SOFTBANK CORP.
CONSOLIDATED FINANCIAL RESULTS
For the fiscal year ended March 31, 2005
Tokyo, May 10, 2005

FINANCIAL HIGHLIGHTS
1.

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

Net sales

FY 2005
April 2004 throughMarch 2005
FY 2004
April 2003 throughMarch 2004

FY 2005
April 2004 throughMarch 2005
FY 2004
April 2003 throughMarch 2004

Operating loss

Ordinary loss

Net lossAmount%Amount%Amount%Amount%¥837,018

61.7¥(25,359)-¥(45,248)-¥(59,871)-¥517,393

27.2¥(54,893)-¥(71,901)-¥(107,094)-

Net loss per share—
primary (yen)Net loss per
share— diluted(yen)¥(171.03)-(28.9)

(2.9)

(5.4)

¥(314.72)-(43.2)(6.1)(13.9)

Negative
return on Equity(%)

Ordinary loss /Total assets (%)

Ordinary loss /Net sales (%)

Note:
1.

Equity in earnings (loss) under the equity method, net:
Fiscal Year ended March 31, 2005:¥ 5,425 million
Fiscal Year ended March 31, 2004:¥(2,276) million

2.

Weighted average number of shares issued and outstanding during the year (consolidated)
Fiscal Year ended March 31, 2005:
351,418,709 sharesFiscal Year ended March 31, 2004:
340,407,372 shares

3.

There are no changes in accounting policies for the fiscal year ended March 31, 2005.

4.

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

12.

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

Total assets

Shareholders'equityEquity ratio (%)

Shareholders' equity
per share (yen)FY 2005
March 31, 2005

¥1,704,853¥178,016

10.4¥505.86

FY 2004
March 31, 2004

¥1,421,206¥238,080

16.8¥677.40

Note: Number of shares outstanding (consolidated)
As of March 31, 2005:
As of March 31, 2004:

3.

351,457,170 shares
351,404,096 shares

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

FY 2005
April 2004 throughMarch 2005
FY 2004
April 2003 throughMarch 2004

Investingactivities

Financing
activities¥(45,989)¥(242,944)¥277,770¥320,194¥(83,829)¥81,878¥306,390¥437,132

Note: The amounts in ( ) under operating and investing activities represent cash used in each activity.

4.

Scope of Consolidation at March 31, 2005
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

153
8
100

Changes in Scope of Consolidation
Consolidated subsidiaries:
Newly added:
Excluded:

Cash and cash
equivalents
at the end of the period

Operatingactivities

3155

Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
18
Excluded:13

2

Management Policies
1. Fundamental Management Policy
The core management philosophy of the SOFTBANK Group (hereafter “the Group”) is “Endeavoring tobenefit society and the economy by fostering the sharing of wisdom and knowledge gained through the IT
revolution.” By conducting business activities in a creative manner, the Group focuses its energy on bothcontributing to the development of society and increasing its corporate value. The rising use of broadband
connections along with rapid advances in data communications technology is steadily bringing the worldcloser to the advent of the ubiquitous information age.
SOFTBANK CORP. (hereafter “the Company”) is concentrating on developing Japan’s broadband market
with the aim of becoming a lifestyle company that can provide broadband technology for every aspect ofpeople’s lives.
The Group was among the first to concentrate management resources in the broadband business, using ADSL
to commence Yahoo! BB comprehensive broadband services in September 2001. As of March 2005, thecumulative number of lines installed in the Group’s Yahoo! BB service exceeded 4.77 million, and thecumulative number of lines for BB Phone IP telephony service has grown to 4.51 million. Furthermore, thenumber of subscribers of wireless LAN service, a value-added service, topped one million. The Group,
which fulfilled its role as a frontrunner in the ADSL business to become a market leader, acquired JAPANTELECOM CO., LTD., in July 2004, creating a telecommunications company with consolidated annual net
sales in the range of ¥1 trillion and approximately 10 million lines.
The Group is now entering a new stage of establishing itself as a comprehensive communications company.
In October 2004, the Group launched Yahoo! BB hikari, a new comprehensive broadband service that uses
optical fiber. In December 2004, a new fixed-line telephone service called Otoku Line was started that isoffered by JAPAN TELECOM CO., LTD. As a means of further bolstering our customer base, in February
2005, we acquired Cable & Wireless IDC Inc., the number two international telecommunications company inJapan. By acquiring telecommunications companies, we are working to reduce the total cost of acquiring
new customers and provide multiple services to customers as well as breaking into the market for corporateclients, as we expand our customer base. These proactive endeavors in the telecommunications business aresupported by various procurement methods and other strategic financial activities.
Aiming to increase consumers’ awareness and trust vis-à-vis the Group and thereby expand our customer baseusing our communications infrastructure services, in January 2005, we acquired the Fukuoka Daiei Hawks, aprofessional baseball team, which was reborn as the Fukuoka Softbank Hawks Corp. Looking ahead, we aim
to capture synergies with our broadband business by delivering baseball content over the Internet and in thefield of electronic transactions with ticket auctions while striving to establish ourselves as a comprehensive
communications company with a firm market position.
*Cable & Wireless IDC Inc.’s new name since the acquisition is JAPAN TELECOM IDC INC. In addition,
JAPAN TELECOM IDC INC. was divided into SOFTBANK IDC INC. and JAPAN TELECOM IDC INC. on
May 1, 2005.
2. Policy Regarding Allocation of Earnings
The fundamental policy of the Company is to increase the profits of shareholders by raising its corporate value,
returning earnings to shareholders and all other stakeholders in a suitable manner. The Company’s policy
regarding dividends is to set dividend payments while taking into consideration the need to maintain the proper3

balance between measures to bolster the operating base and to preserve a stable dividend from a medium- andlong-term perspective. Based on this policy, the Company has proposed a dividend of ¥7 per share, the sameas in fiscal 2004.
3. Target Management Indices
In addition to actual figures and changes in the principal management indices—including net sales, operating
income, ordinary income, net income, and cash flows—for each of our internal management segments, we
attach great importance to such indices, particularly in the telecommunications businesses, that track such user
trends as the number of subscribers, market share, churn rate, and average revenue per user (ARPU).
In fiscal 2006, a high-priority management goal is to record a consolidated operating profit. With thecommencement of full-fledged operations of our Broadband Infrastructure business, since fiscal 2002, we haverecorded consolidated operating losses for four consecutive years. To improve profitability in our ADSL
business and achieve operating profit, we will engage in operating efforts in all aspects of our business andwork to realize synergies with our acquired businesses, working toward corporate management that will
maximize shareholder profit.
4. Medium- and Long-Term Strategies
Over the medium and long terms, we will aim to further increase our customer base in our Broadband
Infrastructure business and Fixed-line Telecommunications business as well as achieve stable profits andsecure and maximize cash flows, taking as the two axes of this plan: (1) conducting a comprehensive
communications business offering a variety of communications methods in a composite manner and (2)capturing synergies among the Group businesses.
(1) Conducting a Comprehensive Communications Business Offering a Variety of Communications Methods
in a Composite Manner
On July 30, 2004, with the aim of becoming a comprehensive communications company, the Company
acquired 100% of JAPAN TELECOM CO., LTD.’s outstanding common stock, and in December 2004,
JAPAN TELECOM CO., LTD. commenced Otoku Line service, a new fixed-line telephone service. With thestart of Yahoo! BB hikari comprehensive broadband services in October 2004, we have engaged in aggressive
business expansion. In February 2005, we acquired Cable & Wireless IDC Inc. with an eye to further
expanding our customer base, particularly corporate customers. Furthermore, we are exploring each andevery possibility in our aim to enter the mobile communications business. Looking ahead, while keeping oursights set on breaking into the mobile phone market along with the IP telephony and fixed-line telephonymarkets, we are endeavoring to respond to diverse market needs—from cheaper and fast ADSL connection
services to high-speed fiber optic communications—and provide multifaceted communications methods,
thereby further expanding our customer base.
(2) Capturing Synergies among the Group Businesses
In our Group companies whose business is based on the Internet, we are striving to create a wide array ofInternet-based content services and expand business. At Yahoo Japan Corporation, Internet auction andshopping businesses are continuing to grow steadily. Furthermore, BBTV, which boasts one of the best
content lineups for video-on-demand (VOD) in Japan, is advancing services using fiber optics in addition to
ADSLs. Moving forward, we are aiming to strengthen content services developed using a broadband
infrastructure and create further added value while raising ARPU and pursuing synergies among ourcompanies, thereby maximizing profits.
In addition, taking advantage of the acquisition of JAPAN TELECOM CO., LTD., and Cable & Wireless IDC
Inc., we are advancing a cooperative system and greater efficiency with core broadband infrastructure4company SOFTBANK BB Corp. in the technology, corporate, and individual departments, as well as
cooperation with other segments, including the e-Commerce and Technology Services businesses in pursuit ofmaximum profits.
5. Important Management Issues(1) Enhance Earnings Power in the Broadband Infrastructure Business and Fixed-line Telecommunications
Business
The Group is expanding the customer base while conducting this business in a manner that places greater
emphasis on increasing earnings power. For example, capital expenditures are being used more efficiently byutilizing existing communications facilities for new businesses and procuring low-cost, high-performanceequipment from overseas. In addition, through tie-ups with business partners to lessen the Group’s
investment burdens at the initial stage of the business cycle and outsourcing call center operations and otheractivities, the Group is working on the improvement of operating efficiency and cost-cutting. We plan toraise ARPU by creating high-value-added services while realizing various Group synergies, thereby reducing
costs and raising efficiency in all facets of the business to strengthen profitability in the Broadband
Infrastructure and Fixed-line Telecommunications businesses.
(2) Strengthen Management System for Information Security
With demands for stronger corporate information security management systems and the enactment of the
Personal Information Protection Act, in addition to measures to protect customer information covering 649
items, SOFTBANK BB Corp. is continuing to strengthen its management system for information security.
Furthermore, the Company has established a Group Information Security Department to carry out risk
assessments of information security at Group companies and, based on the results of assessments, supervise
proposals and execute measures to resolve risks. Some Group companies have been granted the Privacy
Mark and have specialized Information Security Management Systems (ISMSs) in place, and we are taking
proactive measures to provide support for further acquisition. We continue to maintain management systems
for information security of the highest level and are working as a Group to protect all information assets in ourpossession.
(3) Strengthening the Internal Management System
In addition to management systems for information security, to cope with the increase in employees andenlargement of the organization resulting from expansion of existing businesses, forays into new business, andacquisitions, such as that of JAPAN TELECOM CO., LTD., we are reassessing our organizational system andworking to enhance the Company’s internal management system, which employs internal audits. Not only do
we plan to enhance internal audits; we also plan to strengthen our compliance system with the establishment ofguidelines based on the Group constitution. With the reassessment of these operational flows andmanagement systems, we are working toward the realization of the appropriate operations systems.
6. Fundamental Policy and Measures Regarding Corporate Governance<Fundamental Policy for Corporate Governance>
The Company believes that corporate governance is essential to conducting management that places priority on
shareholders and cash flows. As a pure holding company, the Company manages and coordinates theGroup’s diverse businesses, mainly through its Board of Directors and CEO Conference, while respecting theindependence and specialized knowledge of each Group company, and is working to strengthen its Groupmanagement system.

5

<Enactment of Measures Regarding Corporate Governance>(1) Management organization and other corporate governance items related to management decision making
and the execution and supervision of business operations(a) Corporate governance units
The Company has a corporate auditor system. Three of the four corporate auditors are from outside theGroup, ensuring objectivity, fairness, and transparency. The auditors monitor the performance of directors in
the execution of their duties with regard to all business activities. The Board of Directors has eight members,
including two from outside the Group. The directors make decisions regarding important management issues
and supervise the execution of business operations. Directors serve terms lasting two years and are eligible
for reelection in fiscal 2006. In addition, a CEO Conference composed of the Company’s representative
director and the CEOs of each business segment and others is held each month. The Conference coordinates
management policies for the entire Group, manages operating results of Group companies, and performs othertasks.
A consulting attorney provides advice and guidance as necessary regarding daily business operations andmanagement decisions. This attorney also attends all meetings of the Board of Directors and CEO
Conferences to provide advice and guidance. This adds transparency to Group management and reinforcescompliance activities.
(b) Internal controls
The Group has an internal control framework for the purpose of minimizing operational risks and promoting
compliance activities. Based on a plan, the Internal Audit Department conducts operational audits covering
all management and business activities. These audits evaluate and verify compliance by the Company andthe entire Group with management policies, laws, articles of incorporation, regulations, guidelines, and otherapplicable rules. Furthermore, this department gives specific suggestions and directives in order to improve
operations as well as to prevent problems from occurring in advance.
(2) Significant personal, financial, business, or other relationships between the Group, external directors, andexternal corporate auditors
There are no applicable items.
(3) Breakdown of compensation of executive officers
Amount of compensation paid to directors and auditors
Directors
5 people¥217 million
Auditors
5 people¥58 million
Notes:
1. In addition to the above-mentioned figures, ¥6 million was paid to a retiring director and ¥5 million to aretiring auditor as retirement bonuses.
2. Compensated directors included one director who retired in fiscal 2005.
3. Compensated auditors included one auditor who retired in fiscal 2005.
(4) Breakdown of fees to independent auditors(a) Amount that the Company and its consolidated subsidiaries pay to independent auditors¥543 million(b) Of the above-mentioned amount in (a), amount of fees for audit services¥419 million(c) Of the above-mentioned amount in (b), amount of fees paid by the Company¥65 million6(5) Measures taken during the past year to improve corporate governance(a) For the purpose of strengthening our management systems for information security, we have established an
Information Security Committee consisting of the individuals in charge of information security of eachbusiness segment to develop a security policy and internal regulations and bolster supervisory systems. In
addition, we are working to create a system in which items decided by the Information Security Committee arepromptly publicized to employees using such means as portal sites. SOFTBANK BB Corp. has establishedan Information Security Committee and has implemented various measures, including the placement ofInformation Security Committee representatives in each of its divisions (organizational measure), theimplementation of continuous training such as e-learning for all employees (individual measure), theclassification of all operations areas as having one of five security levels (physical measure), and theimplementation of surveillance tools and biometrics (technological measure). While reassessing security
regulations with some flexibility, we are working Groupwide to further strengthen our management systems
for information security. Specifically, with regard to companies that possess personal information, we arecontinuing to engage in activities aimed at the acquisition of ISMSs and the Privacy Mark.
(b) We have adopted the Group Representative Oath System, under which a representative of eachconsolidated subsidiary must submit a Representative Oath stating that the information contained in thefinancial statements submitted by Group companies to the Company is true. This system ensures that there isno misconduct or violations of the law or articles of incorporation; that an internal management system is inplace, functioning properly; that reports are being made to top management; and that the information security
system is cohesive, enabling the Group to disclose company information in a timely and appropriate manner aswell as promote stronger corporate governance and risk management. Furthermore, with the establishment of
this system, Group companies conduct periodic self-assessments covering 115 items related to internal control
and are required to report the results of these assessments to the Company. This allows the Company toverify whether information is disclosed to investors in an accurate and timely manner while developing
internal control of the entire Group and improving the Company’s internal management system.

7

Results of Operations and Financial Position
1. Management’s Analysis of Results of Operations and Financial Position
During fiscal 2005, the Group continued to concentrate on the broadband business. Actions continued tofocus on acquiring more customers to expand the scale of operations with the goal of maximizing future
earnings and cash flows. We acquired JAPAN TELECOM CO., LTD. and other companies with the aim of
expanding our customer base—corporate customers, in particular—and began our Otoku Line service, a new
fixed-line telephone service. In the Broadband Infrastructure business, solid increases in the number ofsubscribers supported continuing improvements in net sales and operating income. Due to start-up costs for
Otoku Line business in the Fixed-line Telecommunications segment, in the latter half of the year, earnings
worsened temporarily; however, we are striving to quickly return consolidated operating income toprofitability with an improvement in Otoku Line business and the realization of synergies among all
businesses.
Regarding our financial position, while SOFTBANK INVESTMENT CORPORATION was excluded fromyear-end consolidation, the Company pushed forward with a succession of acquisitions—JAPAN TELECOM
CO., LTD., Cable & Wireless IDC Inc., and the Fukuoka Daiei Hawks—to expand the scope of our business,and increased the size of our assets. Moving forward, we aim to leverage Group synergies to maximum
effect, thereby realizing even further growth.
* Cable & Wireless IDC Inc.’s new name is JAPAN TELECOM IDC INC., and the new name of the Fukuoka
Daiei Hawks is Fukuoka Softbank Hawks Corp. In addition, JAPAN TELECOM IDC INC. was divided into
SOFTBANK IDC INC. and JAPAN TELECOM IDC INC. on May 1, 2005.
SOFTBANK INVESTMENTCORPORATION will change its name to SBI Holdings Inc., shifting to a holding company structure on July 1,
2005.
2. Consolidated Results of Operations<Overview of Fiscal Year Results>
Net sales increased ¥319,624 million, or 62%, to ¥837,018 million. The increase was primarily attributable
to a ¥166,878 million increase from the Fixed-line Telecommunications segment resulting from the newconsolidation of JAPAN TELECOM CO., LTD. Furthermore, the Broadband Infrastructure segment’s
maintenance of its steady trend of expansion, along with net sales increases in the Internet Culture and
e-Finance segments, also constituted significant factors.
The operating loss decreased ¥29,534 million to ¥25,359 million. In the Broadband Infrastructure segment,
the continuing increase in paying customers reduced the operating loss by ¥33,849 million to ¥53,747 million.
Also, due to the start-up costs of JAPAN TELECOM CO., LTD.’s Otoku Line services, the Fixed-line
Telecommunications segment recorded a ¥36,065 million operating loss.
Aggregated operating income for all segments other than the Broadband Infrastructure segment and theFixed-line Telecommunications segment continued to grow, increasing ¥31,750 million, or 97%, to ¥64,453
million, backed by higher operating income in the Internet Culture, e-Finance, and e-Commerce segments.
The ordinary loss decreased ¥26,652 million to ¥45,248 million. While the Group recorded ¥5,425 million in
a net equity in earnings under the equity method, an increase in interest-bearing debt caused interest expense toincrease ¥10,919 million to ¥22,971 million. Although the Group recorded ¥6,508 million in foreignexchange gains in fiscal 2004, the yen’s depreciation against both the dollar and euro in fiscal 2005 resulted in8

an exchange loss of ¥4,040 million.
The net loss decreased ¥47,222 million to ¥59,871 million. Due to the sale of shares held in BB Call Corp.
and E*TRADE SECURITIES CO., LTD., and other companies, the gain on the sale of investment securitieswas ¥59,121 million. And the Group recorded a ¥26,269 million dilution gain from changes in equity interest
accompanied by the issuance of new shares in E*TRADE SECURITIES CO., LTD., SOFTBANKINVESTMENT CORPORATION, and other companies. As a result, the Group recorded a special income of¥89,360 million. However, due to a eurobond covenant amendment fee of ¥4,071 million, a loss on the saleof investment securities of ¥3,081 million resulting from the sale of eAccess Ltd. and other stock, and avaluation loss on investment securities of ¥7,161 million, the Group recorded a special loss of ¥53,660 million,
resulting in a net loss before income taxes and minority interest of ¥9,548 million. Taxes of ¥9,879 million(after refunds and adjustments) and minority interest of ¥40,444 million have been recorded.
<Fiscal Year Results by Business Segment>
Broadband Infrastructure—Segment sales increased ¥76,399 million, or 59%, to ¥205,306 million. The
number of paying customers in the Yahoo! BB ADSL service continued to grow steadily. There was also an
increase in their share of customers using value-added services, such as higher-speed services and wirelessLAN. The result was strong sales at SOFTBANK BB Corp. and Yahoo Japan Corporation. The operating
loss decreased ¥33,849 million to ¥53,747 million. The improvement in the operating margin was due togrowth in the number of customers and average revenue per user (ARPU), as well as to a decline in the cost of
acquiring customers in the ADSL business and slower growth in fixed expenses compared to businessexpansion. Results in this segment include special income of ¥38,706 million from the gain on the sale ofinvestment securities resulting from the sale of shares held in BB Call Corp. in August 2004.
Fixed-line Telecommunications—Segment sales totaled ¥166,878 million. The operating results of JAPANTELECOM CO., LTD., which was consolidated on its deemed acquisition date of September 30, 2004, arereflected in this segment, which was established with the acquisition, starting in the latter half of fiscal 2005.
Due to the fact that, following the acquisition, the initial burden of the investment for starting up for new
Otoku Line services in December 2004 was incurred in fiscal 2005, the segment recorded an operating loss of¥36,065 million.
e-Commerce—Segment sales increased ¥33 million, or 0%, to ¥254,921 million, and the operating income
increased ¥1,593 million, or 44%, to ¥5,240 million. Due to a marketing strategy focused on profitability andincreased sales to corporate customers, license sales to high-volume customers and sales of intelligent home
appliances to major home electronics retailers remained strong at SOFRBANK BB Corp. In addition, thissegment worked to capture synergies by collaborating with the corporate divisions of JAPAN TELECOM CO.,LTD., SOFTBANK TECHNOLOGY CORP., and other Group companies as well as focusing efforts on thedevelopment and sales of new Internet services, teaming up with the Broadband Infrastructure segment to offer
BB Security, security services to Yahoo! BB customers and BB Soft, software delivery service.
Internet Culture—Segment sales increased ¥38,393 million, or 60%, to ¥102,448 million, and operating
income was up ¥17,497 million, or 54%, to ¥50,079 million. The advertising market as a whole saw its first
upturn in four years, and, as Internet advertising costs exceeded radio advertising costs for the first time,
exhibiting very high growth, sales of Yahoo Japan Corporation were steady mainly due to those of National
Clients* and sponsor sites, enabling it to post record-high advertisement sales. Furthermore, in addition tofavorable performance by such non-advertising corporate businesses as recruitment site Yahoo! Rikunabi, the9number of Yahoo! Auctions and Yahoo! Shopping stores made a solid increase, and with growth in theindividual business with the number of Yahoo! Premium IDs exceeding 5,000,000, Yahoo Japan Corporation
marked drastic increase both in sales and profit.
*Advertisers with significant exposure through other mass media channels.
e-Finance—Segment revenue increased ¥37,370 million, or 90%, to ¥78,797 million. Operating income wasup ¥13,803 million, or 234%, to ¥19,714 million. The revenue growth was mainly attributable to theacquisition of a controlling stake in WORLD NICHIEI Securities Co., Ltd.*, along with higher brokeragecommission revenue at E*TRADE SECURITIES CO., LTD., stemming from ongoing strength in Japan’s
stock markets. There was special income of ¥2,909 million from a gain on the June 2004 sale of investment
securities from the partial sale of shares held in E*TRADE SECURITIES CO., LTD., and a ¥9,974 million
dilution gain from changes in equity interest accompanied by the issuance of new shares in E*TRADE
SECURITIES CO., LTD., in November 2004. Furthermore, equity fluctuations stemming from the issuanceof new shares in SOFTBANK INVESTMENT CORPORATION in March 2005 resulted in a dilution gain of¥14,334 million, which was recorded as special income, and, due to a decrease in equity interest
accompanied by the same issuance of new shares, SOFTBANK INVESTMENT CORPORATION changed
from a consolidated subsidiary to an affiliate accounted for under the equity method.
* WORLD NICHIEI Securities Co., Ltd. and SOFTBANK FRONTIER SECURITIES CO., LTD. merged in
February 2004 to form WORLD NICHIEI FRONTIER Securities Co., Ltd. The new company’s name willchange to SBI Securities Corporation on July 1, 2005.
Broadmedia—Segment sales increased ¥2,770 million, or 21%, to ¥15,663 million. This was mainly the
result of higher sales at Broadmedia Studios Corporation, to which the operations of MOVIE TELEVISION
INC.* were transferred as it is undergoing bankruptcy procedures under the Civil Rehabilitation Law. The
operating loss decreased ¥2,286 million to ¥1,019 million. This segment carried out a reassessment of theallocation of management resources, a part of which was the closure of unprofitable businesses—including theliquidation of the incubation business—and a shift to content-related business. With the transfer of BB Cable
Corporation to SOFTBANK BB Corp. on September 30, 2004, the burden of investments associated with the
BBTV business was shifted to the Broadband Infrastructure segment beginning with the third quarter.
However, this segment continued to post a loss because of expenses associated with BBTV operations during
the first half of the fiscal year.
* In July 2004, Broadmedia Studios Corporation, a wholly owned subsidiary of SOFTBANK Broadmedia
Corporation, took over all operations of MOVIE TELEVISION INC.
Technology Services—Segment sales increased ¥2,907 million, or 13%, to ¥25,510 million. Growth inback-office operations services for e-commerce sites due to higher demand for anti-virus software and strong
sales of network system operations and maintenance services as well as security-related devices at
SOFTBANK TECHNOLOGY CORP. were the main factors behind the rise. Due to the steady growth inhigh-margin services and solutions businesses, operating income increased ¥409 million, or 56%, to ¥1,145
million.
Media & Marketing—Segment sales decreased ¥1,927 million, or 13%, to ¥12,479 million, and the operating
loss decreased ¥28 million to ¥1,064 million. This performance is mainly a reflection of declining sales ofmagazines and books at SOFTBANK Publishing Inc., which continues to be impacted by the contraction of
the market for IT publications. Compared with the slump in paper media, the field of digital media exhibited10

signs of a gradual recovery, allowing ITmedia Inc., which operates an IT total information site, to post healthy
growth in both net sales and operating income. Furthermore, Internet media business, such as music site
BARKS, made aggressive forays into related markets for the first time.
3. Financial Position
The consolidation of JAPAN TELECOM CO., LTD., from the end of September 2004, resulted in the
inclusion of ¥519,320 million in consolidated total assets. Meanwhile, SOFTBANK INVESTMENTCORPORATION, which was excluded from consolidation as of its deemed transfer date of March 31, 2005,
had total consolidated assets of ¥396,644 million as of March 31, 2004. As a result, total consolidated assets
rose ¥283,646 million to ¥1,704,853 million.
<Balance Sheet Analysis (comparison with fiscal 2004)>
Current assets decreased ¥281,822 million to ¥606,117 million. The primary factor in the decrease was a
reduction in deposits related to securities business and receivables related to margin transactions of ¥276,576
million after the exclusion of SOFTBANK INVESTMENT CORPORATION.
Property and equipment increased ¥336,537 million to ¥451,717 million. This was mainly due to increases
in telecommunications equipment and telecommunications service lines of ¥205,500 million (including¥206,733 million from JAPAN TELECOM CO., LTD.), buildings and structures of ¥52,867 million (including¥45,339 million from JAPAN TELECOM CO., LTD.), and construction in progress of ¥45,872 million(including ¥32,255 million from JAPAN TELECOM CO., LTD.).
Intangible assets increased ¥86,512 million to ¥103,540 million. This included an additional goodwill
resulting from the completed acquisitions of JAPAN TELECOM CO., LTD., the Fukuoka Daiei Hawks, andCable & Wireless IDC Inc. of ¥36,903 million, ¥4,054 million, and ¥2,924 million, respectively.
Furthermore, other intangible assets of ¥15,070 million were posted due to a business transfer contract related
to the acquisition of the Fukuoka Daiei Hawks granting baseball promotional rights.
Investments and other assets increased ¥142,971 million to ¥541,972 million. Factors in the rise included
an increase in the market values of shares held in Yahoo! Inc. worth ¥57,421 million as well as a ¥45,001
million increase resulting from the change in status of SOFTBANK INVESTMENT CORPORATION to anaffiliate accounted for under the equity method. Due to a change in accounting standards for financial
instruments, a portion of investments in partnerships was reclassified to investment securities and investmentsin partnerships accounts.
Current liabilities increased ¥135,053 million to ¥690,796 million. Although the exclusion of SOFTBANKINVESTMENT CORPORATION from consolidation resulted in a decrease in payables related to margintransactions and guarantee deposits related to securities business to result in a ¥244,494 million decrease,accounts payable and accrued expenses, short-term borrowings, and cash received as collateral increased¥161,844 million, ¥92,345 million, and ¥90,000 million, respectively.
Long-term liabilities increased ¥232,501 million to ¥767,096 million. This was mainly due to the fact that,with the consolidation of JAPAN TELECOM CO., LTD., corporate bonds (long-term liabilities) and long-term
debt cumulatively increased ¥169,540 million (including ¥159,475 million from JAPAN TELECOM CO.,LTD.), and other long-term liabilities, which include derivative liabilities, increased ¥48,149 million.

11

Shareholders’ equity decreased ¥60,064 million to ¥178,016 million. Accumulated deficits increased¥62,736 million due to the net loss in fiscal 2005, while unrealized gain on investments in limited partnerships
and similar investments of ¥13,846 million was recorded, resulting from changes in accounting standards forfinancial instruments.
<Cash Flows Analysis>(1) Summery of Fiscal 2005
Cash flows were a negative ¥9,688 million during fiscal 2005 as cash was used in operating and investing
activities while cash was provided by financing activities.
Net cash used in operating activities was ¥45,989 million. Loss before income taxes and minority interest
improved ¥67,195 million to ¥9,548 million, while depreciation and amortization of ¥66,417 million wasrecorded; however, due to the sale of BB Call Corp. and other companies, a gain on sale of marketable andinvestment securities of ¥56,049 million was posted as an adjustment item (affecting special income in theincome statements), and equity fluctuations in E*TRADE SECURITIES CO., LTD., and SOFTBANKINVESTMENT CORPORATION led to a dilution gain of ¥25,200 million and ¥31,533 million in income
taxes paid by Yahoo Japan Corporation and other companies, constituting the primary factors in the net
outflow.
Net cash used in investing activities was ¥242,944 million. Although inflows included ¥34,840 million
associated with the sale of shares in BB Call Corp. and other subsidiaries accompanying a change in thescope of consolidation and ¥57,099 million from the sale of marketable securities, such as eAccess Ltd. stock,
there were outflows of ¥172,320 million for the acquisition of JAPAN TELECOM CO., LTD., and othersubsidiaries accompanying a change in the scope of consolidation and ¥90,943 million for the purchase ofproperty and equipment and intangibles telecommunications equipment mainly for SOFTBANK BB Corp.
Net cash provided by financing activities was ¥277,770 million. In addition to redeeming ¥33,908 million
of preferred stock held by former JAPAN TELECOM CO., LTD., shareholder Vodafone K.K., primarycontributing factors to the inflow were proceeds from issuing corporate bonds—for JAPAN TELECOM CO.,LTD., SOFTBANK CORP., SOFTBANK INVESTMENT CORPORATION, and other companies—of¥153,378 million, proceeds from issuance of shares to minority shareholders—such as E*TRADE
SECURITIES CO., LTD. and other companies, totaling ¥30,298 million, ¥51,362 million in the proceeds froma public offering and allocation to a third party of shares in SOFTBANK INVESTMENT CORPORATION, a¥90,000 million increase in cash received as collateral under security deposit agreements, and an increase in
short-term borrowings amounting to ¥53,468 million.
Cash and cash equivalents at the end of the year reflected a ¥107,529 million decrease primarily due to the
exclusion of SOFTBANK INVESTMENT CORPORATION from consolidation. As a result of the foregoing,
cash and cash equivalents at the end of fiscal 2005 totaled ¥320,194 million, a decrease of ¥116,937 million
from the end of fiscal 2004.
(2) Factors That May Have a Material Impact on Cash Flows in the Following Fiscal Year
-Need for Funds to Support Growth in the Group’s Telecommunications Services Business
The Group has always concentrated management resources in its Broadband Infrastructure segment and, in
addition to Yahoo! BB services employing ADSL, is engaged in the full-fledged expansion of various services,
including Yahoo! BB hikari services, which use optical fibers.
Furthermore, in the Fixed-line

12Telecommunications segment, we are vigorously working to expand our customer base for Otoku Line service,a new fixed-line telephone services. With this business expansion, prior investment generated in the form ofcapital investment as well as customer acquisition costs aimed at strengthening our customer base may have a
temporary negative effect on operating cash flows and free cash flows in fiscal 2006.
-Commitment-line Contract
Upon the end of the term of a commitment line established in the previous fiscal year, the Company in October
2004, entered into a ¥105,000 million commitment-line contract with eight financial institutions, which wasarranged by Mizuho Corporate Bank, Ltd. At year-end, the balance of commitment-line borrowings totaled¥75,000 million. Borrowings through the commitment line will be made in consideration of the current levelof liquidity, the availability of other fund procurement methods, and other factors. The Company has notdecided whether to continue the contract into fiscal 2006.
-Refinancing of JAPAN TELECOM CO., LTD.’s long-term borrowings
On April 27, 2005, a ¥106,000 million of JAPAN TELECOM CO., LTD.’s existing debt was repaid, and¥130,000 million in long-term borrowings was borrowed from Deutsche Bank AG, Mizuho Corporate Bank,
Ltd., and Sumitomo Mitsui Banking Corporation.
-Redemption of Bonds
As of the fiscal year-end, outstanding Group bonds totaled ¥426,393 million, of which ¥48,145 million is
expected to be redeemed within one year from March 31, 2005.
<Trends in Cash Flow Indicators>
A summary of trends in cash flow indicators is presented below.
As of March 31,
2005

2004

2003

Equity ratio

10.4%

16.8%

27.2%

Equity ratio (Market cap.)

91.1%

120.4%

48.9%

Debt repayment period

－

－

－

Interest coverage ratio

－

－

－

Notes:
1.

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

Shareholders’ equity divided by total assets

Equity ratio (Market cap.)

Market capitalization divided by total assets

Debt repayment period

Interest-bearing debt divided by net operating cash 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,

3.

Interest-bearing debt is the sum of all consolidated liabilities on which interest must be paid.

4.

Net operating cash inflows and interest expenses are the corresponding figures shown on the consolidated

net of treasury stock, as at March 31, 2005.

statements of cash flows.
5.

Negative figures are indicated by a “－” sign.

4. Risks Relating to Our Businesses and Others
The following is a list of some significant items that may have an effect on the operating results, financial
position, and other aspects of the Group’s operations. Furthermore, factors other than those listed below

13

could have a significant effect on business. The following risks associated with the business are thoseapparent to the Company at present and are not intended to be all-inclusive.
(1) (Risks related to economic environment and market trends)
The Group is active in a broad range of markets, including broadband-related markets, IT-related distribution
markets, fixed-line telecommunications markets, and other markets. Demand for services and products
supplied by the Group are dependent on economic conditions, trends in these markets, and other factors.
Specifically, in the Broadband Infrastructure segment, in addition to the risk of increased costs of acquiring
customers with the emergence of new market trends, the growth in this business could be severely restricted if
Japan’s broadband market shrinks.
Turning to the e-Commerce segment, although this business is enjoying strong sales for highly profitable
Internet-based security software and corporate applications software, if we are not able to respond to suchchanges in the market environment as a change in the distribution channels of Group products or a rapid shift
in consumer trends, the business could be detrimentally affected.
The Internet Culture segment is extremely sensitive to general economic trends in the advertising industry,
particularly in times of sluggishness, when the tendency in all industries is to put high priority on controlling
advertising spending. Furthermore, as the Internet advertising business has a short history, it is also easily
affected by overseas markets, such as the United States, that are ahead of Japan in this field.
In the second half of fiscal 2005, we established the Fixed-line Telecommunications segment, under which
JAPAN TELECOM CO., LTD., launched new Otoku Line services aimed at capturing new customers.
However, due to changes in demand whereby customers are moving away from fixed-line telephone services
while the use of mobile phones and the Internet has permeated the market and is expanding, shrinkage in themarket for fixed-line telephone services is advancing. It may cost more than initially estimated to acquire
customers, or it may be difficult or take longer to realize projected profit in this business.
(2) (Risks related to technological innovation and competition)
In the IT and telecommunications industries in which the Group is developing business, rapid technologicalinnovations—including those in the field of telecommunications, such as telecommunications networks andsystems—are progressing while competition intensifies, and there is a possibility that the services offered by
the Group in the IT and telecommunications sectors could lose their competitiveness.
In the fields of telecommunications networks and systems as well as telecommunications equipment, rapid
technological innovation is constantly occurring both in hardware and software. With such technologicaladvances, the Group’s services could become obsolete or mismatched with market trends in demand, making it
impossible to realize profits as forecast.
Past deregulation of the telecommunications industry has facilitated easier market entry, resulting in extremely
tough competition in Japan’s broadband and fixed communications markets. As a result, broadband usage
fees in Japan are some of the lowest in the world, but it is possible that price competition will continue.
Some competitors boast capital strength, price competitiveness, customer bases, and brand recognition thatexceed those of the Group, which could reduce the Group’s competitiveness.
(3) (Risks related to rules and regulations)
A number of laws and regulations—including the Telecommunications Business Law, the Law concerning
Nippon Telegraph and Telephone Corporation, and the Personal Information Protection Act—apply to theGroup’s business. Due to changes in these laws and regulations or the implementation of new laws andregulations in the future, the Group may not be able to develop its business as expected. For example, achange in the Telecommunications Business Law that revises the NTT connection charge would decrease
profitability in the broadband market. With regard to intellectual property, because a number of companies

14

are aggressively promoting the development of Internet technologies and business models that include
broadband technology, there is the possibility that the Group might be sued by a third party for compensatory
damages for patent violation and that, in the future, the Group’s know-how regarding content provision andtechnology uses may be limited. Also, due to the fact that there are few laws focusing on Internet-related
business in Japan, it is unclear how laws regarding user privacy, consumer protection, and content regulation
will be applied to the Internet Culture business. In addition to this, although the Group has implemented
policies to protect leaks of personal information by significantly strengthening its customer information
management system, establishing handling methods for personal information acquired and possessed by theGroup, and limiting access to its personal information database, even with these measures in place, it may bepossible that we cannot completely protect against personal information leaks.
(4) (Risks related to foreign exchange, financial, and stock markets)
The value of investment securities in the Group’s possession depends on movement in the domestic andoverseas markets as well as the foreign exchange and stock markets, and imports of telecommunications
equipment can be also influenced by the direction of the foreign exchange market. At fiscal year-end, theCompany’s foreign currency bonds include regular bonds denominated in euros worth €400 million andapproximately $1,100 million in borrowings owed to an overseas subsidiary, and, due to market influences, theconsolidated foreign exchange gain in fiscal 2004 amounted to ¥6,508 million, while in fiscal 2005, werecorded a consolidated foreign exchange loss of ¥4,040 million.
In fiscal 2005, consolidated interest-bearing debt totaled ¥853,917 million, and interest expense amounted to¥22,971 million. It is possible that the payment of interest could increase in keeping with rises in interest
rates stemming from financial market trends.
Investing activities are a primary source of cash flows for the Group, and a total crash in market prices of theseinvestments could adversely affect the Company’s capital procurement capabilities.
Stocks ofInternet-related companies in Japan, the United States, and other countries constitute the majority of theCompany’s investments. Changes in the stock prices of these companies are extreme, and a fall in the valueof these assets could have a significant effect on the Company’s procurement capabilities. In fiscal 2005,
unrealized gains on other marketable securities totaled ¥136,662 million, and appreciated gains (the difference
between the value at the time of acquisition and the current market price), on the Company’s equity in publicly
traded consolidated subsidiaries and affiliates accounted for under the equity method, amounted to ¥1,824,125
million.
(5) (Risks associated with new business)
Regarding new businesses that the Group wishes to develop, it is possible that the Group will not be able todevelop as expected. The Group has obtained a 1.7GHz experiment station license, seeking entry into themobile phone market; however, its entry into the mobile phone market could be impeded by the denial of abusiness license or trends in demand for the proposed service, making it possible that the business cannot
develop as expected. Furthermore, with regard to Yahoo! BB hikari services begun in October 2004 andJAPAN TELECOM CO., LTD.’s new Otoku Line services begun in December, 2004, as both are still in theinitial stages, it is possible that they will not be able to fulfill expectations regarding customer acquisition andprofits.
(6) (Risks related to other companies’ equipment and brands)
In developing the Group’s Broadband Infrastructure business, NTT Group dark fiber is used, andtelecommunications equipment is installed at their central offices, so the Group depends on them. In addition,
the Broadband Infrastructure business’s primary service, Yahoo! BB, employs Yahoo! Inc’s Yahoo! brand. If,
in the future, there was a significant change in either of these relationships, it is possible that the Group could

15not realize business development as forecast. Furthermore, the success of the Group businesses is affected
not only by Group trends, but also by relationships with its content providers, Internet service providers (ISPs),
and hardware makers.
(7) (Risks associated with unforeseen situations concerning the management)
The Company’s existing and new businesses are planned and promoted by the Group’s executives and regular
employees. Unforeseen situations concerning top management—President and Chief Executive Officer
Masayoshi Son, in particular—may create an obstacle to a business’s smooth progress and influence theGroup’s business.

16

The SOFTBANK GroupAs of March 31, 2005, the SOFTBANK Group included 261 companies with operations in nine business segments as follows.

Business segment

1.

Broadband
Infrastructure

2.

Fixed-line
Telecommunications

Consolidated
subsidiaries

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

17

6

ADSL and fiber-optic high-speed Internet connection service, IP
telephony service, provision of content and other operations(Note 2)14

2

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

Principal products and operational content of each business3.

e-Commerce(Note 1)

17

9

Distribution of PC software and such hardware as PCs andperipherals, enterprise solutions, and diversified e-commercebusinesses, including business transaction platform (B2B) andconsumer-related e-commerce (B2C)

4.

Internet Culture(Note 1)22

9Internet-based advertising operations, broadband portal business, andInternet-based auction business

5.

e-Finance(Note 4)

5

7Internet-based all-inclusive financial operations

6.

Broadmedia(Note 3)10

2Promoting the spread of broadband service such as broadcasting andcommunications; support for procurement of contents

7.

Technology Services

73

System solution business and business solution business

8.

Media & Marketing8

6Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc., and development of web content specialized in IT

9.

Overseas Funds

34

60

U.S.- and Asia-focused global venture capital business with a main
focus on Internet-related companies

10.

Others19

4

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

153

108

Total

(Note 4)

Notes:
1. SOFTBANK BB Corp. and Yahoo Japan Corporation are included in consolidated subsidiaries of the Broadband Infrastructure and Internet
Culture segments, respectively, while both SOFTBANK BB Corp. and Yahoo Japan Corporation operate multiple businesses and theiroperating results are allocated to multiple business segments.
2. The Fixed-line Telecommunications segment is newly established in fiscal year 2005 as the Company acquired JAPAN TELECOM CO., LTD.
and its nine subsidiaries at September 30, 2004.
3. BB Cable Corporation (“BB Cable”) is included in the Broadband Infrastructure segment from the second half of fiscal year 2005 because BB
Cable was acquired by SOFTBANK BB Corp. effective September 30, 2004.
4. The number of consolidated subsidiaries decreased by 40 and the number of equity-method non-consolidated subsidiaries and affiliates
increased by one as SOFTBANK INVESTMENT CORPORATION changed to an equity-method affiliate from a consolidated subsidiary at
March 31, 2005.

17

Broadband Infrastructure［ Overseas ］
Internet Culture

BB Cable Corporation
IP Revolution, Inc.

Yahoo Japan Corporation［Domestic ］

Tavigator, Inc.
Seven and Y Corp.

Fixed-line
Telecommunications

SOFTBANK BB Corp.

JAPAN TELECOM CO., LTD.
JAPAN TELECOM IDC INC.

(Operating Holding
Companies）

Vector Inc.

e-Commerce

e-Finance

Dee Corp.

SOFTBANK BB Corp.
Carview Corporation［ Overseas ］［ Domestic ］(Operating Holding
Companies）

Club iT Corporation

SOFTBANK CORP.
(Pure Holding Company)

SOFTBANK
Broadmedia
Corporation

SOFTBANKFINANCECORPORATIONSOFTBANKINVESTMENTCORPORATION(Operating Holding
Companies）
SOFTBANK
Holdings Inc.

Overseas Funds

Broadmedia

SOFTBANK Korea Co., Ltd.

SOFTBANK Media& Marketing Corp.

SOFTBANK TECHNOLOGY CORP.

(Operating Holding
Companies）［ Domestic ］

Technology Services［ Overseas］［ Domestic ］

Fukuoka Softbank Hawks
Marketing Corp.

SB CHINA HOLDINGS PTE LTD.
SOFTBANK US Ventures VI LP

SOFTBANK Publishing Inc.
ITmedia Inc.
cyber communications inc.

Media & Marketing［ Overseas ］
Others・・・ Segment
・・・ Consolidated subsidiary
・・・ Equity-method subsidiaryor affiliate

Note 1: JAPAN TELECOM IDC INC. separated to form JAPAN TELECOM IDC INC. and SOFTBANK IDC INC. on
May 1, 2005.
2: SOFTBANK INVESTMENT CORPORATION will rename the company SBI Holdings, Inc. and establish aholding company structure on July 1, 2005.
SOFTBANK subsidiaries listed on domestic stock exchanges as of March 31, 2005 include the following.
Subsidiary

Listed exchangeYahoo Japan Corporation

Tokyo Stock Exchange 1st section

SOFTBANK TECHNOLOGY CORP.

Tokyo Stock Exchange 2nd section

Vector Inc.

HerculesClub iT Corporation

HerculesNote: The following subsidiaries were excluded from consolidated subsidiaries as SOFTBANK INVESTMENTCORPORATION changed to an equity-method affiliate from a consolidated subsidiary at the end of fiscal year
2005.
Subsidiary
Listed exchangeTokyo Stock Exchange 1st section
SOFTBANK INVESTMENT CORPORATION
Osaka Securities Exchange 1st section
Morningstar Japan K.K.
HerculesFinance All Corporation

HerculesWORLD NICHIEI FRONTIER Securities Co., Ltd.

HerculesE*TRADE SECURITIES CO., LTD.

JASDAQ

VeriTrans, Inc.

Hercules18

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2005
AmountMarch 31, 2004%

Amount%Increase(Decrease)

ASSETS
Current assets:
Cash and deposits¥287,978¥327,023¥(39,044)

Notes and accounts receivable - trade168,262

87,98280,280Marketable securities

39,403

113,659(74,255)

Inventories

47,22425,064

22,160

3,025

5,255

(2,230)-95,532(95,532)-

181,043(181,043)

67,54264,105

3,436(7,319)(11,726)

4,406

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

606,11735.5

887,94062.5(281,822)

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

56,8603,992

52,867

Telecommunications equipment

198,598

91,542

107,055

Telecommunications service lines

99,133688

98,444Land

19,396

2,269

17,127

Construction-in-progress

49,354

3,482

45,872Others28,373

13,203

15,170Total tangible assets

451,71726.5

115,179

8.1

336,537

Intangible assets, net:
Goodwill

48,313-48,313

Other intangibles

55,227

17,02838,199Total intangible assets

103,540Investments and other assets:
Investment securities andinvestments in partnerships
Other investments

6.1

17,028

1.2

86,512434,441

262,906

171,53440

86,654(86,614)

Deferred tax assets

40,472

29,303

11,168Other assets
Less:
Allowance for doubtful accounts
Total investments and other assets

75,68824,461

51,226(8,669)(4,324)(4,344)

541,97231.8

399,001

28.1

142,971

Deferred charges

1,504

0.1

2,056

0.1

(551)

Total assets¥1,704,853

100.0¥1,421,206

100.0¥283,646

19

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2005

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

March 31, 2004%

AmountIncrease(Decrease)%¥63,684¥47,613¥16,070

Short-term borrowings

181,186

88,841

92,345

Commercial paper

15,50011,0004,500

Current portion of corporate bonds
Accounts payable – otherand accrued expenses
Income taxes payable

48,14536,154

11,991

228,264

66,420161,844

21,60018,858

2,742

527

233

293

-

160,382(160,382)

Deferred tax liabilities
Payables related tomargin transactions
Guarantee deposits received from customers
related to securities business
Cash receipt as collateral-

84,111(84,111)

100,000

10,00090,000

Other current liabilities

31,88732,125(238)

Total current liabilities

690,79640.5

555,74239.1

135,053

Long-term liabilities:
Corporate bonds

378,248

297,067

81,180Long-term debt

230,837

142,477

88,359Deferred tax liabilities

57,41958,212(792)

Accrued retirement benefits

17,35934

17,325-

1,721(1,721)Other liabilities

83,23235,082

48,149Total long-term liabilities

767,09645.1

534,59537.6

232,501

Total liabilities
Minority interestin consolidated subsidiaries
Shareholders' equity:

1,457,893

85.6

1,090,337

76.7

367,555

68,943

4.0

92,787

6.5(23,843)

Common stock

162,397

9.5

162,303

11.4

93Additional paid-in capital

186,783

10.9

186,690

13.1

93

Accumulated deficit(273,362)(16.0)(210,625)(14.8)(62,736)

Net unrealized gain on other securities

136,662

8.0

105,198

7.4

31,464

Net unrealized loss on derivative instruments(41,056)(2.4)(9,462)(0.6)(31,593)

0.3

2,653

Negative goodwill

Translation adjustments

6,697

0.4

4,044

Less: Treasury stock

(106)

(0.0)

(66)

(0.0)

(39)

178,01610.4

238,080

16.8(60,064)¥1,704,853

100.0¥1,421,206

100.0¥283,646

Total shareholders' equity
Total liabilities andshareholders' equity

20

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

FY 2005
April 2004 through March 2005
AmountNet sales
Cost of sales
Gross Profit
Selling, general and administrative expenses
Operating loss%

FY 2004
April 2003 through March 2004
AmountIncrease(Decrease)%¥837,018
547,402

100.0
65.4

¥517,393
384,024

100.0
74.2

¥319,624
163,378

289,61534.6

133,36925.8

156,246

314,975

37.6

188,26336.4

126,711(25,359)(3.0)(54,893)(10.6)

29,534

Interest income
Foreign exchange gain
Equity in earnings under the equity method
Income from investments in partnerships

2,398
5,425

799
6,508
-

1,598
(6,508)
5,425

3,711

1,165

2,546

Other non-operating income

4,931

4,000

930

Non-operating income
Interest expense
Foreign exchange loss
Equity in loss under the equity method
Valuation loss on inventories
Other non-operating expenses
Non-operating expenses

16,46622,9714,040

2.0

12,473
12,052
-

2.4

3,992
10,919
4,040

-

2,276

(2,276)

9,343

10,052
5,100(10,052)
4,243

36,356

4.4

29,481

5.7

6,875

Ordinary loss

(45,248)(5.4)(71,901)(13.9)

26,652Gain on sale of investment securities
Dilution gain from changes in equity interest
Other special income

59,121
26,2693,969

Special income
Loss on sale of investment securities
Valuation loss on investment securities
Valuation loss on investment in affiliates
Penalty for unfulfilled contract commitment
Bond covenant amendment fee
Provision for doubtful accounts
Office relocation expenses
Additions to reserves under special laws

89,36037,601
1,650
3,534
10.7

42,786

21,52024,619435
8.3

46,574

3,081
7,161
1,678
6,147
4,071
2,473
2,265

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

(7,504)
2,076(7,509)
6,147
4,071
1,443
2,265

1,176
25,60353,660

6.4

742
20,99647,629

9.2

434
4,606
6,031

(9,548)(1.1)(76,744)(14.8)

67,19534,7404.2

24,530

4.8

10,209Refunded

2,897

0.3

-

-

2,897

Deferred(21,963)(2.6)(9,336)(1.8)(12,626)

40,444¥(59,871)

4.8
(7.2)

15,156¥(107,094)

2.9(20.7)

25,288¥47,222

Other special losses
Special loss
Loss before income taxes
and minority interest
Income taxes:
Current

Minority interest
Net loss

Note: In prior years, SOFTBANK CORP. presented the results of investments in partnerships on a gross basis in “Income from investments in partnerships” and“Expenses from investments in partnerships” in the consolidated statements of operations. Effective from April 1, 2004, SOFTBANK CORP. has combined theresults of investments in partnerships in the account of “Income from investments in partnerships” or “Expenses from investments in partnerships” and haspresented such amounts on a net basis in the consolidated statements of operations. The amounts for the fiscal year ended March 31, 2004 have been
reclassified to conform to the current year presentation.

21

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

FY 2005
April 2004 throughMarch 2005

FY 2004
April 2003 throughMarch 2004

ADDITIONAL PAID-IN CAPITAL
Additional paid-in capitalat the beginning of the year
Increase due to issuance of shares
Increase in paid-in capital due tosale of treasury stock
Additional paid-in capitalat the end of the year

¥186,690¥162,231

93

24,425-32¥186,783¥186,690(Millions of yen; amounts less than one million yen are omitted.)

FY 2005
April 2004 throughMarch 2005

FY 2004
April 2003 throughMarch 2004

ACCUMULATED DEFICIT
Accumulated deficit
at the beginning of the year
Net loss¥(210,625)¥(101,031)(59,871)(107,094)

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

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

(176)

(73)

(98)

(287)

17

202

(147)

-

¥(273,362)¥(210,625)

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

Note: In accordance with the accounting principles generally accepted in Japan, the cumulative effect arising from any changes in the scope of
consolidation is treated as an adjustment to retained earnings in the consolidated statements of additional paid-in capital and retained earnings.

22

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

FY 2005
April 2004 through March 2005

FY 2004
April 2003 through March 2004

Loss before income taxes and minority interest¥(9,548)¥(76,744)

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

66,41732,864Equity in (earnings) loss under the equity method, net(5,425)2,276

Dilution gain from changes in equity interest, net(25,200)

(657)

8,840

14,274(56,049)(27,032)

Foreign exchange loss (gain), net

5,324(5,366)

Interest and dividend income(2,862)(1,323)

Interest expense

22,971

12,052(15,854)(25,023)

2,371(9,531)

Increase in other receivables(70,813)(75,485)

Increase in other payables

97,09573,831Other, net(17,519)

24,672(251)(61,194)

2,506

978

Interest paid

(17,924)(11,206)

Income taxes paid

(31,533)(16,174)

1,213

3,767

(45,989)(83,829)

Ⅰ Cash flows from operating activities:

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

Changes in operating assets, liabilities and others
Increase in receivables – trade
Increase (decrease) in payables - trade

Sub-totalInterest and dividends received

Refund of income taxes
Net cash used in operating activities- Continued -23

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

FY2005
April 2004 through March 2005

FY2004
April 2003 through March 2004

Purchase of property and equipment and intangibles¥(90,943)¥(61,472)

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
Proceeds from sale of interests
in consolidated subsidiaries
Increase in loan receivables(29,582)(38,945)

57,099151,136(172,320)

1,693

34,840(1,167)

8,110

29,212(21,387)(23,028)

9,105

22,577Purchase of business rights and others(13,113)-

Other, net(24,753)

1,871

Net cash (used in) provided by investing activities(242,944)

81,878

Increase (decrease) in short-term borrowings, net

53,468(76,851)

Proceeds from issuance of commercial paper

102,500

77,500

Redemption of commercial paper(98,000)(70,500)

Proceeds from long-term debt

166,400

204,828

Repayment of long-term debt

(192,836)(50,993)

Proceeds from issuance of bonds

153,378

216,636

Redemption of bonds(36,124)(56,870)

187

48,63130,2983,704

51,362-(33,908)-(2,457)(2,317)

Cash dividends paid to minority shareholders(2,160)(112)

Increase in cash receipt as collateral

90,00010,000

Other, net(4,336)2,735

Net cash provided by financing activities

277,770

306,390

1,474(13,459)(9,688)290,98012-(107,529)(1,373)267-

437,132

147,526¥320,194¥437,132

Ⅱ Cash flows from investing activities:

Collection of loans

Ⅲ Cash flows from financing activities:

Proceeds from issuance of shares
Proceeds from issuance of shares to minority shareholders
Proceeds from issuance of shares through public offeringand allocation to a third party in
SOFTBANK INVESTMENT CORPORATION
Redemption of preferred shares
held by minority shareholder
Cash dividends paid

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

24

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 loss
Non-operating income(Note)
Non-operating expenses(Note)
Ordinary loss
Special income
Special loss
(Loss) income before income taxes
and minority interest
Income taxes - Current
Income taxes - Refunded
Income taxes - Deferred
Minority interest

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

October 1, 2004 to
December 31, 2004

January 1, 2005 to
March 31, 2005

AmountAmountAmountAmountAmountAmountAmountAmount¥103,881
83,82420,057¥121,572
92,526
29,046¥136,699
97,535
39,164¥155,239
110,137
45,101¥147,311
92,77054,540¥156,395
99,70756,687¥258,087
170,489
87,597¥275,224
184,434
90,78944,25544,20545,81653,98658,35959,658

95,134

101,822(24,197)
2,573
9,009
(30,633)
12,362
6,667(15,159)
4,064
11,917(23,011)
7,815
25,020(6,652)
2,924
4,901(8,630)
2,830
4,894

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

(2,970)1,846
13,114(14,239)
40,6908,526(7,536)
10,465
10,963(8,034)
16,665
18,272(11,032)
10,704
10,978(11,306)
22,24024,496(24,938)(40,215)(10,693)(896)(4,271)

17,925(9,641)(13,561)

9,360
3,668
777
10,723
8,927
3,817
9,524
12,4702,897(721)(4,009)248(4,854)(3,949)(4,542)(7,449)(6,022)
1,156
2,729
4,624
6,645
8,626
6,819
14,843
10,153¥(34,734)¥(42,603)¥(16,344)¥(13,410) ¥(17,876)¥11,830¥(26,560)¥(27,266)
Net (loss) income
Note: Exchange gain (loss), equity in earnings (loss) under the equity method, and income (expenses) from investments in partnerships were
netted on quarterly basis.
Condensed Statements of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)Ⅰ

Net cash (used in) provided
by operating activities
Ⅱ Net cash (used in) provided
by investing activities
Ⅲ Net cash provided by (usedin) financing activities
Effect of exchange rateⅣchanges
Ⅴ Net (decrease) increase in
cash and cash equivalents
Ⅵ Increase in cash and cash
equivalents due to newly
consolidated companies
Ⅶ Decrease in cash and cash
equivalents due to
exclusion of previously
consolidated entities
Ⅷ Increase in cash and cash
equivalents due to merger
Ⅸ Cash and cash equivalents
at the beginning of theperiodⅩ Cash and cash equivalents
at the end of the period
Note:
Depreciation and amortization
included in net cash (used in)provided by operating activities

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

October 1, 2004 to
December 31, 2004

January 1, 2005 to
March 31, 2005

AmountAmountAmountAmountAmountAmountAmountAmount¥(37,821)¥(15,856)¥(18,769)¥(11,381)¥(11,937)¥6,644¥(25,416)¥(15,280)(7,899)72,959(3,273)20,092(23,301)(136,910)¥(17,352)¥(65,379)

22,791(10,785)

160,231

134,152

98,752

20,46934,503

124,046

213

(44)

451

(14,080)

3,778

2,977

(7,364)

2,082(22,716)

46,273

138,640

128,783

67,291(106,819)(15,630)

45,468

-

-

-

-

10

1

-

-

(149)

(1,198)

(0)

(25)

(45)

-

-

(107,483)

-

-

-

-

6

-

-

261

147,526

124,660

169,734

308,374

437,132

504,395

397,578

381,948¥124,660¥169,734¥308,374¥437,132¥504,395¥397,578¥381,948¥320,194¥7,587¥8,129¥8,151¥8,996¥9,850¥8,956¥22,847¥24,76325

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of March 31, 2005, SOFTBANK CORP．
（the “Company”）consolidated 153 subsidiaries. Thirteen subsidiaries were
not consolidated as the individual and aggregate amounts were not considered material in terms of the consolidated total
assets, net sales, net income (loss) and retained earnings (accumulated deficit) of the SOFTBANK consolidated financial
statements.
Main changes in the scope of the consolidation were as follows:<Increase>
JAPAN TELECOM CO.,LTD.
Newly acquired
ACE SECURITIES CO.,LTD.
Newly acquiredJAPAN TELECOM IDC INC.
Newly acquired
Fukuoka Softbank Hawks Corp.
Newly acquired
Other 27 companies<Decrease>
SOFTBANK TECHNOLOGY HOLDINGS CORP.
BB Call Corp.
SOFTBANK INVESTMENT CORPORATIONE*TRADE SECURITIES CO., LTD.
WORLD NICHIEI FRONTIER Securities Co., Ltd.
ACE SECURITIES CO.,LTD.

MergerSale of all shares
Decrease in ownership percentage
Due to exclusion of its parent company, SOFTBANKINVESTMENT CORPORATION from consolidation
Due to exclusion of its parent company, SOFTBANKINVESTMENT CORPORATION from consolidation
Due to exclusion of its parent company, SOFTBANKINVESTMENT CORPORATION from consolidation

Other 49 companies
2. Changes in scope of equity method
As of March 31, 2005, the Company held eight non-consolidated subsidiaries and 100 affiliates, all of which were accounted
for under the equity method.
Main changes in application of the equity method were as follows:<Increase>
SOFTBANK INVESTMENT CORPORATION
Change from a consolidated subsidiary
All About, Inc.
Newly acquired
CREO CO., LTD.
Newly acquired
Other 15 companies<Decrease>
13 companies

3. Fiscal year end
Fiscal year ends of consolidated subsidiaries for both domestic and overseas entities are as follows:<Fiscal year end>
March end
(as same as the consolidated balance sheet date)June end
September end
December end
January end
February end<Domestic>
81
1
3
6
1
4

26

<Overseas>
30
27-

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 shareholders' equity, net oftax, 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 declining balance method<Additional information for change of estimated useful life>
Backbone equipment used for mainly ADSL service had been depreciated over five years. Effective from April 1, 2004,
the Company changed the estimated useful life of the backbone equipment, which is included in “Telecommunications
equipment” in the Company’s consolidated balance sheets, to ten years, to be consistent with other telecommunications
equipment for optical fiber, since the backbone equipment is also used for the optical Internet connection service, “Yahoo!
BB hikari” which started commercial operation in October 2004.
As a result, depreciation expense included in cost of sales decreased by ¥3,034 million, operating loss and ordinary loss
decreased by the same amount, and income before income taxes and minority interest increased by the same amount for
the fiscal year ended March 31, 2005 as compared with the amount which would have been recognized if the previous
estimated useful life had not been changed.
(2) Intangible assets:

Computed using the straight-line method[3] Accounting principles for major allowances and accruals(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses on doubtfulreceivables, plus an amount for receivables other than doubtful receivables calculated using historical write-off
experience ratios from certain prior periods.
(2) Accrued retirement benefits:
JAPAN TELECOM CO., LTD., JAPAN TELECOM IDC INC., and certain other subsidiaries which became newly
consolidated subsidiaries of the Company during the fiscal year ended March 31, 2005, have defined benefit pension
plans for their employees. Those companies accounted for the liability for retirement benefits based on the projected
benefit obligations at March 31, 2005.
[4] Translation of foreign currency transactions and accounts
All assets and liabilities in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance
sheet dates. Exchange gains or losses are charged to operations when incurred.
The translation of revenues and expenses in the financial statements of foreign consolidated subsidiaries into Japanese yen is
performed by using the average foreign currency exchange rate for the period. Assets and liabilities are translated using theforeign currency exchange rates prevailing at the balance sheet dates, and capital stock is translated using the historical rates.
Foreign currency financial statement translation differences are presented as a separate component of “Shareholders' equity,”
except for the portion pertaining to minority shareholders, which is included in “Minority interest in consolidated
subsidiaries.”27

[5] Capital leases
Under the accounting principles generally accepted in Japan, capital leases, as defined therein, other than those whereby theownership of the assets is transferred to the lessee at the end of the lease term, are permitted to be accounted for as operatingleases with a footnote disclosure that includes the estimated acquisition cost, estimated accumulated depreciation and futurelease payments or receipts.
[6] Accounting for significant hedge transactions(1) Collar transaction① Hedge accounting
Unrealized gains and losses, net of tax, on derivative instruments that qualify as an effective cash flow hedge at aconsolidated subsidiary in the United States of America are reported as a separate component of “Shareholders’ equity”
in the Company’s consolidated balance sheets. As such, unrealized gains and losses associated with the derivative
instruments will be recognized into earnings in the same period during which the hedged assets and liabilities arerecognized in earnings.
②

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

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

(2) Interest rate swap and interest rate cap① Hedge accounting
A certain domestic consolidated subsidiary defers recognition of gains or losses resulting from fluctuations in fair value ofderivative instruments until the maturity of the hedged transactions.
② Derivative instruments for hedging and hedged items
Derivative instruments for hedging:Interest rate swap and interest rate cap contracts
Hedged items:
Interest expense on borrowings③ Hedging policy
The domestic consolidated subsidiary uses derivative financial instruments to hedge the risk of exposures to fluctuationsin interest rates in accordance with its internal policies, regarding the authorization and credit limit amount.
[7] Accounting method for consumption taxes
Consumption taxes are accounted for using net-of-tax method.
5. Accounting for business combinations
All assets and liabilities of an acquired entity are revalued at the respective fair market value at the combination date.
6. Amortization of goodwill"Goodwill" is amortized on a straight-line basis over reasonably estimated periods, in which economic benefits are expected tobe realized. An immaterial goodwill is expensed as incurred.
7. Appropriation of retained earnings
The consolidated statement of retained earnings reflects the appropriation of retained earnings approved during the fiscal year.
8. Scope of cash and cash equivalents in the consolidated statements of cash flows“Cash and cash equivalents” comprises cash on hand, demand deposits at banks and highly liquid investments with initial
maturities of three months or less and a low risk of fluctuation in value.

28

Additional Information
Change in the presentation of investments in partnerships
Following the application of a partial revision to the Japanese securities and exchange laws effective from December 1, 2004, andthe release of revised practical guidelines for financial instruments accounting on February 15, 2005, investments in limited
partnerships and similar investments are classified as investment securities from the fiscal year ended March 31, 2005.
The amount of applicable investments in partnerships which are included in “Investment securities and investments in partnerships”
on the consolidated balance sheets is ¥ 101,020 million for the fiscal year ended March 31, 2005.

Effect of the change in the standard enterprise tax in Japan
Effective from April 1, 2004, the enterprise tax components attributed to added value and capital were reported in selling, generaland administrative expenses due to the change in the standard enterprise tax component amounts in Japan.
Selling, general and administrative expenses increased by ¥1,715 million. As a result, operating loss and ordinary loss increased by¥1,715 million and income before income taxes and minority interest decreased by ¥1,715 million for the fiscal year ended March
31, 2005, accordingly.

29

Notes
1. Accumulated depreciation of property and equipment
March 31, 2005
625,280

million yen

March 31, 2004
49,426

million yen

2. Number of treasury stock held by the Company and its subsidiaries
March 31, 2005
Held by the Company

common stock

Number of shares issued

common stock

40,956 shares

March 31, 2004
32,730 shares
351,436,826

351,498,126

3. Investments in non-consolidated subsidiaries and affiliates
March 31, 2005
Investment securities and investments in partnerships

120,897

Other investments

million yen

March 31, 2004
30,891

million yen

35,183-

4. Receivables and payables related to margin transactions
Receivables and payables related to margin transactions in securities businesses engaged by certain consolidated subsidiaries
are as follows:
March 31, 2005

March 31, 2004

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

million yen

168,484

million yen

12,558-

Payables Loans payable to securities companies
for margin transactions-

Proceeds from securities sold for margintransactions-

million yen

126,721

million yen

33,661

5. Assets pledged as collateral(1) For future lease liabilities
March 31, 2005

March 31, 2004

Assets pledged as collateral:
Notes and accounts receivable - trade

11,247

Other current assets (accounts receivable – other)million yen

8,727

million yen

36

7

Secured liabilities:
Notes and accounts payable - trade5

million yen

57

million yen

Note: The collateral for the future lease liabilities was provided by mortgaging against the aggregate of the current andfuture receivables due from customers of certain consolidated subsidiaries and a broadcasting company, based onmarketing agreements, etc. The future lease liabilities at the end of each fiscal year are as follows:
March 31, 2005
Future lease liabilities

37,263(including the above “Notes and accounts payable-trade”)

30

million yen

March 31, 2004
33,558million yen

5. Assets pledged as collateral (continued)(2) For short-term borrowings and long-term debt
March 31, 2005

March 31, 2004

Cash and deposits

446

902

Notes and accounts receivable - trade

1,120

1,124

Assets pledged as collateral:

Inventories

million yen-

544

Buildings and structures

6,660

405

Telecommunications equipment

14,172

5,486

Telecommunications service lines

13,689

-

Land

5,582

1,102

Property and equipment- others
Investment securities

0-

193,398

138,064

million yen

Secured liabilities:
Notes and accounts payable - trade

493 million yen

Short-term borrowings

13,08118-

Accounts payable – other and accrued expenses
Other current liabilities
Long-term debt

592 million yen

25,882-

346

212,119

118,483

289-

Other long-term liabilities
Note:

The following, which are included in the amounts above, are pledged as factory foundation collateral.
Buildings and structures

6,141 million yen- million yen

Telecommunications equipment

11,170-

Telecommunications service lines

13,689

-

580

-

Land

The following, which are included in the amounts above, are guaranteed by factory foundation collateral. (Notes 1 and 2)
Short-term borrowings

6,625 million yen- million yen

Long-term debt

99,375-Note 1: The short-term borrowings of ¥6,625 million and long-term debt of ¥99,375 million at JAPAN TELECOM CO., LTD.(“JAPANTELECOM”), a wholly owned subsidiary of the Company, is secured by investment securities in JAPAN TELECOM held by theCompany and three consolidated subsidiaries of JAPAN TELECOM.
Note 2: JAPAN TELECOM repaid short-term borrowings of ¥6,625 million and long-term debt of ¥99,375 million on April 27, 2005, andentered into a new long- term debt agreement totaling ¥130 billion. In connection with this refinancing, assets pledged as factory
foundation collateral and investment securities in JAPAN TELECOM held by the Company and three consolidated subsidiaries ofJAPAN TELECOM noted above were released.

6. Cash receipt as collateral
Cash receipt as collateral from financial institutions, to whom the Company lent shares of its subsidiary under security deposit
agreements, is presented as follows:
Cash receipt as collateral

March 31, 2005

March 31, 2004

100,000 million yen

10,000 million yen

The Company paid fixed rate amount as stock bailment fees and other fees totaling ¥ 1,692 million for the fiscal year ended March 31, 2005
according to the security deposit agreements, and recorded the fees as other non-operating expenses in the consolidated statements ofoperations.

31

7. Net unrealized gains/losses on derivative instruments
Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”(“SFAS 133”) has been adopted for derivative instruments transacted by the Company’s consolidated subsidiary in the UnitedStates of America.
The consolidated subsidiary in the United States of America has entered into a variable share prepaid forward contract (the“collar transaction”) utilizing its shares of an equity security. The purpose of this collar transaction is to hedge the variabilityof cash flows from a sale of an equity security associated with the future market price fluctuations of the underlying security,
which is used for the settlement of the loans.
According to SFAS 133, unrealized gains and losses, net of tax, on the effective portion of the cash flow hedge as defined arereported as a separate component of “Shareholders’ equity”, until gains and losses on the hedged item are recognized inearnings.
8. Line of credit as a creditor (not used)
March 31, 2005
200

million yen

March 31, 2004
204 million yen

9. Balance of accounts receivable soldMarch 31, 2005
7,855

million yen

March 31, 2004
6,581 million yen

10. Selling, general and administrative expenses
The main components of “Selling, general and administrative expenses” for the fiscal years ended March 31, 2005 and 2004 were as follows:
March 31, 2005

March 31, 2004

Sales promotion expenses

95,131

81,682

Payroll and bonuses

45,55026,587

Fees for outsourced services

37,665

10,042

Allowance for doubtful accounts

3,720

2,917

million yen

million yen

11. Research and development costs included in selling, general and administrative expenses and cost of sales
March 31, 2005

March 31, 2004

4,098

1,267

million yen

million yen

12. Valuation loss on investment in subsidiaries and affiliates“Valuation loss on investment in affiliates” is recognized as a special loss in the consolidated statements of operations.
March 31, 2005
Valuation loss on investment in consolidated subsidiaries

355

Valuation loss on investment in affiliates accounted
for under equity method

1,323

million yen

March 31, 2004
7,275

million yen

1,913

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

Cash and deposits

March 31, 2005

March 31, 2004

287,978

327,023 million yen

million yen

Marketable securities

39,403

113,659

Time deposits with original maturity over three months(1,455)(2,331)-(75)

Stocks and bonds with original maturity over three months(5,732)(1,143)

Cash and cash equivalents

320,194

Deposits received from customers
in the commodities business

32

million yen

437,132 million yen

14. Assets and liabilities of companies newly consolidated through business combination(1) JAPAN TELECOM CO., LTD. and ten companies acquired in connection with the acquisition of JAPAN TELECOM CO., LTD.
（as of September 30, 2004）
Current assets(Note 1)
163,748 million yen
Non-current assets(Note 1)
333,418
Goodwill
38,836
Current liabilities(Note 1)
(159,117)
Long-term liabilities(Note 1)
(152,973)
Minority interest( 33,954)
Acquisition cost
(Note 2)
189,959 million yen
Loans made by the Company(Note 3)29,462
Cash and cash equivalents(Note 4)
(60,584)
of newly consolidated companies
Payments for the acquisition
158,837 million yen(Note 1) Inter-company transactions are eliminated.
(Note 2) Ancillary expenses related to the acquisition and additional investments up to September 30, 2004, the deemed acquisition date, areincluded.
(Note 3) This represents loans made by the Company up to September 30,2004, the deemed acquisition date.
(Note 4) Funds used for the redemption of preferred shares of ¥33,908 million on October 4, 2004 are included.

(2) JAPAN TELECOM IDC INC. (former Cable & Wireless IDC Inc.)（as of March 31, 2005）
Current assets
Non-current assets
Goodwill
Current liabilities
Long-term liabilities
Acquisition cost
Cash and cash equivalentsof a newly consolidated company
Payments for the acquisition

11,503
14,474
2,924(12,667)(3,536)
12,698million yen

million yen(3,619)
9,078

million yen

15．Payments for the acquisition of Fukuoka Softbank Hawks Corp.
(1) Payments for the acquisition of Fukuoka Softbank Hawks Corp. (former the Fukuoka Daiei Hawks)(as of February 28, 2005)
4,154 million yen

Acquisition cost
Cash and cash equivalentsof a newly consolidated company
Payments for the acquisition

(168)
3,985

million yen(2) Payments for the purchase of business rights and others related to the Dome business of Fukuoka Softbank Hawks Marketing Corp.
(as of January 28, 2005)
15,000 million yen(1,886)
13,113 million yen

Acquisition cost for the Dome business related assets
Cash and cash equivalents included in the above assets
Payments for the purchase of business rights and others

3316. Assets and liabilities of previously consolidated companies
Exclusion from consolidation due to the decrease in ownership percentage
SOFTBANK INVESTMENT CORPORATION and its consolidated subsidiaries（as of March 31, 2005）
Current assets
Non-current assets
Deferred charges
Total assets
Current liabilities
Long-term liabilities
Reserves under special laws
Minority interest
Total liabilities and minority interest

717,169
39,287458
756,915532,334
38,543
2,675
53,943
627,496

million yen

million yen
million yen

million yen

Exclusion from consolidation due to the sale of all shares
BB Call Corp.
（as of July 31, 2004）
Current assets
Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

9,927
9,927
0
0

Significant Subsequent Events
There are no applicable items.

34

million yen
million yen
million yen
million yen

35¥250,807

26,796

69,691

Identifiable assets

Depreciation andamortization

Capital expenditures

115,410

28,250¥583,487¥(36,065)¥(87,597)¥174,814

22,87552,273

Identifiable assets

Depreciation
andamortization

Capital expenditures

-

-

¥-

¥-

-

-

128,906

216,504

-

¥-

195

¥128,711

Telecommunications

Infrastructure

Operating income (loss)

Operating expenses

Total(2) Inter-segment(1) Customers

Net sales

Fixed-line

Broadband

1,341

1,522

¥74,053¥3,647251,241

254,888

10,985¥243,902

e-Commerce

5,234

1,333

¥76,408¥5,240249,681

254,9219,950¥244,971

e-Commerce(2) FY 2004 (as of and for the year ended March 31, 2004)¥(53,747)

202,944

166,878

205,306

259,054909¥165,969

331¥204,974

Operating income (loss)

Operating expenses

Total(2) Inter-segment(1) Customers

Net sales

Fixed-line

Telecommunications

Broadband

Infrastructure

1. Business segment information(1) FY 2005 (as of and for the year ended March 31, 2005)

6,561

3,510

¥218,780¥32,582

31,47264,054441¥63,613

CultureInternet

12,512

4,720¥345,737¥50,079

52,368102,448534¥101,913

CultureInternet

3,246

4,320

¥455,796¥5,91135,51541,427

3,477¥37,949e-Finance

4,175

5,900

¥115,507¥19,71459,08378,797

5,562¥73,235

e-Finance

3,145

1,309

¥16,230¥(3,305)

16,19812,892

4,122¥8,770Broadmedia

2,798

2,307

¥8,785¥(1,019)

16,682

15,663

5,623¥10,039

Broadmedia

210

202

¥16,212¥736

21,86722,603

8,167¥14,435

ServicesTechnology

357

247

¥22,442¥1,14524,36525,510

9,478

263

370

¥9,628¥(1,092)

15,50014,4071,221¥13,186

MarketingMedia &

222

185

¥10,758¥(1,064)

13,544

12,4791,427¥11,052

Services¥16,032

Media &
MarketingTechnology

Segment Information

21,215

1,027¥116,115¥(6,260)

14,730

8,469

1,692

¥6,777

Others

231,665

70,786¥1,603,141¥(20,663)

893,192

872,528

35,510¥837,018

Total

Elimination

595(1,245)¥101,712¥(4,695)(30,815)(35,510)(35,510)¥-or corporate

232,261

69,540¥1,704,853¥(25,359)

862,377

837,018-¥837,018

Consolidated

12

326

¥76,257¥1,375

1,067

2,443

-

¥2,443

Funds

Overseas

1,378

297

¥185,607¥(3,965)

9,837

5,871

1,489

¥4,382Others68,43534,735¥1,227,381¥(51,709)

599,205

547,496

30,102¥517,393

Total

¥-

72

(1,189)¥193,825¥(3,184)(26,918)(30,102)(30,102)

corporate

Elimination or

68,50733,546¥1,421,206¥(54,893)

572,287

517,393-¥517,393

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

46

17¥73,091¥1,313

739

2,052

-

¥2,052

Funds

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

36

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 a description of the main business segments.
3. Unallocated operating expenses for the fiscal years ended March 31, 2005 and 2004 in the column "Elimination or corporate", which mainly represent expenses of the corporate
division of the Company, were ¥6,867 million and ¥ 3,482million, respectively.
4. “Fixed-line Telecommunications” business segment is newly established as the Company newly consolidated JAPAN TELECOM CO., LTD. and its subsidiaries at September 30,
2004, the deemed acquisition date. Net sales and operating expenses of JAPAN TELECOM CO., LTD. and its subsidiaries are included in the Company’s results beginning in thethird quarter of fiscal year 2005.
5. Net sales and operating expenses of BB Cable Corporation, which was acquired by SOFTBANK BB Corp. at September 30, 2004, were included in the Broadmedia segment for
the interim period ended September 30, 2004. Net sales and operating expenses of BB Cable Corporation for the six-month period ended March 31, 2005 are included in the
Broadband Infrastructure segment.
6. Corporate assets at March 31, 2005 and 2004 in the column “Elimination or corporate” were ¥151,910 million and ¥223,970 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.
7. “Capital expenditures” include the acquisition of long-term prepaid expenses and deferred charges. “Depreciation and amortization” included the amortization of long-term
prepaid expenses and deferred charges.

2. Geographic Segment Information(1) FY 2005 (as of and for the year ended March 31, 2005)(Millions of yen; amounts less than one million yen are omitted.)
Japan

North

OthersAmerica

Elimination

Total

or corporate

Consolidated

Net sales(1)Customers¥828,768
464

371

223

1,060

(1,060)¥837,018-

829,233

2,281

6,563

838,078(1,060)837,018(2)Inter-segment
Total¥1,910¥6,339¥837,018¥-

Operating expenses

845,650

3,220

9,742

858,613

3,763

862,377

Operating loss¥(16,417)¥(938)¥(3,178)¥(20,535)¥(4,823)¥(25,359)

Identifiable assets¥1,184,086¥270,988¥102,832¥1,557,907¥146,945¥1,704,853(2) FY 2004 (as of and for the year ended March 31, 2004)(Millions of yen; amounts less than one million yen are omitted.)
North

Japan

OthersAmerica

Elimination

Total

Consolidated

or corporate

Net sales(1)Customers(2)Inter-segment
Total¥509,676¥2,194¥5,523¥517,393¥-¥517,393

522

56

107

686

(686)

517,393510,198

2,250

5,631

518,080(686)

Operating expenses

558,680

3,506

7,506

569,6932,594

572,287

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

Identifiable assets¥804,977¥334,678¥69,367¥1,209,023¥212,182¥1,421,206

Notes:
1. Net sales by geographic region are recognized based on the geographic location from which the sales were made.
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, 2005 and 2004 in the column "Elimination or corporate",
which mainly represent expenses of the corporate division of the Company, were ¥6,867 million and ¥3,482 million, respectively.
3. Corporate assets at March 31, 2005 and 2004 in the column "Elimination or corporate" were ¥151,910 million and ¥223,970
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
Overseas sales for the years ended March 31, 2005 and 2004 were omitted because the total overseas sales were less than 10% of total
consolidated sales.

37Leases
1. Capital leases in which the ownership of leased assets is not transferred to the lessee at the end of lease periods(as a lessee)(1) Amounts equivalent to acquisition costs, accumulated depreciation and net book value at the end of each fiscal year are
as follows.
Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Buildings and structures
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Property and equipment - others
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Intangible assets
Equivalent to acquisition costsLess:amount equivalent to accumulated amortization
Net book value
Total
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value

March 31, 2005

March 31, 2004

195,681

49,114(45,685)
149,996 million yen(17,250)
31,863 million yen

47,05660(349)
46,706 million yen(17)
42 million yen

15,938

11,115(10,293)5,644 million yen(5,310)5,804 million yen

2,727

928

(1,076)
1,651 million yen(187)
741 million yen

261,404

61,218(57,404)
203,999 million yen(22,766)
38,452 million yen(2) The future lease payments for capital leases at the end of each fiscal year are as follows.

Due within one year
Due after one year
Total

March 31, 2005

March 31, 2004

40,342
167,676
208,018 million yen

15,15427,90143,056 million yen(3) Lease payments, amounts equivalent to depreciation and interest expense for each fiscal year are as follows.
FY 2005
April 2004 throughMarch 2005

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

27,366 million yen
24,2095,179

FY 2004
April 2003 throughMarch 2004

15,836 million yen
13,7472,408(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.
38

1.

Capital leases in which the ownership of leased assets is not transferred to the lessee at the end of lease periods(continued)(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of each fiscal year are as follows.
March 31, 2005
March 31, 2004
Property and equipment - others
Acquisition costs
617
2,644
Less: accumulated depreciation(284)(2,576)
Net book value
332 million yen
67 million yen
Intangible assets
Acquisition costs
Less: accumulated amortization
Net book value- million yen

168
(38)
129 million yen

Total
Acquisition costs
Less: accumulated depreciation
Net book value

2,644(2,576)67 million yen

785
(323)
461 million yen(2) The future lease receivables for capital leases at the end of each fiscal year are as follows.
March 31, 2005
March 31, 2004
Due within one year176
43
Due after one year
307
29
Total
483 million yen
72 million yen(3) Lease income, depreciation and amount equivalent to interest income for each fiscal year are as follows.
FY 2005
April 2004 throughMarch 2005

Lease income
Depreciation expense
Amount equivalent to interest income

349 million yen
211
3

FY 2004
April 2003 throughMarch 2004

156 million yen
13423(4) Calculation method used to determine the amount equivalent to interest income
The amount equivalent to interest income is calculated by subtracting acquisition costs from the total of lease income andestimated residual value and allocated over the lease periods based on the interest method.

2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating leases at the end of each fiscal year are as follows.
March 31, 2005

Due within one year
Due after one year
Total

6,264
15,551
21,815 million yen

March 31, 2004
599
285
884 million yen(as a lessor)
The future lease receivables for non-cancelable operating leases at the end of each fiscal year are as follows.
March 31, 2005

Due within one year
Due after one year
Total

972
1,816
2,789 million yen
39

March 31, 2004
- million yen

RELATED PARTY TRANSACTIONS WITH THE COMPANY
1. Parent Company and Major Corporate Shareholders
N/A
2. Directors and Major Individual Shareholders

Category

Name

Address

Amountof capital

Natureofbusiness or
occupation

Relationship
Proportionate
interest

Concurrent

Business

directors

relationships

andshareholder

Masayoshi
Son

―

Inc.

transaction

Amount oftransaction

behalf ofManagement,―ofBalance at
Account

March 31,2005

Cash paid on

Son Assets
Director

Nature―31%―

Son Assets
Management,

President

Inc.

Note: Consumption taxes are included in the amount of transaction and year end balance.
3. Subsidiaries
N/A
4. Affiliates
N/A

40

Other
¥25 million

Current
Asset¥9 million

Tax effect accounting
FY 2005 (For the year ended March 31, 2005)
1.
1. Significant components of deferred tax assets and liabilities(Million yen)
Deferred tax assets
Loss carry-forwards¥195,151
Valuation loss on investment securities
76,288Depreciation / Amortization
41,511
Net unrealized loss on derivative instruments
21,949Allowances for doubtful accounts
16,789Accrued expenses
9,697
Valuation loss on inventories
6,451Enterprise tax payable
2,409
Unrealized profit
1,305
Others8,210
Gross deferred tax assets
379,764
Less: valuation allowance(305,824)
Total deferred tax assets
73,939FY 2004 (For the year ended March 31, 2004)
Significant components of deferred tax assets and liabilities(Million yen)
Deferred tax assets
Loss carry-forwards¥143,906
Valuation loss on investment securities
64,791
Allowances for doubtful accounts
7,407
Valuation loss on inventories
6,000
Net unrealized loss on derivative instruments
4,940
Unrealized profit
3,157
Enterprise tax payable
1,807
Depreciation/Amortization
1,623
Others5,604
Gross deferred tax assets
239,239
Less: valuation allowance(191,220)
Total deferred tax assets
48,019Deferred tax liabilities
Unrealized gains on other securities
Valuation gain on investment securities
Exchange gains on long-term receivables
OthersTotal deferred tax liabilities
Net deferred tax liabilities

Deferred tax liabilities
Unrealized gains on other securities
Valuation gain on investment securities
Exchange gains on long-term receivables
OthersTotal deferred tax liabilities
Net deferred tax liabilities(79,676)(6,077)(2,092)(542)(88,389)¥(14,449)
2.

2. Reconciliation between the statutory income tax rateand effective income tax rate:
Statutory tax rate
(Reconciliation)
Dilution gain (loss) from changes in equity interestTax reserve reversal in the Company’s subsidiaryin the United States of America
Differences related to investments in affiliates
Tax rate differential
Change in valuation allowance
OthersIncome tax rate per statements of operations(57,891)(4,764)(4,323)(4,927)(71,906)¥(23,887)

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

111.94 %Statutory tax rate
(Reconciliation)
Change in valuation allowance(55.54) %46.05

Tax rate differential(2.81)

Change in statutory tax rate
Differences related to investments in affiliates
Others(2.79)(1.36)
0.65

40.69 %

33.81
17.68
(354.40)0.78(103.45) %41

Income tax rate per statements of operations

42.05 %

(19.80) %INVESTMENT IN DEBT AND EQUITY SECURITIESFY 2005 (as of March 31, 2005)(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)
FY 2005 (as of March 31, 2005)
Investment Cost

Carrying Amount

Differences¥29,522¥229,035¥199,513

5,134

5,141

7

18

18

0

34,675

234,195

199,520

402

377

(24)

402

377

(24)

¥35,077¥234,572¥199,495

Carrying Amount > Investment Cost
(1)Equity securities(2)Debt securities: Government bonds(3)Others
Sub-total
Carrying Amount≦Investment Cost
Equity securities
Sub-total
Total(2) Available-for-sale and other securities sold during the fiscal year ended March 31, 2005
(Millions of yen; amounts less than one million yen are omitted.)
Sales Price(1)Equity securities

Gain on sales¥26,864(2)Debt securities(3)Others
Total

Loss on sales¥5,157¥1,864

2

0

-

3,739

26

855

¥30,606¥5,184¥2,719(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¥16,466

Unlisted foreign debt securities

1,108

Money Management Fund

1,836

Mid-term government bond funds

191

Preferred fund certificate

2,000

Investment trust without market quotations

30,388Investments in limited partnerships (see note)

63,373

Others

3,010

Total

¥118,374

Note: The amount of difference between cost and fair value at the end of fiscal year 2005, net of tax, on “Investments inlimited partnerships” is recorded in “Net unrealized gain on other securities” on consolidated balance sheets.
(4) The redemption schedule for "held-to-maturity 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, 2005 toApril 1, 2006 to

April 1, 2010 toApril 1, 2015

March 31, 2006

March 31, 2010

March 31, 2015

and thereafter

Government bonds

¥-

¥0

¥-

¥-

Corporate bonds

-

3,373

-

-

Others

-

-

892

-

¥-

¥3,373¥892¥-

Available-for-sale and other securities
Debt securities

Total

42

FY 2004 (as of March 31, 2004)
1. Trading securities(1)Equity securities(2) Debt securities(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2004
Carrying amount
AssetsLiabilities
¥21
¥4
1,285
Total
¥1,307¥4

2. Non-trading securities(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)
FY2004 (as of March 31, 2004)
Investment Cost Carrying Amount
Differences
Carrying Amount > Investment Cost
(1)Equity securities¥37,027¥205,128¥168,100(2)Debt securities: Government bonds
100
100
0
(3)Others
278
321
42
Sub-total
37,406
205,550
168,143
Carrying Amount≦Investment Cost
(1)Equity securities
1,545
1,477
(68)
(2)Debt securities: Corporate bonds
5,281
5,265
(16)
(3)Others
100
91
(8)
Sub-total
6,927
6,834
(93)
Total
¥44,333¥212,384¥168,050(2) Available-for-sale and other securities sold during the fiscal year ended March 31, 2004
(Millions of yen; amounts less than one million yen are omitted.)
Sales Price
Gain on sales
Loss on sales(1)Equity securities¥28,319¥12,080¥97(2)Debt securities
807
250(3)Others
7,397
68
56
Total
¥36,524¥12,174¥153(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
Unlisted foreign debt securities
Money Management Fund
Mid-term government bond funds
Preferred fund certificate
Designated Money Trust
Investment trust without market quotations
OthersTotal

43¥19,237
1,081
3,272
261
2,000
5,000
106,427
0¥137,279

(4) Redemption schedule for "held-to-maturity 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, 2004 to
April 1, 2005to
April 1, 2009 to
April 1, 2014
March 31, 2005
March 31, 2009
March 31, 2014
and thereafter
Available-for-sale and other securities
Debt securities
Government bonds¥¥102¥¥Corporate bonds
5,471
Others871
Total¥¥5,574
¥871
¥-

44

DERIVATIVE TRANSACTIONS
1. Currency Related(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2004
March 31, 2005
Contract amounts
Contract amounts
Fair Unrealized
Fair UnrealizedOver 1
Over 1value gain (loss)
value
gain
year
year

Nature of transaction
Swap transactions to・Receive Australia dollars and pay ¥1,000
Japanese yen
Knock-out option transactions to・Purchase Japanese yen put option andOff-market
euro call option
transactions
・Sell Japanese yen call option and euro
put option
Forward exchange contracts to・Purchase U.S. dollars and sell Japanese
3,193
yen
・Purchase Japanese yen and sell U.S.
dollars
Forward exchange contracts withconditions to・Purchase Japanese yen and sell euro
-

-

¥12

¥12

¥1,000¥1,000

¥20

¥20

-

-

-

-

51

(8)

-

-

-

3,915
(60)
3,915
(60)

-

(37)

22

-

3,249

56

5,650

-

5,437

(212)

-

-

-

5,275

-

5,269

(6)

-

-

-

8,868

-

1

1

Total
¥68
Notes: 1. The amounts in ( ) under "Contract amounts" are option fees.
2. Fair value is based on information provided by financial institutions at the end of each fiscal year.

2. Interest Related¥(183)(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2004
March 31, 2005
Contract
Contract amounts
Fair Unrealized
amounts
Fair UnrealizedOver 1 value gain (loss)
Over 1 value gain (loss)
year
year

Nature of transaction
Swap transactions to・Receive fixed rate and¥1,142¥39¥39 ¥1,285 ¥1,142
pay floating rate
Off-market
・Receive floating rate andtransactions
11,571(149)(149) 12,142 11,571
pay fixed rate
・Receive fixed rate (receipt later)
1,000
1,000
1,000
35
35
and pay fixed rate (prepayment)
Total
¥(73)
Notes: 1. Fair value is based on the information provided by the financial institutions at the end of each fiscal year.
2. Derivative transactions on 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.

45

¥77

¥77

(291)

(291)

35

35
¥(178)PENSION AND SEVERANCE PLANS
1.

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

2.

Projected Benefit Obligation

3.

March 31, 2004
2,086 million yen
1,880

Projected benefit obligation (PBO)
Plan assets at fair value

March 31, 2005
17,202 million yen-

Unfunded PBO

17,202

Unrecognized actuarial losses
Net liability for retirement benefits
Prepaid pension costs

157
17,359
-

206
194
11
22

Accrued retirement benefits

17,359 million yen

34 million yen

March 31, 2005
1,714 million yen
212
42
212
510
138
2,745 million yen

March 31, 2004
626 million yen
20
17
49
367
1,047 million yen

Pension and Severance Costsa)Service costs(Notes 1 and 2)b)Interest costsc)Expected return on plan assetsd)Recognized actuarial lossese)Contributionsf)Losses on transfer of pension plansg)Net pension and severance costs

Notes:
1. The service cost includes the contribution to multi-employer contributory defined benefit welfare pension plan.
2. The service cost includes the pension costs of subsidiaries adopting the simplified pension accounting method.
PER SHARE DATAFY 2004

FY 2005
Net loss per share - primary (yen)Net loss per share - diluted (Note 1)
Shareholders’ equity per share (yen)Basic data for computation of the per share data
1.Weighted average number of common stock outstanding
during each fiscal period (unit: shares) (Note 2)
2.Net loss (in millions of yen)
3.Net loss allocated to common stock outstanding(in millions of yen)
4.Net loss not allocated to common stock holders(in millions of yen) (Note 3)
Notes:
1. Diluted net income per share is not disclosed due to the loss position.
2. There were no common stock equivalents at each period end.
3. The primary component is attributed to bonuses paid to directors.

46¥(171.03)
505.86¥(314.72)
677.40351,418,709

340,407,372¥(59,871)¥(107,094)¥(60,101)¥(107,133)¥229¥39