SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the First Quarter ended June 30, 2003
FINANCIAL HILIGHTS
1.

Results of Operations(Million yen; amounts less than one million yen are omitted.)
Net Sales
Three-month period
endedJune 30, 2003
FY2003
April 2002
through March 2003

Operating loss

Ordinary loss

¥103,881¥(24,197)¥(30,633)¥(34,734)

406,892(91,997)(109,808)(99,989)

Net loss per share—
primary (yen)Net loss

Net loss per share—
diluted (yen)Three-month period
endedJune 30, 2003¥(103.31)-

FY2003
April 2002
through March 2003

(296.94)-

Note: No changes in accounting methods

2.

Financial Condition(Million yen; amounts less than one million yen are omitted.)
Shareholders’
Total assets

Shareholders’ equity
Equity ratio (%)

equity3.

per share (yen)June 30, 2003

¥1,008,478¥272,630

27.0¥809.35

FY2003
March 31, 2003

946,331257,39627.2

767.56

Cash Flows

Operating activities(Million yen; amounts less than one million yen are omitted.)
Cash and cash
Investing activities
Financing activities
equivalents
at end of the period

Three-month period
endedJune 30, 2003¥(37,821)¥(7,899)¥22,791¥124,660

FY2003
April 2002
through March 2003

(68,600)

119,749(17,615)

147,526

1

4.

Scope of Consolidation at June 30, 2003
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

251
4
111

Changes in Scope of Consolidation during the three-month period ended June 30, 2003
Consolidated subsidiaries:
Newly included:
Newly excluded:2
20

Equity-method non-consolidated
subsidiaries and affiliates:
Newly included:
Newly excluded:

452

Management Policies
The core management philosophy of the SOFTBANK Group (the “Group”) is“Endeavoring to benefit society and the economy by fostering the sharing of wisdom andknowledge gained through the IT revolution.” By conducting business activities in acreative manner, the Group focuses its energy on both benefiting society and increasing
its enterprise value.
In line with the management vision of accelerating the IT revolution by promoting theuse of broadband, the Group in recent years has taken the lead in increasing theutilization of broadband. The Group’s policy is to use broadband to maximize its
enterprise value. The Group expects to accomplish this policy by promoting the growthof broadband-related markets through the establishment of an environment in which
low-cost, high-speed, high-capacity, and always-on Internet access is readily available.
The Group’s strategy for the medium and long terms is to use its broadband
infrastructure businesses to capture synergies that can create an Internet-based groupof companies with a diversified profit structure and the ability to generate cash.
In Japan, the number of broadband subscribers rose to 10.93 million as of the end ofJune 2003, a figure that includes more than 8.25 million DSL subscribers (Data from
Ministry of Public Management, Home Affairs, Posts and Telecommunications). In the
broadband infrastructure business, a sector of the highest priority for the Group, theYahoo! BB service, which jointly provided by SOFTBANK BB Corp. and Yahoo Japan
Corporation, surpassed 2.82 million in cumulative lines installed as of the end of June
2003. Yahoo! BB has maintained the leading market share in the ADSL sector as both acommunications carrier and ISP. In addition, the number of Yahoo! BB paying
customers passed the 2-million level in June 2003. The Group already has an
overwhelming lead in the market for IP telephony services. Now, the Group will also be
placing emphasis on content developed on its infrastructure. In this domain, all Group
broadband businesses will be promoted to build a profit structure that is diversified andhas long-term stability.
Regarding the Group’s important issues, the Group is working on rapidly achieving
profitability in its Broadband Infrastructure segment and further growth and stability
in its other businesses, which have already become profitable. Another important issue
is diversifying fund raising channels. On June 30, 2003, SOFTBANK CORP. decided tosell all its shares in Aozora Bank, Ltd. to Cerberus NCB Acquisition, L.P. (“Cerberus”).
Proceeds from this sale, which will be received when Cerberus completes its take-overbid, are earmarked for the broadband infrastructure business and other activities. In
3addition, the Group’s policy is to establish many methods of raising funds, such as leasefinance and liquidation of assets, needed for up-front investments in the broadband
infrastructure business, such as capital expenditures and customer acquisition costs.

4

Results of Operations and Financial Position
1. Consolidated Results of Operations
Summary of First-Quarter Results
First-quarter net sales totaled ¥103,881 million. In addition to net sales in the
e-Commerce segment, there were strong performances in the Broadband Infrastructure
segment as the number of paying customers grew and in the Internet Culture segment.
Operating loss was ¥24,197 million, mainly due to expenses associated with growth in
the scale of operations in the Broadband Infrastructure segment. Excluding theBroadband Infrastructure segment, results continued to be steady at the operating levelwith a profit of ¥4,692 million.
Ordinary loss was ¥30,633 million. In non-operating items, there were a net equity ingain under the equity method of ¥880 million and a net exchange gain of ¥364 million.
However, interest expense was ¥2,767 million because of an increase in long-term debt.
Other non-operating expenses were ¥6,807 million.
Net loss was ¥34,734 million. After net special income of ¥5,694 million, the sum of
special income of ¥12,362 million and special loss of ¥6,667 million, the loss before
income taxes and minority interest was ¥24,938 million. The largest component ofspecial income was a gain on sale of investment securities of ¥11,280 million
representing the partial sale of stock in UTStarcom, Inc. and cyber communications inc.
The largest component of special loss was a valuation loss on investment securities of¥2,339 million, mainly in the Overseas Funds segment.
Results of Operations by Business Segment
Broadband Infrastructure—Segment sales totaled ¥23,809 million. Contributing to thisperformance were SOFTBANK BB Corp., where there was growth in the Yahoo! BB
business in terms of both the number of paying customers and average revenue per user
as additional services being expanded, and Yahoo Japan Corporation, where there was
growth in ISP revenues. Growth also continued at IP REVOLUTION, INC. as thenumber of customers rose. The segment had an operating loss of ¥28,890 million,
mainly the result of expenses in the Yahoo! BB business for acquiring new customers
and other activities.
e-Commerce—Segment sales were ¥56,309 million. Due to weakness throughout theindustry, sales of hardware and software were sluggish at SOFTBANK BB Corp.
First-quarter sales are normally lower than in other periods because hardware and5software sales tend to be concentrated in the four-month period ending in March of eachfiscal year. Segment operating income was ¥645 million as competitive forces squeezed
the gross profit margin. Operating income remained generally steady at othere-Commerce segment companies. Carview Corporation (formerly CarPoint K.K.),
e-Career CORP. and several other companies increased earnings. Dee Corp. increased
sales and operating income, turning to profitability at the operating level.
e-Finance—Segment revenue totaled ¥7,009 million. Brokerage commissions increased
as the number of accounts, including margin accounts, and stock transactions at
E*TRADE SECURITIES CO., LTD. (E*TRADE) rose. Operating income was ¥447
million, which included financial income at E*TRADE, a gain on sale of operational
investment securities and other items. On June 2, 2003, SOFTBANK INVESTMENTCORPORATION merged with E*TRADE Japan K.K., with the former the surviving
company.
Broadmedia—Segment sales were ¥3,125 million. Incentive revenue from sales
promotion for the Yahoo! BB service at Club iT Corporation contributed to thisperformance, although there was a decline in membership at “Club iT”, a CS
broadcasting service organization. The segment had an operating loss of ¥749 million.
The primary cause was start-up and development-related expenses at BB Cable
Corporation, which operates the “BB Cable TV” service via the ADSL network.
Internet Culture—Segment sales totaled ¥13,165 million. Advertising revenues at
Yahoo Japan Corporation increased for the sixth consecutive quarter, rising to an
all-time high. In addition, sales were strong in the auction business due to theintroduction of a system utilization fee. Operating income was ¥6,648 million.
2. Consolidated Financial Position
Balance Sheet Analysis
Total current assets decreased ¥13,131 million to ¥394,305 million, compared with
March 31, 2003 mainly because of an ¥18,144 million decline in cash and deposits.
Property and equipment increased ¥9,383 million to ¥111,633 million mainly because ofcapital expenditures by SOFTBANK BB Corp. in its broadband infrastructure business.
Total investments and other assets increased ¥65,422 million to ¥477,769 million. The
primary reason was a ¥73,768 million increase in investment securities, which included
an increase in the market value of stock in Yahoo! Inc. and UTStarcom, Inc. UTStarcom,
Inc. was reclassified from an equity-method affiliate to an available-for-sale security
6and carried at fair market value at the end of the quarter.
Total liabilities increased ¥43,889 million to ¥686,818 million, compared with March 31,
2003. The major reasons were a ¥26,819 million increase in long-term debt, mainly at
SOFTBANK America Inc., and a ¥24,399 million increase in long-term deferred tax
liabilities resulting mainly from the increase in net unrealized gain on other securities
in relation to stock in Yahoo! Inc. and UTStarcom, Inc. Due to the seasonal decline insales of hardware and software and to other factors, notes and accounts payable–tradedecreased ¥20,024 million to ¥38,509 million.
Total shareholders’ equity increased ¥15,233 million to ¥272,630 million. Accumulated
deficits increased ¥37,485 million because of the net loss in this period, while net
unrealized gain on other securities increased ¥51,283 million, reflecting increases in thevalue of stock in Yahoo! Inc. and UTStarcom, Inc.
Cash Flows Analysis
Cash was provided by financing activities, but was used for operating and investing
activities. As a result, cash and cash equivalents decreased ¥22,865 million to ¥124,660
million, compared with March 31, 2003.
Net cash used for operating activities was ¥37,821 million. Loss before income taxes
and minority interest was ¥24,938 million, mainly the result of the operating loss in the
Broadband Infrastructure segment. Income taxes paid was ¥9,886 million mainly at
Yahoo Japan Corporation.
Net cash used for investing activities was ¥7,899 million. Proceeds from sale ofmarketable and investment securities, including stock in UTStarcom, Inc., totaled¥19,559 million, but ¥22,890 million was used for the purchase of property andequipment and intangibles, mainly transmission equipment at SOFTBANK BB Corp.,
and for other requirements.
Net cash provided by financing activities was ¥22,791 million. Short-term borrowings
decreased ¥22,850 million, but proceeds from long-term debt totaled ¥45,406 million,
mainly reflecting borrowings at SOFTBANK America Inc.

7

The SOFTBANK GroupAs of June 30, 2003, the SOFTBANK Group comprised 366 companies with operation in 8 segments as follows.
Business segment

Consolidated
subsidiaries (includes
partnerships)

Equity-method
non-consolidated
subsidiaries andaffiliates (includes
partnerships)

ADSL high-speed Internet connection service and IP telephony service;
fiber-optic ultra-high-speed Internet connection service and otheroperations
Sales of PC software and such hardware as PCs and peripherals;
enterprise solutions; diversified e-commerce business, including
e-commerce between business and consumer
All-inclusive Web-based financial operations, including Internet
securities operations; management of domestic venture capital funds;
incubation of portfolio corporations
Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc.; exhibition management; web content development
Provision of applications and content for broadband broadcasting andcommunications and promoting the spread of such operations
Internet-based advertising operations; broadband portal business;
Internet-based auction business
Systems solutions business; business solutions business
U.S.- and Asia-focused global private equity operations inInternet-related companies
Holding company functions for overseas operations; back-officeservices in Japan

1.

Broadband
Infrastructure

14

8

2.

e-Commerce

18

10

3.

e-Finance

117

17

4.

Media & Marketing

13

6

5.

Broadmedia

14

2

6.

Internet Culture

16

5

7.

Technology Services

7

4

8.

Overseas Funds

42

55

9.

Others

10

8

251

115

Total

Principal products and operational content of each businessNote: SOFTBANK BB Corp., which is engaged in the Broadband Infrastructure and e-Commerce segments, isincluded in the Broadband Infrastructure segment; Yahoo Japan Corporation, which is engaged in the Internet Cultureand Broadband Infrastructure segments, is included in the Internet Culture segment. Both of them are consolidated
subsidiaries.
Broadband Infrastructure

e-Commerce［ Overseas ］［ Domestic ］
Dee Corp.

IP REVOLUTION, INC.

SOFTBANK BB Corp.

Internet Culture

Yahoo Japan Corporation

Vector Inc.
CarPoint K.K.

（Operation Holding
Companies）

SOFTBANK CORP.
［ Overseas ］

Broadmedia

e-Finance

SOFTBANKINVESTMENTCORPORATION

Tavigator, Inc.
e-Shopping! Books CORP.

Morningstar Japan K.K.

SOFTBANKFINANCECORPORATION（Operation Holding
Companies）

Morningstar, Inc.

E*TRADE Japan K.K.
SOFTBANK FRONTIERSECURITIES CO., LTD.

［ Domestic ］［ Overseas ］（Operation Holding（Pure Holding Company）
Companies）
SOFTBANKSOFTBANK Korea Co., Ltd.
SOFTBANK
Holdings Inc.
Broadmedia
Club iT Corporation
SB CHINA HOLDINGS PTE LTD
Corporation
BB Cable Corporation
Overseas Funds
SOFTBANKSOFTBANK Media &TECHNOLOGY
Marketing Corp.
HOLDINGS CORP.
SOFTBANK US Ventures VI L.P.
（Operation Holding
SOFTBANK Publishing Inc. SB Life Science Ventures I, L.P.
Companies）
SOFTBANK TECHNOLOGY CORP.
SOFTBANK ZDNet Inc.

［ Domestic ］

Aozora Bank, Ltd.

cyber communications inc.

［ Domestic ］
Technology Services

Media & Marketing［ Overseas ］
Others・・・・ Segment

Notes: Changes after July 1, 2003
(1)

Aozora Bank, Ltd.: SOFTBANK will take necessary procedures to sell its sharesin Aozora Bank through a TOB initiated by Cerberus NCB Acquisition, L.P.

(2)・・・・ Consolidated subsidiary・・・・ Equity-method subsidiaryor affiliate“CarPoint K.K.”: The corporate name changed to “Carview Corporation”
from July 1, 2003.

8

CONSOLIDATED BALANCE SHEETS

June 30, 2003
Amount(Millions of yen; amounts less than one million yen are omitted.
Increase
March 31, 2003
(decrease)
Amount%%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable - tradeMarketable securities
Inventories
Deferred tax assets
Receivables related to margin transactions
Other current assets
Less : allowance for doubtful accounts
Total current assets

39.1¥147,503
64,255
5,059
42,201
7,035
48,84799,802(7,268)407,437

43.1¥(18,144)(9,544)(2,497)(6,242)(807)
14,29010,725(911)(13,131)

11.1

79,28422,964102,249

10.8

11,930(2,547)
9,383

2.4

11,1949,830
2,814
23,838

2.5

1,260
(864)
193
588

341,183
88,730835
33,536
15,276(1,794)
477,76947.4

267,414
97,606780
32,701
15,637(1,794)412,34643.6

73,768(8,875)
55
835
(360)
(0)
65,422

343

0.0

459

0.0

(115)

¥1,008,478

100.0¥946,331

100.0¥62,147¥129,358
54,7102,562
35,9596,228
63,138110,528(8,179)394,305

Non-current assets:
Property and equipment, net
Transmission equipment
Other
Total tangible assets

91,215
20,417
111,633

Intangible assets, net
SoftwareConsolidation adjustment
Other intangibles
Total intangible assets

12,454
8,965
3,007
24,427

Investments and other assets
Investment securities
Investments in partnerships
Long-term loans
Deferred tax assets
Other assets
Less : allowance for doubtful accounts
Total investments and other assets

Deferred charges

Total assets

9

CONSOLIDATED BALANCE SHEETS

June 30, 2003
Amount(Millions of yen; amounts less than one million yen are omitted.
Increase
March 31, 2003
(decrease)
Amount%%LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Notes and accounts payable - trade
Short-term borrowings
Commercial paper
Current portion of corporate bonds
Current portion of convertible bonds
Accounts payable - otherAccrued expenses
Income taxes payable
Deferred tax liabilities
Payables related to margin transactions
Other current liabilities
Total current liabilities¥38,509
145,432
4,000
56,21960
50,994
15,591
9,856
9,596
53,25067,614451,12644.7¥58,534
150,557
4,000
56,21960
60,243
14,576
10,912
5,97844,45852,964
458,504

48.5¥(20,024)(5,124)(9,248)1,015(1,055)
3,618
8,791
14,649(7,378)

19.4

(713)
26,81924,399(21)
784
51,267Long-term liabilities:
Corporate bonds
Convertible bonds
Long-term debt
Deferred tax liabilities
Accrued retirement benefits
Other liabilities
Total long-term liabilities

121,049
45
34,96957,68428
21,914
235,691

23.4

121,763
45
8,149
33,285
49
21,130184,424

Total liabilities

686,81868.1

642,92967.9

43,88949,0294.9

46,005

4.9

3,024

Common stock

137,867

13.6

137,867

14.6-

Additional paid-in capital

162,264

16.1

162,231

17.1

32

Accumulated deficits(138,516)(13.7)(101,031)(10.7)(37,485)

Net unrealized gain on other securities

90,8799.0

39,595

4.2

51,283

Translation adjustments

20,1762.0

20,932

2.2

(756)

(40)

(0.0)

(2,199)

(0.2)

2,158

272,63027.0

257,39627.2

15,233¥1,008,478

100.0¥946,331

100.0¥62,147

Minority interestin consolidated subsidiaries

Shareholders' equity:

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

10

CONSOLIDATED STATEMENTS OF INCOME(Millions of yen; amounts less than one million yen are omitted.
Three-month period ended
FY2003
April 2002 through March 2003
June 30, 2003
Amount%Amount%¥103,881

100.0¥406,892

100.0

Cost of sales

83,82480.7

361,243

88.8

Gross profit

20,05719.3

45,648

11.2

Selling, general and administrative expenses

44,255

42.6

137,646

33.8

Operating loss

(24,197)(23.3)(91,997)(22.6)Net salesInterest income
Exchange gain
Equity in gain under the equity method
Other non-operating income
Non-operating income

159
364
880
1,735
3,139

Interest expense
Exchange loss
Other non-operating expenses
Non-operating expenses

2,767

1,092
-

3.0

11,107
5,553
17,753

4.4

6,807
9,575

9.2

8,741
7,704
19,11935,564

8.8

Ordinary loss

(30,633)(29.5)(109,808)(27.0)

Gain on sale of investment securities
Other special income
Special income

11,2801,082
12,362

11.9

127,607
6,797
134,405

33.0

Loss on sale of investment securities
Valuation loss on investment securities
Valuation loss on investment in affiliates
Other special losses
Special loss

20
2,339
545
3,762
6,667

6.4

10,84633,84832,32319,051
96,071

23.6(24,938)(24.0)(71,474)(17.6)

Current
RefundedDeferred

9,360

9.0

(721)

(0.7)

14,84911,12527,350

3.6
2.7
6.7

Minority interest

1,156

1.1

(2,560)(0.6)¥(34,734)(33.4)¥(99,989)(24.6)

Loss before income taxes and minority interest-

Income taxes:

Net loss

Note: SOFTBANK CORP. had presented the results of the financing businesses separately in the accounts of "Revenue from financing
business" and "Financing business expenses" in the consolidated statements of income. Effective from April 1, 2003, SOFTBANK CORP.
has presented the combined results of operations of non-financing business and financing business in the accounts of "Net sales", "Cost of
sales", and "Selling, general and administrative expenses" in the consolidated statements of income for the first quarter period ended June30, 2003.

11

CONSOLIDATED STATEMENTS OF
ADDITIONAL PAID-IN CAPITAL AND RETAINED EARNINGS(Millions of yen; amounts less than one million yen are omitted.)
FY2003Three-month period endedApril 2002 through March 2003
June 30, 2003
ADDITIONAL PAID-IN CAPITAL
Additional paid-in capitalat the beginning of the period
Increase in paid-in capital due to sale of treasury stock

Additional paid-in capitalat the end of the period¥162,231¥162,231-

32¥162,231¥162,264(Millions of yen; amounts less than one million yen are omitted.)
FY2003Three-month period endedApril 2002 through March 2003
June 30, 2003
RETAINED EARNINGS (DEFICITS)
Retained earnings (deficits)at the beginning of the period(¥101,031)¥4,035Net loss(34,734)(99,989)

Cash dividends(2,342)(2,358)Bonuses to directors

(70)

(75)

Net adjustments to retained earnings due tochanges in investment in the affiliated companies
accounted for under the equity method(381)(2,636)

44

11

-

(2)

-

(17)

¥(138,516)¥(101,031)

Increase in retained earnings of consolidated
subsidiaries excluded from consolidation
Decrease in retained earnings of subsidiaries
included into consolidation
Decrease due to merger
Accmulated deficits at the end of the period

12

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions of yen; amounts less than one million yen are omitted.)
FY2003Three-month period endedApril 2002 through March 2003
June 30, 2003
I

Cash flows from operating activities:
Loss before income taxes and minority interest¥(24,938)¥(71,474)

7,587
(880)
2,884
(11,259)
567
(322)
2,767
9,626
(20,172)(11,197)
8,587
10,439(26,311)

20,904(11,107)
66,172(116,839)
8,626(1,311)
8,741(3,522)
3,172
8,576
2,208
32,792(53,061)552(2,174)(9,886)(37,821)1,138(9,386)(13,202)
5,911(68,600)

Cash flows from investing activities:
Purchase of property and equipment and intangibles
Purchase of marketable and investment securities
Proceeds from sale of marketable and investment securities
Additional investments in newly consolidated entities
Proceeds from sale of interests in subsidiaries previously consolidated
Proceeds from sale of interests in consolidated subsidiaries
Increase in loan receivables
Collection of loans
Others, net
Net cash (used for) provided by investing activities(22,890)(686)
19,559292(2,729)812(2,258)(7,899)(64,500)(33,413)
171,350(591)(23)
56,356(5,211)
1,975(6,191)
119,749

Cash flows from financing activities:
Proceeds from issuance of shares to minority shareholders(Decrease) increase in short-term borrowings, net
Proceeds from issuance of commercial paper
Repayment of commercial paper
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Repayment of bonds
Cash dividends paid
Cash dividends paid to minority shareholders
Others, net
Net cash provided by (used for) financing activities

43(22,850)
45,406(859)(108)(1,530)(54)
2,745
22,791

4,842
44,10414,000(20,000)
1,380(7,758)2,496(52,223)(2,354)(122)(1,980)(17,615)213(5,728)(22,716)

27,805

-

60

(149)

(194)

VIII Cash and cash equivalents at the beginning of the period

147,526

119,855

IX Cash and cash equivalents at the end of the period¥124,660¥147,526

Adjustments to reconcile loss before income taxes andminority interest to net cash used for operating activities:
Depreciation and amortization
Equity in gain under the equity method, net
Valuation loss on investment securities
Gain on sale of marketable and investment securities, net
Exchange loss, net
Interest and dividend income
Interest expense
Decrease (increase) in receivables- trade(Decrease) increase in payables-trade(Increase) decrease in other receivables
Increase in other payables
Others, net

Interest and dividends received
Interest paid
Income taxes paid
Refund of income taxes
Net cash used for operating activities
IIIII

IV Effect of exchange rate changes
V Net (decrease) increase in cash and cash equivalents
Increase in cash and cash equivalents due to the companies
VI
newly consolidated
Decrease in cash and cash equivalents due to exclusion ofVII
the entities previously consolidated

13

Basis of Presentation of Consolidated Financial Statements
1.

Changes in scope of consolidation(1) As of June 30, 2003, SOFTBANK ＣＯＲＰ．（the "Company") consolidated 251 subsidiaries. 15 subsidiaries were not consolidated due totheir immateriality in terms of the consolidated total assets, sales and revenues, net loss and accumulated deficits of the SOFTBANK
consolidated financial statements.

(2) As of June 30, 2003, the Company held four non-consolidated subsidiaries and 111 affiliated companies, all of which were accounted forunder the equity method.
The Company has excluded its shares of UTStarcom, Inc. (“UTStarcom”) from the scope of the affiliated companies, which it had
previously accounted for under the equity method, due to the decrease of its shareholding percentage in UTStarcom through a partial saleof its shares of that company.
2.

Summary of significant accounting policies and methods[1] Standards and methods of valuation for significant assets(1) Marketable securities and investment securities
Held-to-maturity debt securities :Other securities:
With market quotations:With no market quotations:

Stated at amortized cost

Stated at fair value, which represents the market prices at the balance sheet date
(Unrealized gain/loss are included as a separate component in shareholders' equity,
net of tax, while cost is primarily determined using the moving-average method)
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:
Transmission equipment:

Computed using the straight-line method

Others:Computed primarily using the declining-balance method(2) Intangible assets:

Computed using the straight-line method[3] Accounting principles for major allowances and accruals
Allowance for doubtful accounts:
The allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses on doubtful receivables,
plus an amount for receivables other than doubtful receivables calculated using historical write-off experience ratios from certain priorperiods.
[4] Translation of foreign currency transactions and accounts
Foreign currency transactions are generally translated using the foreign exchange rates prevailing at the respective transaction dates.
All assets and liabilities in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance sheet
dates. Exchange gains or losses are credited or charged to current income when incurred.
The translation of revenues and expenses in the financial statements of foreign subsidiaries into Japanese yen is performed by using
the average exchange rates for the period. Assets and liabilities are translated using the foreign exchange rates prevailing at thebalance sheet dates, and capital stock is translated using the historical rates.
Foreign currency financial statement translation differences are presented as a separate component of "Shareholders' equity", except
for the portion pertaining to minority shareholders, which is included in "Minority interest in consolidated subsidiaries".
[5] Leases
Under the Japanese accounting standards, capital leases, as defined therein, other than those whereby ownership of the assets istransferred to the lessee at the end of the lease term, are accounted for as operating leases with certain disclosures.

3.

Scope of cash and cash equivalents in the consolidated statements of cash flows"Cash and cash equivalents" comprises cash on hand, bank deposits withdrawable on demand and highly liquid investments with initial
maturities of three months or less and a low risk of fluctuation in value.

14

(Additional information)
Sale of shares of Aozora Bank, Ltd.
On June 30, 2003, the board of directors of the Company resolved to sell all shares of Aozora Bank, Ltd. to Cerberus NCB Acquisition,
L.P. ("Cerberus"). The Company is going to proceed sales procedures by applying for a take-over bid by Cerberus. In addition, Cerberus
needs to obtain an approval required under the Long-Term Credit Banking Law.

I. Overview of sale
1. Number of shares to be sold:

1,385,548,000 (percentage of shareholding: 48.87%)

2. Sales value:¥101,100 million (at ¥73 per share)

3. Purchaser:

Cerberus

4. Implementation plan:

Applying of all shares for a take-over bid by Cerberus

5. Timing:

In the late of August 2003 (plan)

II. Reason of sale and use of proceeds
The Company plans to apply all proceeds of sale to the broadband infrastructure businesses, on which the entire SOFTBANK Grouphas been focusing.

III. Expected impact on results of operation for fiscal year 2004
(assuming sale of all shares held by the Company )1. Stand-alone result:Gain on sale of investment in affiliates of approximately ¥50,000 million

2. Consolidated result:

Loss on sale of investment securities of approximately ¥10,000 million

15

NOTES
1. Accumulated depreciation of property and equipment
June 30, 2003
32,754 million yen

March 31, 2003
27,417 million yen

2. Number of treasury stock held by the Company and its subsidiaries
June 30, 2003

March 31, 2003

Held by the Company

common stock

26,285 shares

24,781 shares

Held by consolidated subsidiaries

common stock- shares

1,558,719 shares

Number of shares issued

common stock

336,876,826 shares

336,876,826 shares

3. Receivables and payables relating to margin transactions
Receivables and payables relating to margin transactions in securities businesses engaged by certain consolidated subsidiaries are
as follows:
June 30, 2003
Receivables related to margin transactions Loans receivable from customers for
margin transactions
Cash deposits as collateral for securities
borrowed from securities financecompanies
Payables related to margin transactions Loans from securities finance companies
for margin transactions
Proceeds from securities sold for margintransactions

March 31, 2003

55,779 million yen

42,457 million yen

7,358

6,389

30,47627,906

22,773

16,552

4. Assets pledged as collateral(1) For future lease liabilities
June 30, 2003
Assets pledged as collateral:
Notes and accounts receivable - trade
Other current assets (accounts receivable -other)
Secured liabilities:
Notes and accounts payable - trade

March 31, 2003

5,504 million yen
72

9,450 million yen
81

220 million yen

251 million yen

Note: The collateral for the future lease liabilities was provided by mortgaging against the aggregate of thecurrent and future receivables due from customers of certain consolidated subsidiaries and a broadcasting
company, based on marketing agreements, etc.
The future lease liabilities at the end of periods are as follows:
June 30, 2003
Future lease liabilities (including the above "Notes
and accounts payable-trade")

31,134 million yen

March 31, 2003
32,732 million yen

16

4. Assets pledged as collateral (continued)(2) For short-term borrowings and long-term debt
June 30, 2003

March 31, 2003

Assets pledged as collateral:
Inventory
Property and equipment
Investment securities

1,982 million yen
193
161,395

1,704 million yen
195
55,711

Secured liabilities:
Short-term borrowings
Accrued expenses
Long-term debt

18,05728,90419,92058
1,350

Note: SOFTBANK America Inc. ("SBA"), a wholly-owned subsidiary of the Company, pledged anddelivered investment securities into a collateral securities account. SBA is able to release the excess amountover 142.857% of the secured liabilities.
The assets pledged as collateral and secured liabilities at the end of the periods are as follows
June 30, 2003

March 31, 2003

Assets pledged as collateral:
Investment securities(Book value)(Fair market value)(Releasable amount)

161,395 million yen
161,395
78,51355,711 million yen
63,17534,758

Secured liabilities:
Short-term borrowings
Accrued expenses
Long-term debt

17,97027,554

19,83358-

June 30, 2003

March 31, 2003

Assets pledged as collateral:
Investments in partnerships

2,004 million yen

2,229 million yen

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

2,376

2,388

(3) For long-term debt owed by a third party

5. Guaranteed obligation
In connection with an acquisition of license from the Monetary Authority of Singapore ("MAS") of security businesses by SBI E2Capital Securities Pte Ltd, an affiliate of the Company, and SBI E2-Capital Pte Ltd, an investee of the Company's subsidiary in
Singapore, SOFTBANK INVESTMENT INTERNATIONAL (STRATEGIC) LIMITED ("SBIIS") in Hong Kong, a consolidated
subsidiary of the Company, has provided MAS the Letter of Undertaking, stipulating that SBIIS undertakes irrevocably andunconditionally to pay and settle all obligations and liabilities of those two entities. E2-Capital (Holdings) Limited has also
provided the same Letter of Undertaking to MAS.

6. Line of credit as a creditor (not used)
June 30, 2003
131 million yen

March 31, 2003
51 million yen

7. Balance of accounts receivable sold
June 30, 2003

March 31, 2003

5,328 million yen

7,466 million yen

178. Valuation loss on investments in subsidiaries and affiliates"Valuation loss on investments in affiliates" presented as a special loss in the consolidated statements of income is as follows.

(1) Valuation loss on investment in consolidated subsidiaries
June 30, 2003

March 31, 2003

545 million yen

10,610 million yen(2) Valuation loss on investment in affiliates accounted for under the equity method
June 30, 2003

March 31, 2003

- million yen

21,713 million yen

9. Consolidated statements of cash flows
Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheet

Cash and deposits

June 30, 2003

March 31, 2003

129,358 million yen

147,503 million yen

Marketable securities

2,562

5,059

Time deposits with original
maturity over three months(5,561)(2,866)

Deposits received from customers
in the commodities business

(144)

(29)

Stocks and bonds with original
maturity over three months(1,553)(2,140)124,660 million yen

147,526 million yen

Cash and cash equivalents1810. Leases
1. Capital leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods(as a lessee)(1) Amounts equivalent to acquisition costs, accumulated depreciation and net book value at the end of the periods

Property and equipment
Equivalent to acquisition costs
Less: amount equivalent to accumulated
depreciation
Net book value

Software (intangible assets)
Equivalent to acquisition costs
Less: amount equivalent to accumulated
amortization
Net book value

Total
Equivalent to acquisition costs
Less: amount equivalent to accumulated
depreciation
Net book value

June 30, 2003

March 31, 2003

52,30952,311(19,247)
33,061 million yen(17,328)
34,982 million yen

1,267

1,105

(331)
935 million yen(261)
844 million yen

53,57653,417(19,579)
33,997 million yen(17,589)
35,827 million yen

June 30, 2003

March 31, 2003

12,361
23,97236,333 million yen

12,43425,70838,143 million yen(2) The future lease payments for capital lease at the end of the periods

Due within one year
Due after one year
Total(3) Lease payments, amounts equivalent to depreciation and interest expenseThree-month period ended
June 30, 2003

FY2003
April 2002 through March 2003

Lease payments

3,441 million yen

12,021 million yen

Amount equivalent to depreciation expense

2,929

10,062529

2,142

Amount equivalent to interest expense(4) Calculation method of amount equivalent to depreciation and interest expense
The amount equivalent to depreciation is computed using the straight-line method over the period of the capital leases, assuming
no residual value except in cases where the residual value is guaranteed in the lease contract.

The amount equivalent to interest expense, which is calculated by subtracting acquisition costs from total lease payments, isallocated over the lease periods based on the interest method.

1910. Leases (continued)
1. Capital leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of the periods
June 30, 2003

March 31, 2003

Property and equipment
Acquisition costs
Less: accumulated depreciation
Net book value

613
(294)
319 million yen

613
(262)
350 million yen

Software (intangible assets)
Acquisition costs
Less: accumulated amortization
Net book value

295
(156)
139 million yen

295
(141)
154 million yen

Total
Acquisition costs
Less: accumulated depreciation
Net book value

909
(451)
458 million yen

909
(404)
504 million yen(2) The future lease receivables for capital leases at the end of the periods
June 30, 2003
Due within one year
Due after one year
Total

191
299
490 million yen

March 31, 2003
188
348
536 million yen(3) Lease income, depreciation and amount equivalent to interest income
Three-month period ended
June 30, 2003

FY2003
April 2002 through March 2003

Lease income

54 million yen

333 million yen

Depreciation expense

46

286

Amount equivalent to interest income

863(4) Calculation method of amount equivalent to interest income
The amount equivalent to interest income, which is calculated by subtracting acquisition costs from total of lease income
and estimated residual value, is allocated over the lease periods based on the interest method.

2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating lease
June 30, 2003
Due within one year
Due after one year
Total

257
248
505 million yen

March 31, 2003
210
240
451 million yen(as a lessor)
No transaction applicable.

20

Segment information
Business Segment Information(1) For the three-month period ended June 30, 2003
Broadband
e-Commerce
Infrastructure

e-Finance

Media &
MarketingBroadmedia¥53,282¥5,621¥3,318¥2,219Internet
CultureTechnology
Services(Millions of yen; amounts less than one million yen are omitted.)
Elimination
Overseas
Others
Total
Consolidatedor
Funds
corporate

Net Sales(1) Third parties(2) Inter-segment
Total
Operating expenses
Operating income (loss)¥23,726¥13,044¥1,771¥632¥262¥103,881-¥103,881

82

3,026

1,387

280

906

120

2,335

-

393

8,533

(8,533)-23,80956,309

7,009

3,598

3,125

13,165

4,107

632

656

112,415(8,533)103,881

52,69955,663

6,561

3,817

3,875

6,517

4,059

470

1,702

135,367(7,287)

128,079¥(28,890)

¥645

¥447

¥(218)¥(749)¥6,648¥47¥162¥(1,045)¥(22,952)¥(1,245)¥(24,197)(2) For the year ended March 31, 2003
Internet
CultureTechnology
Services(Millions of yen; amounts less than one million yen are omitted.)
Elimination
Overseas
Others
Total
Consolidatedor
Funds
corporate

Broadband
Infrastructure

e-Commerce

e-Finance

Media &
MarketingBroadmedia(1) Third parties¥39,945¥250,782¥23,615¥15,916¥10,442¥37,740¥10,912¥3,277¥14,258¥406,892¥-(2) Inter-segment

62

15,304

4,551

996

1,502

459

14,815-

1,603

39,296(39,296)

40,007

266,086

28,167

16,912

11,94438,20025,72815,862446,188(39,296)

Operating expenses

136,212263,620

33,99017,436

13,56021,31924,615

1,286

22,246534,286(35,397)498,889

Operating income (loss)¥(96,204)¥2,466¥(5,823)¥(523)¥(1,615)¥16,881¥1,113¥1,991¥(6,383)¥(88,098)¥(3,899)¥(91,997)

Net Sales

Total

3,277

¥406,892
406,892

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 an internal management purpose.
2. Please refer to the chart of "The SOFTBANK Group" for main businesses by segment

21

Investment in debt and equity securities
June 30, 2003
1. Other securities (available-for-sale) at fair value(Millions of yen; amounts less than one million yen are omitted.)
Investment
Carrying Amount
Differences
Cost(1) Equity securities(2) Debt securities
Government bonds(3) Others
Total¥35,473¥174,415¥138,942

109
483¥36,066

110
409¥174,9350(74)¥138,868

2. Unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)
Carrying Amounts(1) Unlisted held-to-maturity debt securities
Domestic debt securities
Foreign debt securities(2) Unlisted other securities (available-for-sale)
Equity securities (excluding over-the-counter stocks)
Domestic debt securities
Foreign debt securities
MMF
Mid-term government bonds fundPreferred fund certificates
Others
Total

¥0
199
16,902
0
1,697
4,047
261
2,000
589
¥25,698

March 31, 2003
1. Other securities (available-for-sale) at fair value(Millions of yen; amounts less than one million yen are omitted.)
Investment
Carrying Amount
Differences
Cost
Carrying Amount > Investment Cost
(1) Equity securities(2) Debt securities
Government bonds(3) Others
Sub-total
Carrying Amount≦Investment Cost
(1) Equity securities(2) Debt securities
Government bonds(3) Others
Sub-total
Total¥16,312¥78,934¥62,6219
0
16,322

9
0
78,9440062,622

7,094

4,444

(2,649)

100
469
7,664
¥23,987

100
297
4,842
¥83,787(0)(172)(2,822)¥59,800

2. Unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)
Carrying Amounts(1) Unlisted held-to-maturity debt securities
Domestic debt securities
Foreign debt securities(2) Unlisted other securities (available-for-sale)
Equity securities (excluding over-the-counter stocks)
Domestic debt securities
Foreign debt securities
MMF
Mid-term government bonds fundCommercial paper
Preferred fund certificates
Others
Total

¥0
199
19,109
250
1,724
4,370
320
1,999
2,000
605
¥30,58022

Derivative transactions
Currency Related(Millions of yen; amounts less than one million yen are omitted.
March 31, 2003

June 30, 2003

Nature of transaction

Contract amounts
Over 1 year

Fair
value

Unrealized
gain (loss)¥1,000¥48¥48

Contract amounts
Over 1 year

Fair
value

Unrealized
gain¥1,000¥15¥15

Swap transactions to・Receive Australia dollars andpay Japanese yen¥1,000¥1,000

Option transactions to・

Purchase U.S. dollar call option andJapanese yen put option

Off-market
transactions ・ Sell U.S. dollar put option andJapanese yen call option

12,065

-

142

43

-

-

-

-

11,124

-

(8)

90

-

-

-

-

75,946

153-

50,105

980

287

(4)

-

-

-

Forward exchange contracts to・

Purchase U.S. dollars andsell Japanese yen

75,793・

Purchase Japanese yen andsell U.S. dollars

282

27,699-Total

49,124

-

¥996

¥330

Notes: 1. Fair value is based on information from financial institutions
2. The Company and some consolidated subsidiaries entered into forward exchange contracts in order to manage the risk of foreignexchange rate fluctuations relating to the value of assets and liabilities denominated in foreign currency. The Company and its
consolidated subsidiaries did not apply hedge accounting.

Interest Related(Millions of yen; amounts less than one million yen are omitted.
March 31, 2003

June 30, 2003

Nature of transaction

Notional amounts
Over 1 year

Fair
value

Unrealized
gain (loss)

Notional amounts
Over 1 year

Fair
value

Unrealized
gain (loss)

Swap transactions to・Receive fixed rate andpay floating rate

Off-market
Receive floating rate andtransactions ・pay fixed rate
・Receive fixed rate (receipt later) andpay fixed rate (prepayment)¥1,285¥1,142¥80¥80¥1,528¥1,285

¥121

¥121

2,142

1,571

(120)

(120)

2,814

2,142

(198)

(198)

1,000

1,000

36

36

1,000

1,000

36

36

Total

¥(40)

¥(3)

Note: Fair value is based on the information from the financial institutions

23