN CAPITALAND RETAINED EARNINGS(Millions of yen; amounts less than one million yen are omitted.)

FY2005 Interim(April 2004 throughSeptember 2004)

FY2004 Interim(April 2003 throughSeptember 2003)

FY2004(April 2003 throughMarch 2004)¥186,690¥162,231¥162,231-

90

24,425-32

32¥186,690¥162,354¥186,690

ADDITIONAL PAID-IN CAPITAL
Additional paid-in capitalat the beginning of the period
Increase due to issuance of shares
Increase in paid-in capital due tosale of treasury stock
Additional paid-in capitalat the end of the period(Millions of yen; amounts less than one million yen are omitted.)

FY2005 Interim(April 2004 throughSeptember 2004)

FY2004 Interim(April 2003 throughSeptember 2003)

FY2004(April 2003 throughMarch 2004)¥(210,625)¥(101,031)¥(101,031)

Net loss(6,045)(77,338)(107,094)

Cash dividends(2,459)(2,342)(2,342)

Bonuses to directors
Net adjustments to retained earnings due tochange in scope of the consolidation
Increase due to merger

(176)

(73)

(73)

43

(294)

(287)

14

-

202

(7)

-

-

¥(219,257)¥(181,079)¥(210,625)

ACCUMULATED DEFICIT
Accumulated deficit
at the beginning of the period

Decrease due to merger
Accumulated deficit
at the end of the period

Note: Under Japanese GAAP, the cumulative effect arising from any changes in the scope of consolidation is treated as an adjustment
to retained earnings in the consolidated statements of additional paid-in capital and retained earnings.

19

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions of yen; amounts less than one million yen are omitted.)

FY2005 Interim(April 2004 throughSeptember 2004)

FY2004 Interim(April 2003 throughSeptember 2003)

FY2004(April 2003 throughMarch 2004)

Income (loss) before income taxes and minority interest¥13,654¥(65,154)¥(76,744)

Adjustments to reconcile income (loss) before income taxes andminority interest to net cash used in operating activities:
Depreciation and amortization

18,806

15,71732,864Equity in loss under the equity method, net

4,575

1,358

2,276

Valuation loss on investment securities
Gain on sale of marketable and investment securities, net

3,493

10,82914,274(46,190)(7,777)(27,032)

Exchange loss (gain), net

5,385(2,788)(5,366)

Interest and dividend income(1,692)(563)(1,323)

Interest expense

10,231

5,636

12,052808(1,734)(25,023)

Decrease in payables - trade(7,102)(15,862)(9,531)

Increase in other receivables(27,782)(38,842)(75,485)

Increase in other payables

55,43037,04873,831Others, net(9,462)19,80524,015

20,153(42,326)(61,194)

Interest and dividends received

1,640

606

978

Interest paid

(8,990)(6,033)(11,206)

Income taxes paid

(19,334)(9,692)(16,174)

1,238

3,767

3,767

(5,292)(53,678)(83,829)

Ⅰ Cash flows from operating activities:

Decrease (increase) in receivables – trade

Sub-total

Refund of income taxes
Net cash used in operating activities- Continued -20

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(Millions of yen; amounts less than one million yen are omitted.)

FY2005 Interim(April 2004 throughSeptember 2004)

FY2004 Interim(April 2003 throughSeptember 2003)

FY2004(April 2003 throughMarch 2004)

Purchase of property and equipment and intangibles¥(30,594)¥(39,431)¥(61,472)

Purchase of marketable and investment securities(14,637)(20,889)(38,945)

9,599

125,689

151,136

Additional investments in newly consolidated entities(158,205)

(563)

1,693

Sale of interests in subsidiaries previously consolidated

39,451(1,010)(1,167)

Proceeds from sale of interests in consolidated subsidiaries

5,536

2,001

29,212

Increase in loan receivables(5,321)(3,295)(23,028)

Collection of loans

3,339

1,843

22,577

Others, net(9,380)

715

1,871

(160,211)

65,05981,878

Increase (decrease) in short-term borrowings, net

51,400(16,720)(76,851)

Proceeds from issuance of commercial paper

39,00036,50077,500

Redemption of commercial paper(45,000)(19,500)(70,500)

Proceeds from long-term debt

27,40057,410204,828

Repayment of long-term debt

(5,498)(3,861)(50,993)

Proceeds from issuance of bonds

20,529-216,636

Redemption of bonds(29,324)(44,270)(56,870)--

48,631

Proceeds from issuance of shares to minority shareholders

3,475

1,123

3,704

Cash dividends paid

(2,445)(2,308)(2,317)

Cash dividends paid to minority shareholders(1,836)

(96)

(112)

Increase in cash receipt as collateral, net

60,000-10,000

Others, net

1,521

3,730

2,735

119,221

12,006306,390

6,755

169

(13,459)

Ⅴ Net (decrease) increase in cash and cash equivalents
Ⅵ Increase in cash and cash equivalents due to
newly consolidated companies
Ⅶ Decrease in cash and cash equivalents due to exclusion ofpreviously consolidated entities
Ⅷ Increase in cash and cash equivalents due to merger(39,527)

23,556

290,980

12

-

-

(45)

(1,348)(1,373)

6--

Ⅸ Cash and cash equivalents at the beginning of the period

437,132

147,526

147,526

Ⅹ Cash and cash equivalents at the end of the period¥397,578¥169,734¥437,132

Ⅱ Cash flows from investing activities:

Proceeds from sale of marketable and investment securities

Net cash (used in) provided by investing activities
Ⅲ Cash flows from financing activities:

Proceeds from issuance of shares

Net cash provided by financing activities
Ⅳ Effect of exchange rate changes

21Condensed Quarterly Financial Information
Condensed Statement of Income(Millions of yen; amounts less than one million yen are omitted.)

Net sales
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating loss
Non-operating income (Note)
Non-operating expenses (Note)
Ordinary loss
Special income
Special loss
(Loss) income before income
taxes and minority interest
Income taxes - Current
Income taxes - Deferred
Minority interest
Net (loss) income

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

AmountAmountAmountAmountAmountAmount¥103,881
83,82420,057¥121,572
92,526
29,046¥136,699
97,535
39,164¥155,239
110,137
45,101¥147,311
92,77054,540¥156,395
99,70756,68744,25544,20545,81653,98658,35959,658(24,197)
2,573
9,009
(30,633)
12,362
6,667(15,159)
4,064
11,917(23,011)
7,815
25,020(6,652)
2,924
4,901(8,630)
2,830
4,894

(8,884)
4,199
4,941(9,626)
19,776
11,047(3,819)3,068
10,918(11,669)
9,763
2,365

(2,970)1,846
13,114(14,239)
40,6908,526(24,938)(40,215)(10,693)(896)(4,271)

17,925

9,360
(721)
1,156
¥(34,734)

3,668(4,009)2,729¥(42,603)

777
248
4,624
¥(16,344)

10,723(4,854)
6,645¥(13,410)

8,927(3,949)8,626¥(17,876)

3,817(4,542)
6,819¥11,830

Note: Exchange gain (loss), equity in gain (loss) under the equity method, and income (expenses) from investments in partnerships
were netted on quarterly basis.
Condensed Statement of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)

Ⅰ Net cash (used in) provided byoperating activities
Ⅱ Net cash (used in) provided byinvesting activities
Ⅲ Net cash provided by (used in)financing activities
Ⅳ Effect of exchange rate changes
Ⅴ Net (decrease) increase in cash andcash equivalents
Ⅵ Increase in cash and cash
equivalents due to newly
consolidated companies
Ⅶ Decrease in cash and cash
equivalents due to exclusion ofpreviously consolidated entities
Ⅷ Increase in cash and cash
equivalents due to merger
Ⅸ Cash and cash equivalents at the
beginning of the period
Ⅹ Cash and cash equivalents at theend of the period
Note:
Depreciation and amortization included
in net cash (used in) provided byoperating activities

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

AmountAmountAmountAmountAmountAmount¥(37,821)¥(15,856)¥(18,769)¥(11,381)¥(11,937)¥6,644(7,899)72,959(3,273)20,092(23,301)(136,910)

22,791(10,785)

160,231

134,152

98,752

20,469

213

(44)

451

(14,080)

3,778

2,977

(22,716)

46,273

138,640

128,783

67,291(106,819)

-

-

-

-

10

1

(149)

(1,198)

(0)

(25)

(45)

-

-

-

-

-

6

-

147,526

124,660

169,734

308,374

437,132

504,395¥124,660¥169,734¥308,374¥437,132¥504,395¥397,578¥7,587¥8,129¥8,151¥8,996¥9,850¥8,95622

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of September 30, 2004, SOFTBANK CORP．
（the “Company”）consolidated 198 subsidiaries. 17 subsidiaries were
not consolidated due to their immateriality in terms of the consolidated total assets, net sales, net loss and accumulated deficitof the SOFTBANK consolidated financial statements.
Main changes in the scope of the consolidation were as follows:<Increase>
JAPAN TELECOM CO.,LTD.
Newly acquired
ACE SECURITIES CO.,LTD.
Newly acquired
E*TRADE KOREA CO.,LTD.
Change from an affiliate due to acquisition of additional shares
Other 26 companies<Decrease>
SOFTBANK TECHNOLOGY HOLDINGS CORP. Merger
BB Call Corp.
Sale of all shares
Other six companies
2. Changes in scope of equity method
As of September 30, 2004, the Company held seven non-consolidated subsidiaries and 101 affiliates, all of which were
accounted for under the equity method.
Main changes in application of the equity method were as follows:<Increase>
All About, Inc.
Newly acquired
Other eight companies<Decrease>
Change to a consolidated subsidiary due to acquisition of
E*TRADE KOREA CO., LTD.
additional shares
Other three companies
3. Fiscal year end
Fiscal year ends of consolidated subsidiaries in terms of domestic and overseas are as follows:<Fiscal year end>
<Domestic><Overseas>
March end (as same as the consolidated B/S date)
102
33
May end1−
August end
1−
September end
7−
November end
1−
December end
17
33
January end
1−
February end
2−
4. Summary of significant accounting policies[1] Evaluation standards and methods for major assets(1) Marketable securities and investment securities
Held-to-maturity debt securities: Stated at amortized cost
Other securities:
With market quotations:
Stated at fair value, which represents the market prices at the balance sheet date(unrealized gain/loss are included as a separate component in shareholders' equity, netof tax, while cost is primarily determined using the moving-average method)
Without market quotations:
Carried at cost, primarily based on the moving-average method(2) Derivative instruments:
Stated at fair value(3) Inventories:
Carried at cost, primarily based on the moving-average method23

[2] Depreciation and amortization(1) Property and equipment
Buildings and structures:
Telecommunications equipment:
Telecommunications service lines:
Others:Computed primarily using the straight line method
Computed using the straight line method
Computed using the straight line method
Computed primarily using the declining balance method<Additional information for change of estimated useful life>
Backbone equipment used for mainly ADSL service had been depreciated over five years. Effective from April 1, 2004,
the Company changed the estimated useful life of the backbone equipment, which is included in “Telecommunications
equipment” in the Company’s consolidated balance sheets, to ten years, to be consistent with other telecommunications
equipment for optical fiber, since the backbone equipment is also used for the optical Internet connection service, “Yahoo!
BB hikari” which started commercial operation in October 2004.
As a result, depreciation expense included in cost of sales decreased by ¥1,424 million, operating loss and ordinary loss
decreased by the same amount, and income before income taxes and minority interest increased by the same amount for
the interim period ended September 30, 2004 as compared with the amount which would have been recognized if theprevious estimated useful life had been applied consistently.
(2) Intangible assets:

Computed using the straight-line method[3] Accounting principles for major allowances and accruals(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses on doubtfulreceivables, plus an amount for receivables other than doubtful receivables calculated using historical write-off
experience ratios from certain prior periods.
(2) Accrued retirement benefits:
JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”), which became a newly consolidated subsidiary of theCompany at the interim period ended September 30, 2004, and certain of its subsidiaries have defined benefit pension
plans for their employees. JAPAN TELECOM and certain of its subsidiaries accounted for the liability for retirement
benefits based on the projected benefit obligations and estimated plan assets at the end of September 2004.
(3) Allowance for office relocation expenses:
Allowance for office relocation expenses is calculated based on the reasonably estimated amounts of disposal losses on
fixed assets, expenditures for lease restoration, and other expenses for office relocation of the Company and somedomestic consolidated subsidiaries planned in February 2005. Allowance for office relocation expenses is included in“Other current liabilities” in the Company’s consolidated balance sheet.
[4] Translation of foreign currency transactions and accounts
All assets and liabilities in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance
sheet dates. Exchange gains or losses are charged to the net income when incurred.
The translation of revenues and expenses in the financial statements of foreign consolidated subsidiaries into Japanese yen is
performed by using the average exchange rate for the period. Assets and liabilities are translated using the foreignexchange rates prevailing at the balance sheet dates, and capital stock is translated using the historical rates. Foreign
currency financial statement translation differences are presented as a separate component of “Shareholders' equity,” except
for the portion pertaining to minority shareholders, which is included in “Minority interest in consolidated subsidiaries.”[5] Capital lease
Under the Japanese accounting standards, capital leases, as defined therein, other than those whereby the ownership of theassets is transferred to the lessee at the end of the lease term, are permitted to be accounted for as operating leases with afootnote disclosure of the estimated acquisition cost, estimated accumulated depreciation and future lease payments orreceipts.
24[6] Accounting for significant hedge transactions(1) Collar transaction① Hedge accounting
Unrealized gains and losses, net of tax, on derivative instruments that are qualified as an effective cash flow hedge at aconsolidated subsidiary in the United States of America are reported as a separate component of “Shareholders’ equity”
in the Company’s consolidated balance sheets. As such, unrealized gains and losses associated with the derivative
instruments will be recognized into earnings in the same period during which the hedged assets and liabilities arerecognized in earnings.
②

Derivative instruments for hedging and hedged items
Derivative instruments for hedging:
Prepaid variable share forward contract (the collar transaction)
Hedged items:
Equity security③

Hedging policy
The purpose of the collar transaction is to hedge the variability of cash flows associated with the future market price of
the underlying equity security.

(2) Interest rate swap and interest rate cap① Hedge accounting
A certain domestic consolidated subsidiary defers recognition of gains or losses resulting from fluctuations in fair value ofderivative instruments until the maturity of the hedged transactions.
② Derivative instruments for hedging and hedged items
Derivative instruments for hedging:Interest rate swap and interest rate cap contracts
Hedged items:
Interest expense on borrowings③ Hedging policy
The domestic consolidated subsidiary uses derivative financial instruments to hedge the risk of exposures to fluctuationsin interest rates in accordance with its internal policies, regarding the authorization and credit limit amount.
[7] Accounting method for consumption taxes
Consumption taxes are accounted for using net-of-tax method.
5. Scope of cash and cash equivalents in the consolidated statements of cash flows“Cash and cash equivalents” comprises cash on hand, bank deposits withdrawable on demand and highly liquid investmentswith initial maturities of three months or less and a low risk of fluctuation in value.

Additional Information
Effect of the introduction of the new standard enterprise tax in Japan
Effective from April 1, 2004, the newly introduced enterprise tax based on added value and capital is included in selling, general andadministrative expenses due to the introduction of the new standard enterprise tax in Japan. As a result, selling, general andadministrative expenses increased by ¥749 million. Operating loss and ordinary loss increased by ¥749 million and income before
income taxes and minority interest decreased by ¥749 million for the interim period ended September 30, 2004.

25

Notes
1. Accumulated depreciation of property and equipment
September 30, 2004
558,439 million yen

March 31, 2004
49,426 million yen

September 30, 2003
32,104 million yen

2. Number of treasury stock held by the Company
September 30, 2004

March 31, 2004

September 30, 2003

Shares held by the Company

common stock

36,059 shares

32,730 shares

29,541 shares

Number of shares issued

common stock

351,436,826 shares

351,436,826 shares

336,936,826 shares

3. Receivables and payables related to margin transactions
Receivables and payables related to margin transactions in securities businesses engaged by certain consolidated subsidiaries
are as follows:
September 30, 2004

March 31, 2004

September 30, 2003

Receivables Loans receivable from customers for
margin transactions
Cash deposits (collateral) for securities
borrowed from securities companies

168,484 million yen

88,545 million yen

12,5586,477

185,039 million yen

126,721 million yen

63,302 million yen

30,402

33,661

24,380243,728 million yen
9,384

Payables Loans payable to securities companies
for margin transactions
Proceeds from securities sold for margintransactions

4. Assets pledged as collateral(1) For future lease liabilities
September 30, 2004

March 31, 2004

September 30, 2003

Assets pledged as collateral:
Notes and accounts receivable - trade
Other current assets(accounts receivable – other)

10,035 million yen

8,727 million yen

6,412 million yen

18

36

60

8 million yen

57 million yen

175 million yen

Secured liabilities:
Notes and accounts payable - trade

Note: The collateral for the future lease liabilities was provided by mortgaging against the aggregate of the current andfuture receivables due from customers of certain consolidated subsidiaries and a broadcasting company, based onmarketing agreements, etc. The future lease liabilities at the end of periods are as follows:
September 30, 2004
Future lease liabilities (including the above
Notes and accounts payable-trade )31,921 million yen

26

March 31, 2004
33,558 million yen

September 30, 2003
42,377 million yen

4. Assets pledged as collateral (continued)(2) For short-term borrowings and long-term debt
September 30, 2004

March 31, 2004

September 30, 2003

Assets pledged as collateral:
Cash and deposits

735 million yen

902 million yen

485 million yen

Notes and accounts receivable - trade

1,117

1,124

1,126

-

-

307

Marketable securities

-

544

1,692

Buildings and structures

15,123405-

Telecommunications equipment

16,929

5,486

7,228

Telecommunications service lines

14,739--Inventories

Property and equipment- others
Investment securities

6,467

1,102

-

207,115138,064

151,973

Secured liabilities:
Notes and accounts payable - trade
Short-term borrowings
Accounts payable – other and accrued expenses
Other current liabilities
Long-term debt
Other long-term liabilities

552 million yen
57,390592 million yen
13,081805 million yen
48,769

6

-

97

364

346

388

246,723

118,483

6,639

-

-

291

Note:
Following assets, which are included in the above, are pledged as factory foundation collateral.
Buildings and structures

6,334 million yen- million yen- million yen

Telecommunications equipment

12,853--

Telecommunications service lines

14,739--Property and equipment- others

580

-

-

Following liabilities, which are included in the above, are guaranteed by factory foundation collateral.
Short-term borrowings
Accounts payable – other and accrued expenses
Long-term debt

(3)

- million yen- million yen

6

-

-

129,297--

March 31, 2004

September 30, 2003

36,760 million yen

For long-term debt owed by a third party
September 30, 2004
Assets pledged as collateral:
Investments in partnerships

1,842 million yen

1,842 million yen

1,993 million yen

2,331 million yen

2,349 million yen

2,367 million yen

Secured liabilities:
Long-term debt owed by a third party

5. Cash receipt as collateral
Cash receipt as collateral from financial institutions, to whom the Company lent shares of its subsidiary under security deposit
agreements, is presented as follows:
September 30, 2004
Other current liabilities (cash receipt as collateral)

70,000 million yen

27

March 31, 2004
10,000 million yen

September 30, 2003
- million yen

6. Reserves required under special laws
Reserve for securities trading liabilities:

Securities Exchange Law, No. 51

Reserve for commodity trading liabilities:

Commodity Exchange Act, No. 136-22

7. Net unrealized gains/losses on derivative instruments
Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”(“SFAS 133”) is adopted on derivative instruments which the Company’s consolidated subsidiary in the United States ofAmerica utilized.
The consolidated subsidiary in the United States of America has entered into a variable share prepaid forward contract (the“collar transaction”) utilizing its shares of an equity security. The purpose of this collar transaction is to hedge the variabilityof cash flows associated with the future market price of the underlying security, which is used for the settlement of the loans.
According to SFAS 133, unrealized gains and losses, net of tax, on the effective portion of the cash flow hedge as defined arereported as a separate component of “Shareholders’ equity”, until gains and losses on the hedged item are recognized inearnings.
8. Line of credit as a creditor (not used)
September 30, 2004
143 million yen

March 31, 2004
204 million yen

September 30, 2003
49 million yen

9. Balance of accounts receivable sold
September 30, 2004
5,030 million yen

March 31, 2004
6,581 million yen

September 30, 2003
5,888 million yen

10. Research and development costs included in general and administrative expenses and cost of sales
September 30, 2004
1,470 million yen

September 30, 2003
- million yen

March 31, 2004
1,267 million yen

11. Valuation loss on investment in subsidiaries and affiliates“Valuation loss on investment in affiliates” recognized as a special loss in the consolidated statements of income are as follows:
September 30, 2004
Valuation loss on investment in consolidated
subsidiaries
Valuation loss on investment in affiliates
accounted for under equity method

September 30, 2003

March 31, 2004

- million yen

5,380 million yen

7,275 million yen- million yen

1,332 million yen

1,913 million yen

12. Consolidated statements of cash flows
Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets
September 30, 2004

September 30, 2003

March 31, 2004

174,814 million yen

327,023 million yen

Cash and deposits

349,884 million yen

Marketable securities

53,084

2,512

113,659(4,534)(5,568)(2,331)

(49)

(100)

(75)

(807)

(1,922)(1,143)

169,734 million yen

437,132 million yen

Time deposits with original maturity
over three months
Deposits received from customers
in the commodities business
Stocks and bonds with original
maturity over three months
Cash and cash equivalents

397,578 million yen

28Significant Subsequent Events

Acquisition of Cable & Wireless IDC Inc. (“C & W IDC”)
The Company entered into stock purchase agreement on October 26, 2004 and decided to acquire C & W IDC. As a result, C &W IDC will become a subsidiary of the Company.
1. Purpose of the acquisition
Through the acquisition, the Group will significantly strengthen its international telecommunications business. The Group willseek to become the “the No. 1 broadband company” that provides comprehensive communication services including voice, data andinternet connections to corporate clients as well as retail customers.
2.

3.

Outline of C & W IDC(1) Head office address:
2-3-1 Daiba, Minato-ku, Tokyo(2) Paid-in capital:¥36.2 billion (as of March 31, 2004)(3) Principal line of business:
Telecommunications(4) Number of total shares issued:
714,435 shares (as of March 31, 2004)(5) Financial results for recent fiscal year ended March 2004:
Sales:
Operating loss:¥71,308 million¥7,155 million

Ordinary loss:¥7,650 million

Net loss:¥6,671 million

Total assets:¥72,763 million

Shareholders’ Equity:¥2,792 million

Outline of the acquisition(1) Sellers:
Sable Holdings Limited (100% subsidiary of Cable and Wireless plc, “Sable”) and Cable & Wireless Aspac B.V. (100%subsidiary of Sable, “Aspac”)(2) Number of shares acquired:Before share delivery, a debt-equity-swap (DES) for all inter-company loan held by Sable to C & W IDC is arranged.
The Company will acquire all of new common stock which will be issued to Sable (number of shares has not been
determined) and 700,039 shares held by Aspac (shareholding ratio before DES: 97.98%).
(3) Total cost of acquisition (excluding expenses associated with acquisition): ¥12.3 billion(4) Date of share acquisition: After DES above (date of share delivery has not been decided yet.)

Sales of its all shares and warrants held in eAccess Ltd.
The Company sold its 166,670 shares and 11,852 warrants (equivalent to 59,260 shares) held in eAccess Ltd. through its
wholly-owned subsidiary, JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”) for ¥18,292 million on October 4, 2004.
A loss on sale of investment securities of approximately ¥2.2 billion will be recorded in the Company’s consolidated financial
statements for the three-month period ending December 31, 2004. While JAPAN TELECOM will record a gain on sale ofinvestment securities of approximately ¥14.3 billion on a stand-alone basis in the three-month period ending December 31, 2004
based on historical cost of the investment, the loss on sale of investment securities will be recorded in the Company’s consolidated
financial statements since investment securities of JAPAN TELECOM were revalued at the fair market value for consolidation
purposes on September 30, 2004, which was the deemed acquisition date.

29

Significant Subsequent Events (continued)

Loan agreement and redemption of preferred shares at SORA HOLDINGS JAPAN INC. (“SORA”)
SORA, a wholly-owned subsidiary of the Company, entered into a ¥32.5 billion loan agreement (maturity date: June 15, 2011,
interest rate: 3.75% per annum) with Deutsche Bank Akitengesellschaft on October 4, 2004. All proceeds from the loan agreement
were used to redeem preferred shares of SORA held by Vodafone K.K. on October 4, 2004.
SORA is one of the companies associated with the Company’s acquisition of JAPAN TELECOM CO., LTD. (“JAPANTELECOM”). Vodafone K.K. used to own SORA as a holding company to own preferred shares of JAPAN TELECOM.
As a result of the above transaction, JAPAN TELECOM’s preferred shares held by Vodafone K.K. through SORA were completely
redeemed.
Note: SORA exists after the redemption of the preferred shares.

Unsecured straight bond issue at JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”)
Unsecured straight bond issue at JAPAN TELECOM, a wholly-owned subsidiary of the Company, was approved at the Board of
Directors’ meeting held on November 2, 2004. The issue terms, such as an issued amount, have not yet been determined.
Proceeds from the bond issue will be used to reduce the amount of JAPAN TELECOM’s borrowings

30

Segment Information
1. Business segment information(1)

FY2005 interim (for the six-month period ended September 30, 2004)(Millions of yen; amounts less than one million yen are omitted.)
Broadband
Infrastructure

e-Commerce

e-Finance

Media &
MarketingBroadmedia

Internet

Technology

Overseas

CultureServices

Funds

OthersTotal

Eliminationor corporate

Consolidated

Net sales(1) Customers(2) Inter-segment
Total¥95,901¥114,289¥27,962¥5,449¥4,679¥43,525¥7,180¥1,138¥3,579¥303,706¥-¥303,706

93

5,320

2,808

671

2,869

269

4,489

-

1,229

17,751(17,751)-

95,994

119,61030,771

6,120

7,548

43,795

11,669

1,138

4,809

321,457(17,751)

303,706

Operating expenses

130,673

117,029

23,635

6,717

8,970

21,598

11,249311

6,448

326,635(16,138)

310,496

Operating income (loss)¥(34,678)¥2,580¥7,135¥(596)¥(1,421)¥22,196

¥419

¥826

¥(1,639)¥(5,177)¥(1,612)¥(6,790)311(2)

FY2004 interim (for the six-month period ended September 30, 2003)(Millions of yen; amounts less than one million yen are omitted.)
Broadband
Infrastructure

e-Commerce

e-Finance

Media &
MarketingBroadmedia

Internet

Technology

Overseas

CultureServices

Funds

OthersTotal

Eliminationor corporate

Consolidated

Net sales(1) Customers(2) Inter-segment
Total¥53,472¥112,148¥12,149¥6,639¥4,469¥27,714¥6,080¥1,258¥1,523¥225,454¥-¥225,454

76

6,104

2,611

545

2,192

247

4,280

-

696

16,754(16,754)-

53,549118,252

14,760

7,184

6,661

27,962

10,360

1,258

2,219

242,209(16,754)

225,454

Operating expenses

103,214117,119

13,945

7,741

8,122

13,800

10,201

639

4,511

279,297(14,485)

264,811

Operating income (loss)¥(49,665)¥1,133¥815¥(557)¥(1,461)¥14,161

¥158

¥619

¥(2,292)¥(37,087)¥(2,269)¥(39,357)

31

1. Business segment information (continued)(3)

FY2004 (for the year ended March 31, 2004)(Millions of yen; amounts less than one million yen are omitted.)
Broadband
Infrastructure

e-Commerce

e-Finance

Media &
MarketingBroadmedia

Internet

Technology

Overseas

CultureServices

Funds

OthersTotal

Eliminationor corporate

Consolidated

Net sales(1) Customers(2) Inter-segment¥128,711¥243,902¥37,949¥13,186¥8,770¥63,613¥14,435¥2,443¥4,382¥517,393¥-¥517,393

195

10,985

3,477

1,221

4,122

441

8,167

-

1,489

30,102(30,102)-

128,906

254,888

41,427

14,407

12,89264,05422,603

2,443

5,871

547,496(30,102)517,393

Operating expenses

216,504

251,241

35,515

15,50016,19831,472

21,867

1,067

9,837

599,205(26,918)572,287

Operating income (loss)¥(87,597)¥3,647¥5,911¥(1,092)¥(3,305)¥32,582¥736¥1,375¥(3,965)¥(51,709)¥(3,184)¥(54,893)

Total

32

Notes: 1. Business segments are categorized primarily based on the nature of business operations, type of services, and similarity of sales channels, etc., which the SOFTBANK Group uses
for its internal management purpose.
2. Please refer to the chart of “The SOFTBANK Group” for main businesses by segments.
3. Unallocated operating expenses for the periods ended September 30, 2004, September 30, 2003, and March 31, 2004 in the column "Elimination or corporate", which mainly
represent expenses of the corporate division of the Company, were ¥1,674 million, ¥2,826 million and ¥3,482 million, respectively.
4. The Company has newly consolidated JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”) and its nine subsidiaries at September 30, 2004, the deemed acquisition date. Net
sales and operating expenses of JAPAN TELECOM and its subsidiaries will be included in the Company’s results from the second half of the fiscal year 2005.
JAPAN TELECOM and its subsidiaries will be included in a new fixed-line telecommunications segment. No company other than JAPAN TELECOM and its subsidiaries will be
included in the fixed-line telecommunications segment.
5. Net sales and operating expenses of BB Cable Corporation (“BB Cable”), which was acquired by SOFTBANK BB Corp. at September 30, 2004, were included in the Broadmedia
segment for the interim period ended September 30, 2004. Net sales and operating expenses of BB Cable for the second half of the fiscal year 2005 will be included in the
Broadband Infrastructure segment.

32

2. Geographic segment information(1) FY2005 interim (for the six-month period ended September 30, 2004)(Millions of yen; amounts less than one million yen are omitted.)
Elimination

North

Japan

OthersAmerica

Total

Consolidatedor
corporate

Net sales(1)

Customers(2)

Inter-segment¥299,324¥1,060¥3,321¥303,706¥-¥303,706

283

26

56

366

(366)

-

Total

299,607

1,087

3,378

304,073(366)

303,706

Operating expenses

303,529

1,287

4,343

309,161

1,335

310,496

Operating loss¥(3,922)¥(200)¥(965)¥(5,088)¥(1,702)¥(6,790)(2) FY2004 interim (for the six-month period ended September 30, 2003)(Millions of yen; amounts less than one million yen are omitted.)
Elimination

North

Japan

OthersAmerica

Total

Consolidatedor
corporate

Net sales(1)

Customers(2)

Inter-segment¥221,579¥1,149¥2,725¥225,454¥-¥225,454

296

22

29

349

(349)

-

Total

221,876

1,172

2,755

225,804(349)

225,454

Operating expenses

256,532

2,021

3,884

262,438

2,372

264,811

Operating loss¥(34,656)¥(848)¥(1,129)¥(36,634)¥(2,722)¥(39,357)(3) FY2004 (for the fiscal year ended March 31, 2004)(Millions of yen; amounts less than one million yen are omitted.)
Elimination

North

Japan

OthersAmerica

Total

orConsolidated

corporate

Net sales(1)(2)

Customers
Inter-segment
Total¥509,676¥2,194¥5,523¥517,393¥-¥517,393

522

56

107

686

(686)

-

510,198

2,250

5,631

518,080(686)

517,393

Operating expenses

558,680

3,506

7,506

569,6932,594

572,287

Operating loss¥(48,481)¥(1,255)¥(1,874)¥(51,612)¥(3,281)¥(54,893)

Notes: 1. Net sales by geographic region were recognized based on geographic location.
Significant countries in each region are shown below:
North America: United States of America and Canada
Others: Europe, Korea, China, Hong Kong and Singapore
2. Unallocated operating expenses for the periods ended September 30, 2004, September 30, 2003, and March 31, 2004 in thecolumn “Elimination or corporate”, which mainly represent expenses of the corporate division of the Company, were ¥1,674
million, ¥2,826 million and ¥3,482 million, respectively.

3. Overseas sales
Disclosure of overseas sales was omitted because the total overseas sales were less than 10% of total consolidated sales.

33Leases
1. Capital leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods(as a lessee)(1) Amounts equivalent to acquisition costs, accumulated depreciation and net book value at the end of the periods
March 31, 2004

September 30, 2003

55,414

49,11454,661(24,140)
31,273 million yen(17,250)
31,863 million yen(16,354)
38,306 million yen

17,579

11,175

17,226(9,319)8,260 million yen(5,328)
5,847 million yen(9,618)
7,608 million yen

September 30, 2004

Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Property and equipment - others
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Intangible assets
Equivalent to acquisition costsLess:amount equivalent to accumulated amortization
Net book value
Total
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value

2,832

928

1,969

(752)
2,080 million yen(187)
741 million yen(502)
1,466 million yen

75,827

61,21873,858(34,213)
41,614 million yen(22,766)
38,452 million yen(26,475)
47,382 million yen

March 31, 2004

September 30, 2003

15,15427,90143,056 million yen

16,64333,54950,193 million yen(2) The future lease payments for capital lease at the end of the periods
September 30, 2004

Due within one year
Due after one year
Total

18,83526,44945,285 million yen(3) Lease payments, amounts equivalent to depreciation and interest expense
FY2005 interim
April 2004 throughSeptember 2004

Lease payments
Amount equivalent to depreciation expense
Amount equivalent to interest expense

8,257 million yen
7,303
1,099

FY2004
April 2003 throughMarch 2004

15,836 million yen
13,7472,408

FY2004 interim
April 2003 throughSeptember 2003

7,194 million yen
6,070
1,073

(4) Calculation method of amount equivalent to depreciation and interest expense
The amount equivalent to depreciation is computed using the straight-line method over the period of the capital leases,
assuming no residual value except in cases where the residual value is guaranteed in the lease contract.
The amount equivalent to interest expense, which is calculated by subtracting acquisition costs from total lease payments, isallocated over the lease periods based on the interest method.

34

1.

Capital leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods(continued)(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of the periods
March 31, 2004
September 30, 2003
September 30, 2004
Property and equipment - others
617
Acquisition costs
3,288
(284)
Less: accumulated depreciation(2,576)332 million yen- million yen
Net book value
712 million yen
Intangible assets
Acquisition costs
Less: accumulated amortization
Net book value

342
(61)
281 million yen

168
(38)
129 million yen- million yen

Total
Acquisition costs
Less: accumulated depreciation
Net book value

3,631(2,637)994 million yen

785
(323)
461 million yen- million yen(2) The future lease receivables for capital leases at the end of the periods
September 30, 2004
Due within one year610
Due after one year
419
Total
1,030 million yen

March 31, 2004
176
307
483 million yen

September 30, 2003
- million yen

FY2004
April 2003 throughMarch 2004

FY2004 interim
April 2003 throughSeptember 2003

(3) Lease income, depreciation and amount equivalent to interest income
FY2005 interim
April 2004 throughSeptember 2004

Lease income
Depreciation expense
Amount equivalent to interest income

114 million yen
99
17

156 million yen
134
23

108 million yen
9315(4) Calculation method of amount equivalent to interest income
The amount equivalent to interest income, which is calculated by subtracting acquisition costs from total of lease income andestimated residual value, is allocated over the lease periods based on the interest method.

2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating lease
September 30, 2004
353
300
654 million yen

March 31, 2004
599
285
884 million yen

September 30, 2003
258
184
443 million yen

September 30, 2004
376
959
1,335 million yen

March 31, 2004
- million yen

September 30, 2003
- million yen

Due within one year
Due after one year
Total
(as a lessor)
The future lease receivables for non-cancelable operating lease

Due within one year
Due after one year
Total

35

Investment in Debt and Equity Securities

1. Trading securities(Millions of yen; amounts less than one million yen are omitted.)

March 31, 2004
Carrying amounts(at fair value)
AssetsLiabilities

September 30, 2004
Carrying amounts(at fair value)
AssetsLiabilities
1. Equity securities¥327

2. Debt securities

-

2,177

3. Others
Total

¥21

¥-

1,285

September 30, 2003
Carrying amounts(at fair value)
AssetsLiabilities¥4¥2,101

¥-

-

782

-

99

-

-

-

117

-

¥2,604¥-¥1,307¥4¥3,001¥-

2. Non-trading securities(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)

March 31, 2004

September 30, 2004

1. Equity securities
2. Debt securities:
Government bonds
3. Others
Total

Investment

Carrying

costs

amounts¥60,722¥270,308

5,207
4,193
¥70,124

5,207
4,174
¥279,689

Investment

Carrying

costs

amounts¥209,585¥38,573¥206,606(0)(19)¥209,565

5,381
378¥44,3335,365
413¥212,384

Differences

September 30, 2003
Investment

Carrying

costs

amounts¥168,032¥31,283¥168,866¥137,583(16)
34¥168,050

109
402¥31,795

110
337¥169,3130(65)¥137,518

Differences

Differences(2) The carrying amounts of the unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)

September 30, 2004
Carrying amounts
1. Held-to-maturity debt securities
Unlisted foreign debt securities
2. Available-for-sale and other securities
Unlisted equity securities (w/o OTC stocks)
Unlisted domestic debt securities
Unlisted foreign debt securities
Money Management Fund
Mid-term government bond funds
Preferred fund certificate
Designated money trust
Investment trust without market quotations
Others
Total

36

March 31, 2004
Carrying amounts

September 30, 2003
Carrying amounts

¥0

¥-

¥0

20,930
0
1,157
3,019
191
2,000
51,210
10¥78,519

19,237
0
1,081
3,272
261
2,000
5,000
106,427
0¥137,279

20,272
0
991
4,255
261
2,000
5
¥27,786