SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the fiscal year ended March 31, 2007
Tokyo, May 8, 2007

FINANCIAL HIGHLIGHTS
1.

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

Net sales

FY 2007
April 2006 throughMarch 2007
FY 2006
April 2005 throughMarch 2006

Operating income

Net income

Amount%Amount%Amount%Amount%¥2,544,219

129.5¥271,065

335.1¥153,423

458.1¥28,815(49.9)¥1,108,665

32.5¥62,299-¥27,492-¥57,550-

Net income
per share－basic(yen)

Net income
per share－diluted(yen)¥27.31¥54.36

FY 2007
April 2006 throughMarch 2007
FY 2006
April 2005 throughMarch 2006

Note: Equity in earnings under the equity method, net:
Fiscal Year ended March 31, 2007:
Fiscal Year ended March 31, 2006:

2.

Ordinary income

Return on Equity(%)

Ordinary income /Total assets (%)

Operating income /Net sales (%)¥26.62

11.0

5.0

10.7

¥50.71

27.4

1.6

5.6

¥2,130million¥ 9,521million

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

Total assets

Net assets

Equity ratio (%)

Shareholders' equity
per share (yen)FY 2007
March 31, 2007

¥4,310,852¥716,237

6.6¥268.02

FY 2006
March 31, 2006

¥1,808,398¥347,263

13.4¥229.88

Note: Shareholders’equity (consolidated)
As of March 31, 2007:
As of March 31, 2006:¥282,949 million¥242,767 million

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

Investing activities

Financing activities

Cash and cash
equivalents
at the end of the period¥311,201¥(2,097,937)¥1,718,384¥377,520¥57,806¥27,852¥30,078¥446,694

Operating activities
FY 2007
April 2006 throughMarch 2007
FY 2006
April 2005 throughMarch 2006

1

4. Dividends

Total Amountof dividends(Annual)Dividends per share
Interim period（Recorded date）
ended September 30
FY 2006
FY 2007
FY 2008（Forecasted）

To be
determined

Fiscal year
ended March 31

Payout ratio（Consolidated）

Dividends onequity（Consolidated）

Total

(yen)

(yen)

(yen)

(millions of yen)

％

％

-

2.50
2.50

2.50
2.50

2,637
2,639

4.6
9.2

1.3
1.0

To be
determined

To bedetermined

To bedetermined

5. Earnings forecast for the fiscal year ending in March 2008 (April 1, 2007 – March 31, 2008)(Millions of yen; amounts less than one million yen are omitted.)

Net sales

Operating
IncomeOrdinary income

Net income

Six-month period ending
September 30, 2007

¥-

¥-

¥-

¥-

Fiscal year ending
March 31, 2008

¥-

¥-

¥-

¥-

Due to the introduction of unprecedented new sales and pricing methods in our main telecommunications business, especially in the mobile
communications business, forecasting the consolidated business results for the fiscal year ending March 2008 is difficult. A forecast of theconsolidated business results will therefore be announced as soon as a logical estimate can be made.

6. Significant Changes in Scope of Consolidation
Significant Consolidated subsidiaries:
Newly added:
1 (SOFTBANK MOBILE Corp.)
Excluded:
2 (SOFTBANK BB Corp., SOFTBANK TELECOM Corp.)
Note: Refer to “2. The SOFTBANK Group,” on the following page 20, for further information.
7. Accounting Policies
Changes in accounting principles, procedures, disclosure methods, etc., used in the presentation of the consolidated financial
statements(1) Changes due to revisions in accounting standards: Yes(2) Changes other than those in (1): None
Note: Refer to “4. Consolidated Financial Statements, Changes in accounting policies” on the following page 35.
8.

Number of shares issued (Common stock)
Number of shares issued at the fiscal year end:
FY2007 1,055,862,978 shares
FY2006 1,055,231,478 shares(including treasury stock)
Number of treasury stock at the fiscal year end:
FY2007
158,611 shares
FY2006
149,391shares
Note: For basic data for computation of the per share data, please refer to the following page 56.

2[For Reference]
FINANCIAL HIGHLIGHTS (Non-Consoidated)1.

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

Net sales2.

Net income (loss)

Amount%Amount%Amount%Amount%¥--¥(8,481)-¥(30,766)-¥(3,305)-¥--¥(7,841)-¥12,713-¥10,681-

FY 2007
April 2006 throughMarch 2007
FY 2006
April 2005 throughMarch 2006

FY 2007
April 2006 throughMarch 2007
FY 2006
April 2005 throughMarch 2006

Ordinary income(loss)

Operating loss

Net income(loss)
per share－basic(yen)

Net income
per share－diluted(yen)¥(3.13)¥-¥10.13¥10.06

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

Total assets

Net Assets

Equity ratio (%)

Shareholders' equity
per share (yen)FY 2007
March 31, 2007

¥1,347,019¥372,81027.4¥350.15

FY 2006
March 31, 2006

¥1,175,847¥374,432

31.6¥351.89

Note: Shareholders’equity (non-consolidated)
As of March 31, 2007:
As of March 31, 2006:¥369,660 million¥371,282 million

31. Results of Operations(1) Analysis of Results of Operations
1. Overview of Fiscal Year Results
With the April 2006 acquisition of Vodafone K.K. (currently SOFTBANK MOBILE Corp., hereafter“SOFTBANK MOBILE”), the SOFTBANK Group (hereafter “the Group”) achieved fully-fledged entry into themobile communications market. To achieve its targets of increasing subscriber numbers and expanding market
share, the Group focused its efforts on four key initiatives; 3G network enhancement, 3G handset lineup
enrichment, content enhancement, and enhancement of sales structure. Moreover, the Group introduced policies
enabling it to respond to the mobile number portability system, started in October 2006. These policies included
introducing installment sales methods and upgrading price plans.
As a result, the Group achieved a net increase in subscribers (new subscribers minus cancellations) of 698,600
in FY 2007. Also, the acquisition of Vodafone K.K. made a large contribution to increase Group earnings. In
the fiscal year 2007, the Group recorded the highest totals for net sales, operating income and ordinary income
since it was established. Net sales increased to ¥2,544,219 million, operating income to ¥271,065 million,
ordinary income to ¥153,423 million and net income to ¥ 28,815 million.

<Net sales>
Net sales increased by ¥1,435,553 million, or 129% on a year-on-year basis, to ¥2,544,219 million. In regard to
the April 2006 acquisition of Vodafone K.K., the company is included in the scope of consolidation from the end of
April 2006, and its financial results were consolidated from May 2006.

As a result, sales in the Mobile

Communications segment, which was newly established in fiscal 2007, amounted to ¥1,442,040 million. In theInternet Culture segment, sales increased by ¥38,092 million, or 24%, to ¥194,212 million, due to strong
advertising revenues and to favorable tenant fees and system usage fees at Yahoo! Auctions and Yahoo! Shopping.
In addition, the Broadband Infrastructure and the Fixed-line Telecommunications segments also recorded stableperformances.

<Operating income>Operating income was ¥271,065 million, an increase of ¥208,766 million, or 335% from the previous fiscal year.
The Mobile Communications segment, which was newly established in fiscal 2007, recorded operating income of¥155,743 million.

The Broadband Infrastructure segment recorded operating income of ¥26,809 million, an

improvement of ¥6,137 million, or 30%. In the Internet Culture segment, operating income rose ¥22,353 million,
or 30%, to ¥96,544 million. Following a reduction in costs accompanying a change in the marketing strategy for
the Otoku Line service of SOFTBANK TELECOM Corp. (hereafter “SOFTBANK TELECOM”), the Fixed-line
Telecommunications segment recorded an operating loss of ¥2,965 million, compared to an operating loss of¥25,158 million in the previous fiscal year.

<Ordinary income>Ordinary income was ¥153,423 million, an improvement of ¥125,931 million, or 485% from the previous fiscal

4year. While operating income grew strongly, interest expense rose ¥52,516 million, to ¥79,521 million, andfinancing related expenses totaled ¥28,715 million, primarily due to the bridge loan accompanying the acquisitionof Vodafone K.K. and its refinancing.

<Net income>Net income was ¥28,815 million, a reduction of ¥28,735 million, or 50% from the previous fiscal year. Special
income was ¥96,282 million, while special loss was ¥41,132 million.

Major items for special income included thegain on sale of all the shares held in SBI Holdings, Inc. (hereafter “SBI Holdings”), and the sale of a portion of theshares held in cyber communications inc., amounting to ¥84,106 million. The special loss was due primarily to aloss on bond redemption of ¥10,429 million following the repurchase and redemption of Euro-denominatedStraight Corporate Bonds due 2011 and to a trust debt assumption regarding straight bonds issued by SOFTBANKMOBILE. Other principal items included a special loss of ¥7,695 million for loss on disposal of fixed assets,¥5,351 million for valuation loss on investment securities, and ¥4,254 million for loss on sale of investment
securities.

Current income taxes were ¥48,726 million, deferred income taxes were ¥93,676 million, and minority

interest was ¥37,355 million.

2. Analysis of Fiscal Year Results by Business Segment<Mobile Communications>
Net sales in fiscal 2007 were ¥1,442,040 million, and operating income was ¥155,743 million. This segment,
which was newly established in fiscal 2007, is principally comprised of the results of SOFTBANK MOBILE
consolidated in May 2006.

(Quarterly trends of the Segment)
FY2006
2006/Q1 2006/Q2 2006/Q3(Millions of yen)

2006/Q4

Sales
Operatingincome2007/Q1

FY2007
2007/Q2
2007/Q3

2007/Q4

232,467

351,991

430,328

427,252

27,29329,341

56,90642,202

Newly established in FY 2007

[Number of Subscribers]
As of the end of March 2007, SOFTBANK MOBILE had a market share of 16.4% with a total of 15,908,500
subscribers, an increase of 698,600 subscribers from the end of the previous fiscal year.

The net increase (newsubscribers minus cancellations) was more than 100,000 in each of January, February, and March, for a total gain of
412,000 in the fourth quarter. The number of 3G subscribers reached 48.2% of the total number of subscribers,
increasing by 4,622,500 subscribers from the end of the previous fiscal year, to 7,660,100 subscribers. As of theend of April 2007, 3G subscribers accounted for more than 50% of the total number of subscribers.

[Churn Rate and Upgrade Rate]
The churn rate in the fiscal 2007 was 1.50%, a decline of 0.09 percentage points from 1.59% in the previous fiscal

5year. Due to the introduction of mobile number portability and other factors, there was a temporary increase in
the churn rate, but nonetheless the churn rate was down year on year. The upgrade rate increased to 2.61% in thefiscal 2007, an increase of 0.15 percentage points from the previous year, due to an increase in upgrades following
the enhancement of the 3G handset lineup.

[Average Acquisition Cost per User and ARPU]
SOFTBANK MOBILE introduced a new sales method for handsets in September 2006. Under the previous
method, customers received discounts on handsets based on the amount of their contracts, and rates were set at alevel that provided for recovery of sales incentives. Under this framework, the burden placed on customers who
kept a single handset for a long period of time was greater than that on customers who cancelled or upgraded in ashort period of time.

Under the new framework, customers who purchase a handset at the New Super Bonus sales

price will bear a portion of the previous sales incentive as a part of the handset price and payments are made ininstallments (lump-sum payment is also possible). On the other hand, the application of the New Super Bonus
special discount, in which a fixed amount is deducted from the monthly basic charge and call charge, reduces theactual burden borne by the customer.
Due to the introduction of this sales method, average acquisition cost per user, which was between¥40,000-¥50,000 per handset through the second quarter, has declined substantially from the third quarter, to¥20,000-¥30,000 per handset.
For customers who purchased handsets at the New Super Bonus price and subscribed to the New Super Bonus
discount, from January 16, 2007, to April 15, 2007, SOFTBANK MOBILE offered a special service with up to twomonths free of basic monthly charges and flat rate packet charges (“Unlimited Packet Use Discount”).

In the*1fourth quarter, ARPU was ¥5,210, a decline of ¥350 from the third quarter due to this free-of-charge period, New
Super Bonus discounts, and seasonal factors, such as fewer business days. On the other hand, the data ARPU was¥1,380 an increase of ¥50 from the third quarter, due primarily to an increase in the number of 3G subscribers.
SOFTBANK MOBILE is aware that the introduction of installment sales and special discounts, while reducing
customer acquisition and retention costs, will also reduce ARPU. However, SOFTBANK MOBILE believes thatthese practices will also result in longer handset usage periods and reduced churn rates. Furthermore, to increase
the percentage of 3G subscribers, we will work to provide appealing content and services, in order to increase data
ARPU.
SOFTBANK MOBILE is working to implement four key initiatives: 3G Network Enhancement, 3G Handset
Lineup Enrichment, Content Enhancement, and Enhancement of Sales Structure.
*1. ARPU: Average Revenue Per User

[3G Network Enhancement]
At the end of March 2007, the number of 3G base stations was 29,404, an increase of approximately 8,200 during
the fiscal year. Our current target for the number of installed 3G base stations is 46,000, and this target is
excepted to be reached in the first half of the fiscal year ending March 2008.

6

[3G Handset Lineup Enrichment]
In fiscal 2007, we launched 35 new handsets available in 159 colors (of which, 3G handsets accounted for 32
models available in 152 colors). This was a major expansion in comparison with the previous year, when welaunched 19 new models available in 49 colors (of which, 3G handsets accounted for 11 models available in 30
colors).

[Content Enhancement]
In October 2006, we commenced the provision of the new Yahoo! Keitai mobile internet portal site which links toYahoo! JAPAN with just a press of the Y! button, and in February 2007 we launched Yahoo! Kids portal site, which
provides content that can be enjoyed by elementary school students.

While continuing to strengthen our

relationship with Yahoo Japan Corporation, we will enhance our mobile content offerings through alliances with
content providers.

[Enhancement of Sales Structure]
To further strengthen our sales structure, we expanded our development of SoftBank shops. As a result, at the endof the fiscal year we had a total of 2,075 SoftBank shops nationwide, an increase of 217 from the end of theprevious fiscal year.
From October 2006, through introduction of new price plans, flat-rate services, and discount services thepricing structure was enhanced. Further, in January 2007 a simple plan, the “White Plan”, was introduced. The
monthly basic charge is ¥980 (including tax), domestic voice calls between SoftBank users are free between
1:00am and 9:00pm, and other calls are charged at a flat rate of ¥21 per 30 seconds (including tax). Moreover, forheavy users, in March the White Plan exclusive discount service under the name “Double White!” was introduced.
With an additional monthly basic charge of ¥980 (including tax), it offers domestic calls at half price, ¥10.5 per 30
seconds (including tax). At the end of fiscal 2007, the number of White Plan applications had surpassed 3 million,
becoming a driving force behind higher subscriber numbers.

<Broadband Infrastructure>
Net sales decreased by ¥4,224 million, or 2% from the previous fiscal year, to ¥264,227 million.

Operatingincome was ¥26,809 million, an increase of ¥6,137 million or 30%, year on year.

(Quarterly trends of the Segment)
FY2006(Millions of yen)

FY2007

2006/Q1

2006/Q2

2006/Q3

2006/Q4

2007/Q1

2007/Q2

2007/Q3

2007/Q4

Sales

61,20564,43971,543

71,262

63,32265,72867,266

67,910Operatingincome(loss)(4,494)

3,483

9,361

12,321

5,479

6,189

7,747

7,393

[ADSL]The number of Yahoo! BB ADSL lines installed continued to increase steadily, reaching a total of 5.16 million at the7end of March 2007, an increase of 120,000 from the end of the previous fiscal year.
For subscriber acquisition, SOFTBANK BB Corp.’s (hereafter “SOFTBANK BB”) efforts remain centered on
mass electronics retailers. In the future, SOFTBANK BB will strive to take advantage of synergies, such as
cross-selling Yahoo! BB ADSL services to SOFTBANK MOBILE’s users, and to increase profitability throughgreater efficiency.

[FTTH]
Concerning FTTH connection service, SOFTBANK BB is maintaining a state of readiness that will enable it tostart full-fledged operations as soon as a fair competitive environment is established. Until that point is reached,
however, our basic policy is to develop operations in line with anticipated revenues. The profitability of the
FTTH business is improving. We will continue to implement R&D in technologies to succeed ADSL, such as trial
services aimed at the commercialization of FTTR*2 and R&D in high-speed PLC*3.
*2. Fiber To The Remote terminal: From NTT central offices to equipment located near the user's premises, transmission is handled overfiberoptic 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 that used with ADSL.
*3. Power Line Communications: Technology for using power lines in housing and commercial buildings for communicationstransmission.

[Impact of Sale of Modem Rental Business]
Modem rental income is declining because BB TECHNOLOGY Corp. (currently SOFTBANK BB) sold its modem
rental business in December 2005.

In comparison with the previous fiscal year, modem rental revenues declined,

but, under the terms of a service agreement with BB Modem Rental Yugen Kaisha (hereafter “BB Modem Rental”)
servicing fees, incentives, and royalties are being received. In the fiscal 2007, net sales declined from theprevious fiscal year due to a decrease in incentives payments from BB Modem Rental.

However the ADSL

business continues to record strong results, and the Broadband Infrastructure segment recorded higher profits
overall.

<Fixed-line Telecommunications>
Net sales increased by ¥19,896 million, or 6%, to ¥374,129 million.

Operating loss was ¥2,965 million, compared

to an operating loss of ¥25,158 million in the previous fiscal year.

(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
2006/Q3(Millions of yen)

2006/Q4

2007/Q1

FY2007
2007/Q2
2007/Q3

2007/Q4

Sales

88,604

83,30090,256

92,071

88,673

93,276

93,712

98,466

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

2,928

1,212

(916)

(2,603)(656)

SOFTBANK TELECOM positioned the Otoku Line direct connection voice service as its core voice service andcontinued to focus on marketing the service directly to corporate customers.

The number of lines installed

reached 1.22 million as of the end of fiscal 2007, an increase of 380 thousand from the end of the previous fiscal
year.

8

In the second half of the previous fiscal year, agency management and other responsibilities related to thisbusiness were transferred to JAPAN TELECOM INVOICE Co., Ltd. As a result, the profitability of the Otoku
Line business has been improving.
The future will see greater specialization in operations for corporate clients, centered upon the Otoku Line anddata services for corporate customers, and mobile solutions utilizing SOFTBANK MOBILE services.

In

conjunction with these efforts, SOFTBANK TELECOM will seek to increase management efficiency and reduce
costs by pursuing synergies for its three telecommunication companies in the Group.

<Internet Culture>
Compared to the previous fiscal year, in fiscal 2007 net sales increased by ¥38,092 million, or 24%, to ¥194,212
million, and operating income increased by ¥22,353 million, or 30%, to ¥96,544 million.

(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
2006/Q3(Millions of yen)

2006/Q4

2007/Q1

FY2007
2007/Q2
2007/Q3

2007/Q4

Sales

34,63536,89642,21442,37444,642

46,67650,04952,842

Operatingincome16,46917,167

19,256

21,297

21,63022,71225,011

27,189Yahoo Japan Corporation recorded improved sales in Internet advertising due to the provision of advertisingproducts that meet the needs of advertisers, such as mega-banners and targeted advertisements that utilize advanced
Flash techniques. In addition, sponsor sites contributed to its strong sales performance. In non-advertisingbusiness services, efforts were made to increase the number of stores registered in Yahoo! Auctions and Yahoo!
Shopping. As a result, the number of stores registered at the end of fiscal 2007 increased to 27,044. In consumer
services the number of first-time bidders on Yahoo! Auctions increased substantially.

This increase was the resultof a campaign started during the third quarter of fiscal 2007 that enabled anyone with a Yahoo! Japan customer ID
to place bids.

Moreover, revenues from system commission fees recorded strong gains, primarily due to anincrease in commission charges for the Yahoo! Auctions bidding system.

<e-Commerce>
Compared to the previous fiscal year, in fiscal 2007 net sales decreased by ¥11,704 million, or 4%, to ¥271,570
million, while operating income rose ¥1,820 million, or 37%, to ¥6,680 million.
From fiscal 2007 on, SOFTBANK BB applied “Practical solution on accounting for revenue recognition ofsoftware” (Financial Accounting Standards Implementation Guideline No.17 issued on March 30, 2006).

As aresult, SOFTBANK BB is required to present certain transactions as net sales from this fiscal year, net sales ofcertain software transactions were recorded at ¥1,244 million, which would have been the amount of gross profit if
the previous accounting standard had been applied. Due to the netting with the amounts for goods purchased, net
sales and cost of goods sold each decreased by ¥34,160 million.

9

(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
2006/Q3
Sales(Millions of yen)

2006/Q4

2007/Q1

FY2007
2007/Q2
2007/Q3

2007/Q3

60,46967,68871,456

83,66159,14265,03765,36982,021

726

817

1,473

1,843

1,461

1,399

2,010

1,809

OperatingincomeIn SOFTBANK BB’s distribution business, the sales structure for corporate customers was reinforced, and as aresult, shipments of hardware, such as PC servers and peripherals, increased. Growth in sales of software to home
appliance mass retailers was primarily driven by security related products. In addition, wholesale business to
e-commerce companies was also strong.
A shift of strategy in the distribution business towards the e-commerce and service businesses was
implemented from fiscal 2007. As one facet of that initiative, BB Softservice Corp. was established in April 2006,
through the corporate separation of SOFTBANK BB’s consumer SaaS*4 department and made a full-scale
operational start, and its performance has been strong.
to corporate customers.

SOFTBANK MOBILE’s handsets have also been offered

In the future, by leveraging synergies among the Group companies, services offered tocorporate customers will be strengthened and extended further.
*4. Software as a Service: A service that consists out of renting application software etc. to customers through the Internet.

<Others>
The results of this segment include the performance of Broadcast media 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).

3. Forecasts for the Next Fiscal YearIn the Group's core telecommunications business, especially the mobile communications business, the Group has
introduced the installment sales method for mobile handsets and has introduced a range of price plans and discountservices etc. to meet diverse customer needs.

These include sales and pricing methods that have no precedent in

the industry and it is difficult to estimate customer trends for them. At this point, we cannot make sound estimates,
and it is difficult to make performance forecasts.
To proactively provide enhanced information disclosure to shareholders and investors, consolidated
performance forecasts will be announced at the point when rational estimates are possible.

10(2) Financial Position

1. Assets, Liabilities, and Net Assets(Influence of the Vodafone K.K. acquisition on the balance sheet)
In SOFTBANK CORP’s (hereafter “the Company”) consolidated balance sheet at the end of the fiscal year, the
new consolidation of Vodafone K.K. (currently SOFTBANK MOBILE Corp.) from the end of April 2006 had theeffect of increasing current assets by ¥677,817 million, non-current assets by ¥2,000,516 million (including
goodwill of ¥981,410 million), current liabilities by ¥480,452 million, and long-term liabilities by ¥1,562,942
million. The issuance of BB Mobile Corp. (hereafter “BB Mobile”) preferred stock allocated to Vodafone
International Holdings B.V. raised minority interests by ¥300,000 million.
Furthermore, in accordance with “practical guidance regarding consolidating procedures on consolidated
financial statements (Accounting System Committee report No.7, revised on March 29, 2007), Goodwill was
retroactively reduced by ¥100,539 million along with the situation where SOFTBANK MOBILE revaluated thecollectibility of deferred tax assets and reversed all of the valuation allowance on loss carryforward in this fiscal
year.
Long-term liabilities include ¥1,355,091 million financed through whole business securitization and ¥84,596
million financed through subordinated loan from Vodafone Overseas Finance Ltd. (*). The Group plans to repay
the liabilities as scheduled by striving to improve profitability in the future.
* Name of lender changed from Vodafone International Holdings B.V., as of December 1, 2006.

<Assets>
Current assets increased by ¥502,303 million from the end of the previous fiscal year, to ¥1,247,433 million.
Principally as a result of the new consolidation of SOFTBANK MOBILE, the Group recorded increases of¥395,051 million in notes and accounts receivable-trade, ¥94,887 million in short-term deferred tax assets, and¥26,300 million in inventories, such as mobile phone handsets. In addition, other current assets increased by¥71,000 million due to increases in receivables and prepaid expenses. On the other hand, cash and deposits
declined by ¥68,640 million.
In the fiscal year 2007, notes and accounts receivable increased as a result of higher receivables from
customers, due to full-fledged sales of handsets under the installment sales method from the third quarter of fiscal
2007 on, and higher receivables from sales agents due to a larger number of handsets sold.
Property and equipment, net increased by ¥611,246 million, to ¥1,029,852 million.

Primarily as a result of

the new consolidation of SOFTBANK MOBILE, the Group recorded increases of ¥499,814 million intelecommunications equipment, such as base stations and switching equipment, and ¥32,140 million in buildings
and structures, such as network centers. In addition, construction-in-progress increased by ¥43,901 million.
Intangible assets increased by ¥1,177,424 million, to ¥1,279,710 million. Primarily as a result of the newconsolidation of SOFTBANK MOBILE, goodwill increased by ¥987,348 million and software increased by¥166,943 million.
Investments and other assets increased by ¥208,294 million, to ¥749,677 million.

11

Primarily as a result of thenew consolidation of SOFTBANK MOBILE, long-term deferred tax assets increased ¥132,744 million and otherassets including long-term prepaid expenses rose ¥52,636 million.

<Liabilities>
Current liabilities increased by ¥556,000 million, to ¥1,142,903 million. Principally due to the new consolidationof SOFTBANK MOBILE, accounts payable-other and accrued expenses rose ¥301,438 million, and accounts
payable-trade rose ¥134,734 million.

In addition, cash receipts as collateral rose ¥50,000 million. The Group

does not utilize notes payable to settle accounts.
Long-term liabilities increased by ¥1,577,480 million, to ¥2,451,712 million. Due primarily to the financing
used in the acquisition of Vodafone K.K., long-term debt rose ¥1,519,812 million.

In addition, as a part of the

new capital equipment used by SOFTBANK MOBILE is leased, lease obligations of ¥74,964 million wererecorded.

Accompanying the new consolidation of SOFTBANK MOBILE, an allowance for point mileage of¥43,787 million was also recorded.

<Net Assets>
Net assets increased by ¥368,973 million, to ¥716,237 million.

Accumulated deficit decreaseｄ by ¥26,289

million due to the recording of net income. In addition, minority interest in consolidated subsidiaries rose
¥328,760 million, primarily due to the issuance of BB Mobile preferred stock allocated to Vodafone International
Holdings B.V.

2. Cash Flow
During the fiscal 2007, net cash provided by operating and financing activities was ¥311,201 million and¥1,718,384 million, respectively, while net cash used in investing activities was ¥2,097,937 million. As a result,cash and cash equivalents at the end of the fiscal year amounted to ¥377,520 million, a decrease of ¥69,173 million
from the end of the previous fiscal year.

<Cash Flows from Operating Activities>
Net cash provided by operating activities was ¥311,201 million. Income before income taxes and minority
interest amounted to ¥208,573 million.

Non-cash items included depreciation and amortization, excluding

amortization of goodwill totaling ¥189,092 million and amortization of goodwill amounting to ¥53,595 million.
Adjustments included the subtraction of gain on sales of marketable and investment securities, net, of ¥79,885
million, which is included in income before income taxes and minority interest and the addition of interest expenseof ¥79,521 million. In addition, increase in receivables was ¥225,489 million and increase in payables was¥91,184 million. Interest paid was ¥62,081 million, and income taxes paid, for Yahoo Japan Corporation andothers, was ¥45,964 million.

<Cash Flows from Investing Activities>
Net cash used in investing activities was ¥2,097,937 million.

This principally reflected the payment of¥1,844,849 million for acquisition of interests in subsidiaries newly consolidated related to the acquisition of

12

Vodafone K.K. The purchase of property and equipment and intangibles totaled ¥297,764 million as a result ofcapital investment mainly in the telecommunications business.

In addition, purchase of marketable andinvestment securities was ¥114,022 million, while proceeds from sales of marketable and investment securities, due
primarily to the sale of all of the shares held in SBI Holdings and the sale of a portion of the shares held in cybercommunications inc. was ¥168,354 million.

<Cash Flows from Financing Activities>
Net cash provided by financing activities was ¥1,718,384 million.

Proceeds from long-term debt were ¥1,586,970

million, principally on account of funds raised for the acquisition of Vodafone K.K. Due primarily to the issuanceof BB Mobile preferred stock that was allocated to Vodafone International Holdings B.V., proceeds from issuanceof shares to minority shareholders were ¥300,378 million. In addition, proceeds from issuance of bonds were¥72,558 million, redemption of bonds was ¥205,334 million, repayment of long-term debt was ¥98,151 million,
and proceeds from lease financing of equipment newly acquired were ¥65,818 million.

<Trends in Cash Flow Related Indicators>
A summary of trends in cash flow related indicators is presented below.

FY 2005

FY 2006

FY 2007

Equity ratio

10.4%

13.4%

6.6%

Equity ratio (Market cap.)

91.1%

201.3%

74.2%

Debt repayment period－

15.6 years

7.6 years

Interest coverage ratio

－

2.1

3.9

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 inflows
Interest coverage ratio: Net operating cash inflows divided by interest expenses
2. Market capitalization is calculated by multiplying the closing stock price by the number of shares outstanding,
net of treasury stock, at the end of the fiscal year.
3. Interest-bearing debt is the sum of all liabilities on the consolidated balance sheet on which interest is paid.
4. Net operating cash inflows and interest expenses are the corresponding figures shown on the consolidated
statements of cash flows.
5. Negative figures are indicated by “－”.

13

<Reference>
A summary of cash flow related indicators excluding the Mobile Communications Segment is presented below.
FY 2007
Debt repayment period

9.9 years

Interest coverage ratio

3.1(3) Basic Policies for Profit Distribution, and Dividends for fiscal 2007 and 2008
The Company strives to increase returns to shareholders by augmenting enterprise value.

Our basic policy is to return

our profits to all our stakeholder groups in a fair way.
The company’s policy regarding dividends is to set dividend payments while taking into consideration the need tomaintain the proper balance between bolstering the operating base and preserving a stable dividend from a medium-to
long-term perspective. The proposed dividend for fiscal 2007 is the same as last fiscal year at ¥2.5 per share.

The

dividend from the current fiscal year onwards is undecided at this time.

(4) Risk Factors
The following is a list of some significant risk factors that have the potential to affect the operating results, financial
position, stock price, and other aspects of the Group’s operations.
could have a significant effect on the Group’s business.

Furthermore, factors other than those listed below

The following business risks are those apparent to theCompany at present and are not intended to be all-inclusive.

1. Risks Related to Economic Conditions and Market Trends
The Group is active in a broad range of markets, including mobile communications, broadband-services-related,
fixed-line telecommunications, IT-related distribution, and other markets.

Demand for services and products

supplied by the Group is dependent on economic conditions, trends in these markets, and other factors.
In particular, deregulation of the telecommunications industry has facilitated easier market entry, resulting in
extremely tough competition in Japan’s broadband-communications, fixed-line telecommunications, and mobile
communications markets. As a result, broadband service usage fees in Japan are the lowest in the world, andcompetition is intensifying in the fixed-line telecommunications and mobile communications markets. Therefore,
it is possible that price competition will continue in each of these markets. Some of the Group’s competitors boast
capital strength, price competitiveness, customer bases, and brand recognition that exceed those of the Group. As
a result of these factors, the Group’s competitiveness could decline.

<Mobile Communications>
In conjunction with the introduction of mobile number portability carriers improved their products, and services
and competition among carriers intensified. In addition, new market entrants are expected to change the market
environment. As a result, if new customer acquisition and retention do not proceed as planned, ARPU declines, or
customer acquisition and retention costs etc. increase, profits could be substantially affected.
Moreover, it is possible that the new price plans and discount services, and flat-rate services introduced by

14

SOFTBANK MOBILE starting in 2006 could lead to declines in ARPU, with an adverse effect on profitability.

In

addition, if the growth in the number of customers exceeds the Group’s plans, capital investment for the purpose ofbolstering communications networks could increase, with a temporary adverse affect on cash flow and profitability.

<Broadband Infrastructure>
If the market penetration of broadband services offered by other companies, such as FTTH access service, exceeds
the Group’s projections and the churn rate of the ADSL access service increases, or if Japan’s broadband market
penetration approaches saturation, the growth in this business could be severely restricted. Also, if market trends
lead to higher customer acquisition costs or lower ARPU, profitability could be adversely affected.

<Fixed Line Telecommunications>
Accompanying the spread of mobile phones, IP phones, and other services, the scale of the fixed-line consumer
market has been shrinking each year. On the other hand, in the corporate market competition is intensifying. As
a result, the profitability of the fixed-line services offered by SOFTBANK TELECOM could be adversely affected.

<e-Commerce>
Wholesale sales of security-related software and PC peripheral equipment to corporate clients and mass retailers
remain favorable, but if the Group is not able to respond to changes in the market environment, such as changes in
the methods of distribution for products handled by the Group companies or rapid shifts in consumer preferences,
this business could be adversely affected.

<Internet Culture Business>
The Internet advertising business conducted by Yahoo Japan Corporation and other companies is extremely
sensitive to economic trends, particularly during sluggish economic conditions, when the tendency in all industries
is to put a high priority on controlling advertising spending. Furthermore, as the Internet advertising business has
a short history, it is also easily affected by overseas markets that are ahead of Japan in this field, such as the UnitedStates.

2. Risks Related to Technological Innovation
In the telecommunications and IT industries in which the Group is developing business, technologies and standards
are changing rapidly on an industry-wide scale, including the fields of telecommunications networks andtelecommunications systems technologies. The Group must respond flexibly to these changes.
However, if the Group is unable to respond appropriately for any reason, it is possible that the services offeredby the Group in the telecommunications and IT industries could become obsolete or lose competitiveness,accompanied by a loss of the Group’s competitive advantage in these industries. Furthermore, even if the Groupis able to respond to such changes, it is possible that the cost of improving existing equipment or the cost of new
equipment introductions will increase. These trends and the Group’s response to them could affect the Group’s
results.

15

3. Risks Related to Reliance on the Management Resources of Other Companies
In developing its mobile telecommunications, broadband infrastructure, and fixed-line telecommunications
operations, the Group uses telecommunications facilities owned by NIPPON TELEGRAPH AND TELEPHONE
EAST CORPORATION and NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION (hereafter“NTT East-West”). In building its network, the Group uses telecommunications facilities including dark fiber anddry copper owned by NTT East-West and installs telecommunications equipment at NTT East-West central offices.
Under the Telecommunications Business Law, NTT East-West is required to provide access to their dark fiber anddry copper, which are classified as designated telecommunications facilities.

Therefore, at this point, the Group

believes that the possibility of its operational development being hindered is low, but in the future, for any reason, if
the continued use of these network facilities becomes difficult, or if usage fees are increased, there could be an
adverse influence on the Group’s performance.
In addition, the Broadband Infrastructure segment’s primary service, Yahoo! BB, and the Mobile
Communications segment’s Yahoo! Keitai portal site employ the Yahoo! brand of Yahoo! Inc. Currently, theGroup has a good relationship with Yahoo! Inc., but if there is a significant change in this relationship in the future,
it is possible that the Group will not be able to develop its business as forecast.

4. Risks Related to Foreign Exchange, Financial, and Stock Markets
The value of investment securities in the Group’s possession depends on economic conditions and trends in stockand foreign exchange markets in Japan and overseas, and imports of telecommunications equipment are influenced
by trends in the foreign exchange market.
As of March 31, 2007, consolidated interest-bearing debt totaled ¥2,394,403 million, and interest expense in
fiscal 2007 was ¥79,521 million.
The Group has a substantial amount of interest-bearing debt and holds large amounts of assets and liabilities
denominated in foreign currencies.
significant risks.

The Group considers interest rate and foreign exchange rate risks to be

The Group strives to minimize the risks it faces, utilizing long-term fixed rates and other means

to minimize interest rate risks and currency hedges on major assets and liabilities denominated in foreign currencies.
However, depending on market trends, it might not be possible to completely avoid these risks.
Stocks of Internet-related companies in Japan, the United States, and other countries constitute the majority of
the Group’s investments. Investing activities are a source of cash flows for the Group. Fluctuations in the stock
prices of these companies could be extreme, and a decline in the value of these assets could have a significant effecton the Group’s ability to raise funds for its operations.
As of March 31, 2007, the unrealized gain on other marketable securities, net of tax totaled ¥122,619 million.
In addition, the Group’s equity in publicly traded consolidated subsidiaries and affiliates accounted for under theequity-method amounted to ¥1,065,858 million at market value.

The consolidated book value of these securitieswas ¥96,385 million and the unrealized gain (the difference between the market value of the portion held by theGroup and the consolidated book value) was ¥969,473 million.

5. Risks Related to Operational Expansion Based on Investments Accompanying M&A Activities and Business16

Alliances
In the event of an acquisition or business alliance, the Group works to understand risks by conducting due diligence
regarding such matters as the financial position of the other company.
obligations will arise after an acquisition.

However, there is a risk that unanticipatedFurthermore, due to changes in the business environment orcompetitive conditions, it is also possible that the implementation of initial operating plans will be hindered.
Moreover, there is also a risk that the Group will not be able to realize the synergies with the other company that
had been initially anticipated due to such factors as a loss of customers or important employees, and therefore will
not adequately recover investments that have already been made. As a result, the Group might not be able todevelop its operations as expected.

6. Risks Related to Rules and Regulations<Rules and regulations related to telecommunications operations>
A number of laws and regulations—including the Telecommunications Business Law and the Radio Law—apply to
the Group’s telecommunications operations.

In the event of changes in these laws and regulations or the

implementation of new laws and regulations in the future, the Group might not be able to develop its business as
expected. Furthermore, the Ministry of Internal Affairs and Communications has set up the Mobile BusinessResearch Group and various study groups to consider mobile communications business models, such as so-called
SIM lock*1, the appropriateness of sales incentives, and the development of MVNO*2. Policies based on thesereports could have an adverse influence on the development of the Group’s communications operations in the
future.
*1. Limitation of the use of mobile handsets through IC chip cards (SIM cards) that contain information such as other operator’s mobile phone
numbers.
*2. Mobile Virtual Network Operator: An operator that leases a mobile communications network from another company and provides
communication services.

<Rules and regulations related to intellectual property>
The Group strives to ensure that the video content handled in the Group’s video distribution operations, including
Yahoo! Streaming, and BBTV, does not infringe on any rights or interests, including the intellectual property rights
of holders of various intellectual property rights. However, it is possible that the Group’s actions will infringe
upon various rights and interests, including the intellectual property rights of intellectual property rights holders,
and that the Group will be subject to demands that it stop using video content or that it pay compensatory damages.
With regard to intellectual property, a number of companies are aggressively promoting the development ofInternet technologies and business models that include broadband technology, and as a result there is the possibility
that the Group might be sued by a third party for compensatory damages for patent infringement and that, in the
future, the Group’s business activities may be restricted in regard to the provision of content and/or the use oftechnologies.
In addition, if laws and regulations regarding intellectual property, such as the Copyright Law, are revised, theGroup might not be able to develop its operations as expected.

<Rules and regulations related to the protection of personal information>17

In regard to the management of personal information, the Group has implemented measures to prevent leaks of
personal information by significantly strengthening its customer information management system, establishinghandling methods for personal information that it acquires and retains, and restricting access to databases that
contain personal information, etc. In particular, telecommunications carriers of the Group are handling personal
information appropriately in accordance with the “Guidelines on the Protection of Personal Data in
Telecommunications Business” (MIC Notice No. 695 of August 31, 2004).

Nonetheless, despite theaforementioned policies being implemented by the Group, it is possible that the Group will not be able tocompletely prevent leaks of personal information. As a result, trust in the Group could decline and the Group’s
operations could be adversely affected.

7. Risks Related to Compliance
The Group’s operations extend across a wide span of fields, and the Group must observe a range of laws andregulations, including not only the Telecommunications Business Law and the Radio Law in the Group’s
telecommunications operations but also the Private Information Protection Law, the Act for the Prevention of Illegal
Mobile Phone Use, the Financial Products Transaction Law, the Antimonopoly Law, and the Act Against
Unjustifiable Premiums and Misleading Representations. The Group continues to take steps to further enhance its
compliance system, such as the formulation of the SOFTBANK Group Code of Conduct for Officers andEmployees.

However, despite these measures, it is possible that compliance related risks cannot be completely

avoided, and in the event that laws or regulations are infringed, the Group’s results could be adversely affected.

8. Risks Related to Impairment of Fixed Assets
As a result of such factors as a decline in asset profitability, it is possible that the Group will not be able to recoverits investment in fixed assets, leading to the recognition of an impairment loss as stipulated in the “AccountingStandards for Impairment of Fixed Assets”. In that event, the Group’s results and financial position could be
affected.

9. Risks Related to System Failure
To provide comprehensive telecommunications services, the Group has created networks for mobile, fixed-line,
ADSL, FTTH access and other modes of telecommunication.

To prevent system disruptions on thesecommunications networks and provide stable services, the Group pays maximum attention to continuity throughinternal control activities, but there is a possibility of disruption due to human error. In addition, it is also possiblethat major natural and other disasters (such as typhoons, earthquakes, and terrorism) could result in disruption ofservices.

In such an event, the Group’s ability to provide continuing telecommunication services may besignificantly affected and considerable time might be required to restore these services.

As a result, suchcircumstances could have an adverse impact on the performance of the Group.

10. Risks Related to Debt Covenants
The Group’s interest-bearing debt includes debt covenants, and the Group is in compliance with those covenants.
The major debt covenants are described in section 4. Consolidated Financial Statements, Notes to Consolidated

18

Financial Statements, (Consolidated Balance Sheet) 12. Debt Covenants.
The ¥1,366 billion loan raised through SOFTBANK MOBILE’s whole business securitization, as described in
Notes to Consolidated Financial Statements, (Consolidated Balance Sheet) 12. Debt Covenants(5), entails certain
financial and operating performance standards. In accordance with the loan agreement, if SOFTBANK MOBILE
fails to meet these standards, limits will be placed on capital expenditures and prior approval from the lenders will
be necessary for new service development, and there could be an influence on the Group’s operational development.
Furthermore, in the event that Softbank Mobile cannot meet these standards on a cumulative basis, the lenders canappoint a majority of the board of directors and might exercise their collateral rights for assets provided ascollateral, including shares of SOFTBANK MOBILE.
Moreover, in the event that the Group fails to meet debt covenants other than those outlined above, the related
interest-bearing debt may become due immediately and the Group’s cash flows might be adversely affected. In
addition, accompanying a change in interest-bearing debt covenants, profitability could be adversely affected.

11. Risks Related to Unforeseen Situations Concerning Management
The Company’s existing and new businesses are planned and promoted by the Group’s officers and employees.
Unforeseen situations concerning top management— especially the President and Chief Executive Officer
Masayoshi Son—could create an obstacle to smooth operational progress and influence the Group’s operations.

19

2. The SOFTBANK GroupAs of March 31, 2007, the SOFTBANK Group is comprised of the following ten business segments. The number ofconsolidated subsidiaries and equity-method affiliates in each business segment is as follows.
Business segments

Consolidated
subsidiaries

Equity-method
non-consolidated
subsidiaries andaffiliates

Principal products and operational content of each business

1.

MobileCommunications(Note 1)

5

1

Mobile communication services, and sale of cellular phones accompanying its
services2.

Broadband
Infrastructure(Note 2)

6

2

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

3.

Fixed-line
Telecommunications(Note 2)

5-

Fixed-line telecommunications such as voice transmission service, datatransmission service, private leased circuit and data center service

4. Internet Culture(Note 2)

17

16

Internet-based advertising operations, broadband portal business, andInternet-based auction business

5. e-Commerce(Note 2)

7

3

Distribution 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)

Broadmedia

9

1

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

Technology Services

1-

System solution business and business solution businessMedia & Marketing3-Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc., and development of web content specializing in IT

Overseas Funds

42

35

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

Others23

8

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

118

66

6 Others:

Total
Notes
1.
2.

3.

Mobile Communications segment was established from this fiscal year due to the consolidation of SOFTBANKMOBILE Corp. and its consolidated subsidiaries.
SOFTBANK BB Corp., SOFTBANK TELECOM Corp. and Yahoo Japan Corporation are included in the
consolidated subsidiaries of the Broadband Infrastructure, Fixed-line Telecommunications and Internet Culture
segments, respectively, while SOFTBANK BB Corp., SOFTBANK TELECOM Corp. and Yahoo Japan
Corporation operate multiple businesses and their operating results are allocated to multiple business segments.
Due to the consolidation of SOFTBANK MOBILE Corp. and its subsidiaries from this fiscal year, certain
subsidiaries were not consolidated as the individual and aggregate amounts were not considered material in
relation to the consolidated total assets, net sales, net income and retained earnings (accumulated deficit) of the
SOFTBANK consolidated financial statements.

20

The diagram of major subsidiaries and affiliates in the business segments are as follows;

Mobile Communications
Mobile Communications
Broadband Infrastructure
Broadband Infrastructure

SOFTBANK MOBILE Corp.

SOFTBANK BB Corp.

BB Mobile Corp.

Fixed-line
Fixed-line
Telecommunications
Telecommunications

Internet Culture
Internet Culture

SOFTBANK TELECOM Corp.

Yahoo Japan Corporation
SOFTBANK IDC Corp.

All About, Inc.

e-Commercee-Commerce

YUME NO MACHI SOUZOU IINKAI CO., LTD
CREO CO., LTD.

SOFTBANKSOFTBANKCORP.
CORP.
(Pure
(PureHolding
HoldingCompany)
Company)

SOFTBANK BB Corp.
Vector Inc.

ValueCommerce Co., Ltd.
Alibaba.com Corporation

Carview Corporation

Media & Marketing (Note)
Media & Marketing (Note)

GungHo Online Entertainment Inc.

SOFTBANK Creative Corp.

Broadmedia (Note)
Broadmedia (Note)

ITmedia Inc.

Club iT Corporation

Overseas Funds (Note)
Overseas Funds (Note)

Technology Services (Note)
Technology Services (Note)
SOFTBANKTECHNOLOGY CORP.

SOFTBANK Holdings Inc.

Others (Note)
Others (Note)
Fukuoka Softbank Hawks Marketing Corp.
TV Bank Corporation

・・・・

Segment

・・・・

Consolidated subsidiary

・・・・

Equity-method affiliates

Note: 1. BB TECHNOLOGY Corp. and SOFTBANK BB Corp. resolved a merger on March 31, 2007. The merger was
executed by absorption; BB TECNOLOGY Corp. is the surviving company and changed its corporate name to
SOFTABNK BB Corp. after the merger.
2. Broadmedia, Technology Services, Media & Marketing, Overseas Funds, and other segments are included in“Others” segment.

SOFTBANK subsidiaries listed on domestic stock exchanges as of March 31, 2007:
Subsidiary

Listed exchangeTokyo Stock Exchange 1st section

1.Yahoo Japan Corporation

Jasdaq Securities Exchange
2.SOFTBANK TECHNOLOGY CORP.

Tokyo Stock Exchange 1st section

3.Vector Inc.

Hercules4.Club iT Corporation

HerculesNote:

ITmedia Inc. listed its shares on the Mothers on April 19, 2007.

21

3. Management Policies(1) Fundamental Management Policies
Since their establishment, the Company and 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
and knowledge gained through the IT revolution.” The Group is working to facilitate the realization of a true
ubiquitous society, where broadband will enable anyone to access all kinds of information at any time and anywhere.
As a corporate group based on Internet-related businesses, the Group will not limit itself to its existing role as acomprehensive telecommunications carrier.

Rather, by providing both information infrastructure and content as acomprehensive digital information company, the Group aims to make people’s lifestyles and business styles more
affluent and enjoyable and to be the global No. 1 corporate group in the broadband era.

(2) Target Management Indices
The Group places great importance on results and rates of change in the principal management indices—net sales,
operating income, ordinary income, net income, cash flows, and EBITDA* -for each of our internal management
segments.

The Group also attaches great importance to indices that track user trends, particularly intelecommunications businesses, such as the number of subscribers, market share, churn rate, and ARPU.
* EBITDA: Operating income/loss + depreciation and loss from disposal of fixed assets (which are included in operating expenses)(3) Medium-and-Long-Term Strategies
As a comprehensive digital information company in the ubiquitous society, the Group aims to integrate fixed-line andmobile communication broadband services 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 of Group revenues

and enterprise value through the establishment of unique business models for the broadband 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.

(4) Important Management Issues for the Company
1. Mobile communications initiatives
In the mobile communications business, since the acquisition of Vodafone K.K. (currently SOFTBANK MOBILE)
in April 2006, the Group has worked to implement four key initiatives -3G network enhancement, 3G handset
lineup enrichment, content enhancement, and enhancement of sales structure. In the future, the Group willcontinue to work on the implementation of these initiatives.

2. Broadband infrastructure initiatives
The Group’s Yahoo! BB ADSL service has a customer base exceeding 5 million lines, and the service has received
broad support from customers in such areas as cost and speed. In the future, the Group will continue working toacquire new customers for this service and will continue its R&D activities targeting the commercialization of newtechnologies that will succeed ADSL, such as FTTR access trial services and high-speed PLC services etc.

22

On the other hand, a fair competitive environment has not been established in the FTTH access service market
in Japan, not only in costs but also in such areas as procedural requirements. In this setting, the Group ismaintaining a system that will enable it to start full-fledged operations once a fair competitive environment isestablished. For the near future, our basic policy is to develop operations in line with anticipated revenues.

3. Fixed-line telecommunications initiatives
In fixed-line telecommunications operations, the scale of the consumer market continues to shrink due to thepenetration of mobile phones and IP phone services, but demand remains firm in the corporate market.

In such anenvironment, SOFTBANK TELECOM continues to directly market fixed-line services to corporations, with anemphasis on the Otoku Line direct connection voice service.
In addition, SOFTBANK TELECOM has been developing and providing mobile solutions for corporate
customers utilizing the services of SOFTBANK MOBILE, and will work aggressively to provide data services tocorporate customers.

With continuous cost reduction through the effective use of the Group’s management

resources, SOFTBANK TELECOM will work to enhance its profitability.

4. Pursue synergies among Group companies
SOFTBANK MOBILE, which joined the Group from the fiscal year ending March 2007, will work to bolster its
relationships with Yahoo Japan Corporation. At the same time, the Group will work to differentiate itself fromcompetitors by utilizing the content and services of Group companies.
Moreover, the Group’s three communications companies -SOFTBANK MOBILE, SOFTBANK BB and
SOFTBANK TELECOM- will conduct business in unison by pursuing various synergies, such as cost reductions
through network integration and enlargement of the customer base and retail channels.

5. Initiatives to become a comprehensive digital information company
As a corporate group of Internet-based businesses, the Group will not limit itself to its existing role as acomprehensive communications carrier. Rather, the Group will further enhance its appealing broadband content,such as through the Yahoo! Streaming video portal site. As a comprehensive digital information company in the
broadband era, the Group will work to develop innovative services in infrastructure, portals, and content and strive
to clearly differentiate itself from competitors.

6. Establishing and enhancing internal control systems
Under the Financial Products Transaction Law, from the fiscal year commencing April 2008, companies will be
required to report on internal control systems for financial reporting. Accordingly, we are moving forward withthe establishment of a system for evaluating the effectiveness of internal control and for responding to auditors.
The Group continues its efforts to strengthen its systems, and established an Internal Control Office on April 1,
2007.
Moreover, the Group will also continue working to bolster its governance and compliance systems.

23

４. Consolidated financial Statements
Consolidated Balance Sheets(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2006
AmountMarch 31, 2007%

Amount%Increase(Decrease)

ASSETS
Current assets:
Cash and deposits¥446,306¥377,666¥(68,640)

Notes and accounts receivable - trade188,921583,972

395,051

Marketable securities

4,372

8,588

4,215

Inventories

50,59776,89826,300

Deferred tax assets

14,107

108,994

94,887

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

48,250119,250

71,000(7,424)(27,936)(20,512)745,13041.2

1,247,433

28.9

502,303

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

57,30489,44432,140

Telecommunications equipment

194,970

694,785

499,814

Telecommunications service lines

91,724

92,235510

Land19,40427,747

8,343

Construction-in-progress

27,87571,77743,901Others27,32553,861

26,536

Total tangible assets

418,605

23.1

1,029,852

23.9

611,246

Intangible assets, net:
Goodwill

45,5781,032,927

987,348

Software

33,671200,615

166,943

Other intangibles

23,036

46,16823,131

Total intangible assets

102,286

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

5.7

1,279,710

29.7

1,177,424

464,650

487,421

22,77025,039157,783

132,744

61,241

113,877

52,636(9,548)(9,405)143

541,38229.9

749,67717.4

208,294

Deferred charges

993

0.1

4,178

0.1

3,184

Total assets¥1,808,398

100.0¥4,310,852

100.0¥2,502,454

24

Consolidated Balance Sheets(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2006

AmountLIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Accounts payable - trade

March 31, 2007%

AmountIncrease(Decrease)%¥60,432¥195,167¥134,734

Short-term borrowings

218,300

193,656(24,644)

Commercial paper

10,4005,000(5,400)Current portion of corporate bonds
Accounts payable – otherand accrued expenses
Income taxes payable

11,09443,96432,870114,112415,561

301,438

29,13733,070

3,932

Current-portion of lease obligations-

18,04918,049Cash receipts as collateral

100,000

150,000

50,000

Other current liabilities

43,41488,43345,019Total current liabilities

586,90232.4

1,142,903

26.5

556,000

Long-term liabilities:
Corporate bonds

456,128

422,599(33,528)

Long-term debt

209,370

1,729,183

1,519,812

Deferred revenue

41,84026,392(15,447)

Deferred tax liabilities

48,64250,136

1,494

Accrued retirement benefits

17,27916,701(578)

Allowance for point mileage-

43,78743,787

Lease obligations-

74,96474,964

Other liabilities

100,970

87,947(13,023)

Total long-term liabilities

874,23248.4

2,451,712

56.9

1,577,480

Total liabilities

1,461,135

80.8

3,594,615

83.4

2,133,480

162,9169.0

163,309

3.8

393

5

0.0

1

0.0

(3)

Additional paid-in capital

187,303

10.3

187,669

4.3

366

Accumulated deficit(218,561)(12.1)(192,271)(4.5)

26,289Less: Treasury stock

(169)

(0.0)

(193)

(0.0)

(23)

Total shareholders’ equity

131,494

7.2

158,515

3.6

27,021

Net unrealized gain on other securities

129,051

7.1

122,619

2.8(6,432)

Deferred losses on hedges(36,840)(2.0)(26,995)

(0.6)

9,845

Foreign currency translation adjustments

19,062

1.1

28,8100.7

9,747

Total valuation and translation adjustments

111,273

6.2

124,434

2.9

13,160

3,150

0.2

3,180

0.1

30

Minority interest in consolidated subsidiaries

101,3465.6

430,106

10.0

328,760

Total net assets
Total liabilities andnet assets

347,26319.2

716,23716.6

368,973¥1,808,398

100.0¥4,310,852

100.0¥2,502,454

Net Assets:
Common stockPre-stock issuance paid-in capital

Stock acquisition rights

25

Consolidated Statements of Income(Millions of yen; amounts less than one million yen are omitted.)

FY 2006
April 2005 through March 2006
AmountNet sales
Cost of sales
Gross Profit¥1,108,665
723,812FY 2007
April 2006 through March 2007%

Amount

%

100.0
65.3

¥2,544,219
1,409,520

100.0
55.4

Increase(Decrease)¥1,435,553
685,708

384,85334.7

1,134,698

44.6

749,845

322,55329.1

863,63333.9

541,079

Operating income

62,2995.6

271,065

10.7

208,766

Interest income
Equity in earnings under the equity method
Income from investments in partnerships, net

2,136
9,521

3,394
2,130

1,257
(7,390)

777

1,726

948

Other non-operating income

3,321

6,280

2,958

Non-operating income
Interest expense
Foreign exchange loss
Financing related expenses
Other non-operating expenses

15,75627,005
6,320
17,237

Selling, general and administrative expenses

1.4

13,531
79,521834
28,715
22,1010.5(2,225)52,516(5,485)28,715
4,863

Non-operating expenses

50,564

4.5

131,173

5.2

80,609Ordinary income

27,492

2.5

153,423

6.0

125,931

Gain on sale of investment securities
Other special income

172,306
26,218Special income
Loss on sale of investment securities
Valuation loss on investment securities
Loss on redemption of bonds
Loss on disposal of fixed assets
Loss on contract revision relating to sales
operation change
Impairment loss in fixed-line
telecommunication businessRestructuring charge relating to BBTV
business
Penalty for unfulfilled contract commitment
Refinance arrangement fee
Other special losses
Special loss
Income before income taxes and minority
interest
Income taxes:
Current
Deferred
Minority interest
Net income

198,524

84,106
12,17517.9

96,282(88,199)(14,042)3.8(102,241)

522
8,717
8,542

4,254
5,351
10,4297,695

3,732(3,366)
10,429(847)

25,495-(25,495)

18,052-(18,052)

14,749-(14,749)

3,565
3,153
13,732
96,532

8.7

13,402
41,132

1.6(3,565)(3,153)(330)(55,399)

129,484

11.7

208,573

8.2

79,08940,753

3.7

48,726

1.9

7,972

1,837

0.2

93,676

3.7

91,83829,342¥57,550

2.6
5.2

37,355¥28,815

1.5
1.1

8,013
¥(28,735)

26

Consolidated Statements of Changes in Net Assets
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
Deferred Foreign currency
unrealized
translation
Total
gains (losses) losses onhedgesadjustments
on othersecurities

Stockacquisition Minority
interests
rightTotal net
assetsCommonstock

Pre-stockissuance
paid-in
capitalAdditional
paid-in
capitalAccumulated Treasury
deficit
stock

Total

¥162,397¥-¥186,783¥(273,362)¥(106)¥75,712¥136,662¥(41,056)

519

-

519

-

-

1,038

Cash receipt before stock issuance

-

5

-

-

-

5

-

-

-

(2,460)-(2,460)Bonuses to directors

-

-

-

(86)

-

(86)

-

-

-

-

Dividend from surplus

-

-

-

Net adjustment to accumulated
deficit due to change in scope of
consolidation

-

-

-

13

-

13

-

-

-

-

-

-

13

-

-

-

(215)
57,550
-

(63)

(215)
57,550
(63)

-

-

-

-

-

-

-

-

-

-

-

(215)
57,550
(63)

-

-

-

-

-

-

(7,610)4,215

12,365

8,969-

32,402

41,371

Total changes in this year

519

5

519

54,801(63)

55,781(7,610)4,215

12,365

8,969-

32,402

97,153

Balance at March 31, 2006

¥162,916¥5¥187,303¥(218,561)¥(169)¥131,494¥129,051¥ (36,840)¥19,062¥111,273

Balance at March 31, 2005

¥6,697 ¥102,303¥3,150¥68,943 ¥250,110

Changes of items during the year
Issuance of new shares

Decrease due to merger
Net income
Acquisition of treasury stock
Items other than changes inshareholders’ equity

27

-

1,038
5
(2,460)(86)¥3,150 ¥101,346 ¥347,263

From April 1, 2006 to March 31, 2007:(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ equity

Valuation and translation adjustments
Net
Deferred Foreign currency
unrealized
translation
Total
gains (losses) losses onhedgesadjustments
on othersecurities

Stockacquisition Minority
interests
rightTotal net
assetsCommonstock

Pre-stockissuance
paid-in
capitalAdditional
paid-in
capitalAccumulated Treasury
deficit
stock

Total

¥162,916¥5¥187,303¥(218,561)¥(169)¥131,494¥129,051¥(36,840)¥19,062¥111,273

393

(5)

393

-

-

780

Cash receipt before stock issuance

-

1

-

-

-

1

-

-

-

(2,637)-(2,637)

Bonuses to directors

-

-

-

(90)

-

(90)

-

-

-

-

Dividend from surplus

-

-

-

Net adjustment to additional paid-in
capital and accumulated deficit due
to change in scope of consolidation

-

-

(26)

202

-

176

-

-

-

-

-

-

176

-

-

-

28,815-(23)

28,815
(23)

-

-

-

-

-

-

-

28,815
(23)

-

-

-

-

-

-

(6,432)

9,845

9,747

13,16030

328,760

341,951

Total changes in this year

393

(3)

366

26,289(23)

27,021(6,432)

9,845

9,747

13,16030

328,760

368,973

Balance at March 31, 2007

¥163,309¥1¥187,669¥(192,271)¥(193)¥158,515¥122,619¥ (26,995)

Balance at March 31, 2006

¥3,150 ¥101,346 ¥347,263

Changes of items during the year
Issuance of new shares

Net income
Acquisition of treasury stock
Items other than changes inshareholders’ equity

28¥28,810 ¥124,434

-

780
1
(2,637)(90)¥3,180 ¥430,106 ¥716,237

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

FY 2006
April 2005 through March 2006

FY 2007
April 2006 through March 2007

¥129,484¥208,573

79,744

189,092

Amortization of goodwill

6,945

53,595Equity in earnings under the equity method, net(9,521)(2,130)

Dilution gain from changes in equity interest, net(21,806)(2,484)

8,717

5,351

(171,864)(79,885)

Foreign exchange loss, net

5,497

1,136

Interest and dividend income(2,402)(3,713)

Interest expense

27,00579,521

Increase in receivables – trade(23,333)(225,489)

Increase in payables - trade

4,331

91,184

Increase in deferred revenue

40,000-

Other, net

32,563

98,977

105,361

413,729

Ⅰ. Cash flows from operating activities:

Income before income taxes and minority interest
Adjustments to reconcile income before income taxes andminority interest to net cash provided by operating
activities:
Depreciation and amortization(excludes amortization of goodwill)

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

Changes in operating assets, liabilities and others

Sub-totalInterest and dividends received

3,301

5,519

Interest paid

(22,332)(62,081)

Income taxes paid

(31,588)(45,964)

3,064-

57,806311,201

Refund of income taxes
Net cash provided by operating activities- Continued -29Consolidated Statements of Cash Flows (Continued)(Millions of yen; amounts less than one million yen are omitted.)

FY 2006
April 2005 through March 2006

FY 2007
April 2006 through March 2007¥(189,490)¥(297,764)

Purchase of marketable and investment securities
Proceeds from sale of marketable and investment securities
Acquisition of interests in subsidiaries newly consolidated,
net of cash acquired
Sale of interests in subsidiaries previously consolidated, net(88,479)(114,022)

178,022

168,354(4,525)(1,844,849)

39,826(89)

Proceeds from sales of interests in consolidated subsidiaries

29,232

10

Increase in loan receivables(17,425)(16,519)

Collection of loans

16,583

15,749Proceeds from sale of modem rental business

45,000-

Other, net

19,107(8,805)

Net cash provided by (used in) investing activities¥27,852¥(2,097,937)

Increase (decrease) in short-term borrowings, net

32,043(8,848)Decrease in commercial paper(5,100)(5,400)

Proceeds from long-term debt

125,550

1,586,970

Repayment of long-term debt

(158,211)(98,151)

Proceeds from issuance of bonds

91,84972,558

Redemption of bonds(53,547)(205,334)

Proceeds from issuance of shares

1,038

786

Proceeds from issuance of shares to minority shareholders

1,619

300,378

Cash dividends paid

(2,456)(2,640)Cash dividends paid to minority shareholders
Proceeds from lease financing of equipment newly
acquired
Increase in cash receipts as collateral, net(2,442)(3,143)-65,818-50,000

Other, net(264)(34,607)

Net cash provided by financing activities

30,078

1,718,384

10,905

3,073

126,642(65,277)(142)(3,896)

320,194446,694¥446,694¥377,520

Ⅱ. Cash flows from investing activities:

Purchase of property and equipment and intangibles

Ⅲ. Cash flows from financing activities:

Ⅳ. Effect of exchange rate changes
on cash and cash equivalents
Ⅴ. Net increase (decrease) in cash and cash equivalents
Ⅵ. Decrease in cash and cash equivalents due to exclusion ofpreviously consolidated entities
Ⅶ. Cash and cash equivalents at the beginning of the year
Ⅷ. Cash and cash equivalents at the end of the year30

Condensed Quarterly Financial Information
Condensed Statements of Operations(Millions of yen; amounts less than one million yen are omitted.)

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

First quarter

Second quarter

Third quarter

April 1, 2005 toJune 30, 2005

July1, 2005 to
October 1, 2005 to
September 30, 2005 December 31, 2005

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

January 1, 2006 to
March 31, 2006

April 1, 2006 toJune 30, 2006

July 1, 2006 to
September 30, 2006

October 1, 2006 to
December 31 2006

January1, 2007 to
March 31, 2007

AmountAmountAmountAmountAmountAmountAmountAmount¥258,637
175,674
82,962¥264,149
178,575
85,573¥287,471
184,551
102,920¥298,406
185,010
113,395¥494,231
273,895
220,336¥625,941
341,443
284,498¥702,195
390,157
312,037¥721,850
404,024
317,826

86,153

77,98379,40779,009165,978

226,303

227,304

244,045(3,190)3,122
12,950(13,017)
22,914
9,136

7,590
4,442
12,499(466)
35,916
10,30923,512
2,784
15,068
11,22898,93450,47534,386
6,227
10,86729,74740,75826,61054,357
12,09640,45925,994
4,672
1,365

58,194
4,540
26,03936,696
66,795
13,89584,733
1,829
37,63748,924
15,788
6,688

73,7804,259
36,23141,808
9,024
19,182760

25,141

59,68743,89529,30289,59658,02431,6508,230
11,623
9,695
11,204
10,14670,826
12,552(44,798)(2,779)(187)
20,171(15,366)
9,224(3,182)
27,21160,423
6,463
6,734
7,817
8,326
8,514
8,930
10,765
9,145¥(11,153)¥6,971¥22,002¥39,730¥1,418¥13,021¥7,494¥6,881
Net income (loss)
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 quarterly basis for presentation purposes.
Condensed Statements of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)First quarter

Second quarter

April 1, 2005 toJune 30, 2005

July 1, 2005 to
October 1, 2005 to
September 30, 2005 December 31, 2005

AmountⅠ Net cash provided by (usedin)operating activities
Ⅱ Net cash provided by (usedin) investing activities
Ⅲ Net cash provided by (usedin) financing activities
Ⅳ Effect of exchange ratechanges on cash and cash
equivalents
Ⅴ Net increase (decrease) incash and cash equivalents
Ⅵ Decrease in cash and cash
equivalents due to
exclusion of previously
consolidated entities
Ⅶ Cash and cash equivalents
at the beginning of theyear
Ⅷ Cash and cash equivalents
at the end of the year
Note:
Depreciation and amortization
included in net cash provided
by operating activities

AmountThird quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

January 1, 2006 to
March 31, 2006

April 1, 2006 toJune 30, 2006

July 1, 2006 to
September 30, 2006

October 1, 2006 to
December 31, 2006

January 1, 2007 to
March 31, 2007

AmountAmountAmountAmountAmountAmount¥(18,213)¥232¥61,949¥13,837¥64,675¥122,464¥71,193¥52,868(28,703)(45,593)

86,627

15,521(1,965,832)

8,847(71,675)(69,276)

12,925(11,081)(46,728)

74,963

1,743,429(144,656)

124,058(4,446)

1,150

639

3,866

5,248

134

703

(2,716)

4,951(32,840)(55,802)105,714

109,571(157,593)(12,641)

120,859(15,902)

(142)

-

-

-

(3,886)-(9)-

320,194

287,211

231,408

337,122446,694285,214272,572

393,423¥287,211¥231,408¥337,122¥446,694¥285,214¥272,572¥393,423¥377,520¥22,543¥23,195¥21,031¥19,919¥48,989¥62,424¥66,271¥65,00131

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of March 31, 2007, SOFTBANK CORP. (hereafter the “Company”) consolidated 118 subsidiaries. Sixty threesubsidiaries were not consolidated as the individual and aggregate amounts were not considered material in relation to theconsolidated total assets, net sales, net income and retained earnings (accumulated deficit) of the SOFTBANK consolidated
financial statements.
Changes in scope of consolidation were as follows:<Increase>17 companies
Significant changes:
SOFTBANK MOBILE Corp.
Newly acquired<Decrease>
52 companies
Significant changes
SOFTBANK TELECOM Corp.
Merged with SOFTBANK TELECOM SALES Corp.
(currently SOFTBANK TELECOM Corp.)
SOFTBANK BB Corp.
Merged with BB TECHNOLOGY Corp.
(currently SOFTBANK BB Corp.)
Insignificant companies were excluded from scope of consolidation from this fiscal year.
2. Changes in scope of equity method
As of March 31, 2007, the Company held 66 affiliates, all of which were accounted for under the equity method. Sixty
three non-consolidated subsidiaries and 26 affiliates were not accounted for under the equity method, as the individual andaggregate amounts were not considered material in relation to the net income (loss) and retained earnings (accumulated
deficit) of the SOFTBANK consolidated financial statements.
Changes in application of equity method were as follows:<Increase>17 companies<Decrease>38 companies
Significant changes:
SBI Holdings, Inc.
cyber communications inc.

Sale of shares
Sale of shares

3. Fiscal year end
Fiscal year ends of consolidated subsidiaries for both domestic and overseas entities are as follows:<Fiscal year end>
March end
(same as the consolidated balance sheet date)June end
July end
December end
January end
February end<Domestic><Overseas>
55
2
3
1
2

32

33
1
18
3
-

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 is included as a separate component in net assets, 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 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>
SOFTBANK MOBILE Corp., SOFTBANK TELECOM Corp., and certain other subsidiaries have defined benefit
pension plans for their employees. These companies account for the obligation for retirement benefits based on the
projected benefit obligations as of March 31, 2007.
(3) <Allowance for point mileage >SOFTBANK MOBILE Corp. has an allowance for point mileage which is accrued based on the estimated future
obligation arising from point 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 assets,” 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.

33

[6] Accounting for significant hedge transactions(1) Collar transaction① <Hedge accounting>Unrealized gains and losses, net of tax, on a 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 assets” in the
Company’s consolidated balance sheets. As such, unrealized gains and losses associated with the collar transaction will
be recognized 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, which is used for the settlement of loans at maturity.
(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.
(3) Forward-exchange contract① <Hedge accounting>Long-term debt denominated in foreign currencies for which foreign exchange forward contracts are used to hedge theforeign currency fluctuation are translated at the contracted rate, if the forward contracts quality for hedge accounting.
② <Derivative instruments for hedging and hedged items>
Derivative instruments for hedging:
Forward-exchange contract
Hedged items:
Foreign currency-denominated bond
③ <Hedging policy>
In accordance with the Company’s policy, the Company use derivatives to hedge foreign exchange risk associated withcertain assets and liabilities denominated in foreign currencies.
[7] Accounting method for consumption taxes
Consumption taxes are accounted for using the net method of reporting.
5. Accounting for business combinations
All assets and liabilities of an acquired entities are revalued at the respective fair market value at the combination date.

34

6. 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. (currently SOFTBANK MOBILE Corp.) is amortized over
20-year-period.
7. 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.
8. Accounting standard for statement of changes in net assets
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 fiscal year ended March 31,
2007.
Consolidated statements of changes in net assets is disclosed for the fiscal year ended March 31, 2007 under the new standard.
Furthermore, the consolidated statements of changes in net assets for the fiscal year ended March 31, 2006 is presented under
the new standard.

Changes in accounting policies
1. Presentation of net assets in balance sheet
The Company applied “Accounting Standards for presentation of net assets” (Financial Accounting Standards No. 5 issued on
December 9, 2005), and “Application Guideline for Accounting Standards for presentation of net assets” (Financial AccountingStandards Implementation Guideline No. 8 issued on December 9, 2005) for the fiscal year ended on March 31, 2007.
The shareholders’ equity based on the previous presentation of shareholders’ equity in balance sheet is ¥282,949 million.
Furthermore, the Company presented its net assets in balance sheet using the new presentation for March 31, 2006.
2. 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 fiscal year ended March 31, 2007.
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.
3. Practical solution on accounting for revenue recognition of software
The Company applied “Practical solution on accounting for revenue recognition of software” (Financial Accounting Standards
No. 17 issued on March 30, 2006) from the fiscal year ended March 31, 2007.
As a result, the Company is required to present certain transactions as net sales from this fiscal year, and net sales of certain
software transactions were recorded at ¥1,244 million, which would have been the amount of gross profit if the previous
accounting standard had been applied. Due to the netting with the amounts for cost of good sold, net sales and cost of goods
sold decreased by ¥34,160 million.

35

4. Presentation of goodwill in the balance sheets and statements of cash flows
The Company applied “Accounting Standard for Business Combinations” (Accounting Standards issued on October 31, 2003
by the Business Accounting Council in Japan), “Accounting Standard for Business Divestitures and the related Implementation
Guidance” (Financial Accounting Standards No. 7 issued on December 27, 2005), “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures” (Financial Accounting Standards Implementation
Guidance No. 10 issued on December 27, 2005) from the fiscal year ended on March 31, 2007.
(Consolidated Balance Sheets)
Goodwill related to business rights previously included in “Other intangibles” of intangible assets, net and goodwill related toconsolidation goodwill are presented as “Goodwill” as of March 31, 2007. The same presentation has been adopted for its
accounts as of March 31, 2006.
(Consolidated Statements of Cash Flows)
Amortization of goodwill related to business rights previously accounted in “Depreciation and amortization” and amortizationof goodwill related to consolidation goodwill previously accounted in “Others, net” of cash flows from operating activities arepresented as “Amortization of goodwill” for the fiscal year ended March 31, 2007. The same presentation has been adopted
for its accounts for the fiscal year ended March 31, 2006.
5. Practical solution on investors' accounting for limited-liability partnerships and limited-liability companies
The Company applied “Practical solution on investors accounting for limited-liability partnerships and limited-liability
companies” (Financial Accounting Standards No. 20 issued on September 8, 2005) from the fiscal year ended March 31, 2007.
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.

36

Notes(Consolidated Balance Sheets)
1. Accumulated depreciation of property and equipment
As of March 31, 2006
603,313

million yen

As of March 31, 2007
719,297

million yen

2. Investments in non-consolidated subsidiaries and affiliates
As of March 31, 2006
Investment securities and investments in partnerships

194,816

million yen

As of March 31, 2007
105,536

million yen

3. Contingent liability
Based on debt assumption agreements with financial institutions, SOFTBANK MOBILE Corp. has transferred its debt
repayment obligation for straight bonds previously issued to financial institutions. The bonds and payments to financial
institutions incurred from transferring its debt repayment obligation for the bonds are eliminated in the Company’s consolidatedbalance sheets.
.
However, under the terms of the indenture, SOFTBANK MOBILE Corp. will continue to be responsible for payments on thebonds until maturity or redemption of the bonds.
Subject Bonds

Aggregate amountFirst Series Unsecured Bond

25,000 million yen

Third Series Unsecured Bond

25,000 million yen

Fifth Series Unsecured Bond

25,000 million yen

Seventh Series Unsecured Bond

25,000 million yen

Total

100,000 million yen

4. Assets pledged as collateral(1) For future lease liabilities
As of March 31, 2006

As of March 31, 2007

Assets pledged as collateral:
Notes and accounts receivable – trade

10,653

million yen

10,877

million yen

Note: The collateral for the future lease liabilities (Capital lease recorded as operating lease) was provided by mortgaging
against the aggregate of the current and future receivables due from customers of certain consolidated subsidiaries.
The future lease liabilities at the end of periods are as follows:
As of March 31, 2006
Future lease liabilities

23,846(Capital lease recorded as operating lease)37

million yen

As of March 31, 2007
13,026

million yen

(2) For short-term borrowings and long-term debt
Assets pledged as collateral and secured liabilities by consolidated subsidiaries are as follows:
March 31, 2006

March 31, 2007

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

70,897 million yen
303,486
13,986362,644226
15,566
0
196,552
115
963,475 million yen

975 million yen
8,20925
119,805113
129,128 million yen

1,246 million yen
5,373
123
1,474,523
1,481,265 million yen

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

SOFTBANK MOBILE Corp. shares owned by BB Mobile Corp. and BB Mobile Corp. shares owned by Mobiletech
Corporation are pledged as collateral for long-term debt (totaled to ¥1,355,091 million) resulted from the refinancing theloan accompanying the acquisition of SOFTBANK MOBILE Corp., in addition to the assets pledged as collateral above.
5. 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:
As of March 31, 2006
Investment securities

364 million yen

As of March 31, 2007
193 million yen

6. Cash receipts as collateral
Cash receipts as collateral from financial institutions, to whom the Company has lent shares in its subsidiary under security
deposit agreements, are presented as follows:
As of March 31, 2006
Cash receipts as collateral

100,000 million yen

As of March 31, 2007
150,000 million yen

According to the security deposit agreements, the Company paid a fixed rate amount as stock bailment fees and other fees
totaling ¥2,859 million, and ¥3,539 million for the fiscal year ended March 31, 2006 and March 31, 2007, respectively, andrecorded the fees as other non-operating expenses in the consolidated statements of income.

38

7. Deferred revenue
On December 8, 2005, BB TECHNOLOGY Corp. (currently SOFTBANK BB Corp.) sold its modem rental business andrecognized gains. Since the gain on the sale of the modem rental business is considered to be realized as the service isrendered, the gain was deferred and will be amortized over five years, which is the estimated economic useful life of modem
equipment, which was the revenue source of the modem rental operations. For the fiscal year ended March 31, 2007, revenue
earned and attributed to recognition of deferred revenue were ¥4,311 million.
Based on the service agreement with BB Modem Rental Yugen Kaisha, BB TECHNOLOGY Corp. received royalties relating
to future revenue from the modem rental business and this advanced payment for future royalties was included in deferred
revenue. The deferred revenue will be reserved in conjunction with the recognition of revenue in future periods in proportion
to the actual business performance of the ADSL business, such as the number of paying customers. For the fiscal year ended
March 31, 2007, royalty fees totaling ¥9,721 million were recorded as revenue. The amounts of deferred revenue from thesale of the modem rental business recorded in the Company’s consolidated balance sheets are as follows:
As of March 31, 2006

As of March 31, 2007

Other current liabilities (deferred revenue)

14,096 million yen

15,025 million yen

Deferred revenue

41,840 million yen

26,392 million yen

In accordance with the service agreement, SOFTBANK BB Corp must refund a part of the above deferred revenue, which is
attributable to the service agreement, if certain financial results are not met.
8. Line of credit as a creditor (not used)
As of March 31, 2006
16,097

million yen

As of March 31, 2007
7,708

million yen

9. Balance of accounts receivable sold
As of March 31, 2006
8,477

million yen

As of March 31, 2007-

million yen

10. Notes receivable maturing at period-end
Notes receivable are settled on the date of clearance. Since the end of the fiscal year, March 31, 2007, was a non-business day,the following balance of notes receivable maturing on that date was not settled and was included in the closing balances of“Notes and accounts receivable-trade.”
As of March 31, 2006
- million yen

Notes and accounts receivable-trade

As of March 31, 2007

173 million yen

11. Pre-stock issuance paid in capitalPre-stock issuance paid-in capital represents amounts paid at the exercise of warrants, but the shares were not issued. At theissuance of 1,200 new shares in April 2007, pre-stock issuance paid-in capital was converted into common stock of ¥0 million
and additional paid-in capital of ¥0 million.

39

12. Debt Covenants
The Group's interest-bearing debt includes debt covenants, with which the Group is in compliance. The major debt covenants
are as follows. If the Group conflict with the following covenants, creditors may require repayment of all debt.
(In the events where the covenants set several conditions, the strictest condition is presented below.)(1) The amount of net assets shown in the Company's balance sheet at the end of fiscal year and interim period must not fall
below 75% of the value of net assets shown in the balance sheet at the end of the same period in the previous fiscal year.
(2) The amount of the Company's net assets at the end of each quarter must not fall below the larger of [1] or [2] below.
[1] 75% of the amount of the Company's net assets at the end of the most recent fiscal year.
[2] 60% of the amount of the Company's net assets at March 31, 2005.
(3) The period-end balance sheets of SOFTBANK BB Corp. and SOFTBANK TELECOM Corp. must not show excessive
debt. The consolidated balance sheets of BB Mobile Corp. for fiscal year end and interim period end must not show
excessive debt.
(4) Other than the exceptions listed below, as a general rule, members of the following restricted group of companies (hereafter,
the “restricted group”), will not take on debt obligations* from any company not included in the restricted group or issue
any preferred stock after October 12, 2006, the issuance date of these Euro-denominated Senior Notes due 2013.
(Restricted group)(a) SOFTBANK CORP.
(b) SOFTBANK BB Corp.
(c) SOFTBANK TELECOM Corp.
(d) SOFTBANK MOBILE Corp.
(e) Mobiletech Corporation(f) BB Mobile Corp.
(g) TELECOM EXPRESS Co., Ltd.
(h) Japan System Solution Co., Ltd.
(i) SBBM Corporation(Exceptions)
The major exceptions are as follows:ⅰ. SOFTBANK CORP. is permitted to borrow up to ¥200 billion through its commitment line, etc.
ⅱ. Borrowing related to the acquisition of SOFTBANK MOBILE Corp. (including refinancing) is permitted up to aprincipal amount of ¥1,450 billion.
ⅲ. Among the restricted group, those involved in the mobile communications business segment (d, f, g, h) are permitted toincur capital expenditure related debt obligations* up to a principal amount of ¥400 billion.
ⅳ. SOFTBANK TELECOM Corp. is permitted to borrow up to a principal amount of ¥175 billion.
ⅴ. The refinancing of the outstanding debt of the restricted group as of October 12, 2006, the issuance date of the note, ispermitted up to the same level of principal amount.
ⅵ. In the event that [1] a company in the restricted group incurs lease obligations or [2] a subsidiary of SOFTBANK CORP.
other than the members of the restricted group incur lease obligations, SOFTBANK CORP. is permitted to provide
guarantees to leasing companies up to a principal amount of ¥400 billion for the total of [1] and [2].
ⅶ. SOFTBANK CORP. is permitted to make security lending transactions using the stock of Yahoo Japan Corporation up
to, as a general rule, ¥200 billion.
ⅷ. Other than (ⅰ) to (ⅶ) above, debt-incurring activities* which are pari passu with those notes are permitted up to ¥150
billion.
*(Note) Debt-incurring activities include new borrowings, leasing, etc.

40(5) SOFTBANK MOBILE Corp. received a loan (hereafter the “SBM loan”) from Mizuho Trust & Banking Co., Ltd.
(hereafter the “lender”), which, as the Tokutei Kingai Trust Trustee, was entrusted with the proceeds by WBS Funding*1.
Under the terms of the SBM loan agreement, SOFTBANK MOBILE Corp. is allowed a certain degree of flexibility in its
business operations, as a general rule. However, in the event that the loan agreement's financial performance targets(reduction in cumulative debt, adjusted EBITDA*2, leverage ratio*3) or operational performance targets (number ofsubscribers) are not met, depending on the importance and the timing of issue, the influence of the lender on the operationsof SOFTBANK MOBILE Corp. might be increased. It is possible that limits will be placed on capital investment, thatprior approval will be required for development of new services, that a majority of the board directors will be appointed, andthat rights to assets pledged as collateral, including shares of SOFTBANK MOBILE Corp., will be exercised. As of
March 31, 2007, there is no infringement of the debt covenants.
Note: *1.WBS Funding
WBS Funding: a special purpose company for the purpose of allocating the total amount raised from domestic
and foreign financial institutions--¥1,441.9 billion--under the WBS scheme through the Tokutei Kingai Trust
Trustee for the SBM loan to SOFTBANK MOBILE Corp.. SOFTBANK MOBILE Corp. borrowed from
Tokutei Kingai Trust Trustee an amount of ¥1,366 billion, representing the total amount of ¥1,441.9 billion
raised by WBS Funding less such items as interest hedge costs and interest reserve.
*2. Adjusted EBITDA
Adjusted EBITDA: EBITDA is adjusted by lease payments, which are included in operating expenses, in thesame manner as adjustments of depreciation and amortization in the calculation of EBITDA.
*3.Leverage ratio
Leverage ratio = Debt / Adjusted EBITDA. The balance of debt does not include capital financing,
subordinated loans from the SOFTBANK Group or Vodafone Oversea Financial Limited or existing bonds.
(6) The amount of net assets shown in SOFTBANK TELECOM Corp.’s balance sheets for the end of each interim period andthe end of each fiscal year must not fall below the larger of [1] or [2] below.
[1] 75% of the net assets shown in the consolidated balance sheets of SOFTBANK TELECOM Corp. at the end of themost recent fiscal year.
[2] 60% of the amount of net assets shown in the consolidated balance sheets for SOFTBANK TELECOM Corp. as ofMarch 31, 2005.

(Consolidated Statements of Operations)
1. Selling, general and administrative expenses
Fiscal year ended
March 31, 2006
9,211 million yen

Sales commission

Fiscal year ended
March 31, 2007
260,478 million yen

Sales promotion expense

59,671

145,382

Payroll and bonuses

69,50594,723

Allowance for doubtful accounts

4,319

16,614

2. Financing related expenses
It is the financing related expense in order to raise funds for the acquisition of Vodafone K.K. (currently SOFTBANKMOBILE Corp.) and the debt refinancing.
3. Loss on redemption of bonds
The loss on redemption of bonds is presented as follows:(1) The loss, ¥7,386 million, is incurred from the settlement of repurchase and redemption of SOFTBANK CORP. Euro9.375% Senior Notes due 2011.
(2) The loss, ¥3,042 million, is incurred from the advanced redemption of bonds previously issued by SOFTBANKMOBILE Corp based on the debt assumption agreement with financial institutions.

41

4. Loss on disposal of fixed assets for the fiscal year ended March 31, 2007
Telecommunications equipment

1,487 million yen

Construction-in-progress

2,483

Property and equipment (Others)

1,807

Software

1,916
Total

7,695 million yen(Statements of changes in net assets)
1. Class and number of outstanding shares:
March 31, 2006
Number of common stocks

Increase

1,055,231,478

Decrease

March 31, 2007-

1,055,862,978

Decrease

March 31, 2007-

158,611

631,500

Note: Increase resulted from the exercise of stock acquisition rights.
2. Class and number of treasury stocks:
March 31, 2006
Number of common stocks

Increase

149,391

9,220

Note: Increase resulted from the acquisition of the fractional shares.

3. Stock acquisition rights:
Type
SOFTBANK,
Corp.
Consolidated
Subsidiaries

Detail of stock acquisitionrightsClass of shares

Stock acquisition rights
issued in 2004

CommonstocksNumber of shares for stock acquisition rights
March 31,
March31,
Increase Decrease
2007
2006
24,000,000

Total

-

-

Millions of yen
March 31, 2007

24,000,000

3,150

-

30

-

3,180

4. Dividends:(1) Dividend paid
Resolution

Class ofAmount of dividend

Dividend pershares(Millions of yen)share

Ordinary general meeting ofCommonshareholders, June 23, 2006

stocks

2,637

¥2.50

Record date
March 31, 2006

Effective dateJune 23, 2006

(2) Dividends which recorded date is in the fiscal year 2007 and effective date for payment is in the next fiscal year 2008.
Resolution

Class ofAmount of dividend

Dividend pershares(Millions of yen)share

Ordinary general meeting ofCommonshareholders, June 22, 2007

stocks

2,639

42

¥2.50

Record date
March 31, 2007

Effective dateJune 25, 2007

(Consolidated Statements of Cash Flows)
1. Consolidated statements of cash flows
Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets
As of March 31, 2006

2.

As of March 31, 2007

Cash and deposits

446,306

million yen

Marketable securities

4,372

8,588

Time deposits with original maturity over three months(1,400)(1,989)Stocks and bonds with original maturity over three months(2,584)(6,744)

Cash and cash equivalents

446,694

377,666 million yen

million yen

377,520 million yen

SOFTBANK MOBILE Corp. and three consolidated subsidiaries acquired in connection with the acquisition of
SOFTBANK MOBILE Corp.
（as of April 30, 2006）
Current assets
Non-current assets
Goodwill
Current liabilities
Long-term liabilities
Acquisition cost
Loans made by the Company
Cash and cash equivalentsof newly consolidated companies
Payments for the acquisition(Note 1)

324,183
952,442
1,028,552(453,849)(144,665)
1,706,666
163,000(Note 1)
(Note 2, 3)(Note 4)

million yen

million yen(25,419)
1,844,246

million yen

Note:
1. Amounts are after considering intercompany transactions.
2. The costs incurred for the acquisition of remaining shares of SOFTBANK MOBILE Corp. in August 2006 are included.
Accordingly, SOFTBANK MOBILE Corp. became a fully-owned subsidiary.
3. Accompanying costs are included.
4. Loan amounts at the acquisition date, April 30, 2006
3. Scope of Purchase of property and equipment and intangibles in the consolidated statement of cash flows“Purchase of property and equipment and intangibles” are comprised of cash outflow from purchasing property, equipment andintangible assets (excluding goodwill) and long-term prepaid expenses.
4. Presentation of Capital lease (transfer title) in the consolidated statement of cash flows
After SOFTBANK MOBILE Corp. purchases telecommunication equipment from vendors, SOFTBANK MOBILE Corp
sells the equipment to a lease company. The lease company leases equipment to SOFTBANK MOBILE Corp. This procedure
is attributed to nature of its equipments. The leased asset and lease obligation are recorded on the consolidated balance sheet.
The cash outflows from the purchase of the equipment from vendors are included in “Purchase of property and equipment andintangibles” and the cash inflows from the sale of the equipment to a lease company is included in “Proceeds from leasefinancing of equipment newly acquired.”
5. Repayment of the borrowing based on Bridge Facility contracted by BB Mobile Corp.
The repayment of the borrowings based on the bridge facility contracted by BB Mobile Corp. (totaled to ¥1,173,830 million)
for its acquisition of SOFTBANK MOBILE Corp. was completed by refinancing in November 2006. The increase inborrowings and the decrease in repayment are offset each other in “Increase (decrease) in short-term borrowings, net.” The
new borrowings (totaled to ¥1,366,000 million) from refinancing are included in “Proceeds from long-term debts.”

43

Segment Information
1. Business segment information(1) For the fiscal year ended March 31, 2006
(Millions of yen; amounts less than one million yen are omitted.)
Fixed-line

InternetCommunications Infrastructure

Telecommunications

Culture(1) Customers¥267,272¥347,447(2) Inter-segment

1,179

6,785

MobileBroadband

Elimination

e-Commerce

OthersTotal¥155,550¥272,739¥65,654¥1,108,665¥-¥1,108,665

569

10,535

17,41936,489(36,489)-

or Corporate

Consolidated

Net sales

Total
Operating expenses
Operating income (loss)
Identifiable assets

Newly
Establishedin thisFiscalPeriodDepreciation
and amortization
Capital expenditures

268,451354,233

156,120

283,275

83,073

1,145,154(36,489)

1,108,665

247,779

379,392

81,929278,41487,833

1,075,350(28,984)

1,046,366¥20,672¥(25,158)¥74,190¥4,860¥(4,759)¥69,804¥(7,504)¥62,299

247,592

517,974

439,178

72,136291,172

1,568,054

240,344

1,808,398

28,48546,282

7,461

1,121

4,211

87,561

958

88,51926,25662,254

16,338

2,169

3,416

110,436913

111,349(2) For the fiscal year ended March 31, 2007
(Millions of yen; amounts less than one million yen are omitted.)
MobileBroadband

Communications Infrastructure

Fixed-line

Internet

Telecommunications

Culturee-Commerce

OthersTotal

Elimination
or Corporate

Consolidated

Net sales(1) Customers(2) Inter-segment
Total¥1,430,821¥258,824¥332,136¥191,509¥256,923¥74,003¥2,544,219¥-¥2,544,219

11,218

5,402

41,993

2,702

14,647

16,781

92,746(92,746)-

1,442,040

264,227

374,129

194,212271,570

90,7852,636,966(92,746)2,544,219

Operating expenses

1,286,296

237,418

377,095

97,667

264,889

95,5152,358,883(85,729)

2,273,153

Operating income (loss)¥155,743¥26,809¥(2,965)¥96,544¥6,680¥(4,730)¥278,082¥(7,017)¥271,065

Identifiable assets

2,691,192

200,288522,256442,219

79,514

290,8114,226,283

84,5694,310,852

156,166

27,311

44,933

9,662

1,083

3,083

242,241446

242,687

2,000,212

20,05042,524

16,370

2,857

3,288

2,085,306

581

2,085,887

Depreciation
and amortization
Capital expenditures

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 the main businesses segments.
3. The Mobile Communications segment was established for the fiscal year ended March 31, 2007 due to the consolidation of
SOFTBANK MOBILE Corp. Net sales and operating expenses of SOFTBANK MOBILE Corp. and its consolidated subsidiaries
are consolidated from May 2006.
4. Unallocated operating expenses for the fiscal year ended March 31, 2006 and 2007 in the column “Elimination or Corporate,” mainly
represents expenses of the corporate division of the Company, totaling ¥7,841 million, and ¥8,481 million, respectively.
5. Corporate assets at March 31, 2006 and 2007 in the column “Elimination or corporate” were ¥275,510 million and ¥120,675 million,
respectively. Corporate assets represent mainly surplus operating funds (cash and marketable securities), long-term investment
securities of the Company and assets held by the corporate division of the Company.
6. “Depreciation and amortization” includes depreciated amount of long-term prepaid expenses
7. “Capital expenditures” include increase in “Property and equipment, net,” “Intangible assets, net,” and long-term prepaid expense on
the consolidated balance sheet, and increase in “goodwill” and each asset in the acquisition of newly consolidated subsidiary.

44

2. Geographic segment information(1) FY 2006 (as of and for the year ended March 31, 2006)(Millions of yen; amounts less than one million yen are omitted.)
Japan

North

OthersAmerica

Total

Elimination

Consolidated

or corporate

Net sales(1)Customers(2)Inter-segment
Total¥1,100,446¥1,351¥6,867¥1,108,665¥-¥1,108,665

3,325

686

412

4,425

(4,425)-

1,103,772

2,038

7,279

1,113,090(4,425)

1,108,665

Operating expenses

1,028,151

2,934

12,2081,043,294

3,071

1,046,366

Operating income (loss)¥75,621¥(896)¥(4,929)¥69,796¥(7,496)¥62,299¥1,179,017¥261,177¥110,864¥1,551,058¥257,339¥1,808,398

Identifiable assets(2) FY 2007 (as of and for the year ended March 31, 2007)(Millions of yen; amounts less than one million yen are omitted.)
Japan

North

OthersAmerica

Total

Elimination

Consolidated

or corporate

Net sales(1)Customers(2)Inter-segment
Total¥2,532,359¥1,861¥9,997¥2,544,219¥-¥2,544,219

2,979

-

266

3,245

(3,245)-2,535,339

1,861

10,264

2,547,465(3,245)2,544,219

Operating expenses

2,254,378

2,793

11,0652,268,236

4,916

2,273,153

Operating income (loss)¥280,960¥(931)¥(801)¥279,228¥(8,162)¥271,065

Identifiable assets¥3,757,765¥282,558¥153,692¥4,194,016¥116,836¥4,310,852

Notes:
1. Net sales by geographic region are recognized based on geographic location of the operation.
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 fiscal years ended March 31, 2006 and 2007 in the column “Elimination or corporate,”
which mainly represent expenses of the corporate division of the Company, were ¥7,841 million and ¥8,481 million, respectively.
3. Corporate assets at March 31, 2006 and 2007 in the column “Elimination or corporate” were ¥275,510 million and ¥120,675
million, respectively. Corporate assets represent mainly surplus operating funds (cash and marketable securities), long-term
investment securities of the Company and assets held by the corporate division of the Company.
3. Overseas sales
Disclosure of overseas sales was omitted because the total overseas sales were less than 10% of total consolidated sales.

45

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, accumulated impairment loss, and net book value at the end ofeach fiscal year are as follows:
As of March 31, 2006

Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costs
Less:
Amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value
Buildings and structures
Equivalent to acquisition costs
Less:
Amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

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

Net book value
Intangible assets
Equivalent to acquisition costs
Less:
Amount equivalent to accumulated amortization
Amount equivalent to accumulated impairment loss

Net book value
Total
Equivalent to acquisition costs
Less:
Amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value

As of March 31, 2007

197,727

185,251(64,550)(21,703)
111,473 million yen(60,294)(21,703)103,252 million yen

46,99948,237(2,674)44,324 million yen(6,127)
42,109 million yen

13,604

20,187(5,700)(1,657)
6,245 million yen(6,168)(1,388)
12,630 million yen

2,624

10,124(1,238)(287)
1,097 million yen(2,254)(234)
7,635 million yen

260,955

263,800(74,164)(23,648)
163,141 million yen(74,846)(23,326)
165,628 million yen

Long-term prepaid expenses relating to a lease contract, in which the contract term and payment term are different, for the fiscal
years ended March 31, 2006 and 2007 were ¥1,989 million and ¥7,848 million , respectively and are included in “other assets” ofinvestments and other assets in the consolidated balance sheets.
(2) The future lease payments for capital lease at the end of the periods
As of March 31, 2006

Due within one year
Due after one year
Total
Balance of allowance for impairment loss on leased assets

34,560158,800
193,361 million yen
23,427 million yen

46

As of March 31, 2007

33,088
165,966
199,055 million yen
18,170 million yen

(3) Lease payments, amounts equivalent to depreciation and interest expense for each fiscal year are as follows.
FY 2006
ended March 31, 2006

Lease payments
Reversal of allowance for impairment loss on leased assets

Amount equivalent to depreciation expense
Amount equivalent to interest expense
Impairment loss

56,517 million yen
300
44,59515,80823,727FY 2007
ended March 31, 2007

52,875 million yen
5,256
41,52914,086-(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.
(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of the periods
As of March 31, 2006
As of March 31, 2007
Property and equipment - others
Acquisition costs
164
Less: accumulated depreciation(137)
Net book value
26 million yen- million yen(2) The future lease receivables for capital leases at the end of the periods
As of March 31, 2006

Due within one year
Due after one year
Total

29
29 million yen

As of March 31, 2007
- million yen(3) Lease income, depreciation and amount equivalent to interest income
FY 2006
April 2005 throughMarch 2006

Lease income
Depreciation expense
Amount equivalent to interest income

46 million yen
41
3

FY 2007
April 2006 throughMarch 2007

29 million yen
290(4) Calculation method of amount equivalent to interest income
The amount equivalent to interest income is calculated by subtracting acquisition costs from total 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
As of March 31, 2006

Due within one year
Due after one year
Total

9,904
11,041
20,946 million yen

As of March 31, 2007
9,898
4,386
14,284 million yen(as a lessor)
The future lease receivables for non-cancelable operating leases
As of March 31, 2006

Due within one year
Due after one year
Total

1,305
1,921
3,227 million yen

47

As of March 31, 2007
1,258
1,700
2,958 million yen

RELATED PARTY TRANSACTIONS WITH THE COMPANY
1. Parent Company and Major Corporate Shareholders
N/A
2. Directors and Major Individual Shareholders(Millions of yen; amounts less than one million yen are omitted.)Category

Director andshareholder

Name

Masayoshi
Son

Address-

Amount ofcapital-Nature ofbusiness or
occupation

Son Assets
Management,
Inc.

Relationship
Proportionate
interest

Concurrent
directors

31%-

Nature of transaction

Amount oftransaction

Cash paid on behalfof Son Assets
Management Inc

228

Facility use fee

61Businessrelationship-Account

Balance at
March 31,
2007

Other current
asset

24

Deposits received

142

President
Deposits received-

Note: Consumption taxes are included in the amount of the year end balance, but not in the amount of the transaction.
The terms of transactions and the policies“Facility use fee” and “Deposits received” are determined based on the percentage of facility used as with the case of affiliates.
3. Subsidiaries
N/A
4. Affiliates
N/A

48

Tax effect accounting
FY 2006 (For the year ended March 31, 2006)

FY 2007 (For the year ended March 31, 2007)

1. Significant components of deferred tax assets and liabilities

1.

Significant components of deferred tax assets and liabilities(Million yen)

(Million yen)

Deferred tax assets
Loss carry-forwards

Deferred tax assets¥181,802

Valuation loss on investment securities

63,777

Depreciation / Amortization

52,759Loss carry-forwards
Revaluation of acquired consolidated subsidiaryat the respective fair market value
Depreciation / Amortization

96,971
71,044

Unrealized loss on derivative instruments

19,665Investment securities

69,460Allowances for doubtful accounts

17,686

Allowances for doubtful accounts

24,238

Accrued expenses

17,531

Deferred revenue

18,970Exchange gain on affiliates’ stock

11,429Allowances for point mileage

18,567

Deferred revenue

8,656

Deferred losses on hedges

14,363

Valuation loss on inventories

3,855

OthersEnterprise tax payable

2,897

73,245Gross deferred tax assets

606,084

Unrealized gain

897

Less: valuation allowance(317,231)

Others4,825

Total deferred tax assets

288,852

Gross deferred tax assets

385,784

Less: valuation allowance(318,184)

Total deferred tax assets

67,599Deferred tax liabilities

2.

¥219,224

Deferred tax liabilities

Unrealized gains on other securities(70,264)

Unrealized gains on other securities(65,809)

Valuation gain on investment securities(6,371)Others(6,400)Foreign currency exchange gains on long-term receivables(227)

Total deferred tax liabilities(72,210)

Others(232)

Net deferred tax assets¥216,641

Total deferred tax liabilities(77,095)

Net deferred tax liabilities¥(9,495)
2.

Reconciliation between the statutory income tax rate
And effective income tax rate:

Statutory tax rate

Reconciliation between the statutory income tax rateand effective income tax rate:

40.69 %

Statutory tax rate

(Reconciliation)

40.69 %

(Reconciliation)

Dilution gain (loss) from changes in equity interest(3.71) %Consolidation adjustments resulting from gain onsale of investments in affiliates under equity method

13.21 %

Differences related to investments in affiliates(4.35)

Amortization of goodwill

10.38

Tax rate differential(2.17)

Consolidation adjustments resulting from gain andloss on sale of investments in consolidated subsidiaries

7.85

Tax deduction for IT industry and others development(1.27)Tax rate differential(2.31)

Change in valuation allowance

4.21

Change in valuation allowance(2.48)

Others(0.50)

Others0.93

Income tax rate per statements of income

32.89 %

Income tax rate per statements of income

49

68.27 %

Investment in Debt and Equity Securities
FY 2006 (as of March 31, 2006)(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)
FY 2006 (as of March 31, 2006)
Investment Cost

Carrying Amount

Differences¥18,532¥220,845¥202,313

18,532

220,845

202,313

16,277

13,473(2,804)

Carrying Amount > Investment Cost
Equity securities
Sub-total
Carrying Amount≦Investment Cost
(1)Equity securities(2)Others

59

59

-

Sub-total

16,337

13,533(2,804)

Total¥34,869¥234,379¥199,509(2) Available-for-sale and other securities sold during the fiscal year ended March 31, 2006
(Millions of yen; amounts less than one million yen are omitted.)
Sales Price
Gain on sales
Loss on sales¥33,103¥27,951¥173(1)Equity securities
7,044
839
(2)Debt securities
61,152
13,2292(3)Others¥101,300¥42,020¥175
Total(3) The carrying amounts of the unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)
Carrying Amounts
Available-for-sale and other securities
Unlisted equity securities, excluding over-the-counter stocks¥26,759

Investments in limited partnerships

6,494

Money Management Fund

2,959

Preferred fund certificate

2,000

Designated Money Trust

1,000

Mid-term government bond funds

191

Unlisted foreign debt securities

94

Others329

Total¥39,827(4) Redemption schedule for “held-to-maturity debt securities” and “available-for-sale and other securities” with maturity date
subsequent to the consolidated balance sheet date(Millions of yen; amounts less than one million yen are omitted.)
April 1, 2006 to

April 1, 2007 to

April 1, 2011 to March

April 1, 2016

March 31, 2007

March 31, 201131, 2016

and thereafter-94

Debt securities
Corporate bonds

50

-

-

FY 2007 (as of March 31, 2007)(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)
FY 2007 (as of March 31, 2007)
Investment Cost

Carrying Amount

Differences¥39,163¥230,903¥191,740

1,100

1,100

0

40,263232,003

191,740

905

886

(18)

Carrying Amount > Investment Cost
(1)Equity securities(2)Others
Sub-total
Carrying Amount≦Investment Cost
Equity securities
Sub-total
Total

905

886

(18)

¥41,168¥232,890¥191,721(2) Available-for-sale and other securities sold during the fiscal year ended March 31, 2007
(Millions of yen; amounts less than one million yen are omitted.)
Sales Price(1)Equity securities(2)Debt securities(3)Others
Total

Gain on sales

Loss on sales¥10,812¥7,704¥3,943

22

4

-

7,111

155

311

¥17,946¥7,865¥4,254(3) The carrying amounts of the unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)
Carrying Amounts(1)Held-to-maturity debt securities
Unlisted debt securities¥170(2)Available-for-sale and other securities
Unlisted equity securities, excluding over-the-counter stocks¥141,790

Money Management Fund

6,053

Investments in limited partnerships

5,802

Preferred fund certificate

2,000

Designated Money Trust

1,000

Mid-term government bond funds

171

Unlisted foreign debt securities

148

Others446

Total¥157,583(4) The redemption schedule for “held-to-maturity debt securities” and “available-for-sale and other securities” withmaturity date subsequent to the consolidated balance sheet date(Millions of yen; amounts less than one million yen are omitted.)
April 1, 2007 to

April 1, 2008 to

April 1, 2012 toApril 1, 2017

March 31, 2008

March 31, 2012

March 31, 2017

and thereafter

248

70

-

-

Debt securities
Corporate bonds

51

DERIVATIVE TRANSACTIONS
1. Currency Related(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2006
Contract amounts
Over 1Nature of transaction

year

March 31, 2007

Fair

Unrealized

value

gain

Contract amounts
Over 1year

Fair

Unrealized

value

gain (loss)

Option transactions to・Purchase U.S dollar call option and Japanese
Off-market
transactions

yen put option

¥-

-

¥-

¥-

¥5,900

-

¥(41)

¥(41)

29,132-

29,128(3)

70,890-70,866

(23)

-

-

-

-

9,045

-

9,130

85

Forward exchange contracts to・Purchase U.S. dollars and sell Japanese yen
・ Purchase Euro and sell Japanese yen
Total

¥(3)

¥20

Notes: 1. Fair value is based on information provided by financial institutions at the end of each fiscal year.
2. Derivative transactions to which the Company applied hedge accounting are excluded.
2. Interest Related
There are no applicable items.
Note: Derivative transactions to which the Company applied hedge accounting are excluded.
3. Securities Related
There are no applicable items.
Note: Derivative transactions to which the Company applied hedge accounting are excluded.

PENSION AND SEVERANCE PLANS
1.

Pension Plans
Employees of the Company and most of its domestic consolidated subsidiaries participate in defined contribution pension plans andthe contributory defined benefit welfare pension plans.

2. Projected Benefit Obligation
Projected benefit obligation (PBO)

March 31, 2006

March 31, 2007

17,279 million yen

16,701 million yen-

Plan assets at fair value-

Unfunded PBO

17,27916,701--

17,27916,701-

Unrecognized actuarial losses
Net liability for retirement benefits
Prepaid pension costs

17,279 million yen

16,701 million yen

March 31, 2006

March 31, 2007a)Service costs (Note 1)

2,600

1,568 million yenb)Interest costs

330

Accrued retirement benefits

3. Pension and Severance Costsc)Expected return on plan assets

million yen

368
-

-

d)Recognized actuarial lossese)Amortization of prior service obligations (Note 2)f)Contributions

(645)

29

-

(2,838)592h)Net pension and severance costs

2,878

2,127
million yen

1,254 million yen

Notes:
1. Service costs include ¥998 million for FY2006 and ¥1,024 million for FY2007 of contributions to multi-employer
contributory defined benefit welfare pension plans.
2. This resulted from the revision of the pension plans of SOFTBANK TELECOM Corp. and SOFTBANK MOBILE Corp.
52

Stock Option
The stock option outstanding as of March 31, 2007 is as follows:(1) Stock option
Stock Subscription Rights (2001)

The First Series of Stock Acquisition Rights (2003)

The Company

The Company

June 21, 2001

June 24, 2003

Resolved date at thegeneral meeting ofshareholders
Persons To whom stockacquisition rights allotted

Directors of the Company: 8

Employees of the Company: 80
Directors of Subsidiaries:
16
Employees of Subsidiaries: 1,746

Class and number ofshares1,650,000 shares of common stock of the Company

4,200,000 shares of common stock of the Company

Grant date

September 29, 2001

December 9, 2003

Continuously rendering the service from the grant date
(September 29, 2001)to the vesting date in stages from June 30,
2002 to June 30, 2004:

Continuously rendering the service from the grant date
(December 9, 2003)to the vesting date in stages from June 30,
2004 to November 28, 2007 and:A. to June 30, 2002: 30% of allotment shares

1. In case individuals who are allotted the Stock Acquisition
Rights (the “holders of the Stock Acquisition Rights”) are thedirectors, executive officers or those who are scheduled to be
employed as executive officers of the Company or thesubsidiaries of the Company at the issue date;

B. to June 30, 2003: 30% of allotment shares
C. to June 30, 2004: 40% of allotment shares

A. to June 30, 2004: 0% of allotment shares
B. to November 28, 2004: 25% of allotment shares

Conditions to earn
vestedstock
acquisition rights

C. to November 28, 2005: 25% of allotment shares
D. to November 28, 2006: 25% of allotment shares
E. to November 28, 2007: 25% of allotment shares

2. In case the holders of the Stock Acquisition Rights are theemployees or those who are scheduled to be employed of theCompany or the subsidiaries of the Company at the issue date;
A. to June 30, 2004: 0% of allotment shares
B. to November 28, 2005: 50% of allotment shares
C. to November 28, 2006: 25% of allotment shares
D. to November 28, 2007: 25% of allotment shares
1.In case the holders of the Stock Acquisition Rights are thedirectors, executive officers or those who are scheduled to be
employed as executive officers of the Company or thesubsidiaries of the Company at the issue date;
A. 0% of allotment shares:
From December 9, 2003 to June 30, 2004
B. 25% of allotment shares:
From December 9, 2003 to November 28, 2004
C. 25% of allotment shares:
From December 9, 2003 to November 28, 2005
D. 25% of allotment shares:
From December 9, 2003 to November 28, 2006
E. 25% of allotment shares:
From December 9, 2003 to November 28, 2007
2.In case the holders of the Stock Acquisition Rights are theemployees or those who are scheduled to be employed of theCompany or the subsidiaries of the Company at the issue date;
A. 0% of allotment shares:
From December 9, 2003 to June 30, 2004
B. 50% of allotment shares:
From December 9, 2003 to November 28, 2005
C. 25% of allotment shares:
From December 9, 2003 to November 28, 2006
D. 25% of allotment shares:
From December 9, 2003 to November 28, 2007

A. 30% of allotment shares:
From September 29, 2001 to June 30, 2002
B. 30% of allotment shares:
From September 29, 2001 to June 30, 2003
C. 40% of allotment shares:
From September 29, 2001 to June 30, 2004

Period of service

Exercisable period ofStockAcquisition
RightsFrom July 1, 2002, to June 30, 2007
To be in the qualified position in the Company or its
subsidiaries is required to exercise the rights

53

From July 1, 2004, to June 30, 2009
To be in the qualified position in the Company or its
subsidiaries is required to exercise the rights

The Third Series of Stock Acquisition Rights (2004)

The Third Series of Stock Acquisition Rights (2005)

The Company

The Company

Resolved date at thegeneral meeting ofshareholders

June 24, 2004

June 22, 2005

Persons To whom stockacquisition rights allotted

Executive officers of Subsidiaries: 12

Employees of the Company:
16
Directors of Subsidiaries:
1
Executive officers of Subsidiaries: 3
Employees of Subsidiaries:
152

822,000 shares of common stock of the Company

923,300 shares of common stock of the Company

October 8, 2004

February 10, 2006

Continuously rendering the service from the grant date
(October 8, 2004) to the vesting date in stages from June30, 2005 to September 30, 2008:

Continuously rendering the service from the grant date(February 10, 2006) to the vesting date in stages from June30, 2006 to June 30, 2009Class and number ofshares to be issued upon
exerciseof
Stock
Acquisition Rights
Grant dateConditions to earn
vested stock acquisitionrightsA. to June 30, 2005: 0% of allotment shares

A. to June 30, 2006: 0% of allotment shares
B. to June 30, 2007: 50% of allotment shares

B. to September 30, 2005: 25% of allotment shares

C. to June 30, 2008: 25% of allotment shares

C. to September 30, 2006: 25% of allotment shares

D. to June 30, 2009: 25% of allotment shares

D. to September 30, 2007: 25% of allotment shares
E. to September 30, 2008: 25% of allotment shares

A. 0% of allotment shares:

A. 0% of allotment shares:

From February 10, 2006 to June 30, 2006

From October 8, 2004 to June 30, 2005

B. 50% of allotment shares:

B. 25% of allotment shares:

From February 10, 2006 to June 30, 2007

From October 8, 2004 to September 30, 2005

Period of service

C. 25% of allotment shares:

C. 25% of allotment shares:

From February 10, 2006 to June 30, 2008

From October 8, 2004 to September 30, 2006

D. 25% of allotment shares:

D. 25% of allotment shares:

From February 10, 2006 to June 30, 2009

From October 8, 2004 to September 30, 2007
E. 25% of allotment shares:
From October 8, 2004 to September 30, 2008

Exercisable period ofStockAcquisition
RightsFrom July 1, 2005, to June 30, 2010
To be in the qualified position in the Company or its
subsidiaries is required to exercise the rights

From July 1, 2006, to June 30, 2011
To be in the qualified position in the Company or its
subsidiaries is required to exercise the rights(2) The stock option activity is as follows:
1. Number of shares
Stock Subscription Rights The First Series of Stock The Third Series of Stock The Third Series of Stock(2001)
Acquisition Rights (2003) Acquisition Rights (2004) Acquisition Rights (2005)
The Company
The Company
The Company
The Company
Non-vested
Shares at the beginning of the year
Shares granted during the year
Shares forfeited and expired during
the year
Shares vested during the year
Shares at the end of the year-

1,509,000-

315,000-

923,300--

28,05036,00028,400-742,725738,225

93,000186,000

894,900

876,000
330,000

1,509,000
742,725
241,500

105,000
93,00060,000--37,05012,000-546,000

1,973,175

126,000-

VestedShares at the beginning of the year
Shares vested during the year
Shares exercised during the year
Shares forfeited or expired during
the year
Exercisable shares at the end of theyear

2. Prices per share
Exercise price (yen)Average market price at the exercise
date (yen)Fair value price at the grant date (yen)Stock Subscription Rights The First Series of Stock The Third Series of Stock The Third Series of Stock(2001)
Acquisition Rights (2003) Acquisition Rights (2004) Acquisition Rights (2005)¥996¥1,440¥1,827¥4,172
2,746

2,744

2,430

-

-

-

-

-

54

BUSINESS COMBINATIONS
Merger of consolidated subsidiaries
1. Merger of SOFTBANK TELECOM SALES Corp. and SOFTBANK TELECOM Corp.
On December 15, 2006, SOFTBANK TELECOM SALES Corp. and SOFTBANK TELECOM Corp., the Company’s
wholly-owned subsidiaries, resolved the merger, which was approved at the extraordinary shareholders’ meeting of both companies
held on January 31, 2007. The merger became effective from February 1, 2007.
1. Outline of the merger(1) Companies involved in merger
SOFTBANK TELECOM SALES Corp. and SOFTBANK TELECOM Corp.
(2) Main business of merger companies
SOFTBANK TELECOM SALES Corp.
Fixed-line telecommunication and investment businesses
SOFTBANK TELECOM Corp.
Fixed- line telecommunication business(3) Method of the merger
SOFTBANK TELECOM SALES Corp., as the surviving company, acquired SOFTBANK TELECOM Corp., which
subsequently was dissolved.
(4) Company name after the merger
SOFTBANK TELECOM Corp.
(SOFTBANK TELECOM SALES Corp. changed its company name to SOFTBANK TELECOM Corp. after themerger.)(5) Purpose and method of the merger
The purpose of this merger is to accelerate business development of SOFTBANK TELECOM Corp. within the
SOFTBANK Group and strengthen its financial structure by merging with SOFTBANK TELECOM SALES Corp. basedon the SOFTBANK Group’s management policy which is to strengthen the operational base.
2. Summary of accounting procedures
The merger is accounted for using accounting standards for business combinations, applying to transactions under common
control, based upon “Accounting Standard for Business Combinations” (Accounting Standards issued on October 31, 2003 by
the Business Accounting Council in Japan) and “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (Financial Accounting Standards Implementation Guidance No. 10 issued on
December 27, 2005).
2. Merger of BB TECHNOLOGY Corp. and SOFTBANK BB Corp.
On February 26, 2007, BB TECHNOLOGY Corp. and SOFTBANK BB Corp., the Company’s wholly-owned subsidiaries,
resolved the merger, which was approved at the extraordinary shareholders’ meeting of both companies held on February 28, 2007.
The merger became effective from March 31, 2007.
1. Outline of the merger(1) Companies involved in merger
BB TECHNOLOGY Corp. and SOFTBANK BB Corp.
(2) Main business of merger companies
BB TECHNOLOGY Corp.
ADSL business
SOFTBANK BB Corp.
Content services, FTTH, and distribution businesses, etc.
(3) Method of the merger
BB TECHNOLOGY Corp., as the surviving company, acquired SOFTBANK BB Corp., which subsequently was
dissolved.
55

(4) Company name after the merger
SOFTBANK BB Corp.
(BB TECHNOLOGY Corp. changed its company name to SOFTBANK BB Corp. after the merger.)(5) Purpose and method of the merger
The purpose of this merger is to facilitate the reconstruction of the Broadband infrastructure business for pursuing further
synergies among the three telecommunication businesses, Mobile Communications, Broadband Infrastructure, andFixed-line Telecommunications, within the Group after newly establishing Mobile Communications business segment thisfiscal year.
2. Summary of accounting procedures
The merger is accounted for using accounting standards for business combinations, applying to transactions under common
control, based upon “Accounting Standard for Business Combinations” (Accounting Standards issued on October 31, 2003 by
the Business Accounting Council in Japan) and “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (Financial Accounting Standards Implementation Guidance No. 10 issued on
December 27, 2005).
PER SHARE DATAFY 2006
Shareholders’ equity per share (yen)Net income per share - primary (yen)Net income per share – diluted (yen)FY 2007¥229.88
54.36
50.71

¥268.02
27.31
26.62

The Company conducted the three-for-one share split of the Company’s common stock on January 5, 2006.
Per share data for the FY2006 were calculated supposing the share split as conducted at the beginning of the fiscal year.

Basic data for computation of the per share data
1. Net income (in millions of yen)
2. Net income allocated to common stock outstanding(in millions of yen)
3. Amounts not allocated to shareholders(in millions of yen)
4. Weighted average number of common stock outstanding
during each fiscal year (unit: shares)
5. Adjustment for net income used to calculate net income per share – diluted(in millions of yen)
6. Increase of common stock used to calculate net income per share – diluted(unit: shares)
7. Residual securities which does not dilute net income per share:

57,55028,81557,32528,815224-

1,054,478,501

1,055,264,814

370

1,520

83,390,701

84,391,085

Stock acquisition rights
Agreement on June 22,

Stock acquisition rights
Agreement on June 22,

2005

2005

Significant Subsequent Event
Issuance of Straight-Bond
The Company issued the following straight-bond on April 26, 2007.
1. Issuance name
Twenty fourth Unsecured Straight-Bond
2. Proposed aggregate amount of issue
20 billion yen
3. Face value of issue
100yen per face value of 100yen
4. Interest rate
2.72% per year
5. Maturity date
April, 26, 2010
6. Use of proceeds
Refinance of interest bearing debts

56