SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the three-month period ended June 30, 2006
Tokyo, August 8, 2006

FINANCIAL HIGHLIGHTS
1.

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

Operatingincome (loss)

Net sales

Ordinary income(loss)Net income (loss)

Amount%Amount%Amount%Amount%Three-month period ended
June 30, 2006

¥494,231

91.1¥54,357-¥25,994-¥1,418-Three-month period ended
June 30, 2005

¥258,637

75.6¥(3,190)-¥(13,017)-¥(11,153)-

Fiscal year ended
March 31, 2006

¥1,108,665-¥62,299-¥27,492-¥57,550-

Net income (loss) per
share— primary (yen)Net income pershare— diluted (yen)Three-month period ended
June 30, 2006

¥1.34

¥0.81

Three-month period ended
June 30, 2005¥(31.73)-

Fiscal year ended
March 31, 2006

¥54.36¥50.71

Notes: Percentage changes for net sales, operating income (loss), ordinary income (loss) and net income (loss) are compared with thecorresponding period of the previous fiscal year.
2.

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

Total assets

Net asset

Equity ratio (%)

Net asset
per share (yen)As ofJune 30, 2006

¥4,031,003¥646,190

5.8¥222.90

As ofJune 30, 2005

¥1,620,882¥244,588

10.3¥476.15

As ofMarch 31, 2006

¥1,808,398¥347,263

13.4¥229.881

3.

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

Operating activities

Investing activities

Financing activities

Cash and cash equivalents
at the end of the period

Three-month period ended
June 30, 2006

¥64,675¥(1,965,832)¥1,743,429¥285,214

Three-month period ended
June 30, 2005¥(18,213)¥(28,703)¥12,925¥287,211

Fiscal year ended
March 31, 2006

¥57,806¥27,852¥30,078¥446,694

4.

Scope of Consolidation at June 30, 2006
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

122
3
65

Changes in Scope of Consolidation (Comparing with March 31, 2006)
Consolidated subsidiaries:
Newly added:
Excluded:1142

Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
1
Excluded:20

2Management Policies
1. Fundamental Management Policies
Since its establishment, SOFTBANK CORP. (hereafter "the Company") and the SOFTBANK Group(hereafter "the Group") have followed the core management philosophy of "Endeavoring to benefit
society and the economy and to maximize enterprise value by fostering the sharing of wisdom andknowledge gained through the IT revolution." The Group is working to facilitate the realization of thetrue ubiquitous society, where broadband will enable anyone to access all kinds of information at any
time and anywhere.
In accordance with this management philosophy, the Group established Yahoo Japan Corporation(hereafter "Yahoo Japan") in 1996 and has worked to increase the penetration of commercial Internet
services in Japan. In addition, the Group started Yahoo! BB ADSL comprehensive broadband service in2001 and has been a driving force in the development of Japan's broadband environment, one of the mostadvanced in the world. In April 2006, the Company acquired Vodafone K.K., making a rapid entry into
the mobile communications business and, at the same time, significantly advancing the Group toward therealization of the true ubiquitous society.
Through innovative operational developments, the Group opened up new markets and, at the same time,it established dominant No. 1 positions in those markets. In the mobile communications market, which
the Group has newly entered, the Group will aggressively introduce new handsets and new services andwill expand a lineup of appealing content, centered on Yahoo! JAPAN. Thus, the Group will directly
expand the scale of the market and at the same time accelerate the growth of the Group as a whole.
In consumer businesses, the Group will strive to rapidly build a seamless broadband infrastructure thatlinks Yahoo! BB and mobile communications. In this way, the Group will target the realization of asociety in which an ubiquitous environment makes it possible to enjoy the range of innovative content
that has already been developed for deployment over fixed-line broadband. The Group will also enhance
the provision of appealing content that utilizes the advantages of broadband, such as the Yahoo!
Streaming, a video portal site.
In corporate businesses, JAPAN TELECOM CO., LTD., (hereafter “JAPAN TELECOM”) which is incharge of the Group's corporate services, has focused on provision of ICT*1 solution services. In July
2006, the Group integrated the mobile solutions know-how of Vodafone K.K.'s corporate sales division
into JAPAN TELECOM. The Group will strive to improve customer satisfactions by accurately meeting
diverse business needs in both fixed-line and mobile voice and data communications.
In May 2006, the Group agreed on a strategic alliance, including the establishment of a joint venture forthe purpose of global rollout of broadband content and others, with Vodafone Group PLC (hereafter“Vodafone PLC”), a mobile operator with one of the world's largest customer bases. The Group will
position this joint venture as a foothold for the extension to markets around the world of new businessmodels for the broadband era that was established in Japan, a broadband advanced country.
As a comprehensive digital information company that is making all people's lifestyles and business styles
more affluent and enjoyable, the Group aims to be the global No. 1 corporate group in the broadband era.
On May 10, 2006, the Financial Services Agency (FSA) ordered the Company’s independent auditors,
ChuoAoyama PricewaterhouseCoopers (hereafter “ChuoAoyama”), to suspend operations for two months,
from July 1 to August 31, 2006. As a result, as of July 1, 2006, ChuoAoyama lost their certification as
the Company's auditor. To provide for independent auditors over the period of ChuoAoyama's
suspension, the Company contracted with Deloitte Touch Tohmatsu to serve as temporary independent
auditors at the board of auditors meeting held on July 3, 2006. At the ordinary general meeting ofshareholders scheduled for June 2007, the Company plans to appoint Deloitte Touch Tohmatsu as
independent auditors.
*1. ICT: Information & Communications Technology

32. Medium-and-Long-Term Strategies
As a comprehensive digital information company in the ubiquitous society, the Group aims to achieve
FMC*2 through broadband and to seamlessly develop a range of broadband content over that
infrastructure. In this way, the Group's medium-and-long-term strategies target the maximization ofGroup revenues and enterprise value through the establishment of unique business models for thebroadband era that will generate long-term, stable income from its infrastructure businesses, increasing
returns from its portal businesses, and diversified sources of profit from its content businesses.
*2. FMC: Fixed Mobile Convergence(1) Expanding broadband content
The Group is targeting further expansion of the content available on the broadband infrastructure. The
elimination of areas with no broadband service is an objective of the Ministry of Internal Affairs andCommunications' Next-Generation Broadband Strategy 2010 (Draft). Along with the growth in thehousehold penetration rate of fixed-line broadband access services, the realization of broadband
circumstances in mobile communications is also expected. The Group believes that the provision ofvideo and a wide range of other attractive broadband content will be important in the years ahead. In
addition to substantially improving the services and content available under the Group's brand, including
Yahoo! JAPAN, the Group will strive to expand broadband content through alliances with leading content
providers in Japan and overseas.
(2) Rapidly establishing ubiquitous, seamless broadband infrastructure
To realize an ubiquitous, seamless broadband environment, the Group aims to provide a comprehensive
range of telecommunications modes. In fixed-line broadband infrastructure, the Group's Yahoo! BB
ADSL service has driven the popularization of broadband in Japan. The Group is working to achieve
further increases in the speed of ADSL service through technical innovation, and at the same time theGroup is engaged in R&D targeting the commercialization of new technologies, such as FTTR*3. In themobile communications business, the Group made a full-scale entry into the mobile phone market in
April 2006 with the acquisition of Vodafone K.K. Targeting the use of broadband and rich content in
mobile communications, the Group aims to achieve FMC at an early stage through utilization of nextgeneration high-speed mobile communications services and Group wireless LAN networks.
*3. Fiber To The Remote terminal: From NTT central offices to equipments located near theuser's premises, transmission is handled over fiberoptic technology, like that used with
FTTH. From the nearby transmission equipment, which is installed on such structures as
telephone poles, to the user, transmission is handled over metal wire technology, like thatused with ADSL.
(3) Providing broadband content developed in-house to customers around the world
The Group aims to be the No. 1 broadband content group in Japan, which has the fixed-line broadband
infrastructure with the lowest cost and highest speed in the world. The Group's strategy is to promote thisbroadband content in countries around the world.
Following the acquisition of Vodafone K.K., in May 2006, the Group agreed on a strategic alliance with
Vodafone PLC, a mobile operator with one of the largest customer bases in the world. This alliance will
include the establishment of a joint venture that will target global promotions of broadband content. As
the first step, the Group will use this joint venture to extend the unique broadband business model
developed by the Group and expand profit opportunities on a global basis.
3. Important Management Issues(1) Taking steps in response to mobile number portability*4
The mobile phone market is expected to undergo intensified competition among operators with theintroduction of mobile number portability this fall. From October 2006, the Group plans to change thebrand name of its mobile phone business from Vodafone to SOFTBANK. At the introduction of mobile
number portability, the Group will aim to acquire new customers by improving customer satisfactions,and to that end the Group is currently addressing to the following four initiatives.

4

1. 3G*5 Network Enhancement
The Group will enhance the network to eliminate areas in which it is difficult to receive 3G mobile phonesignals. Within the current fiscal year, the Group’s objective is to increase the number of 3G basestations to 46,000. As of the end of June 2006, the number of 3G base stations was 22,771, and theGroup will further reinforce its efforts to increase the number of base stations.
2. 3G Handset Enrichment
The Group will enhance its lineup of 3G handsets that are optimal for Japan's market. In the first quarter,
the Group released five 3G handset models, including the Sharp 905SH, which can receive onesegment*6 digital terrestrial TV broadcasts.
3. Enhancement of Content for Mobile Platforms
The Group will take steps to expand content for mobile platforms, such as tie-ups with Yahoo! JAPAN.
In the first quarter, the Group has started to offer services in advance for Disney Mobile Comics, anelectronic comics service, and Cars 3D Game, Disney's first Bluetooth-enabled*7 multiplayer 3D racing
game. Accompanying a brand change in Vodafone K.K.’s mobile phone business, the Vodafone Live!
mobile portal site will be renamed Yahoo! Mobile. In the future, new handsets will have Yahoo! Keitai
Button that offers easy, one-touch access to the Yahoo! Mobile site, enabling customers to conveniently
enjoy the abundant content of the SOFTBANK Group, including Yahoo! JAPAN.
4. Enhancement of Sales Structure
In addition to sales bases centered on existing Vodafone shops, the Group will strengthen handling ofVodafone products, such as through mass electronics retailers, one of the Group's powerful sales channels.
Moreover, the Group has taken steps to strengthen the corporate sales organization, such as merging
Vodafone's corporate sales department into JAPAN TELECOM in July 2006.
*4. A system that allows mobile phone users to switch to another mobile phone company
without changing their mobile phone number*5. Third-generation mobile phone*6. Digital terrestrial TV broadcasts for mobile devices*7. A short-distance wireless transmission standard(2) Rapidly creating group synergies
With the completion of its acquisition, Vodafone K.K. has become a new member of the Group from thecurrent fiscal year. The Group will work to build a group system that can move as rapidly as possible tocreate new synergies among Vodafone K.K. and Group companies. Anticipated synergies with JAPANTELECOM, which offers fixed-line telecommunications services; BB TECHNOLOGY Corp., which
offers broadband operations; and Yahoo Japan, which conducts Internet operations, include thefollowing:
1. Cost reduction synergies from network integration
2. Cost reduction synergies from organizational integration and increased efficiency
3. Marketing synergies from expansion of customer bases and sales channels
4. Synergies in content services, such as Yahoo! JAPAN(3) Becoming a comprehensive digital information company
As a corporate group of the Internet-based businesses, the Group will not limit itself to its existing role asa comprehensive communications carrier. Rather, the Group will further enhance its broadband content,
centered on video, such as the Yahoo! Streaming video portal site. As a comprehensive digital
information company in the broadband era, the Group will work to develop innovative services ininfrastructure, portals, and content and strive to clearly differentiate itself from competitors.
(4) Broadband infrastructure initiatives
In Japan, FTTH access service is rapidly penetrating. As a result, the net increase in the number ofcustomers for the Group's Yahoo! BB ADSL comprehensive broadband service remains at a low level,
while the churn rate is increasing. The Group has received broad support from customers for the Yahoo!
BB ADSL service provided by the Group, in terms of both cost and speed, and at this point, the Group
believes that this service has sufficient functionality for customers to enjoy a wide range of content over5

broadband. The Group’s future initiatives in broadband infrastructure operations will include thefollowing:(1) In ADSL operations, the Group will work to acquire new customers to retain its customer base of over
5 million. Following initiatives in the previous fiscal year, the Group continues to aim for higher revenue
by increasing the number of users of high value added services, such as Yahoo! BB 50M and other highspeed service plans and wireless LAN services.
(2) The Group will continue R&D targeting the commercialization of new technologies, including FTTR,
for succeeding ADSL.
(3) Currently, it is difficult to describe the competitive situation in the FTTH access service market in
Japan as fair, not only in costs but also in such areas as procedural requirements. Operators other thanNTT East and NTT West are in inferior competitive positions. The Group is maintaining a state ofreadiness that will enable it to start full-fledged operations as soon as a fair competitive environment isestablished. For the near future, the Group’s basic policy is to develop operations commensurate with
anticipated income and profit. The Group considers FTTH to be a national business and believes that theexistence of "universal circuit company"*8 to lease circuits to all operators from an impartial position
would serve the national interest. The Group is actively promoting its viewpoint in such forums as the
Next-Generation Broadband Strategy 2010 (Draft) of the Ministry of Internal Affairs andCommunications.
*8. Universal circuit company: A company that provides “lifeline” communications services, such aswith postal services, electricity, gas, and water, at affordable, appropriate rates, for fair, stable
access available to anyone in any part of the country.
(5) Strengthening governance and compliance systems
The Group considers governance and compliance to be important management issues. In December 2005,
the Company revised the SOFTBANK Group Charter, formulated the SOFTBANK Group Code of
Conduct for Officers and Employees, and set up the Group Hotline. In the quarter under review,
Vodafone K.K. became a Group member, and the Group's operational scale was enlarged and number of
employees continued to increase. In this setting, in May 2006, the Group inaugurated the CCO
Committee, which is composed of the Chief Compliance Officers of Group companies and holds regularmeetings, in order to share information on compliance systems and to improve the compliance system for
the Group as a whole. In the future, the Group will continue to implement initiatives targeting to bolster
the governance and compliance systems.
In addition, the Group will continue working to ensure that all Group employees strictly observe allapplicable laws, regulations, and social norms in corporate and social activities and that the Group meetsthe expectations of all stakeholders, and to that end the Group will strive to see that the Group acts inaccordance with an even higher level of ethical standards.

6

Results of Operations and Financial Position
1. Consolidated Results of Operations<Overview of Results for the three-month period ended June 30, 2006>
Net sales increased by ¥235,594 million, or up by 91% on a year-on-year basis to ¥494,231 million.
Sales in the Mobile Communications segment, which was newly established in the current fiscal year,
amounted to ¥232,467 million. On April 27, 2006, the Company completed the acquisition of Vodafone
K.K., which is included in scope of consolidation from the end of April 2006, and the financial results
were consolidated from May 2006. In the Internet Culture segment, sales increased by ¥10,007 million,
or up by 29% to ¥44,642 million, due to strong advertising revenues and others. The Broadband
Infrastructure and the Fixed-line Telecommunications segments also recorded strong performances.
Operating income was ¥54,357million, an improvement of ¥57,547 million from the operating loss of¥3,190 million recorded in the same period of the previous fiscal year. The Mobile Communications
segment, which was newly established in the current fiscal year, recorded operating income of ¥27,293
million. The Broadband Infrastructure segment’s operating income was ¥5,479 million, an improvementof ¥9,973 million, due to higher sales and a shift of subscriber acquisition efforts to more effective
channels, such as mass electronics retailers. The Fixed-line Telecommunications segment’s operating
income was ¥1,212 million, an improvement of ¥15,301 million, resulting from a change in the marketingstrategy for the Otoku Line service of JAPAN TELECOM. In the Internet Culture segment, favorable
advertising revenues and others resulted in arise in operating income of ¥5,161million, or 31%, to¥21,630 million.
Ordinary income was ¥25,994 million, an improvement of ¥39,012 million from the ordinary loss of¥13,017 million recorded in the same period of the previous fiscal year. In addition to the improvementin operating income/loss, equity in earnings under the equity method increased by ¥7,440 million, to¥9,051 million, principally due to higher profit at SBI Holdings, Inc. On the other hand, interest expenserose ¥7,795 million, to ¥14,601 million, mainly as a result of borrowings associated with the acquisitionof Vodafone K.K. Other non-operating expenses, such as arranger’s fees, totaled ¥25,857 million.
Net income was ¥1,418 million, an improvement of ¥12,571 million from the net loss of ¥11,153 million
recorded in the same period of the previous fiscal year. Special income was ¥4,672 million, and special
loss was ¥1,365 million. In addition, current income taxes were ¥10,146 million, deferred income taxes
were ¥9,224 million, and minority interest was ¥8,514 million.

7

<Results for the Three-Month Period Ended June 30, 2006 by Business Segments>
Mobile Communications
This segment, which was newly established in the current fiscal period, is principally comprised of theresults of Vodafone K.K. starting in May. Net sales were ¥232,467 million, and operating income was¥27,293 million.
(Quartely trends of the Segment)
FY2007
2007/Q1
Sales

232,467

Operatingincome27,293(Millions of yen; amounts less than one million yen are omitted)
FY2006
2006/Q4
2006/Q3
2006/Q2
2006/Q1
Newly established on April 30, 2006

As of the end of June 2006, Vodafone K.K. had a total of 15,240,200 subscribers. The number ofsubscribers has increased steadily since June 2005. The number of 3G subscribers has reached 3,715,400,
or 24.4% of the total number of subscribers.
Due to the increasing number of subscribers using basic charge discount services, such as the Happy
Bonus plan, basic charges are declining, but as a result of the rising percentage of 3G subscribers, datatransmission charges are increasing. ARPU (average revenue per user) in the first quarter was ¥5,590. In
respect to costs, the Company will reduce network costs through group synergies and implement
thorough cost control measures.
The Group launched five new 3G handsets in the first quarter. In May 2006, the Group released the
AQUOS Mobile 905SH, by Sharp, which can receive one-segment digital terrestrial TV broadcasts. In
June 2006, the Group launched the 705T, by Toshiba, a compact and colorful model with a music player,
and the 705SH SLIMIA, by Sharp, a slim and lightweight model with a sophisticated design.
In content, the Group started to offer Cars 3D Game, Disney's first Bluetooth-enabled multiplayer 3D
racing game, and services in advance for Disney Mobile Comics, an electronic comics service through theVodafone Live!, mobile portal site.
As of the end of June 2006, global roaming service was available in 158 countries and regions and from222 operators. As for price plans, the number of subscribers for the LOVE Flat-rate plan was 1.2 million
at the end of June 2006.
In the 3G mobile communications network, the Group is actively working to expand the network,
eliminate areas with poor connectivity, and improve indoor coverage. The Group will continue to offer
services that have been well received. These services include flat-rate services, such as the LOVE Flatrate and Family Call Flat-rate, and basic charge discount services, such as Happy Bonus. Moreover, theGroup will further enhance its handset lineup and appealing content.
Broadband Infrastructure
Segment sales increased by ¥2,116 million, or up by 3% from the same period of the previous fiscal year,to ¥63,322 million. Operating income was ¥5,479 million, an improvement of ¥9,973 million.
(Quartely trends of the Segment)
FY2007
2007/Q1(Millions of yen; amounts less than one million yen are omitted)
FY2006
2006/Q4
2006/Q3
2006/Q2
2006/Q1

Sales

63,322

71,262

71,54364,43961,205

Operatingincome (loss)

5,479

12,321

9,361

3,483

(4,494)8

The number of Yahoo! BB ADSL lines installed continued to grow steadily, reaching a total of 5.08
million at the end of June 2006. The ARPU of the ADSL business also continued to improve, due in partto growth in the percentage of users subscribing to high-value-added services, such as Yahoo! BB 50M
and other high-speed service plans and in-house wireless LAN services.
For subscriber acquisition, the Group’s efforts remain centered on mass electronics retailers. In the future,
the Group will strive to take advantage of synergies, such as cross-selling Yahoo! BB ADSL services toVodafone K.K.’s existing mobile phone subscribers.
Modem rental income is declining following the sale by BB TECHNOLOGY Corp. (hereafter “BB
TECHNOLOGY”) in December 2005 of its modem rental business. On the other hand, under the termsof a service agreement with BB Modem Rental Yugen Kaisha (hereafter “BB Modem Rental”), BB
TECHNOLOGY is receiving servicing fees, incentives, and royalties. In the first quarter, net sales andoperating income declined substantially from the fourth quarter of the fiscal year ended March 31, 2006,
due to decreasing incentives payments from BB Modem Rental.
Fixed-line Telecommunications
Segment sales increased by ¥69 million, or up by 0%, to ¥88,673 million. Operating income was ¥1,212
million, an improvement of ¥15,301 million.
(Quartely trends of the Segment)
FY2007
2007/Q1(Millions of yen; amounts less than one million yen are omitted)
FY2006
2006/Q4
2006/Q3
2006/Q2
2006/Q1

Sales

88,67392,071

90,256

83,30088,604

Operatingincome (loss)

1,212

2,928

(1,787)(12,209)(14,089)

The number of lines installed for JAPAN TELECOM’s Otoku Line direct connection voice service
reached 890 thousand as of the end of June 2006. In June, JAPAN TELECOM acquired thetelecommunication services (direct connection voice, My Line, ADSL, ISP service, etc.) of HEISEIDENDEN CO., LTD., and HDD COMMUNICATIONS CO., LTD. As a result, the number of lines
installed for direct connection voice services offered by JAPAN TELECOM reached 1.02 million. In thefiscal year ended March 31, 2006, agency managements and other responsibilities related to the Otoku
Line business were transferred to JAPAN TELECOM INVOICE Co., Ltd. JAPAN TELECOM has
worked to reinforce its marketing to corporate customers and has focused on providing its voice-network
solutions using Otoku Line. As a result, substantial gains in profitability are being recorded.
JAPAN TELECOM has provided ICT solution services to corporate customers. In June 2006, JAPANTELECOM reached an agreement with Secom Trust Systems Co., Ltd., regarding a joint businessdevelopment in the field of large-scale disaster countermeasures. In July, JAPAN TELECOM reached anagreement with Daiichikosho Co., Ltd., regarding a joint venture utilizing SuppliVar*1, and in August
2006 a joint venture company was established. In addition, in July 2006, JAPAN TELECOM establishedthe Mobile Business Division to enable coordinated business development with Vodafone K.K.’s
Enterprise Sales Division. In the future, by providing a range of solutions that meet business needs,
JAPAN TELECOM will work to improve customer satisfaction.
*1. SuppliVar is an abbreviation of Supplement Variety. This solution business entails theprovision of entertainment and advertising distribution for the restaurant industry utilizing
broadband terminals with ordering functionality.
Internet Culture
Segment sales increased by ¥10,007 million, or up by 29%, to ¥44,642 million, and operating income
rose ¥5,161 million, or 31%, to ¥21,630 million.

9

(Quartely trends of the Segment)
FY2007
2007/Q1(Millions of yen; amounts less than one million yen are omitted)
FY2006
2006/Q4
2006/Q3
2006/Q2
2006/Q1

Sales

44,642

42,37442,21436,896

34,635

Operatingincome21,63021,297

19,256

17,167

16,469Yahoo Japan continued to record strong results in Internet advertising, centered on advertising by national
clients*2. In non-advertising business services, the Yahoo! Rikunabi employment information service
recorded favorable sales, and in consumer services, Yahoo! Auctions recorded strong system usage
revenues. The number of customer IDs for Yahoo! Premium continued to increase, reaching 6.35 million
at the end of June 2006.
*2. National clients: Advertisers with substantial advertising exposure in other mass media, suchas TV, newspapers, and magazines.
e-Commerce
Segment sales decreased by ¥1,326 million, or down by 2%, to ¥59,142 million, while operating income
rose ¥734 million, or 101%, to ¥1,461 million.
(Quartely trends of the Segment)
FY2007
2007/Q1(Millions of yen; amounts less than one million yen are omitted)
FY2006
2006/Q4
2006/Q3
2006/Q2
2006/Q1

Sales

59,142

83,661

71,456

67,68860,469Operatingincome

1,461

1,843

1,473

817

726

In the distribution business, SOFTBANK BB Corp. (hereafter “SOFTBANK BB”) reinforced its sales
system for corporate customers. As a result, shipment increased, centered on PC servers and peripherals,
and sales of software were strong. Sales and profits increased. In consumer business, wholesaling to EC
companies remained favorable. In distribution, from the current period, a strategy of shifting to ecommerce and service businesses is being implemented. In April 2006, BB Softservice Corp. wasestablished through the corporate separation of SOFTBANK BB’s consumer ASP*3 service department.
In the future, leveraging synergies among SOFTBANK Group companies, services will be further
strengthened and extended to corporate customers.
The Company applied “Practical solution on accounting for revenue recognition of software” (Financial
Accounting Standards Implementation Guideline No.17 issued on March 30, 2006) from this first quarter.
As a result, certain software transactions stated at ¥ 274 million as net sales are netted with amounts forgoods purchased. Due to the netting with the amounts for goods purchased, net sales and cost of goods
sold decreased by ¥7,455 million.
*3. Application Service Provider: A company that rents application software and others tocustomers through the Internet.
Others
The results of this segment include the performance of Broadmedia business (mainly Club iT
Corporation), Technology Services business (mainly SOFTBANK TECHNOLOGY CORP.), Media &Marketing business (mainly SOFTBANK Creative Corp.), and Other Businesses (mainly TV BANK
Corp. and Fukuoka Softbank Hawks related businesses).

10

2. Financial Position<Balance Sheet Analysis>
In the Company’s consolidated balance sheet at the end of the first quarter, in comparison with theconsolidated balance sheet at the end of March 2006, the new consolidation of Vodafone K.K. from theend of April 2006 had the effect of increasing current assets of ¥320,135 million, non-current assets of¥1,990,897 million (including goodwill of ¥1,114,454 million), current liabilities of ¥286,120 million,
long-term liabilities of ¥146,044 million, and minority interest in consolidated subsidiaries of ¥2,812
million. In raising funds for the acquisition of Vodafone K.K., the LBO bridge loan from financial
institutions raised current liabilities of ¥1,166,000 million, subordinated loans by Vodafone International
Holdings B.V. raised long-term liabilities of ¥100,000 million, and the issuance of BB Mobile Corp.
preferred stock subscribed by Vodafone International Holdings B.V. raised net asset of ¥300,000 million.
Current assets increased by ¥106,745 million from the end of the previous fiscal year, to ¥851,875
million. As a result of the new consolidation of Vodafone K.K., the Company recorded increases of¥134,113 million in notes and accounts receivable-trade, ¥67,239 million in short-term deferred tax assets,¥27,794 million in inventories, such as mobile phone handsets, and ¥43,873 million in other current
assets such as receivables. On the other hand, principally as the result of payment for the acquisition ofVodafone K.K., cash and deposits declined by ¥160,955 million.
Property and equipment increased by ¥537,294 million, to ¥955,899 million. As a results of the newconsolidation of Vodafone K.K., the Company recorded increases of ¥419,835 million intelecommunications equipment, such as base stations and switching equipment, ¥31,258 million inbuildings and structures, such as network centers, and ¥10,698 million in land. In addition, constructionin-progress was up by ¥51,581 million.
Intangible assets increased by ¥1,268,787 million, to ¥1,371,073 million. Goodwill increased by¥1,116,113 million, primarily as a result of the new consolidation of Vodafone K.K., and software rose
¥124,337 million.
Investments and other assets increased by ¥307,262 million, to ¥848,644 million. Primarily as a resultof the new consolidation of Vodafone K.K., long-term deferred tax assets increased ¥140,127 million. In
addition, other assets increased by ¥104,776 million, principally due to the recording of deposits
following the implementation in April 2006 of legal defeasance with respect to Euro-denominatedStraight Bonds due 2011.
Current liabilities increased by ¥1,608,309 million, to ¥2,195,212 million. Short-term borrowings rose
¥1,316,229 million, primarily on account of a bridge loan used in the acquisition of Vodafone K.K. In
addition, principally due to the new consolidation of Vodafone K.K., accounts payable-other and accrued
expenses rose ¥159,658 million and current portion of corporate bonds rose ¥24,970 million. Cashreceipts as collateral rose ¥50,000 million. The Company plans to shift from the bridge loan used in theacquisition of Vodafone K.K. to permanent financing in the fall of 2006.
Long-term liabilities increased by ¥315,367 million, to ¥1,189,599 million. Long-term debt rose
¥179,626 million, primarily as a result of fund-raising associated with the acquisition of Vodafone K.K.
Principally due to the new consolidation of Vodafone K.K., corporate bonds rose ¥99,276 million, andprovision for loyalty program of ¥41,033 million was recorded.
Net asset increased by ¥298,926 million, to ¥646,190 million. Minority interest in consolidated
subsidiaries rose ¥306,495 million, primarily due to the issuance of BB Mobile Corp. preferred stock for
Vodafone International Holdings B.V.

11

<Cash Flow Analysis>
During the three-month period ended June 30, 2006, net cash provided by operating and financing
activities was ¥64,675 million and ¥1,743,429 million, respectively, while net cash used in investing
activities was ¥1,965,832 million. As a result, cash and cash equivalents at the end of the periodamounted to ¥285,214 million, a decrease of ¥161,480 million from the end of the previous fiscal year.
Net cash provided by operating activities was ¥64,675 million. Income before income taxes andminority interest amounted to ¥29,302 million, and depreciation and amortization totaled ¥38,048 million.
In addition, due to progress in the collection of receivables, principally in the e-Commerce segment,
decrease in receivables-trade was ¥34,259 million, and due to the payment of payables, decrease inpayables-trade was ¥12,776 million. Equity in earnings under the equity method, net, which is included
in income before income taxes and minority interest, totaled ¥9,051 million and was posted negative as
an adjustment item. In addition, interest paid was ¥9,168 million and income taxes paid, for Yahoo Japanand others, were ¥27,546 million.
Net cash used in investing activities was ¥1,965,832 million. This mainly reflected the payment of¥1,835,955 million for acquisition of interests in subsidiaries newly consolidated, net of cash acquired,accompanying the acquisition of Vodafone K.K. As a result of capital investment, principally in the
Mobile Communications, Broadband Infrastructure, and Fixed-line Telecommunications segments,
purchase of property and equipment and intangibles totaled ¥76,776 million.
Net cash provided by financing activities was ¥1,743,429 million. Increase in short-term borrowings,
net, was ¥1,286,475 million, principally on account of funds raised for the acquisition of Vodafone K.K.
Due primarily to the issuance of BB Mobile Corp. preferred stock that were allocated to Vodafone
International Holdings B.V., proceeds from issuance of shares to minority shareholders was ¥300,084
million. In addition, increase in cash receipt as collateral was ¥50,000 million.

12

The SOFTBANK GroupAs of June 30, 2006, the SOFTBANK Group included 122 companies with operations in ten business segments asfollows.
Business segment

MobileCommunications
Broadband
2.
Infrastructure
Fixed-line
3.
Telecommunications
1.

Consolidated
subsidiaries

Equity-method
non-consolidated
subsidiaries andaffiliates(Note 1)

6-

Mobile communication services, and sale of cellular phones accompanying to
its services(Note 2)

6

2

ADSL and fiber-optic high-speed Internet connection service, IP telephonyservice, provision of content and other operations(Note 2)

5

1

Fixed-line telecommunications such as voice transmission service, datatransmission service, private leased circuit and data center service
Internet-based advertising operations, broadband portal business, andInternet-based auction businessDistribution of PC software and such hardware as PCs and peripherals,
enterprise solutions, and diversified e-commerce businesses, including
business transaction platform (B2B) and consumer-related e-commerce (B2C)

Principal products and operational content of each business4. Internet Culture(Note 2)19

9

5. e-Commerce(Note 2)

10

4

Broadmedia

8

2

Broadband service such as broadcasting and communications; support for
procurement of content

Technology Services

1-

System solution business and business solution businessMedia & Marketing3

1Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc., and development of web content specializing in IT

Overseas Funds

38

40

U.S.- and Asia-focused global venture capital business principally focused on
Internet-related companies

Others26

9

Leisure and service business, holding company functions for overseas
operations, and back-office services in Japan

122

68

6 Others:

Total

Note: 1. Mobile Communications segment was established from the first quarter of this fiscal year due to theconsolidation of Vodafone K.K. and its consolidated subsidiaries.
2. SOFTBANK BB Corp., JAPAN TELECOM CO., LTD. and Yahoo Japan Corporation are included in the
consolidated subsidiaries of the e-Commerce, Fixed-line Telecommunications and Internet Culture segments,
respectively, while SOFTBANK BB Corp., JAPAN TELECOM CO., LTD. and Yahoo Japan Corporation
operate multiple businesses and their operating results are allocated to multiple business segments.
3. Due to the consolidation of Vodafone K.K. and its subsidiaries from the first quarter of this fiscal year, certain
subsidiaries were not consolidated as the individual and aggregate amounts were not considered material in
relation to the SOFTBANK consolidated financial statements.

13

Mobile Communications
Mobile Communications

Broadband Infrastructure
Broadband Infrastructure

Vodafone K.K. (Note 2)
BB TECHNOLOGY Corp.

BB Mobile Corp.

SOFTBANK BB Corp.

Fixed-line
Fixed-line
Telecommunications
Telecommunications

BB Cable Corporation

Internet Culture
Internet CultureJAPAN TELECOM CO., LTD.
SOFTBANK IDC Corp.

Yahoo Japan Corporation

e-Commercee-Commerce

CREO CO., LTD.

SOFTBANKSOFTBANKCORP.
CORP.
(Pure Holding Company)(Pure Holding Company)

SOFTBANK BB Corp.
Vector Inc.

All About, Inc.
Alibaba.com Corporation

Carview Corporation

1)
Media & Marketing (NoteMedia & Marketing (Note 1)

GungHo Online Entertainment Inc.

SOFTBANK Creative Corp.
1)
Broadmedia (NoteBroadmedia (Note 1)

ITmedia Inc.
cyber communications inc.

Club iT Corporation
1)
Overseas Funds (NoteOverseas Funds (Note 1)

1)
Technology Services (NoteTechnology Services (Note 1)

SOFTBANKTECHNOLOGY CORP.

1)Others (Note
Others (Note 1)

Fukuoka Softbank Hawks Marketing Corp.
TV Bank Corporation
SBI Holdings, Inc. (Note 3)

SOFTBANK Holdings Inc.

・・・・ Segment・・・・ Consolidated subsidiary
・・・・

Equity-method subsidiary
and affiliates

Note: 1. Broadmedia, Technology Services, Media & Marketing, Overseas Funds, and other segments are included in“Others” segment.
2. Vodafone K.K. plans to change its company name to SOFTBANK Mobile Corp. from October 1, 2006.
3. The Company sold its all shares in SBI Holdings, Inc., which was accounted for under the equity method,
through its wholly-owned subsidiary, SOFTBANK AM CORPORATION on August 1, 2006 and August 2,
2006. As a result, SBI Holdings, Inc. is not to be accounted for under the equity method.

14

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
As of March 31, 2006

As of June 30, 2006
Amount%Amount%Increase(Decrease)

As of June 30, 2005
Amount%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable –tradeMarketable securities¥285,351¥446,306¥(160,955)¥288,119

323,034

188,921

134,113

152,974

7,173

4,372

2,800

6,885

Inventories

78,39250,597

27,794

61,168Deferred tax assets

81,346

14,107

67,2392,326

Other current assets
Less:
Allowance for doubtful accounts
Total current assets

92,12348,25043,87349,558(15,545)(7,424)(8,120)(7,362)

106,745553,671

851,87521.1

745,130

41.2

34.2

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

88,56257,304

31,25857,372

Telecommunications equipment

614,806

194,970

419,835

214,928

Telecommunications service lines

95,01891,724

3,293

96,874Land

30,103

19,404

10,69819,396

Construction-in-progress

79,457

27,87551,581

42,187

Others47,951

27,325

20,62526,884

Total tangible assets

955,899

537,294

457,64423.7

418,605

23.1

28.2

Intangible assets, net:
Goodwill

1,161,691

45,5781,116,113

49,313

Software158,008

33,671

124,337

31,025

Other intangibles

51,37323,03628,33623,0981,268,787

103,438

Total intangible assets
Investments and other assets:
Investment securities andinvestments in partnerships
Deferred tax assets
Other assets
Less:
Allowance for doubtful accounts
Total investments
and other assets

1,371,073

34.0

102,286

5.7

526,892

464,650

62,241

397,333

165,166

25,039140,127

42,282

166,018

61,241

104,776

73,655(9,432)(9,548)116(8,700)

6.4

848,64421.1

541,382

29.9

307,262504,571

31.1

Deferred charges

3,509

0.1

993

0.1

2,515

1,557

0.1

Total assets¥4,031,003

100.0¥1,808,398

100.0¥2,222,604¥1,620,882

100.0

15

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
As of March 31, 2006

As of June 30, 2006
Amount%Amount%Increase(Decrease)

As of June 30, 2005

AmountLIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Accounts payable - trade¥91,012¥60,432¥30,579¥44,585

Short-term borrowings

1,534,529

218,300

1,316,229

209,245

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

14,60010,400

4,200

8,500

36,064

11,094

24,97048,145

273,781

114,122

159,658

162,500

11,324

29,137(17,813)

9,585

Cash receipts as collateral

150,000

100,000

50,000100,000

Other current liabilities

83,89943,414

40,48530,485

Total current liabilities

2,195,212

1,608,309

613,04854.5

586,902

32.4

%

37.8

Long-term liabilities:
Corporate bonds

555,404

456,128

99,276383,352

Long-term debt

388,997

209,370

179,626

226,902

Deferred revenue

37,612

41,840(4,227)-

Deferred tax liabilities

45,457

48,642(3,185)52,078

Accrued retirement benefits

17,43017,279151

17,608Provision for loyalty program

41,033-41,033-

Other liabilities

103,663

100,970

2,692

83,305

Total long-term liabilities

1,189,599

29.5

874,23248.4

315,367

763,246

47.1

Total liabilities

3,384,812

84.0

1,461,135

80.8

1,923,677

1,376,294

84.9

162,969

4.0

162,9169.0

52

162,397

10.0

-

-

5

0.0

(5)

-

-

10.3

52

186,783

11.5

Net asset:
Common stockPre-stock issuance paid-in capital
Additional paid-in capital

187,355

4.6

187,303

Accumulated deficit(219,394)(5.4)(218,561)(12.1)(833)(287,201)(17.7)

(175)

(0.0)

(169)

(0.0)

(5)

(109)

(0.0)

125,0773.1

129,051

7.1(3,974)

135,942

8.4(38,764)(1.0)(36,840)(2.0)(1,923)(41,582)(2.6)

18,1300.5

19,062

1.1(932)

11,115

0.7

3,150

0.1

3,150

0.2

0

3,150

0.2

407,841

10.1

101,346

5.6

306,495

74,092

4.6

646,190

16.0

347,263

19.2

298,926

244,588

15.1¥4,031,003

100.0¥1,808,398

100.0¥2,222,604¥1,620,882

100.0

Less: Treasury stock
Net unrealized gain on othersecurities
Deferred losses on hedges
Foreign currency translation
adjustments
Stock acquisition right
Minority interestin consolidated subsidiaries
Total net assets
Total liabilities andnet assets

16

CONSOLIDATED STATEMENTS OF OPERATIONS(Millions of yen; amounts less than one million yen are omitted.)Three-month period
ended June 30, 2006

Three-month period
ended June 30, 2005

Amount%Amount%Net sales¥494,231

100.0¥258,637

100.0

Cost of sales

273,895

55.4

175,674

220,336

44.6

Selling, general and administrative expenses

165,978

Operating income (loss)

54,357Gross profit

Increase(Decrease)

Fiscal year ended
March 31, 2006

Amount%¥235,594¥1,108,665

100.0

67.9

98,220723,81265.3

82,962

32.1

137,373

384,853

34.7

33.6

86,153

33.3

79,825322,553

29.1

11.0

(3,190)(1.2)

57,54762,299

5.6Interest income

1,088

326

762

2,136

Equity in earnings under the equity method

9,051

1,610

7,440

9,521

Other non-operating income

1,956

1,185

770

4,099

8,973

15,756

2.5

3,122

1.2

Non-operating income

12,096

Interest expense

14,601

6,806

7,795

27,005

Other non-operating expenses

25,857

6,143

19,71323,5581.4

Non-operating expenses

40,4598.2

12,9505.0

27,50950,564

4.5

Ordinary income (loss)

25,994

5.3(13,017)(5.0)

39,012

27,492

2.5

Gain on sales of investment securities

3,971

21,827(17,855)

172,306

Other special income

701

1,087

(386)

26,218Special income

4,672

0.9

22,9148.9(18,241)

198,524

17.9

Special loss
Income before income taxes and minority
interest
Income taxes:

1,365

0.3

9,136

3.6

(7,771)

96,532

8.7

29,302

5.9

760

0.3

28,541

129,484

11.7

Current

10,146

2.0

8,230

3.2

1,915

40,753

3.7

Deferred

9,224

1.9

(2,779)(1.1)

12,003

1,837

0.2

8,514
¥1,418

1.7
0.3

6,463
¥(11,153)

2.5
(4.3)

2,050
¥12,571

29,342¥57,550

2.6
5.2

Minority interest
Net income (loss)

17

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSET
From April 1, 2006 to June 30, 2006:(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ Equity

Valuation and translation adjustments

Total

Deferred
losses onhedgesForeign currencytranslation
adjustments

Total

(169)

131,494

129,051(36,840)

19,062111,273

3,150

101,346

347,263(2,637)-99(2,637)

-

(90)

-

-

476

-

-

-

99
(2,637)

(90)

-

-

-

-

-

-

-

1,418
-

1,418
(5)

-

-

-

-

-

-

1,418
(5)

-

(3,974)(1,923)(932)(6,830)-306,495

299,666

52

(5)

52

(833)

(5)

(739)

(3,974)(1,923)(932)(6,830)-306,495

298,926

162,969-

187,355(219,394)(175)

130,754

125,077(38,764)

18,130104,4433,150

407,841

646,190Pre-stockissuance
paid-in
capitalAdditional
paid-in
capital162,916

5

187,303(218,561)

Issuance of new shares
Dividend from surplus

52
-

(5)
-

52
-

Bonuses to directors (see Note1)

-

-

-

Balance at March 31, 2006

Stockacquisition Minority
interests
right

Net
unrealized
gain (losses)
on othersecurities

Commonstock

Accumulated Treasury
deficitstock

Total net
assetsChanges of items during the period

Net adjustment to accumulated deficit
due to change in scope of theconsolidation (see Note 2)
Net income
Acquisition of treasury stock18

Items other thanshareholders’ equity

changesin

Total movement in this period
Balance at June 30, 2006

476
(5)
-

From April 1, 2005 to June 30, 2005:

-

(90)
476

(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ Equity
Commonstock

Pre-stockissuance
paid-in
capitalAdditional
paid-in
CapitalAccumulated Treasury
deficitstock

Valuation and translation adjustments
Net
Deferred Foreign currency
unrealized
losses ontranslation
gain (losses)
hedgesadjustments
on othersecurities

Total

Stock
acquisition Minority
interests
right

Total

Total net
assets162,397-

186,783(273,362)(106)

75,712

136,662(41,056)

6,697

102,303

3,150

68,943

250,110

Changes of items during the period
Dividend from surplus

-

-

-

(2,460)-(2,460)

-

-

-

-

-

-

(2,460)Bonuses to directors (see Note1)
Decrease due to merger
Net income
Acquisition of treasury stock

-

-

-

(86)
(138)
(11,153)
-

(3)

(86)
(138)
(11,153)
(3)

-

-

-

-

-

-

(86)
(138)
(11,153)
(3)

-

-

-

-

-

-

(719)

(526)

4,417

3,171

-

5,148

8,320

Balance at March 31, 2005

Items other thanshareholders’ equity

changes

Total movement during the period
Balance at June 30, 2005

in

-

-

-

(13,838)(3)(13,842)

(719)

(526)

4,417

3,171

-

5,148

(5,522)

162,397-

186,783(287,201)(109)

61,870135,942(41,582)

11,115

105,475

3,150

74,092

244,588

- Continued From April 1, 2005 to March 31, 2006:(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ Equity

Valuation and translation adjustments
Net unrealized Deferred gain Foreign
currency
gain (losses) (losses) on
Totaltranslation
hedgeson otheradjustments

Stockacquisition Minority
interests
rightTotal net
assetsCommonstock

Pre-stock
Issuance
paid-in
capital162,397-

186,783(273,362)(106)

75,712

136,662(41,056)

6,697

102,303

3,150

68,943

250,110

519

-

519

-

-

1,038

-

-

-

-

-

-

1,038

Cash receipt before stock issuance

-

5

-

-

-

5

-

-

-

-

-

-

5

Dividend from surplus

-

-

-

(2,460)-(2,460)

-

-

-

-

-

-

(2,460)Bonuses to directors (see Note 1)

-

-

-

(86)

-

(86)

-

-

-

-

-

-

(86)

Balance at March 31, 2005

Additional
Accumulated
paid-in
deficitcapitalTreasury
stock

Total

Changes of items during the period
Issuance of new shares

19

Net adjustment to accumulated deficit
due to change in scope of theconsolidation (see Note 2)
Decrease due to merger
Net Income
Acquisition of treasury stock
Items other thanshareholders’ equity schanges

Total movement during the period
Balance at March 31, 2006

in

13

13

-

-

-

(215)
57,550
-

(63)

(215)
57,550
(63)

-

-

-

-

-

-

13
-

-

-

-

-

-

(215)
57,550(63)(7,610)4,215

12,365

8,969-

32,402

41,371

519

5

519

54,801(63)

55,781(7,610)4,215

12,365

8,969-

32,402

97,153

162,916

5

187,303(218,561)(169)

131,494

129,051(36,840)

19,062111,273

3,150

101,346

347,263

Note 1: In accordance with the accounting principles generally accepted in Japan, bonuses to directors, to be appropriated in accordance with a resolution of the shareholders at an ordinary
meeting held subsequent to the fiscal year-end, are recorded in the consolidated statements of changes in net asset in the fiscal year in which the resolution was passed.
Note 2: In accordance with the accounting principles generally accepted in Japan, the cumulative effect arising from any changes in the scope of consolidation is treated as an adjustment
to accumulated deficit in the consolidated statements of changes in net asset.

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions of yen; amounts less than one million yen are omitted.)Three-month period ended
June 30, 2005

Three-month period
ended June 30, 2006

Fiscal year ended
March 31, 2006

Ⅰ. Cash flows from operating activities:
Income before income taxes and minority interest¥29,302¥760¥129,484

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

38,04820,94280,417

Amortization of goodwill

10,940

1,600

6,272

Equity in earnings under the equity method, net(9,051)(1,610)(9,521)

Dilution gain from changes in equity interest, net

(293)

(826)

(21,806)

Valuation loss on investment securities

143

1,682

7,188

(3,970)(21,699)(171,864)

Foreign exchange (gain) loss, net

(88)

2,657

5,497

Interest and dividend income(1,276)(524)(2,402)

Interest expense

14,601

6,806

27,005Gain on sales of marketable and investment securities, net

Changes in operating assets, liabilities and others
Decrease (increase) in receivables - trade34,25914,628(23,333)(Decrease) increase in payables - trade(12,776)(18,724)

4,331

Decrease (Increase) in other receivables

13,169(5,741)(9,864)

Decrease in other payables(8,289)(5,650)(26,773)

Others, net(6,127)

5,407

110,731

98,593(291)

105,361Interest and dividends received

2,797

1,775

3,301

Interest paid

(9,168)(3,745)(22,332)

Income taxes paid

(27,546)(18,867)(31,588)

-

2,915

3,064

¥64,675¥(18,213)

57,806Sub-total

Refund of income taxes
Net cash provided by (used in) operating activities- Continued -20

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(Millions of yen; amounts less than one million yen are omitted.)Three-month period
ended June 30, 2006

Three-month period
ended June 30, 2005

Fiscal year ended
March 31, 2006

Purchase of property and equipment and intangibles¥(76,776)¥(90,147)¥(189,490)

Purchase of marketable and investment securities(60,754)(14,409)(88,479)

5,958

69,922

178,022(1,835,955)-(4,525)11(109)

39,826-

1

29,232

Increase in loan receivables(4,750)(3,780)(17,425)

Collection of loans

2,277

5,401

16,583

Others, net

4,157

4,417

64,107(1,965,832)(28,703)

27,852

1,286,475

19,05832,043

4,200(7,000)(5,100)

Proceeds from long-term debt

210,070

110,020

125,550

Repayment of long-term debt

(7,272)(110,198)(158,211)-

12,252

91,849(1,899)(5,400)(53,547)

105

-

1,038

Proceeds from issuance of shares to minority shareholders

300,084

160

1,619

Cash dividends paid

(1,846)(1,816)(2,456)

Cash dividends paid to minority shareholders(2,968)(2,256)(2,442)

Increase in cash receipt as collateral

50,000--

Others, net(93,519)(1,892)(264)

1,743,429

12,92530,078

Ⅱ. Cash flows from investing activities:

Proceeds from sales of marketable and investment securities
Acquisition of interests in subsidiaries newly consolidated,
net of cash acquired
Sales of interests in subsidiaries previously consolidated
Proceeds from sales of interests in consolidated subsidiaries

Net cash (used in) provided by investing activities
Ⅲ. Cash flows from financing activities:
Increase in short-term borrowings, net
Increase (decrease) in commercial paper

Proceeds from issuance of bonds
Redemption of bonds
Proceeds from issuance of shares

Net cash provided by financing activities
Ⅳ. Effect of exchange rate changes on cash and cash
equivalents
Ⅴ. Net decrease in cash and cash equivalents
Ⅵ. Decrease in cash and cash equivalents due to exclusion ofpreviously consolidated entities

134

1,150

10,905(157,593)(32,840)

126,642(3,886)

(142)

(142)

Ⅶ. Cash and cash equivalents at the beginning of the period

446,694

320,194

320,194

Ⅷ. Cash and cash equivalents at the end of the period¥285,214¥287,211¥446,694

21

CONDENSED QUARTERLY FINANCIAL INFORMATION
Condensed Statement of Income(Millions of yen; amounts less than one million yen are omitted.)First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

April 1, 2006 toJune 30, 2006

January 1, 2006 to
March 31, 2006

October 1, 2005 to
December 31, 2005

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

AmountAmountAmountAmountAmountNet sales¥494,231¥298,406¥287,471¥264,149¥258,637
Cost of sales
273,895
185,010
184,551
178,575
175,674
Gross profit
220,336
113,395
102,920
85,57382,962
Selling, general and administrative
165,978
79,00979,407
77,98386,153
expenses
Operating income (loss)
54,35734,386
23,512
7,590(3,190)Non-operating income (Note)
12,096
6,227
2,784
4,442
3,122
Non-operating expenses (Note)
40,45910,867
15,06812,49912,950Ordinary income (loss)
25,99429,747
11,228(466)(13,017)
Special income
4,672
40,75898,93435,916
22,914
Special loss
1,365
26,61050,475
10,309
9,136
Income before income taxes and minority interest
29,30243,89559,68725,141760
Income taxes - Current
10,146
11,204
9,695
11,623
8,230
Income taxes - Deferred
9,224(15,366)
20,171(187)(2,779)Minority interest
8,514
8,326
7,817
6,734
6,463
Net income (loss)¥1,418¥39,730¥22,002¥6,971¥(11,153)
Note: Exchange gain (loss), equity in earnings (loss) under the equity method, and income (expenses) from investments in partnerships were
included in “Non-operating income” and “Non-operating expenses” and were netted on a quarterly basis for presentation purposes.
Condensed Statement of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

April 1, 2006 toJune 30, 2006

January 1, 2006 to
March 31, 2006

October 1, 2005 to
December 31, 2005

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

AmountAmountAmountAmountAmountⅤ

Net cash provided by (used in) operating
activities
Net cash (used in) provided by investing
activities
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash andcash equivalents
Net (decrease) increase in cash and cash
equivalents

Ⅵ(Decrease) in cash and cash equivalents due to
exclusion of previously consolidated entities(3,886)

-

-

-

(142)

Cash and cash equivalents at the beginning of
the period
Cash and cash equivalents at the end of theperiod446,694

337,122

231,408

287,211

320,194¥285,214¥446,694¥337,122¥231,408¥287,211¥38,048¥18,311¥19,519¥21,643¥20,942

Ⅰ
Ⅱ
Ⅲ
Ⅳ

Ⅶ
Ⅷ

Note:
Depreciation and amortization included in net cash
provided by operating activities¥64,675¥13,837¥61,949¥232¥(18,213)(1,965,832)

15,521

86,627(45,593)(28,703)

1,743,429

74,963(46,728)(11,081)

12,925

134

5,248

3,866

639

1,150

(157,593)

109,571

105,714(55,802)(32,840)

22

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of June 30, 2006, SOFTBANK CORP．
（the “Company”）consolidated 122 subsidiaries. 53 subsidiaries were notconsolidated as the individual and aggregate amounts were not considered material in relation to the consolidated total assets,
net sales, net income (loss) and retained earnings (accumulated deficit) of the SOFTBANK consolidated financial
statements.
Changes in scope of consolidation were as follows:<Increase>
11 companies
Significant changes:
Vodafone K.K.
Newly acquired<Decrease>
42 companies
Insignificant companies were excluded from scope of consolidation from this fiscal period.
2. Changes in scope of equity method
As of June 30, 2006, the Company held three non-consolidated subsidiaries and 65 affiliates, all of which were accounted forunder the equity method. 50 non-consolidated subsidiaries and 23 affiliates were not accounted for under the equity
method, as the individual and aggregate amounts were not considered material in relation to the net income (loss) andretained earnings (accumulated deficit) of the SOFTBANK consolidated financial statements.
Main changes in application of equity method were as follows:<Increase>
One company<Decrease>
20 companies
Insignificant companies were excluded from scope of equity method from this fiscal period.
3. 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 is included as a separate component in net asset, net of 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 method[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 straight line method(2) Intangible assets:

Computed using the straight-line method23

[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>
Vodafone K.K., JAPAN TELECOM CO., LTD., and certain other subsidiaries have defined benefit pension plans fortheir employees. These companies account for the obligation for retirement benefits based on the projected benefit
obligations as of June 30, 2006.
(3) <Provision for loyalty program>
Vodafone K.K. has provision for loyalty program which is accrued based on the estimated future obligation arising frompoint service, based on past experience.
[4] Translation of foreign currency transactions and accounts
All assets and liabilities in foreign currencies are translated at the foreign currency exchange rates prevailing at the respectivebalance sheet dates. Foreign currency exchange gains or losses are charged to net income when incurred.
The translation of foreign currency denominated 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 aretranslated using the foreign currency exchange rates prevailing at the balance sheet dates, and capital stock is translated using
the historical foreign currency exchange rates. Foreign currency financial statement translation differences are presented asa separate component of “Net asset,” and 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.
[6] Accounting for significant hedge transactions(1) Collar transaction① <Hedge accounting>Unrealized gains and losses, net of tax, on collar transaction that qualifies as an effective cash flow hedge at consolidated
subsidiaries in the United States of America are reported as a separate component of “Net asset” in the Company’s
consolidated balance sheets. As such, unrealized gains and losses associated with the collar transaction will berecognized into earnings in the same period during which the hedged assets and liabilities are recognized 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.

24(2) Interest rate swap
① <Hedge accounting>
For interest rate swaps whose amounts, index and periods are same as the conditions for hedged items, the “exceptional
method” is adopted. Under this method, a certain domestic consolidated subsidiary does not account for gains and lossesof those interest rate swaps on a fair value basis and recognizes swap interest on an accrual basis.
② <Derivative instruments for hedging and hedged items>
Derivative instruments for hedging:Interest rate swap contracts
Hedged items:
Interest expense on borrowings③ <Hedging policy>
The domestic consolidated subsidiaries use 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 the net method of reporting.
4. Accounting for business combinations
All assets and liabilities of acquired entities are revalued at the respective fair market value at the combination date.
5. Amortization of goodwill"Goodwill" is amortized on a straight-line basis over reasonably estimated periods in which economic benefits are expected tobe realized. Immaterial goodwill is expensed as incurred.
The goodwill resulted from acquisition of Vodafone K.K. is amortized over 20-year-period.
6. Scope of cash and cash equivalents in the consolidated statements of cash flows“Cash and cash equivalents” are comprised of cash on hand, bank deposits withdrawable on demand and highly liquid
investments with initial maturities of three months or less and a low risk of fluctuation in value.
7. Presentation of net asset in balance sheet
The Company applied “Accounting Standards for presentation of net asset” (Financial Accounting Standards for presentationof net asset in balance sheet Guideline No.5 issued on December 9, 2005 by the Business Accounting Council in Japan), and“Application Guideline for Accounting Standards for presentation of net assets” (Financial Accounting Standards
Implementation Guideline No.8 issued on December 9, 2005) for three months ended on June 30, 2006.
The shareholders’ equity based on the previous presentation of shareholders’ equity in balance sheet is ¥235,198 million.
The Company disclosed net assets in balance sheet using the new presentation for three months ended on June 30, 2006.
Furthermore, the Company presented its net asset in balance sheet using the new presentation for March 31, 2006 and June 30,
2005.
8. Accounting standard for statement of changes in net asset
The Company applied “Accounting Standards for statement of changes in net assets” (Financial Accounting Standards No.6
issued on December 27, 2005) and “Guidance on Accounting Standard for statement of changes in net assets” (Financial
Accounting Standards Implementation Guideline No.9 issued on December 27, 2005) from the period ended June 30, 2006.
9. Accounting standard for share-based payment
The Company applied “Share-based Payment” Financial Accounting Standards No.8 issued on December 27, 2005 and“Guidance on Accounting Standard for share-based Payment” (Financial Accounting Standards Implementation Guideline
No.11 issued on December 27, 2005) from the period ended June 30, 2006.
As a result, the effect of the application of these standards and guideline was not considered material in relation to the income
before income taxes and minority interest.

2510. Practical solution on accounting for revenue recognition of software
The Company applied “Practical solution on accounting for revenue recognition of software” (Financial Accounting Standards
Implementation Guideline No.17 issued on March 30, 2006) from this first quarter.
As a result, certain software transactions stated at ¥274 million as net sales are netted with amounts for goods purchased. Due tothe netting with the amounts for goods purchased, net sales and cost of goods sold decreased by ¥7,455 million.

26

Notes
1. Accumulated depreciation of property and equipment
June 30, 2006
626,519 million yen

March 31, 2006
603,313 million yen

June 30, 2005
639,531 million yen

June 30, 2006

March 31, 2006

June 30, 2005

10,697 million yen-

10,653 million yen-

11,463 million yen
5- million yen- million yen

3 million yen

2. Assets pledged as collateral(1) For future lease liabilities
Assets pledged as collateral:
Notes and accounts receivable - trade
Other current assets (accounts receivable – other)
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. The future lease liabilities at the end of
periods are as follows:

Future lease liabilities (including the above“Notes and accounts payable-trade”)

June 30, 2006

March 31, 2006

June 30, 2005

20,542 million yen

23,846 million yen

32,481 million yen(2) For short-term borrowings and long-term debt
All common stocks of BB Mobile Corp., Vodafone K.K., and subsidiaries of Vodafone K.K. are pledged as collateral for
short-term borrowings, ¥1,166,000 million resulted from the acquisition of Vodafone K.K.
Assets pledged as collateral and secured liabilities by consolidated subsidiaries other than the short-term borrowings above areas follows:
June 30, 2006

March 31, 2006

June 30, 2005

532 million yen
993
503
1,284
5,001
0
208,169
216,484 million yen

336 million yen
1,061
867
1,513
5,001
0
201,293
210,074 million yen

476 million yen
1,100
520
2,549
5,001
0
203,621
213,270 million yen

Other long-term liabilities

614 million yen
55,299116
118,283-

975 million yen
8,20925
119,805113

544 million yen
18,662
17
116,778
204

Total

174,313 million yen

129,128 million yen

136,207 million yen

Assets pledged as collateral:
Cash and deposits
Notes and accounts receivable - trade
Buildings and structures
Telecommunications equipment
Land
Property and equipment- others
Investment securities
Total
Secured liabilities:
Notes and accounts payable - trade
Short-term borrowings
Accounts payable – other and accrued expenses
Long-term debt

27

3. Securities loaned
A portion of investment securities was lent to financial institutions according to stock lending agreements, and the amounts ofapplicable investment securities recorded in the Company’s consolidated balance sheets are as follows:
March 31, 2006
June 30, 2005
June 30, 2006
Investment securities
364 million yen
1,836 million yen
40,527 million yen
4. Cash receipts as collateral
Cash receipts as collateral from financial institutions, to whom the Company lent shares of one of its subsidiaries under security
deposit agreements, is presented as follows:
Cash receipts as collateral

June 30, 2006

March 31, 2006

June 30, 2005

150,000 million yen

100,000 million yen

100,000 million yen

According to the security deposit agreements, the Company paid a fixed rate amount as stock bailment fees and other fees totaling ¥ 581 million,¥ 2,859 million and ¥ 472 million for the periods ended June 30, 2006, March 31, 2006 and June 30, 2005, respectively, and recorded the fees
as other non-operating expenses in the consolidated statements of operations.

5. Line of credit as a creditor (not used)
June 30, 2006
14,373 million yen

March 31, 2006
16,097 million yen

June 30, 2005
528 million yen

June 30, 2006
- million yen

March 31, 2006
8,477 million yen

June 30, 2005
5,553 million yen

6. Balance of accounts receivable sold

7. Selling, general and administrative expenses
Payroll and bonuses

Three-month period ended Three-month period ended
June 30, 2006
June 30, 2005
¥17,765
million¥20,555 million

Fiscal year ended
March 31, 2006
¥69,505 million

Sales promotion expense

26,053

16,74859,671

Sales commission

45,770

1,980

3,050

988

1,156

4,319

Allowance for doubtful accounts

8. Consolidated statements of cash flows(1) Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets:
June 30, 2006
285,351 million yen
7,173

June 30, 2005
288,119 million yen
6,885

March 31, 2006
446,306 million yen
4,372Time deposits with original maturities
over three months(1,595)(1,481)(1,400)Stocks and bonds with original
maturities over three months(5,714)(6,311)(2,584)

Cash and cash equivalents

285,214 million yen

287,211 million yen

446,694 million yen

Cash and deposits
Marketable securities28

(2) Vodafone K.K. and three consolidated subsidiaries acquired in connection with the acquisition of Vodafone K.K.
（as of April 30, 2006）
Current assets
Note 1
324,291 million yen
Non-current assets
851,508
Goodwill
1,123,826
Current liabilities
Note 1(453,926)
Long-term liabilities(144,665)
Minority interest(2,658)Acquisition cost
Note 2
1,698,375 million yen
Loans made by the Company
Note 3163,000
Cash and cash equivalents(25,419)of newly consolidated companies
Payments for the acquisition
1,835,955 million yen(Note 1) Amounts are after considering intercompany transactions.
(Note 2) Accompanying costs are included.
(Note 3) Loan amounts until the acquisition date, April 30, 2006
9. Statements of changes in stockholders’ equity(1) Class and number of outstanding shares:
March 31, 2006

Increase

1,055,231,478

Number of common stocks

Decrease

72,000June 30, 2006-

1,055,303,478(Note) Increase is resulted from the exercise of stock acquisition rights.
(2) Class and number of treasury stocks:
March 31, 2006

Increase

149,391

Number of common stocks

Decrease

2,005

June 30, 2006-

151,396(Note) Increase is resulted from the acquisition of the fraction of shares.
(3) Share warrants:Type

SOFTBANK
Subsidiarycompanies

Number of shares for stock acquisition rights

Million of yen

Detail of stock acquisitionrightsClass of shares

March 31,2006

Increase

Decrease

June 30, 2006

June 30, 2006

Stock acquisition rights
issued in 2004

Commonstocks

24,000,000--

24,000,000

3,150

Total

(4) Dividends:
Resolution
Ordinary general meeting ofshareholders, June 23, 2006

Class ofsharesAmount of dividend(Million of yen)

Commonstocks

2,637

29

-

0

-

3,150

Dividend per
share
¥2.50

Record date
March 31, 2006

Effective dateJune 26, 2006

Significant Subsequent Event<Sale of shares of SBI Holdings, Inc.>The Company sold its all shares held in SBI Holdings, Inc., which was accounted for under the equity method, through its
wholly-owned subsidiary, SOFTBANK AM CORORATION on August 1, 2006 and August 2, 2006.
(1) Summary of Sale:
August 1, 2006
1. Sale of shares:
2.
3.

SBI Holdings, Inc. common stocks of
1,111,000 shares
Approximately ¥50 billion
SBI and others (Sold through
ToSTNet-2)

Sale price:
Sold to:August 2, 2006
1. Sale price:2.
3.

SBI Holdings, Inc. common stocks of
2,134,811.21 shares
Approximately ¥86 billion
Goldman Sachs Ltd.

Sale price:
Sold to:(2) Effects on consolidated results
The gain on the sale of investment securities of approximately ¥65 billion in aggregate will be recorded in the second quarter ofthe fiscal year ending March 31, 2007.

30

Segment Information
1. Business segment information(1)

For the three-month period ended June 30, 2006
(Millions of yen; amounts less than one million yen are omitted.)
Communications

Broadband
Infrastructure

Telecommunications

Internet
Culturee-Commerce

OthersTotal¥231,545¥62,797¥81,892¥44,453¥55,886¥17,655¥494,231-¥494,231

922

524

6,781

189

3,256

2,634

14,307(14,307)-

MobileFixed-line

Elimination
Consolidated
or Corporate

Net sales(1) Customers(2) Inter-segment¥

232,467

63,322

88,67344,64259,142

20,289508,539(14,307)494,231

Operating expenses

205,174

57,842

87,461

23,012

57,681

21,007452,179(12,305)

439,874

Operating income (loss)¥27,293¥5,479¥1,212¥21,630¥1,461¥(717)¥56,360¥ (2,002)¥54,357

Total

(2)

For the three-month period ended June 30, 2005
(Millions of yen; amounts less than one million yen are omitted.)
MobileCommunications

Net sales

Newly(1) Customers(2) Inter-segment
Total

Establishedthis Fiscal
PeriodOperating expenses
Operating income (loss)

Broadband
Infrastructure¥61,005

Telecommunications

Internet
Culturee-Commerce

OthersTotal¥87,393¥34,493¥58,535¥17,209¥258,637

Fixed-line

Elimination
Consolidated
or Corporate¥-¥258,637

200

1,210

141

1,933

3,051

6,537

(6,537)-

61,20588,604

34,63560,46920,260265,175(6,537)

258,637

65,700102,694

18,16559,742

20,860267,164(5,336)

261,827¥(4,494)¥(14,089)¥16,469¥726¥(600)¥(1,988)¥ (1,201)¥(3,190)(3) For the fiscal year ended March 31, 2006
(Millions of yen; amounts less than one million yen are omitted.)
MobileCommunications
Net sales

Newly(1) Customers(2) Inter-segment
Total

Establishedthis Fiscal
PeriodBroadband
Infrastructure

Telecommunications

Internet
Culturee-Commerce

OthersTotal¥267,272¥347,447¥155,550¥272,739¥65,654¥1,108,665

1,179

6,785

569

10,535

17,41936,489(36,489)-

268,451354,233

156,120

283,275

83,073

1,145,154(36,489)

1,108,665

Fixed-line

Elimination
Consolidated
or Corporate¥-¥1,108,665

Operating expenses

247,779

379,392

81,929278,41487,833

1,075,350(28,984)

1,046,366

Operating income (loss)¥20,672¥(25,158)¥74,190¥4,860¥(4,759)¥69,804¥ (7,504)¥62,299

Notes: 1.Business segments are categorized primarily based on the nature of business operations, type of services,similarity of sales channels, etc., which the SOFTBANK Group uses for its internal management purposes.
2. Please refer to the chart of “The SOFTBANK Group” for a description of the main business segments.
3. Unallocated operating expenses for the periods ended June 30, 2006, June 30, 2005 and March 31, 2006 in thecolumn "Elimination or corporate", which mainly represent expenses of the corporate division of the Company,
were ¥1,395 million, ¥977million and ¥7,841 million, respectively.
4. Mobile Communications segment was established in the first quarter of FY2007 due to the consolidation ofVodafone K.K. Net sales and operating expenses of Vodafone K.K and its consolidated subsidiaries areconsolidated from May 2006.

31

Leases
1. Capital leases in which the ownership of leased assets is not transferred to the lessee 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 each period are as
follows:
March 31, 2006
June 30, 2005
June 30, 2006
Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costs
197,727 million yen 195,443 million yen
202,110 million yen
Less:(64,550)(55,141)(74,630)
amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss
(21,703)(21,703)
Net book value
111,473 million yen 140,302 million yen
105,776 million yen
Buildings and structures
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value
Property and equipment - others
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value
Intangible assets
Equivalent to acquisition costsLess:amount equivalent to accumulated amortization
Amount equivalent to accumulated impairment loss

Net book value
Total
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value

48,232 million yen

46,999 million yen

46,988 million yen(4,143)44,088 million yen(2,674)44,324 million yen(899)
46,089 million yen

17,232 million yen

13,604 million yen

13,562 million yen(5,788)(1,656)
9,786 million yen(5,700)(1,657)
6,245 million yen(7,574)
5,988 million yen

6,702 million yen

2,624 million yen

2,575 million yen(1,252)(287)
5,161 million yen(1,238)(287)
1,097 million yen(1,119)1,456 million yen

274,277 million yen

260,955 million yen

258,570 million yen(85,815)(23,647)
164,814 million yen(74,164)(23,648)
163,141 million yen(64,734)
193,836 million yen

Long-term prepaid expense relating to mainly ten year term lease contract with payment completed in initial five years whichis included in “Other assets” of “Investments and other assets” in the consolidated balance sheets for the period ended June 30,
2006 and for the fiscal year ended March 31, 2006 were ¥3,169 million and ¥1,989 million, respectively.
(2) The future lease payments for capital leases at the end of each period are as follows:
March 31, 2006
June 30, 2006
Due within one year
Due after one year

June 30, 2005

Total

34,831 million yen
161,845
196,676 million yen

34,560 million yen
158,800
193,361 million yen

40,294 million yen
158,495
198,790 million yen

Balance of allowance for impairment loss on leased assets

21,942million yen

23,427 million yen- million yen

32

(3) Lease payments and amounts equivalent to depreciation and interest expense for each period are as follows:
FY2006
Three-month period
Three-month period
April
2005 throughended June 30, 2006
ended June 30, 2005
March 2006
56,517 million yen
14,233 million yen
Lease payments
12,829 million yen
Reversal of allowance for impairment loss on
300
1,484
leased assets
44,595
11,254
Amount equivalent to depreciation expense
9,988
Amount equivalent to interest expense
15,8084,108
3,522
Impairment loss
23,727(4) Calculation method used to determine the 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 is calculated by subtracting acquisition costs from the total lease payments andallocated over the lease periods based on the interest method.

33

1.

Capital leases in which the ownership of leased assets is not transferred to the lessee at the end of lease periods(continued)(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of each period are as follows:
March 31, 2006
June 30, 2006
Property and equipment - others
Acquisition costs
164 million yen
164 million yen
Less: accumulated depreciation
(137)
(149)
Net book value
26 million yen
15 million yen
Total
Acquisition costs
Less: accumulated depreciation
Net book value

June 30, 2005
164 million yen(103)
60 million yen

164 million yen(137)
26 million yen

164 million yen(103)
60 million yen(2) The future lease receivables for capital leases at the end of each period are as follows:
March 31, 2006
June 30, 2006
Due within one year
29 million yen
17 million yen
Due after one year
0
Total
29 million yen
17 million yen

June 30, 2005
44 million yen
21
65 million yen

164 million yen(149)
15 million yen(3) Lease income, depreciation and amount equivalent to interest income for each period are as follows:
FY2006
Three-month period
Three-month period
April
2005 throughended June 30, 2006
ended June 30, 2005
March 2006
46 million yen
11 million yen
Lease income
11 million yen
Depreciation expense
41
10
10Amount equivalent to interest income
310(4) Calculation method used to determine the amount equivalent to interest income
The amount equivalent to interest income is calculated by subtracting acquisition costs from the total of lease income andestimated residual value and 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 leases at the end of each period are as follows:
Due within one year
Due after one year
Total

June 30, 2006
12,922 million yen
9,258
22,181 million yen

March 31, 2006
9,904 million yen
11,041
20,946 million yen

June 30, 2005
8,380 million yen
13,556
21,937 million yen(as a lessor)
The future lease receivables for non-cancelable operating leases at the end of each period are as follows:
Due within one year
Due after one year
Total

June 30, 2006
1,309 million yen
2,161
3,470 million yen

34

March 31, 2006
1,305 million yen
1,921
3,227 million yen

June 30, 2005
1,275 million yen
1,994
3,269 million yen

INVESTMENT IN DEBT AND EQUITY SECURITIES
1. Other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)

March 31, 2006

June 30, 2006

1. Equity securities
2. Debt securities:
Corporate bonds andother debt securities
3. Others
Total

Investment

Carrying

costs

amounts

Differences

Investment

Carrying

costs

amounts¥36,418 ¥233,887 ¥197,469
-

-

-

59
59
¥36,477 ¥233,947 ¥197,469

Differences¥34,810 ¥234,319-

June 30, 2005

¥199,509

-

-

59
59
¥34,869 ¥234,379¥199,509

Investment

Carrying

costs

amounts

Differences¥30,630 ¥243,264 ¥212,633
5,097

5,100

3

18
18
0
¥35,746 ¥248,383 ¥212,637

2. Carrying amounts of unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)

June 30, 2006
Carrying amounts

March 31, 2006
Carrying amounts

June 30, 2005
Carrying amounts

¥675

¥-

¥-

¥81,127
5,884
5,219
2,000
1,000
627
¥96,534¥26,759
6,494
2,959
2,000
1,000
614
¥39,827¥16,871
6,686
1,184
2,000
629
¥27,372

1. Debt securities (held-to-maturity)
Unlisted debt securities
2. Other securities
Unlisted equity securities
Investments in limited partnerships (see Note)
Money Management Fund
Preferred fund certificate
Designated money trust
OthersTotal

Note: Relating to “Investments in limited partnerships,” the difference between cost and fair value of limited partnerships, net of tax, isrecorded in “Net unrealized gain on other securities” in the consolidated balance sheets.

35