SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the nine-month period ended December 31, 2006
Tokyo, February 8, 2007

FINANCIAL HIGHLIGHTS
1.

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

OperatingincomeNet sales

AmountOrdinary income(loss)Net income%

Amount%Amount%Amount%Nine-month period ended
December 31, 2006

¥1,822,369

124.9¥197,285 606.8¥111,615-¥21,933

23.1

Nine-month period ended
December 31, 2005

¥810,258

44.2¥27,912¥(2,255)-¥17,819-

Fiscal year ended
March 31, 2006

¥1,108,665-¥62,299¥27,492

Net income per share— primary (yen)Net income per share— diluted (yen)Nine-month period ended
December 31, 2006

¥20.79¥20.25Nine-month period ended
December 31, 2005

¥50.70¥47.31

Fiscal year ended
March 31, 2006

¥54.36¥50.71¥57,550

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

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

Net assets
per share (yen)Total assets

Net assets

Equity ratio (%)

As ofDecember 31, 2006

¥4,191,853¥695,897

6.4¥253.74

As of
December 31, 2005

¥1,748,605¥312,925

12.5¥623.32

As ofMarch 31, 2006

¥1,808,398¥347,263

13.4¥229.881

3.

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

Operating activities

Investing activities

Financing activities

Cash and cash equivalents
at the end of the period

Nine-month period ended
December 31, 2006

¥258,332¥(2,028,660)¥1,722,831¥393,423

Nine-month period ended
December 31, 2005

¥43,968¥12,331¥(44,885)¥337,122

Fiscal year ended
March 31, 2006

¥57,806¥27,852¥30,078¥446,694

4.

Scope of Consolidation at December 31, 2006
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

115
2
69

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

1048

Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
12
Excluded:28

6.

Earnings forecast for the fiscal year ending in March 2007 (April 1, 2006 – March 31, 2007)(Millions of yen; amounts less than one million yen are omitted.)

Fiscal year ending
March 31, 2007

Net sales

Operatingincome¥-¥-Ordinary income(loss)¥-Net income¥-

Due to the introduction of unprecedented new sales and pricing methods in our main telecommunications business, especially in the mobile
communications business, forecasting the consolidated business results for the fiscal year ending in March 2007 is difficult. A forecast of theconsolidated business results will therefore be announced as soon as a logical estimate can be made.

2

Management Policies
1. Fundamental Management Policies
Since their establishment, SOFTBANK CORP. (hereafter “the Company”) and the SOFTBANK Group (hereafter “theGroup”) have followed the core management philosophy of “Endeavoring to benefit society and the economy and to
maximize enterprise value by fostering the sharing of wisdom and knowledge gained through the IT revolution.”

The

Group is working to facilitate the realization of the true ubiquitous society, where broadband will enable anyone to accessall kinds of information at any time and anywhere.
As a corporate group based on Internet-related businesses, the Group will not limit itself to its existing role as acomprehensive telecommunications carrier.

Rather, by providing both information infrastructure and content as acomprehensive digital information company, the Group aims to make people's lifestyles and business styles more affluent
and enjoyable and to be the global No. 1 corporate group in the broadband era.
2. Medium-and-Long-Term Strategies
As a comprehensive digital information company in the ubiquitous society, the Group aims to integrate fixed-line andmobile through broadband and to seamlessly develop a range of broadband content over that infrastructure. In this way,
the Group's medium-and-long-term strategies target the maximization of Group revenues and enterprise value through theestablishment of unique business models for the broadband era that will generate long-term, stable income from its
infrastructure businesses, increasing returns from its portal businesses, and diversified sources of profit from its content
businesses.
(1) Expanding market share and bolstering financial position in the mobile communications business
The Company entered the mobile communications business with the acquisition of Vodafone K.K. (currently
SOFTBANK MOBILE Corp.) in April 2006, the third-largest company in the mobile phone industry at that time. The
short-term issues faced in that business and our initiatives are described in more detail in Section 3 below. As a medium
to long term strategy, we will strive to improve profitability and expand our market share by resolving these short-term
issues, thereby enhancing customer satisfaction and leading to a higher ARPU*1 and a lower churn rate.
At the end of November 2006, SOFTBANK MOBILE Corp. (hereafter “SOFTBANK MOBILE”) used a WBS*2
fund-raising scheme to raise ¥1.366 trillion, thereby completing the long-term refinancing of the ¥1.280 trillion bridge
facility used for the April 2006 acquisition of Vodafone K.K. As a result, the shareholders' equity ratio at the end of thethird quarter of the fiscal year ending March 2007 declined to 6.4% from 13.4% at the end of March 2006. However,
leveraging improved profitability in the mobile communications business, we will continue to repay debt systematically,and bolster our financial position.
*1. ARPU: Average Revenue Per User
*2. WBS: Whole Business Securitization is a structured financing scheme. Under WBS, the business is securitizedon the basis of the cash flow generated from the business, thereby increasing the certainty of repayment.
(2) Expanding broadband content
The Group is targeting further expansion of the content available on the broadband infrastructure. The elimination ofareas with no broadband service is an objective of the Ministry of Internal Affairs and Communications'3

Next-Generation Broadband Strategy 2010. Along with the growth in the household penetration rate of fixed-line
broadband access services, the realization of broadband capabilities in mobile communications is also expected.

The

Group believes that from now on it will be important to provide appealing broadband content, such as video and social
networking services (SNS).
In November 2006, together with News Corporation Group, the Company established MySpace Japan K.K., which
will operate MySpace Japan, the Japanese version of “MySpace”, the world’s largest SNS by number of registeredmembers. The trial launch of the new service was commenced in November.
In addition, we received official permission from the Ministry of Education, Culture, Sports, Science andTechnology for the establishment of “Cyber University”, a four-year university that will offer all courses over theInternet, in November 2006.

It will open in April 2007.

In addition to substantially improving the services and content available under the Group's brand, including Yahoo!
JAPAN, the Group will strive to expand broadband content through alliances with leading content providers in Japanand overseas.
(3) Rapidly establishing ubiquitous, seamless broadband infrastructure
To realize a ubiquitous, seamless broadband environment, the Group aims to provide a comprehensive range oftelecommunications means.
In the broadband infrastructure business, the Group's Yahoo! BB ADSL service has driven the popularization ofbroadband in Japan.

The Group will continue to implement R&D targeting the commercialization of various newtechnologies, such as FTTR*3 and high-speed PLC*4.
In mobile communications, we are taking steps toward the realization of mobile broadband, such as the installationof base stations for third-generation (3G) mobile phones and the October 2006 launch of 3G High-Speed, a high-speed
data communications service using HSDPA*5.

In addition, in December 2006 the Ministry of Internal Affairs andCommunications granted us a trial operator's license for base stations for IEEE 802.16e-2005 (Mobile WiMAX), whichmakes even higher-speed wide-area mobile wireless access services possible. Targeting commercialization of thistechnology, we have commenced a field trial.
In the future, we will integrate fixed line and mobile infrastructure at the broadband level at an early stage. This will
be executed by linking the above to next-generation high-speed mobile services such as Mobile WiMAX or other Group
resources, such as wireless LAN networks.
*3. Fiber To The Remote terminal: From NTT central offices to equipment located near the user's premises,transmission is handled over fiberoptic technology, like that used with FTTH. From the nearby transmission
equipment, which is installed on such structures as telephone poles, to the user, transmission is handled overmetal wire technology, like that used with ADSL.
*4. Power Line Communications: Technology for using power lines in housing and commercial buildings forcommunications transmission.
*5. High Speed Downlink Packet Access: A high-speed data transmission protocol for 3G mobile communications
systems.
(4) Providing broadband content developed in-house to customers around the world
Japan has the world's least expensive high-speed fixed-line broadband infrastructure and is also expected to achieve
broadband capabilities in the field of mobile communications.

4

The Group is striving to be the No. 1 corporate groupin the domestic market for broadband content, and in the future, we will implement a strategy of utilizing thisbroadband content in countries around the world.
In the future, the Group will expand the unique broadband business model developed by the Group and enlarge profit
opportunities on a global basis.
3. Important Management Issues(1) Mobile Communications Initiatives
In the mobile communications market, mobile number portability (MNP*6) was instituted in October 2006, andcompetition among mobile phone companies has intensified. In this environment, to acquire new customers throughincreased customer satisfaction and to maximize the cash flow from the mobile communications business, the Group is
implementing the following four key initiatives.
1. 3G Network Enhancement
At the end of December 2006 the number of 3G base stations was 25,588 compared to 24,539 at the end of September
2006, representing an increase of 1,049 during the third quarter.
In addition, from October 2006 on we started providing 3G High-Speed HSDPA data communication service in partof Tokyo's 23 wards and other major (government decreed) cities. By the end of January 2007 we expanded theservice area to the remaining major (government decreed) cities throughout Japan.
The total of 3G base stations in service and the candidate properties for which the owners have given consent(including those under construction) is scheduled to exceed 46,000 in February 2007.

Our first goal was to have

46,000 3G base stations in service by the end of FY2007. Currently we estimate that the work will be completed during
the first half of FY2008.
2. 3G Handset Lineup Enrichment
We continue to work on enhancing our lineup of 3G handsets.
For the fall/winter sales campaigns, we announced an extensive lineup of 16 models available in 69 colors, such as
the SoftBank 910SH by Sharp, which features the industry's first 3x optical zoom and an autofocus 5-megapixel camera,
and the SoftBank 707SC, by Samsung, an ultra-slim model with a thickness of about 11.9 mm. Of these 16 models, 14
were released in the third quarter. In addition, the AQUOS Mobile 905SH by Sharp won the highest recognition when
it received the Nikkei Sangyo Shimbun Award in the 2006 Nikkei Superior Products and Services Awards.

This

handset can receive one-segment broadcasts--digital terrestrial broadcasts for mobile devices--and features a
cycloid-style LCD that can rotate 90 degrees.
In January 2007 we announced a lineup of 14 new models for the spring sales campaign with fashion as a key word.
The SoftBank 812SH by Sharp offers 20 color variations in one model, and the SoftBank 708SC by Samsung, is only
about 8.4mm thick. The spring campaign models also include the Kodomobile (Mobile for kids) SoftBank 812T by
Toshiba, which will be the first SoftBank handset designed for children and equipped with GPS functions.
campaign models will be released from the beginning of February 2007 on.

5

The spring3. Content Enhancement
In October 2006, we commenced the provision of innovative mobile Internet content. For example, the new Yahoo!
Keitai mobile Internet portal site links to Yahoo! JAPAN with just a press of the Y! button, and Yahoo! mocoa*7, is anapplication that integrates multiple communications services, such as Yahoo! JAPAN’s popular Yahoo! Mail andYahoo! Messenger. In addition, the number of digital comic titles available for SoftBank 3G handsets exceeded 3,000
in November 2006.
Moreover, when we launch the Kodomobile SoftBank 812T, by Toshiba, which is planned for late February, we alsoplan to start Yahoo! Kids, a portal site that will provide content suitable for elementary school students. Whileleveraging synergies within the Group, such as ongoing tie-ups with Yahoo Japan Corporation (hereafter “Yahoo
Japan”), we will continue to enhance our mobile content offerings.
4. Enhancement of Sales Structure
We are working to bolster SoftBank Shops and further strengthen our sales structure. At the same time, we arereinforcing the handling of SOFTBANK MOBILE products through mass electronics retailers, one of the Group's
powerful sales channels. In addition, we are utilizing the marketing and customer bases of SOFTBANK TELECOM
Corp. (hereafter “SOFTBANK TELECOM”) to strengthen the corporate sales system.
In October 2006, we introduced new rate plans, such as the Gold Plan, the Orange Plan, and the Blue Plan, andflat-rate services, such as “Unlimited Packet Use Discount!” Further, in January 2007 we introduced the White Plan,a simple plan where, for domestic service, the monthly basic charge is ¥980 (including tax), voice calls between
SoftBank users are free between 1:00am and 9:00pm, and other calls are charged at a flat rate of ¥21 per 30 seconds(including tax).

Moreover, on March 1, 2007 we will introduce a White Plan discount service under the name “W

White” that will offer domestic calls at half price, ¥10.5 per 30 seconds (including tax), for an additional monthly
basic charge of ¥980 (including tax) .
In SOFTBANK MOBILE advertisements that were placed in the October 26, 2006, morning editions ofnewspapers, and in TV commercials that were broadcast from October 26 to November 2, small type was used todisplay the conditions that are required for free calls under the Gold Plan + New Super Bonus.

In December 2006, a

warning was received from the Japan Fair Trade Commission based on the concern that consumers may have been
misled, impeding fair competition.

SOFTBANK MOBILE has taken the warning seriously and sincerely and is

striving to ensure that its materials are easier to understand.
*6. Mobile Number Portability: A system that allows mobile phone users to switch to another operator withoutchanging their mobile phone number*7. Yahoo! mocoa: Yahoo! mobile communication application(2) Broadband infrastructure initiatives
The FTTH access service in Japan has spread rapidly.

Nonetheless, the cost and speed of the Group’s Yahoo! BB

ADSL service have received broad support from customers, and at this point, we believe that this service has sufficient
capacity for customers to enjoy a wide range of content over broadband.
While the Group will make every effort to acquire new customers to maintain its customer base for Yahoo! BB ADSL
of over 5 million lines, we will continue our R&D activities targeting the commercialization of new technologies thatwill succeed ADSL, such as FTTR access services and high-speed PLC services.

6

On the other hand, a fair competitive environment in the FTTH access service market in Japan does not exist yet, notonly concerning costs but also in such areas as procedural requirements. In this setting, the Group is maintaining asystem that will enable it to start full-fledged operations once a fair competitive environment is established. For the near
future, our basic policy is to develop operations in line with anticipated revenues.
(3) Fixed-line telecommunications initiatives
In fixed-line telecommunications operations, the consumer market continues to scale down due to the penetration ofmobile phones and e-mail, but demand remains firm in the corporate market.

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

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

SOFTBANK TELECOM will work to enhance its profitability.
(4) Generation of a synergistic effect among Group companies
The Group will work to generate new synergies between new Group member SOFTBANK MOBILE, which joined theGroup in the current fiscal year, and other Group companies. In October 2006, the Group built a unified system for its
communications operations through the integration of the management systems of the Group's three communications
companies (SOFTBANK MOBILE, BB TECHNOLOGY Corp., hereafter “BB TECHNOLOGY”, and SOFTBANKTELECOM). Moreover, SOFTBANK MOBILE is taking steps to generate synergies in content and services, such as
launching innovative mobile Internet content, including Yahoo! Keitai, Yahoo! mocoa, and Yahoo! Kids. The groupwill pursue various group synergies such as cost reduction through network integration and enlargement of ourcustomer base and retail channels through sales synergies.
(5) Initiatives to become a comprehensive digital information company
As a corporate group of Internet-based businesses, the Group will not limit itself to its existing role as a comprehensive
communications carrier. Rather, the Group will further enhance its appealing broadband content, such as through theYahoo! Streaming video portal site, MySpace Japan and Cyber University, which offers all of its instruction over theInternet.

As a comprehensive digital information company in the broadband era, the Group will work to develop

innovative services in infrastructure, portals, and content and strive to clearly differentiate itself from competitors.
(6) Strengthening governance and compliance systems
The Group considers governance and compliance to be important management issues. The Company revised the
SOFTBANK Group Charter, formulated the SOFTBANK Group Code of Conduct for Officers and Employees, and set
up a Group Hotline.
Moreover, the Group will continue endeavoring to ensure that all Group employees strictly observe all applicablelaws, regulations, and social norms in corporate and social activities and that the Group meets the expectations of all
stakeholders, and to that end the Group will strive to see that the Group acts in accordance with an even higher level of
ethical standards.

7

From the fiscal year commencing in April 2008, companies will be required to meet reporting standards for theevaluation of internal controls on financial reporting, commonly known as the Japanese SOX Act. Accordingly, we
are moving forward with the establishment of a system for effective evaluation of internal control and for responding to
the auditors.

8Results of Operations and Financial Position
1.

Consolidated Results of Operations<Overview of Results for the Nine-Month Period ended December 31, 2006>
Net sales increased by ¥1,012,110 million, or 125% on a year-on-year basis, to ¥1,822,369 million. In regard to the April
2006 acquisition of Vodafone K.K. (currently SOFTBANK MOBILE Corp.), the company is included in the scope of
consolidation from the end of April 2006, and its financial results were consolidated from May 2006. As a result, sales in the
Mobile Communications segment, which was newly established in the current fiscal period, amounted to ¥1,014,788 million.
In the Internet Culture segment, sales increased by ¥27,623 million, or 24 %, to ¥141,369 million, due to strong advertising
revenues and to favorable tenant fees and system usage fees at Yahoo! Auction and Yahoo! Shopping. In addition, theBroadband Infrastructure and the Fixed-line Telecommunications segments also recorded strong performances.
Operating income was ¥197,285 million, an increase of ¥169,372 million, or 607%, from the same period of the previous
fiscal year. The Mobile Communications segment, which was newly established in the current fiscal year, recorded
operating income of ¥113,541 million.

The Broadband Infrastructure segment recorded operating income of ¥19,415

million, an improvement of ¥11,064 million, or 132%, due to improved profitability in the FTTH (hikari home) and content
businesses. In the Internet Culture segment, advertising revenues were strong, tenant fees and system usage fees at Yahoo!
Auctions and Yahoo! Shopping were favorable. As a result, operating income rose ¥16,461 million, or 31%, to ¥69,354 million.
Following enhanced profitability accompanying a change in the marketing strategy for the Otoku Line service of SOFTBANKTELECOM, the Fixed-line Telecommunications segment recorded an operating loss of ¥2,308 million, an improvement of¥25,779 million in comparison to the same period of the previous fiscal year.
Ordinary income was ¥111,615 million, an improvement of ¥113,870 million from the ordinary loss of ¥2,255 million
recorded in the same period of the previous fiscal year.

Operating income increased ¥169,372 million.

However,primarily due to the bridge loan accompanying the acquisition of SOFTBANK MOBILE and its refinancing, interest
expense rose ¥33,029 million, to ¥53,539 million, and financing related expenses totaled ¥28,396 million.
Net income was ¥21,933 million, an improvement of ¥4,113 million, or 23%, from the same period of the previous fiscal
year. Special income was ¥87,257 million. Major items included gain on sales of investment securities of ¥80,708 million
following the sale of all the shares held in SBI Holdings, Inc., in August 2006, and the sale of a portion of the shares held incyber communications inc., in December 2006. On the other hand, special loss was ¥21,949 million, due primarily to a loss
on bond redemption of ¥10,429 million following the repurchase and redemption of Euro-denominated Straight Bonds due
2011 and to a trust debt assumption regarding straight bonds issued by SOFTBANK MOBILE.

Current income taxes were

¥93,525 million, deferred income taxes were ¥33,253 million, and minority interest was ¥28,210 million.

9

<Results for the Nine-Month Period ended December 31, 2006 by Business Segment>
Mobile Communications
Net sales were ¥1,014,788 million, and operating income was ¥113,541 million. This segment, which was newly establishedin the current fiscal period, is principally comprised of the results of SOFTBANK MOBILE starting in May.
(Quarterly trends of the Segment)
FY2007
2007/Q3
2007/Q2

2007/Q1

Sales

232,467

Operatingincome430,328

351,991(million yen)
2006/Q4

FY2006
2006/Q3
2006/Q2

2006/Q1

Newly established in FY2007

56,90629,341

27,293As of the end of December 2006, SOFTBANK MOBILE had a total of 15,496,500 subscribers, an increase of 189,500
subscribers from the end of the second quarter. The net increase in December 2006 (new subscribers minus cancellations)was 97,000, the first net increase above 90,000 in the two years and nine months since March 2004. The shift from 2G to 3G
accelerated, and the number of 3G subscribers reached 38.5% of the total number of subscribers, increasing by 1,398,100
subscribers from the end of the second quarter, to 5,960,500 subscribers. The increase in subscribers during January 2007
amounted up to 164,000 contracts.
Accompanying the introduction of new models for the fall and winter sales campaigns, unit sales of handsets to sales agentsincreased substantially, and as a result handset sales increased.
The churn rate in the third quarter temporarily reached 1.60% following the introduction of mobile number portability, an
increase from 1.27% in the second quarter. The upgrade rate increased to 3.02%, or 0.49 percentage points, from 2.53% in
the second quarter.
SOFTBANK MOBILE introduced the installment sales method for handsets in September 2006. This step was taken withthe goal of establishing a framework that is fair for both customers who replace their handsets within short periods of time andcustomers who use the same handsets for relatively long periods of time. Under the installment method, customers whopurchased a handset at the New Super Bonus sales price will pay for a portion of the handset cost in installments (lump-sum
payment is also possible). At the same time the New Super Bonus Special Discount (constant sum discount) is applied tothe monthly basic and communication charge, which are our remuneration for services provided, thus reducing the actual
burden borne by the customer. (See Handset Installment Sales Process below.)
Due to the introduction of the installment sales method, the sales incentives for handsets decreased. This caused a
decline in customer acquisition and retaining costs.

We recognize the decrease of ARPU; however we expect that the newsales method will have an advantageous effect on long term user acquisition and the churn rate.
Due to the full-scale implementation of installment sales in the third quarter, average acquisition cost per user in the third
quarter declined ¥21,400 from the second quarter, to ¥22,400.
For customers who subscribed under the New Super Bonus Plan, from October 26, 2006 to January 15, 2007, we offered theSoftbank Grand Opening Campaign, which featured a rate plan with up to two months free of basic monthly charges andflat-rate packet communication charges (“Unlimited Packet Use Discount”). In the third quarter, ARPU was ¥5,560, adecline of ¥140 from the second quarter due to this free-of-charge period and seasonal factors.

10

Handset Installment Sales Process(1) Purchase of handset, down payment(lump sum payment also possible)

Sales
AgentsCustomers
Sales contract

Sales agent
contract

Charges forward(3) Balance invoice,special discount(4) Payment of balance ininstallments(2) Payment of balance

SOFTBANKMOBILE(1) Customer > Sales agent
Purchase of handset, down payment (lump sum payment also possible)(2) SOFTBANK MOBILE > Sales agent
Payment of balance(3) SOFTBANK MOBILE > Customer
Invoicing of balance in installments (12, 18, or 24 payments)(New Super Bonus Special Discount: a fixed amount is deducted from monthly basic charge andcommunication charges reducing the burden borne by the customer.)(4) Customer > SOFTBANK MOBILE
Payment of balance in installments (12, 28, or 24 payments)

Broadband Infrastructure
Net sales decreased by ¥871 million, or 0.4% from the same period of the previous fiscal year, to ¥196,317 million.
Operating income was ¥19,415 million, an increase of ¥11,064 million or 132% compared to the same period of the previous
fiscal year.
(Quarterly trends of the Segment)
FY2007
2007/Q3
2007/Q2(million yen)
2007/Q1

2006/Q4

FY2006
2006/Q3
2006/Q2

2006/Q1

Sales

67,26665,72863,322

71,262

71,54364,43961,205

Operatingincome(loss)

7,747

6,189

5,479

12,321

9,361

3,483

(4,494)

The number of Yahoo! BB ADSL lines installed continued to increase steadily, reaching a total of 5.16 million at the end of
December 2006. The ARPU of the ADSL business also continued to improve due to growth in the percentage of users

11subscribing to high-speed service plans, such as Yahoo! BB 50M. For subscriber acquisition, the Group’s efforts remain
centered on mass electronics retailers. In the future, the Group will strive to take advantage of synergies, such as
cross-selling Yahoo! BB ADSL services to SOFTBANK MOBILE’s subscribers.
Concerning FTTH connection service, the Group is maintaining a state of readiness that will enable it to start full-fledged
operations as soon as a fair competitive environment is established, but until that point is reached; our basic policy is todevelop operations in line with anticipated revenues. The profitability of our FTTH business is improving. We willcontinue to implement R&D targeting the commercialization of various new technologies to succeed ADSL, such as FTTR
and high-speed PLC.
Modem rental income is declining because BB TECHNOLOGY sold its modem rental business in December 2005. On
the other hand, under the terms of a service agreement with BB Modem Rental Yugen Kaisha (hereafter “BB Modem Rental”),
BB TECHNOLOGY is receiving servicing fees, incentives, and royalties. Net sales for the nine month period ended
December 31, 2006 declined from the same period of the previous fiscal year due to a decrease in incentives payments fromBB Modem Rental. However the ADSL business, excluding this impact, continues to record strong results.
Fixed-line Telecommunications
Net sales increased by ¥13,501 million, or 5%, to ¥275,662 million. Operating performance improved ¥25,779 million, to an
operating loss of ¥2,308 million.
(Quarterly trends of the Segment)
FY2007
2007/Q3
2007/Q2(million yen)
2007/Q1

2006/Q4

FY2006
2006/Q3
2006/Q2

2006/Q1

Sales

93,712

93,276

88,67392,071

90,256

83,30088,604

Operatingincome(loss)(2,603)

(916)

1,212

2,928

(1,787)(12,209)(14,089)SOFTBANK TELECOM positioned the Otoku Line direct connection voice service as its core voice service and continued
to focus on marketing the business directly to corporate customers. The number of lines installed reached 1,140 thousand asof the end of December 2006.
In the fiscal year ended March 31, 2006, agency management and other responsibilities related to the Otoku Line businesswere transferred to JAPAN TELECOM INVOICE Co., Ltd. As a result, the profitability of the Otoku Line business is
improving. In the third quarter, due to expenses related to operational integration following the June 2006 acquisition ofservices from HEISEI DENDEN CO., LTD and HDD COMMUNICATIONS CO., LTD, an operating loss was recorded,following an operating loss in the second quarter.

In the future, SOFTBANK TELECOM will work to enhance its

profitability by reducing costs through the effective use of the Group management resources. At the same time, SOFTBANKTELECOM will aggressively focus its management resources on strategic fields, such as providing mobile solutions, utilizing
the services of SOFTBANK MOBILE, and data services to corporate customers.
Internet Culture
Net sales increased by ¥27,623 million, or 24%, to ¥141,369 million, and operating income increased by ¥16,461 million, or
31%, to ¥69,354 million.

12

(Quarterly trends of the Segment)
FY2007
2007/Q3
2007/Q2(million yen)
2007/Q1

2006/Q4

FY2006
2006/Q3
2006/Q2

2006/Q1

Sales

50,04946,67644,642

42,37442,21436,896

34,635

Operatingincome25,011

22,712

21,63021,297

19,256

17,167

16,469Yahoo Japan continued to record strong results in Internet advertising due to the provisioning of advertising products thatmeet the needs of advertisers and to the acquisition of smaller-scale advertisers including the stores on Yahoo! Shopping. In
non-advertising business services, the number of stores registered in Yahoo! Auctions and Yahoo! Shopping increased, and as
a result, tenant fees and commission revenues were favorable. In consumer services, the number of first-time bidders on
Yahoo! Auctions increased substantially. This increase was the result of a campaign started in October 2006 that enabledanyone with a Yahoo Japan customer ID to place bids.
e-Commerce
Net sales decreased by ¥10,064 million, or 5%, to ¥189,549 million, while operating income rose ¥1,854 million, or 61%, to¥4,871 million.
From the period under review, the Company applied “Practical solution on accounting for revenue recognition ofsoftware”(Financial Accounting Standards Implementation Guideline No.17 issued on March 30, 2006). As a result, theCompany is required to present certain transactions as net sales from this fiscal year, net sales of certain software transactions
were recorded at ¥850 million, which would have been the amount of gross profit if the previous accounting standard had been
applied. Due to the netting with the amounts for goods purchased, net sales and cost of goods sold decreased by ¥22,227
million.
(Quarterly trends of the Segment)
FY2007
2007/Q3
2007/Q2(million yen)
2007/Q1

2006/Q4

FY2006
2006/Q3
2006/Q2

2006/Q1

Sales

65,36965,03759,142

83,661

71,456

67,68860,469Operatingincome

2,010

1,399

1,461

1,843

1,473

817

726

Higher sales and profits were recorded in the distribution business of SOFTBANK BB Corp. (hereafter “SOFTBANK BB”).
Although there were signs of sluggishness in software sales due to the imminent launch of Windows Vista™, SOFTBANKBB reinforced its sales system for corporate customers, and as a result, hardware shipments, such as PC servers andperipherals etc. increased. In the future, SOFTBANK BB will also focus on mobile services for corporate customers. In the
consumer business, wholesaling to EC companies remained favorable. A shift of strategy in the distribution businesstowards the e-commerce and service businesses is being implemented as of the current period. As one facet of that initiative,
BB Softservice Corp. was established in April 2006, through the corporate separation of SOFTBANK BB’s consumer ASP*1
service department, and made a full-scale operational start. In the future, by leveraging synergies among the Group
companies, services offered to corporate customers will be strengthened and extended further.
*1. Application Service Provider: A company that rents application software etc. to customers through the Internet.

13

Others
The results of this segment include the performance of Broadmedia business (mainly Club iT Corporation), Technology
Services business (mainly SOFTBANK TECHNOLOGY CORP. and IT Media Inc.), Media & Marketing business (mainly
SOFTBANK Creative Corp.), and other businesses (mainly TV BANK Corp. and Fukuoka Softbank Hawks related
businesses).

2.

Financial Position<Balance Sheet Analysis>
In the Company’s consolidated balance sheet as of December 31, 2006 the new consolidation of Vodafone K.K. (currently
SOFTBANK MOBILE Corp.) from the end of April 2006 had the effect of increasing current assets by ¥476,537 million,
non-current assets by ¥2,030,984 million (including goodwill of ¥1,091,455 million), current liabilities by ¥364,913 million,
and long-term liabilities by ¥1,512,398 million (including ¥1,365,602 million in long-term borrowings raised through the
WBS financing scheme and an increase of ¥84,596 million due to subordinated loans by Vodafone International HoldingsB.V.). The issuance of BB Mobile Corp. preferred stock allocated to Vodafone International Holdings B.V. raised net
assets by ¥300,000 million.
Current assets increased by ¥364,099 million from the end of the previous fiscal period, to ¥1,109,229 million.
Principally as a result of the new consolidation of SOFTBANK MOBILE, the Company recorded increases of ¥282,345
million in notes and accounts receivable-trade, ¥54,754 million in short-term deferred tax assets, and ¥ 29,062 million ininventories, such as mobile phone handsets.
in receivables and prepaid expenses.

In addition, other current assets increased by ¥57,675 million due to increases

On the other hand, principally as the result of payments related to the acquisition of

SOFTBANK MOBILE, cash and deposits declined by ¥51,533 million.
In the nine month period ended December 31, 2006 notes and accounts receivable increased as a result of higher
receivables from customers, due to full-fledged sales of handsets under the installment sales, and higher receivables from sales
agents due to a larger number of handsets sold.
Property and equipment, net increased by ¥575,735 million, to ¥994,341 million. Primarily as a result of the newconsolidation of SOFTBANK MOBILE, the Company recorded increases of ¥472,227 million in telecommunications
equipment, such as base stations and switching equipment, ¥30,444 million in buildings and structures, such as network
centers, and ¥10,715 million in land.

In addition, construction-in-progress increased by ¥37,325 million.

Intangible assets increased by ¥1,271,906 million, to ¥1,374,193 million.

Primarily as a result of the new consolidationof SOFTBANK MOBILE, goodwill increased by ¥1,098,940 million and software increased by ¥149,658 million.
Investments and other assets increased by ¥168,051 million, to ¥709,433 million.

Primarily as a result of the newconsolidation of SOFTBANK MOBILE, long-term deferred tax assets increased ¥132,296 million and other assets
including long-term prepaid expenses rose ¥45,485 million.

14

Although Yahoo Japan acquired shares in The Japan Net

Bank, Limited, investment securities declined ¥9,863 million due to the sale of all shares in SBI Holdings, Inc. etc.
Current liabilities increased by ¥526,913 million, to ¥1,113,816 million.

Principally due to the new consolidation of

SOFTBANK MOBILE, accounts payable-other and accrued expenses rose ¥230,981 million, and accounts payable-traderose ¥98,721 million.

Cash receipts as collateral rose ¥50,000 million.

investment securities, income taxes payable rose ¥47,455 million.
accounts.

In addition, due primarily to gain on the sales of

The Group does not utilize notes payable to settle

Due to the refinancing of the bridge loan, used for the acquisition of SOFTBANK MOBILE, the loan wasconverted into long-term debt in the third quarter.
Long-term liabilities increased by ¥1,507,907 million, to ¥2,382,139 million.

Due primarily to the refinancing of thebridge loan used in the acquisition of SOFTBANK MOBILE, long-term debt rose ¥1,511,580 million.

As a part of the

new consolidation of SOFTBANK MOBILE, an allowance for point mileage of ¥44,787 million was recorded.
Net assets increased by ¥348,633 million, to ¥695,897 million.

Minority interest in consolidated subsidiaries rose

¥323,583 million, primarily due to the issuance of BB Mobile Corp. preferred stock allocated to Vodafone International
Holdings B.V.
<Cash Flow Analysis>
During the nine-month period ended December 31, 2006, net cash provided by operating and financing activities was¥258,332 million and ¥1,722,831 million, respectively, while net cash used in investing activities was ¥2,028,660 million.
As a result, cash and cash equivalents at the end of the period amounted to ¥393,423 million, a decrease of ¥53,270 million
from the end of the previous fiscal year.
Net cash provided by operating activities was ¥258,332 million. Income before income taxes and minority interest
amounted to ¥176,922 million. Non-cash items included depreciation and amortization, excluding amortization of goodwill,
totaling ¥135,120 million and amortization of goodwill amounting to ¥42,565 million. Adjustments included the subtractionof gain on sales of marketable and investment securities, net, of ¥80,518 million, which is included in income before income
taxes and minority interest and the addition of interest expense of ¥53,539 million. In addition, increase in receivables was¥112,760 million and increase in payables was ¥55,284 million. Interest paid was ¥37,360, and income taxes paid, for Yahoo
Japan and others, was ¥45,890 million.
Net cash used in investing activities was ¥2,028,660 million. This principally reflected the payment of ¥1,844,046
million for acquisition of interests in subsidiaries newly consolidated, net of cash acquired, related to the acquisition of
SOFTBANK MOBILE and others, and purchase of property and equipment and intangibles totaling ¥230,461 million as aresult of capital investment, principally in the Mobile Communications, Broadband Infrastructure, and Fixed-line
Telecommunications segments. In addition, purchase of marketable and investment securities was ¥102,571 million, while
proceeds from sales of marketable and investment securities, due primarily to the sale of all shares of SBI Holdings, Inc. andthe sale of a portion of the shares held in cyber communications inc. were ¥159,339 million.

15

Net cash provided by financing activities was ¥1,722,831 million. Long-term debt rose ¥1,586,970 million, andshort-term borrowings, net, increased by ¥20,645 million, principally on account of funds raised for the acquisition of
SOFTBANK MOBILE. Due primarily to the issuance of BB Mobile Corp. preferred stock that was allocated to Vodafone
International Holdings B.V., proceeds from issuance of shares to minority shareholders was ¥300,331 million. In addition,
proceeds from issuance of bonds were ¥72,668 million, redemption of bonds was ¥205,302 million, and repayment oflong-term debt was ¥74,827 million.
3. Information about forecasts for the fiscal year (consolidated)
In the Group's core communications business, especially the mobile communications business, the Group has introduced theinstallment sales method for mobile handsets and a range of rate plans to meet diverse customer needs. These include sales
and pricing methods that have no precedent in the industry and it is therefore not possible to estimate customer trends for them.
At this point it is difficult to make performance forecasts.
To aggressively provide enhanced information disclosure to shareholders and investors, consolidated performance
forecasts will be announced at the point when rational estimates are possible.

16

The SOFTBANK GroupAs of December 31, 2006, the SOFTBANK Group included 115 companies with operations in ten business segments asfollows.
Business segments

Consolidated
subsidiaries

Equity-method
non-consolidated
subsidiaries andaffiliates

Principal products and operational content of each business

1.

MobileCommunications(Note 1)

5

1

Mobile communication services, and sale of cellular phones accompanying to
its services

2.

Broadband
Infrastructure(Note 2)

6

2

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

3.

Fixed-line
Telecommunications(Note 2)

6-

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

4. Internet Culture(Note 2)16

16

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

5. e-Commerce(Note 2)

9

3

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

Broadmedia

9

1

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

Technology Services

1-

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

Overseas Funds

38

38

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

Others22

10

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

115

71

6 Others:

Total
Notes
1.
2.

3.

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

17

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

Note: Broadmedia, Technology Services, Media & Marketing, Overseas Funds, and other segments are included in“Others” segment.

18

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

As of March 31, 2006

AmountAmount%%Increase(Decrease)

As of December 31, 2005
Amount%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable tradeMarketable securities¥394,772¥446,306¥(51,533)¥336,442

471,266

188,921282,345

177,678

7,022

4,372

2,649

10,218Inventories

79,65950,59729,06257,312

Deferred tax assets

68,861

14,10754,754

3,132

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

105,925

48,25057,67555,445(18,279)(7,424)(10,854)(7,278)364,099

632,952

1,109,229

26.5

745,130

41.2

36.2

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

87,74957,30430,44457,603

Telecommunications equipment

667,197

194,970

472,227

203,602

Telecommunications service lines

92,95591,724

1,230

93,061

Land

30,11919,404

10,715

19,396

Construction-in-progress

65,20027,87537,32532,721Others51,11827,32523,792

26,423

Total tangible assets

994,341

575,735

432,80923.7

418,605

23.1

24.7

Intangible assets, net:
Goodwill

1,144,518

45,5781,098,940

48,351

Software183,330

33,671

149,658

31,055

Other intangibles

46,34423,03623,30724,024

1,271,906

103,431

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

1,374,193

32.8

102,286

5.7

454,786

464,650(9,863)497,866

157,336

25,039132,296

22,322

106,726

61,24145,48567,330(9,416)(9,548)132(9,270)5.9

709,433

16.9

541,38229.9

168,051578,248

33.1

Deferred charges

4,655

0.1

993

0.1

3,661

1,163

0.1

Total assets¥4,191,853

100.0¥1,808,398

100.0 ¥2,383,454¥1,748,605

100.0

19

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

As of March 31, 2006

AmountAmount%%Increase(Decrease)

As of December 31, 2005

Amount%LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable - trade¥159,154¥60,432¥98,721¥50,956

Short-term borrowings

254,606

218,300

36,305

112,483

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

19,80010,4009,400

16,50023,964

11,094

12,87011,094345,104

114,122230,981

165,056

76,59329,13747,455

18,264

Cash receipts as collateral

150,000

100,000

50,000120,000

Other current liabilities

84,59343,414

41,17841,695

Total current liabilities

1,113,816

526,913536,049

26.6

586,902

32.4

30.7

Long-term liabilities:
Corporate bonds

451,482

456,128(4,645)454,968

Long-term debt

1,720,950

209,370

1,511,580

215,730

Deferred revenue

30,132

41,840(11,708)

45,156

Deferred tax liabilities

47,23048,642(1,411)

52,579Accrued retirement benefits

17,177

17,279(102)

17,121

Allowance for point mileage

44,787-44,787-

Other liabilities

70,378100,970(30,591)

114,075

Total long-term liabilities

2,382,139

56.8

874,23248.4

1,507,907

899,629

51.4

Total liabilities

3,495,956

83.4

1,461,135

80.8

2,034,821

1,435,679

82.1

163,130

3.9

162,9169.0

214

162,566

9.3

2

0.0

5

0.0

(3)

-

-

Additional paid-in capital

187,490

4.5

187,303

10.3

187

186,952

10.7

Accumulated deficit(199,161)(4.8)(218,561)(12.1)

19,400(258,266)(14.8)

Less: Treasury stock

(187)

(0.0)

(169)

(0.0)

(17)

(162)

(0.0)

151,274

3.6

131,494

7.2

19,78091,0895.2

99,5402.4

129,051

7.1(29,511)

168,808

9.6(11,340)(0.3)(36,840)(2.0)

25,500(59,702)(3.4)

28,326

0.7

19,062

1.1

9,263

18,914

1.1

116,5252.8

111,273

6.2

5,252

128,020

7.3

3,167

0.1

3,150

0.2

17

3,150

0.2

424,92910.1

101,346

5.6

323,583

90,665

5.2

695,897

16.6

347,263

19.2

348,633

312,925

17.9¥4,191,853

100.0¥1,808,398

100.0¥2,383,454¥1,748,605

100.0

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

Total shareholders’ equity
Net unrealized gain on othersecurities
Deferred losses on hedges
Foreign currency translation
adjustments
Total valuation and translation
adjustments
Stock acquisition right
Minority interestin consolidated subsidiaries
Total net assets
Total liabilities andnet assets

20

CONSOLIDATED STATEMENTS OF OPERATIONS(Millions of yen; amounts less than one million yen are omitted.)
Nine-month period ended Nine-month period ended
December 31, 2006
December 31, 2005

Increase(Decrease)

Amount%Amount%Net sales¥1,822,369

100.0¥810,258

100.0 ¥1,012,110

Cost of sales

1,005,496

55.2

538,801

66.5

816,87244.8

271,457

Selling, general and administrative expenses

619,587

34.0

Operating income

197,285

10.8Interest income

3,075

Equity in earnings under the equity method

Fiscal year ended
March 31, 2006

Amount%¥1,108,665

100.0

466,694

723,812

65.3

33.5

545,415

384,85334.7

243,54430.1

376,042

322,553

29.1

27,912

3.4

169,372

62,299

5.6

1,150

1,925

2,136

5,282

6,214

(932)

9,521

Income from investments in partnerships

1,891

739

1,151

777

Other non-operating income

4,448

2,230

2,218

3,321

4,362

15,756Gross profit

Non-operating income

14,6970.8

10,334

1.3

Interest expense

53,53920,51033,02927,005

Foreign exchange loss

2,943

7,126

(4,182)

6,320

Financing related expenses

28,396-28,396-

Other non-operating expenses

15,487

12,865

2,622

17,237

1.4

Non-operating expenses

100,367

5.5

40,502

5.0

59,86550,564

4.5

Ordinary income (loss)

111,615

6.1(2,255)(0.3)

113,870

27,492

2.5

Gain on sales of investment securities

80,708146,080(65,371)

172,306

Other special income

6,548

11,685(5,137)

26,218(70,508)

198,524

Special income

87,257

4.8

157,766

19.5

Valuation loss on investment securities

1,983

4,699

(2,716)

7,188

Loss on redemption of bonds
Loss on contract revision relating to sales
operation change
Impairment loss in fixed-line
telecommunications businessRestructuring charge relating to BBTV
business
Penalty for unfulfilled contract commitment

10,429-10,429--26,429(26,429)

25,495---18,052-

14,749(14,749)

14,749Refinance arrangement fee
Other special loss
Special loss
Income before income taxes and minority
interest
Income taxes:

-

3,653

(3,653)

3,565

-

3,153

(3,153)

3,153

9,537

17,235(7,697)

24,326

17.9

21,9491.2

69,921

8.6(47,971)

96,532

8.7

176,9229.7

85,58910.6

91,333

129,484

11.7

Current

93,525

5.1

29,548

3.7

63,97640,753

3.7

Deferred

33,253

1.8

17,2042.1

16,0481,837

0.2

28,210¥21,933

1.6
1.2

21,015¥17,819

2.6
2.2

7,194
¥4,11329,342¥57,550

2.6
5.2

Minority interest
Net income

21

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
From April 1, 2006 to December 31, 2006:(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ equity

Valuation and translation adjustments

Stockacquisition Minority
interests
right

Total

Net
unrealized
gain (losses)
on othersecurities

Deferred
losses onhedgesForeign currencytranslation
adjustments

Total¥(169)¥131,494¥129,051¥(36,840)¥19,062¥111,273

-

-

422

-

-

-

2

-

(2,637)-(2,637)

-

-

(87)

-

(87)

-

-

-

-

-

-

-

-

-

-

(26)

191

-

164

-

-

-

-

-

-

164

-

-

-

21,933-(17)

21,933
(17)

-

-

-

-

-

-

-

21,933
(17)

-

-

-

-

-

-

(29,511)25,500

9,263

5,252

17

323,583

328,853

Total movement in this period

214

(3)

187

19,400(17)

19,780(29,511)25,500

9,263

5,252

17

323,583

348,633

Balance at December 31, 2006

¥163,130¥2¥187,490¥(199,161)¥(187)¥151,274¥99,540¥ (11,340)¥28,326¥116,525

Commonstock

Pre-stockissuance
paid-in
capitalAdditional
paid-in
capitalAccumulated Treasury
deficitstock¥162,916¥5¥187,303¥(218,561)

Issuance of new shares

214

(5)

213

Cash receipt before stock-2

Dividend from surplus-

Bonuses to directors (see Note1)
Net adjustment to additional paid-in
capital and accumulated deficit due
to change in scope of consolidation(see Note 2)
Net income
Acquisition of treasury stock
Items other than changes inshareholders’ equity-

Balance at March 31, 2006

Total net
assets¥3,150 ¥101,346 ¥347,263

Changes of items during the period

22

From April 1, 2005 to December 31, 2005:

2(2,637)(87)¥3,167 ¥424,929 ¥695,897(Millions of yen, amounts less than one million yen are omitted)
Shareholders’ equity

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

Commonstock

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

Total

¥162,397¥-¥186,783¥(273,362)¥75,712Issuance of new shares

168

-

168

-

-

Dividend from surplus

-

-

-

(2,460)-Bonuses to directors (see Note1)
Net adjustment accumulated deficit
due to change in scope of
consolidation (see Note 2)
Decrease due to merger
Net income
Acquisition of treasury stock

-

-

-

(86)

-

-

-

-

38

-

-

-

-

-

168
¥162,566

Balance at March 31, 2005-

422¥(106)

Stockacquisition Minority
interests
right

Total

¥6,697 ¥102,303¥3,150Total net
assets¥136,662¥(41,056)¥68,943 ¥250,110

337

-

-

-

-

-

-

337

(2,460)

-

-

-

-

-

-

(2,460)

(86)

-

-

-

-

-

-

(86)

-

38

-

-

-

-

-

-

38

(215)
17,819
-

(56)

(215)
17,819
(56)

-

-

-

-

-

-

(215)
17,819
(56)

-

-

-

-

32,146(18,646)

12,21625,717-

21,72147,438-168

15,095(56)

15,37632,146(18,646)

12,21625,717-

21,721

62,815¥-¥186,952¥(258,266)¥(162)¥91,089¥168,808¥(59,702)¥18,914 ¥128,020¥3,150Changes of items during the period

Items other than changes inshareholders’ equity
Total movement during the period
Balance at December 31, 2005

¥90,665 ¥312,925

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

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

Stockacquisition Minority
interests
rightTotal net
assetsCommonstock

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

Total

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

519

-

519

-

-

1,038

Cash receipt before stock

-

5

-

-

-

5

-

-

-

(2,460)-(2,460)Bonuses to directors (see Note1)
Net adjustment to accumulated deficit
due to change in scope of
consolidation (see Note 2)
Decrease due to merger
Net income
Acquisition of treasury stock
Items other than changes inshareholders’ equity

-

-

-

(86)

-

(86)

-

-

-

-

Dividend from surplus

-

-

-

-

-

-

13

-

13

-

-

-

-

-

-

13

-

-

-

(215)
57,550
-

(63)

(215)
57,550
(63)

-

-

-

-

-

-

-

-

-

-

-

(215)
57,550
(63)

-

-

-

-

-

-

(7,610)4,215

12,365

8,969-

32,402

41,371-

32,402

97,153

Balance at March 31, 2005

¥6,697 ¥102,303¥3,150¥68,943 ¥250,110

Changes of items during the period
Issuance of new shares

23

Total movement in this period
Balance at March 31, 2006

519

5

519

54,801(63)

55,781(7,610)4,215

12,365

8,969¥162,916¥5¥187,303¥(218,561)¥(169)¥131,494¥129,051¥ (36,840)¥19,062¥111,273

-

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions of yen; amounts less than one million yen are omitted.)
Nine-month period ended Nine-month period ended
December 31, 2006
December 31, 2005

Fiscal year ended
March 31, 2006

I.. Cash flows from operating activities:
Income before income taxes and minority interest¥176,922¥85,589¥129,484

135,120

61,62079,744

Amortization of goodwill

42,565

5,150

6,945

Equity in earnings under the equity method, net(5,282)(6,214)(9,521)

Dilution gain from changes in equity interest, net(2,029)(9,488)(21,806)

Valuation loss on investment securities

1,983

4,699

7,188

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

Gain on sales of marketable and investment securities, net(80,518)(145,853)(171,864)

Foreign exchange loss, net

2,749

6,319

5,497

Interest and dividend income(3,311)(1,384)(2,402)

Interest expense

53,53920,51027,005(112,760)(12,386)(23,333)

55,284(7,166)

4,331

Increase in deferred revenue-

40,00040,000

Increase in other receivables(12,170)(12,818)(9,864)

Increase (decrease) in other payables

48,21821,206(26,773)

Others, net

36,50435,22570,731

336,81585,007

105,361

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

Sub-totalInterest and dividends received

4,769

2,501

3,301

Interest paid

(37,360)(15,127)(22,332)

Income taxes paid

(45,890)(31,441)(31,588)

-

3,028

3,064

¥258,332¥43,968

57,806

Refund of income taxes
Net cash provided by operating activities- Continued -24

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(Millions of yen; amounts less than one million yen are omitted.)
Nine-month period ended Nine-month period ended
December 31, 2006
December 31, 2005

Fiscal year ended
March 31, 2006

II. Cash flows from investing activities:
Purchase of property and equipment and intangibles¥(230,461)¥(177,052)¥(189,490)

Purchase of marketable and investment securities(102,571)(69,392)(88,479)

159,339

161,019

178,022(1,844,046)(3,464)(4,525)(21)

40,44239,826

8

5,853

29,232(14,228)(14,550)(17,425)

9,762

13,435

16,583-45,00045,000(6,442)

11,03919,107(2,028,660)

12,331

27,852

Increase (decrease) in short-term borrowings, net

20,645(80,701)

32,043

Increase (decrease) in commercial paper

9,400

1,000

(5,100)

Proceeds from long-term debt

1,586,970

120,350

125,550

Repayment of long-term debt

(74,827)(139,554)(158,211)

Proceeds from issuance of bonds

72,66891,87891,849(205,302)(53,515)(53,547)

427

337

1,038

Proceeds from issuance of shares to minority shareholders

300,331

871

1,619

Cash dividends paid

(2,636)(2,452)(2,456)

Cash dividends paid to minority shareholders(3,126)(2,497)(2,442)

Increase in cash receipt as collateral

50,00020,000-

Others, net(31,718)

(602)

(264)

1,722,831(44,885)

30,078Proceeds from sales of marketable and investment securities
Acquisition of interests in subsidiaries newly consolidated,
net of cash acquired
Sales of interests in subsidiaries previously consolidated
Proceeds from sales of interests in consolidated subsidiaries
Increase in loan receivables
Collection of loans
Proceeds from sale of modem rental business
Others, net
Net cash (used in) provided by investing activities
III. Cash flows from financing activities:

Redemption of bonds
Proceeds from issuance of shares

Net cash provided by (used in) financing activities
Ⅳ. Effect of exchange rate changes on cash and cash
equivalents
Ⅴ. Net (decrease) increase in cash and cash equivalents
Ⅵ. Decrease in cash and cash equivalents due to exclusion ofpreviously consolidated entities(1,878)

5,656

10,905(49,374)

17,070126,642(3,896)

(142)

(142)

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

446,694

320,194

320,194

Ⅷ. Cash and cash equivalents at the end of the period¥393,423¥337,122¥446,694

25

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

Second quarter

First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

October 1, 2006 to
December 31, 2006

July 1, 2006 to
September 30, 2006

April 1, 2006 toJune 30, 2006

January 1, 2006 to
March 31, 2006

October 1, 2005 to
December 31, 2005

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

AmountAmountAmountAmountAmountAmountAmountNet sales¥702,195¥625,941¥494,231¥298,406¥287,471¥264,149¥258,637
Cost of sales
390,157
341,443
273,895
185,010
184,551
178,575
175,674
Gross profit
312,037
284,498
220,336
113,395
102,920
85,57382,962
Selling, general and administrative
227,304
226,303
165,978
79,00979,407
77,98386,153
expenses
Operating income (loss)
84,73358,19454,35734,386
23,512
7,590(3,190)Non-operating income (Note)
1,829
4,540
12,096
6,227
2,784
4,442
3,122
Non-operating expenses (Note)
37,637
26,03940,45910,867
15,06812,49912,950Ordinary income (loss)
48,92436,69625,99429,747
11,228(466)(13,017)
Special income
15,78866,795
4,672
40,75898,93435,916
22,914
Special loss
6,688
13,895
1,365
26,61050,475
10,309
9,136
Income before income taxes and58,02489,59629,30243,89559,68725,141760
minority interest
Income taxes - Current
12,55270,826
10,146
11,204
9,695
11,623
8,230
Income taxes - Deferred
27,211(3,182)
9,224(15,366)
20,171(187)(2,779)Minority interest
10,765
8,930
8,514
8,326
7,817
6,734
6,463
Net income (loss)¥7,494¥13,021¥1,418¥39,730¥22,002¥6,971¥(11,153)
Note: Exchange gain (loss), equity in earnings (loss) under the equity method, and income (expenses) from investments in partnerships were
included in “Non-operating income” and “Non-operating expenses” and were netted on a quarterly basis for presentation purposes.
Condensed Statement of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)

Ⅰ
Ⅱ
Ⅲ
Ⅳ
Ⅴ
Ⅵ
Ⅶ
Ⅷ

Net cash provided by (usedin) operating activities
Net cash provided by (usedin) investing activities
Net cash provided by (usedin) financing activities
Effect of exchange ratechanges on cash and cash
equivalents
Net increase (decrease) incash and cash equivalents
Decrease in cash and cash
equivalents due to newly
consolidated companies
Cash and cash equivalents atthe beginning of the period
Cash and cash equivalents at
the end of the period

Note:“Depreciation and amortization” and“Amortization of goodwill” included
in net cash provided by operating
activities

Third quarter

Second quarter

First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

October 1, 2006 to
December 31, 2006

July 1, 2006 to
September 30, 2006

April 1, 2006 toJune 30, 2006

January 1, 2006 to
March 31, 2006

October 1, 2005 to
December 31, 2005

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

AmountAmountAmountAmountAmountAmountAmount¥71,193¥122,464¥64,675¥13,837¥61,949¥232¥(18,213)(71,675)

8,847(1,965,832)

15,521

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

124,058(144,656)

1,743,429

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

12,925(2,716)

703

134

5,248

3,866

639

1,150

120,859(12,641)(157,593)

109,571

105,714(55,802)(32,840)(9)-(3,886)

-

-

-

(142)

272,572

285,214446,694

337,122

231,408

287,211

320,194¥393,423¥272,572¥285,214¥446,694¥337,122¥231,408¥287,211¥66,271¥62,424¥48,989¥19,919¥21,031¥23,195¥22,543

26

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of December 31, 2006, SOFTBANK CORP. (hereafter the "Company") consolidated 115 subsidiaries. Sixty four
subsidiaries were not consolidated as the individual and aggregate amounts were not considered material in relation to theconsolidated total assets, net sales, net income (loss) and retained earnings (accumulated deficit) of the SOFTBANK
consolidated financial statements.
Changes in scope of consolidation were as follows:<Increase>
10 companies
Significant changes:
SOFTBANK MOBILE Corp.
Newly acquired<Decrease>48 companies
Insignificant companies were excluded from scope of consolidation from this fiscal period.
2. Changes in scope of equity method
As of December 31, 2006, the Company held two non-consolidated subsidiaries and 69 affiliates, all of which were
accounted for under the equity method. Sixty two non-consolidated subsidiaries and 26 affiliates were not accounted forunder the equity method, as the individual and aggregate amounts were not considered material in relation to the net income(loss) and retained earnings (accumulated deficit) of the SOFTBANK consolidated financial statements.
Changes in application of equity method were as follows:<Increase>
12 companies<Decrease>
28 companies
Significant changes:
SBI Holdings, Inc.
cyber communications inc.

Sale of shares
Sale of shares

3. Summary of significant accounting policies[1] Evaluation standards and methods for major assets(1) Marketable securities and investment securities
Held-to-maturity debt securities: Stated at amortized cost
Other securities:
With market quotations:
Stated at fair value, which represents the market prices at the balance sheet date(unrealized gain/loss is included as a separate component in net assets, net of tax, while
cost is primarily determined using the moving-average method)
Without market quotations:
Carried at cost, primarily based on the moving-average method(2) Derivative instruments:

Stated at fair value(3) Inventories:

Carried at cost, primarily based on the moving-average method[2] Depreciation and amortization(1) Property and equipment
Buildings and structures:
Telecommunications equipment:
Telecommunications service lines:
Others:Computed primarily using the straight line method
Computed using the straight line method
Computed using the straight line method
Computed primarily using the straight line method27

(2) Intangible assets:

Computed using the straight-line method[3] Accounting principles for major allowances and accruals(1) <Allowance for doubtful accounts>
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses on doubtfulreceivables, plus an amount for receivables other than doubtful receivables calculated using historical write-off
experience ratios from certain prior periods.
(2) <Accrued retirement benefits>
SOFTBANK MOBILE Corp., SOFTBANK TELECOM Corp., and certain other subsidiaries have defined benefit
pension plans for their employees. These companies account for the obligation for retirement benefits based on the
projected benefit obligations as of December 31, 2006.
(3) <Allowance for point mileage >SOFTBANK MOBILE Corp. has an allowance for point mileage which is accrued based on the estimated future
obligation arising from point service, based on past experience.
[4] Translation of foreign currency transactions and accounts
All assets and liabilities in foreign currencies are translated at the foreign currency exchange rates prevailing at the respectivebalance sheet dates. Foreign currency exchange gains or losses are charged to net income when incurred.
The translation of foreign currency denominated revenues and expenses in the financial statements of foreign consolidated
subsidiaries into Japanese yen is performed by using the average exchange rate for the period. Assets and liabilities aretranslated using the foreign currency exchange rates prevailing at the balance sheet dates, and capital stock is translated using
the historical foreign currency exchange rates. Foreign currency financial statement translation differences are presented asa separate component of "Net assets," and the portion pertaining to minority shareholders, which is included in “Minority
interest in consolidated subsidiaries.”[5] Capital lease
Under the Japanese accounting standards, capital leases, as defined therein, other than those whereby the ownership of theassets is transferred to the lessee at the end of the lease term, are permitted to be accounted for as operating leases with afootnote disclosure of the estimated acquisition cost, estimated accumulated depreciation and future lease payments orreceipts.
[6] Accounting for significant hedge transactions(1) Collar transaction① <Hedge accounting>Unrealized gains and losses, net of tax, on collar transaction that qualifies as an effective cash flow hedge at consolidated
subsidiaries in the United States of America are reported as a separate component of “Net assets” in the Company’s
consolidated balance sheets. As such, unrealized gains and losses associated with the collar transaction will berecognized into earnings in the same period during which the hedged assets and liabilities are recognized in earnings.
② <Derivative instruments for hedging and hedged items>
Derivative instruments for hedging:
Prepaid variable share forward contract (the collar transaction)
Hedged items:
Equity security③ <Hedging policy>
The purpose of the collar transaction is to hedge the variability of cash flows associated with the future market price of
the underlying equity security.

28

(2) Interest rate swap
① <Hedge accounting>
For interest rate swaps whose amounts, index and periods are same as the conditions for hedged items, the "exceptional
method" is adopted. Under this method, a certain domestic consolidated subsidiary does not account for gains and lossesof those interest rate swaps on a fair value basis and recognizes swap interest on an accrual basis.
② <Derivative instruments for hedging and hedged items>
Derivative instruments for hedging:Interest rate swap contracts
Hedged items:
Interest expense on borrowings③ <Hedging policy>
The domestic consolidated subsidiaries use derivative financial instruments to hedge the risk of exposures to fluctuationsin interest rates in accordance with its internal policies, regarding the authorization and credit limit amount.
[7] Accounting method for consumption taxes
Consumption taxes are accounted for using the net method of reporting.
4. Accounting for business combinations
All assets and liabilities of acquired entities are revalued at the respective fair market value at the combination date.
5. Amortization of goodwill"Goodwill" is amortized on a straight-line basis over reasonably estimated periods in which economic benefits are expected tobe realized. Immaterial goodwill is expensed as incurred.
The goodwill resulted from acquisition of SOFTBANK MOBILE Corp. is amortized over 20-year-period.
6. Scope of cash and cash equivalents in the consolidated statements of cash flows"Cash and cash equivalents" are comprised of cash on hand, bank deposits withdrawable on demand and highly liquid
investments with initial maturities of three months or less and a low risk of fluctuation in value.
7. Presentation of net assets in balance sheet
The Company applied "Accounting Standards for presentation of net assets" (Financial Accounting Standards No. 5 issued on
December 9, 2005), and "Application Guideline for Accounting Standards for presentation of net assets" (Financial AccountingStandards Implementation Guideline No. 8 issued on December 9, 2005) for the nine-month ended on December 31, 2006.
The shareholders’ equity based on the previous presentation of shareholders’ equity in balance sheet is ¥267,800 million.
The Company disclosed net assets in balance sheet using the new presentation for the nine-month period ended on December
31, 2006. Furthermore, the Company presented its net assets in balance sheet using the new presentation for March 31, 2006
and December 31, 2005.
8. Accounting standard for statement of changes in net assets
The Company applied "Accounting Standards for statement of changes in net assets" (Financial Accounting Standards No. 6
issued on December 27, 2005) and "Guidance on Accounting Standard for statement of changes in net assets" (Financial
Accounting Standards Implementation Guideline No. 9 issued on December 27, 2005) from the nine-month period ended
December 31, 2006.
Consolidated statements of changes in net assets is disclosed for the nine-month period ended December 31, 2006 under the
new standard. Furthermore, the consolidated statements of changes in net assets for the fiscal year ended March 31, 2006 andfor the nine-month period ended December 31, 2005 are presented under the new standard.
9. Accounting standard for share-based payment
The Company applied "Share-based Payment" (Financial Accounting Standards No. 8 issued on December 27, 2005) and"Guidance on Accounting Standard for share-based Payment" (Financial Accounting Standards Implementation Guideline No.
11 issued on December 27, 2005) from the nine-month period ended December 31, 2006.
As a result, the effect of the application of these standards and guideline was not considered material in relation to the income
before income taxes and minority interest.
29

10. Practical solution on accounting for revenue recognition of software
The Company applied "Practical solution on accounting for revenue recognition of software" (Financial Accounting Standards
No. 17 issued on March 30, 2006) from the nine-month period ended December 31, 2006.
As a result, the Company is required to present certain transactions as net sales from this fiscal year, and net sales of certain
software transactions were recorded at ¥850 million, which would have been the amount of gross profit if the previous
accounting standard had been applied. Due to the netting with the amounts for cost of good sold, net sales and cost of goods
sold decreased by ¥22,227 million.
11. Presentation of goodwill in the balance sheets and statements of cash flows
The Company applied "Accounting Standard for Business Combinations" (Accounting Standards issued on October 31, 2003
by the Business Accounting Council in Japan), "Accounting Standard for Business Divestitures and the related Implementation
Guidance" (Financial Accounting Standards No. 7 issued on December 27, 2005), "Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures" (Financial Accounting Standards Implementation
Guidance No. 10 issued on December 27, 2005) from the nine-month period ended on December 31, 2006.
(Consolidated Balance Sheets)
Goodwill related to business rights previously included in "Other intangibles" of intangible assets, net and goodwill related toconsolidation goodwill are presented as "Goodwill" as of December 31, 2006. The same presentation has been adopted for its
accounts as of March 31, 2006 and as of December 31, 2005.
(Consolidated Statements of Cash Flows)
Amortization of goodwill related to business rights previously accounted in "Depreciation and amortization" and amortizationof goodwill related to consolidation goodwill previously accounted in "Others, net" of cash flows from operating activities arepresented as "Amortization of goodwill" for the nine-month period ended December 31, 2006. The same presentation has
been adopted for its accounts for the fiscal year ended March 31, 2006 and the nine-month period ended December 31, 2005.
12. Practical solution on investors' accounting for limited-liability partnerships and limited-liability companies
The Company applied "Practical solution on investors' accounting for limited-liability partnerships and limited-liability
companies" (Financial Accounting Standards No. 20 issued on September 8, 2005) from the nine-month period ended
December 31, 2006.
As a result, the effect of the application of these standards and guideline was not considered material in relation to the income
before income taxes and minority interest.

30

Notes(Consolidated Balance Sheets)
1. Accumulated depreciation of property and equipment
December 31, 2006
687,610 million yen

March 31, 2006
603,313 million yen

December 31, 2005
597,632 million yen

2. Contingent liability
Based on debt assumption agreements with financial institutions, SOFTBANK MOBILE Corp. has transferred its debt
repayment obligation for straight bonds previously issued to financial institutions. The process through which liabilities on thebonds are eliminated from the balance sheet.
However, under the terms of the indenture, SOFTBANK MOBILE Corp. will continue to be responsible for payments on thebonds until maturity or redemption of the bonds.
Subject Bonds

Aggregate amountFirst Series Unsecured Bond

25,000 million yen

Third Series Unsecured Bond

25,000 million yen

Fifth Series Unsecured Bond

25,000 million yen

Seventh Series Unsecured Bond

25,000 million yen

Total

100,000 million yen

3. Assets pledged as collateral(1) For future lease liabilities
December 31, 2006

March 31, 2006

December 31, 2005

10,973 million yen-

10,653 million yen-

10,867 million yen
3 million yen- million yen- million yen

0 million yen

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

Note: The collateral for the future lease liabilities was provided by mortgaging against the aggregate of the current andfuture receivables due from customers of certain consolidated subsidiaries. The future lease liabilities at the end of
periods are as follows:

Future lease liabilities (including the above“Accounts payable - trade”)

December 31, 2006

March 31, 2006

December 31, 2005

13,637 million yen

23,846 million yen

20,841 million yen

31

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

March 31, 2006

December 31, 2005

71,265 million yen
212,387
13,949373,878

336 million yen
1,061
867
1,513

491 million yen
1,056
878
1,767

194
15,5100161,96378
849,228 million yen

5,001
0
201,293
210,074 million yen

5,001
0
245,680
254,876 million yen

1,137 million yen
6,831
120
1,487,190
280 million yen

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

561 million yen
16,25626
122,261
211
139,316 million yen

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

SOFTBANK MOBILE Corp. shares owned by BB Mobile Corp. and BB Mobile Corp. shares owned by Mobiletech
Corporation are pledged as collateral for short-term borrowings (totaled to ¥397 million) and long-term debt (totaled to¥1,365,602 million) resulted from the refinancing the loan accompanying the acquisition of SOFTBANK MOBILE
Corp., in addition to the assets pledged as collateral above.
4. Securities loaned
A portion of investment securities was lent to financial institutions according to stock lending agreements, and the amounts ofapplicable investment securities recorded in the Company’s consolidated balance sheets are as follows:
March 31, 2006
December 31, 2005
December 31, 2006
Investment securities

470 million yen

364 million yen

357 million yen

5. Cash receipts as collateral
Cash receipts as collateral from financial institutions, to whom the Company lent shares of one of its subsidiaries under security
deposit agreements, is presented as follows:
Cash receipts as collateral

December 31, 2006

March 31, 2006

December 31, 2005

150,000 million yen

100,000 million yen

120,000 million yen

According to the security deposit agreements, the Company paid a fixed rate amount as stock bailment fees and other fees
totaling ¥2,303 million, ¥2,859 million and ¥1,953 million for the periods ended December 31, 2006, March 31, 2006 andDecember 31, 2005, respectively, and recorded the fees as other non-operating expenses in the consolidated statements ofoperations.
6. Line of credit as a creditor (not used)
December 31, 2006
15,771 million yen

32

March 31, 2006

December 31, 2005

16,097 million yen

15,361 million yen

7. Balance of accounts receivable soldMarch 31, 2006

December 31, 2006

December 31, 2005

- million yen

8,477 million yen

8,943 million yen

Nine-month period ended
December 31, 2006
69,619 million yen

Nine-month period ended
December 31, 2005
51,683 million yen

Fiscal year ended
March 31, 2006
69,505 million yen(Consolidated Statements of Operations)
1. Selling, general and administrative expenses
Payroll and bonuses
Sales promotion expense

101,155

44,38459,671

Sales commission

188,466

6,636

9,211

6,117

3,487

4,319

Allowance for doubtful accounts

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

(Statements of changes in net assets)
1. Class and number of outstanding shares:
March 31, 2006

Increase

1,055,231,478

Number of common stocks

Decrease

December 31, 2006-

1,055,544,178

Decrease

December 31, 2006-

156,537

312,700(Note) Increase resulted from the exercise of stock acquisition rights.
2. Class and number of treasury stocks:
March 31, 2006

Increase

149,391

Number of common stocks

7,146(Note) Increase resulted from the acquisition of the fraction of shares.
3. Share warrants:Type

SOFTBANK,
Corp.
Consolidated
Subsidiaries

Number of shares for stock acquisition rights

Millions of yen

Detail of stock acquisitionrightsClass of shares

March 31,2006

Increase

Decrease

December 31,
2006

December 31,
2006

Stock acquisition rights
issued in 2004

Commonstocks

24,000,000--

24,000,000

3,150

Total

-

17

-

3,167

4. Dividends:
Resolution

Class ofsharesOrdinary general meeting ofshareholders, June 23, 2006

CommonstocksAmount of dividend(Millions of yen)

2,637

33

Dividend per
share
¥2.50

Record date

March 31, 2006

Effective dateJune 23, 2006

(Consolidated Statements of Cash Flows)
1. Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets:
December 31, 2006
394,772 million yen
7,022

December 31, 2005
336,442 million yen
10,218March 31, 2006
446,306 million yen
4,372Time deposits with original maturities
over three months(2,618)(1,839)(1,400)Stocks and bonds with original
maturities over three months(5,753)(7,698)(2,584)

Cash and cash equivalents

393,423 million yen

337,122 million yen

446,694 million yen

Cash and deposits
Marketable securities

2.

SOFTBANK MOBILE Corp. and three consolidated subsidiaries acquired in connection with the acquisition of
SOFTBANK MOBILE Corp.
（as of April 30, 2006）
Current assets(Note 1)
324,183 million yen
Non-current assets
851,905
Goodwill
1,129,092
Current liabilities(Note 1)(453,849)
Long-term liabilities(144,665)
Acquisition cost
(Note 2, 3)
1,706,666 million yen
Loans made by the Company(Note 4)
163,000
Cash and cash equivalents(25,419)of newly consolidated companies
Payments for the acquisition
1,844,246 million yen(Note 1) Amounts are after considering intercompany transactions.
(Note 2) The costs incurred for the acquisition of remaining shares of SOFTBANK MOBILE Corp. in August 2006 are
included. Accordingly, SOFTBANK MOBILE Corp. became a fully-owned subsidiary.
(Note 3) Accompanying costs are included.
(Note 4) Loan amounts until the acquisition date, April 30, 2006

3. Repayment of the borrowing based on Bridge Facility contracted by BB Mobile Corp.
The repayment of the borrowings based on the bridge facility contracted by BB Mobile Corp. (totaled to ¥1,173,830 million)
for its acquisition of SOFTBANK MOBILE Corp. was completed by refinancing in November 2006. The increase inborrowings and the decrease in repayment are offset each other in "Increase (decrease) in short-term borrowings, net." The
new borrowings (totaled to ¥1,366,000 million) from refinancing is included in "Proceeds from long-term debts."

34

Significant Subsequent Event
Merger of two consolidated subsidiaries
On December 15, 2006, SOFTBANK TELECOM SALES Corp. and SOFTBANK TELECOM Corp., the Company’s
wholly-owned subsidiaries, resolved the merger, which was approved at the extraordinary shareholders’ meeting of bothcompanies held on January 31, 2007. The merger became effective from February 1, 2007.
1. Outline of the merger(1) Companies involved in merger
SOFTBANK TELECOM SALES Corp. and SOFTBANK TELECOM Corp.
(2) Main business of merger companies
SOFTBANK TELECOM SALES Corp.
Fixed-line telecommunication and investment businesses
SOFTBANK TELECOM Corp.
Fixed- line telecommunication business(3) Method of the merger
SOFTBANK TELECOM SALES Corp., as the surviving company, acquired SOFTBANK TELECOM Corp., which
subsequently was dissolved.
(4) Company name after the merger
SOFTBANK TELECOM Corp.
(SOFTBANK TELECOM SALES Corp. changed its company name to SOFTBANK TELECOM Corp. after themerger.)(5) Purpose and method of the merger
The purpose of this merger is to accelerate business development of SOFTBANK TELECOM Corp. within the
SOFTBANK Group and strengthen its financial structure by merging with SOFTBANK TELECOM SALES Corp.
based on the SOFTBANK Group’s management policy which is to strengthen the operational base.
2. Summary of accounting procedures
The merger is accounted for using corporate merger accounting standards, applying to all jointly controlled transactions,based upon "Accounting Standard for Business Combinations" (Accounting Standards issued on October 31, 2003 by theBusiness Accounting Council in Japan) and "Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures" (Financial Accounting Standards Implementation Guidance No. 10 issued
on December 27, 2005).

35

Segment Information
1. Business segment information(1)

For the nine-month period ended December 31, 2006
(Millions of yen; amounts less than one million yen are omitted.)

Communications

Broadband
Infrastructure

Telecommunications

Internet
Culturee-Commerce

OthersTotal¥1,008,538¥192,836¥247,719¥139,110¥178,333¥55,832¥1,822,369-¥1,822,369

6,250

3,480

27,943

2,259

11,216

9,871

61,021(61,021)-

MobileFixed-line

Elimination
Consolidated
or Corporate

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

1,014,788

196,317275,662

141,369

189,549

65,703

1,883,390(61,021)

1,822,369

Operating expenses

901,246

176,901

277,971

72,014

184,677

69,876

1,682,688(57,604)

1,625,083

Operating income (loss)¥113,541¥19,415¥(2,308)¥69,354¥4,871¥(4,172)¥200,702¥(3,417)¥197,285

Total

(2)

For the nine-month period ended December 31, 2005
(Millions of yen; amounts less than one million yen are omitted.)
MobileCommunications

Broadband
Infrastructure¥196,310

Telecommunications

Internet
Culturee-Commerce

OthersTotal¥257,656¥113,305¥192,132¥50,854¥810,258

Fixed-line

Elimination
Consolidated
or Corporate

Net sales

Newly(1) Customers¥-¥810,258

Established
878

4,504

440

7,481

10,41023,715(23,715)-

197,188

262,161

113,746

199,613

61,264

833,974(23,715)810,258

Operating expenses

188,838

290,249

60,852

196,596

66,034

802,570(20,224)

782,346

Operating income (loss)¥8,350¥(28,087)¥52,893¥3,017¥(4,769)¥31,404¥ (3,491)¥27,912(2) Inter-segment

this Fiscal
Total

Period(3) For the fiscal year ended March 31, 2006
(Millions of yen; amounts less than one million yen are omitted.)
MobileCommunications

Broadband
Infrastructure

Telecommunications

Internet
Culturee-Commerce

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

1,179

6,785

569

10,535

17,41936,489(36,489)-

268,451354,233

156,120

283,275

83,073

1,145,154(36,489)

1,108,665

Fixed-line

Elimination
Consolidated
or Corporate

Net sales

Newly(1) Customers¥-¥1,108,665

Established(2) Inter-segment

this Fiscal
Total

PeriodOperating expenses

247,779

379,392

81,929278,41487,833

1,075,350(28,984)

1,046,366

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

Notes: 1.Business segments are categorized primarily based on the nature of business operations, type of services,similarity of sales channels, etc., which the SOFTBANK Group uses for its internal management purposes.
2. Please refer to the chart of "The SOFTBANK Group" for a description of the main business segments.
3. Unallocated operating expenses for the nine-month periods ended December 31, 2006, December 31, 2005 andfor the fiscal year ended March 31, 2006 in the column "Elimination or Corporate", which mainly represent
expenses of the corporate division of the Company, were ¥3,986 million, ¥3,445 million and ¥7,841 million,
respectively.
4. The Mobile Communications segment was established in the nine-month period ended December 31, 2006 dueto the consolidation of SOFTBANK MOBILE Corp. Net sales and operating expenses of SOFTBANKMOBILE Corp. and its consolidated subsidiaries are consolidated from May 2006.

36

Leases
1. Capital leases in which the ownership of leased assets is not transferred to the lessee at the end of lease periods(as a lessee)(1) Amounts equivalent to acquisition costs, accumulated depreciation and net book value at the end of each period are as
follows:
March 31, 2006
December 31, 2005
December 31, 2006
Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costs
197,727 million yen 201,765 million yen
198,797 million yen
Less:
Amount equivalent to accumulated depreciation
Amount equivalent to accumulated impairment loss

Net book value(69,048)(21,703)108,045 million yen(64,550)(21,703)
111,473 million yen(62,854)(3,198)135,712 million yen

48,224 million yen

46,999 million yen

46,991 million yen(5,464)42,759 million yen(2,674)44,324 million yen(2,079)44,911 million yen

20,215 million yen

13,604 million yen

11,961 million yen(5,753)(1,431)
13,030 million yen(5,700)(1,657)
6,245 million yen(5,931)(1,500)4,529 million yen

10,121 million yen

2,624 million yen

2,656 million yen(1,802)(247)
8,071 million yen(1,238)(287)
1,097 million yen(1,372)(373)
910 million yen

277,359 million yen

260,955 million yen

263,375 million yen(82,068)(23,383)
171,908 million yen(74,164)(23,648)
163,141 million yen(72,238)(5,072)
186,064 million yen

Buildings and structures
Equivalent to acquisition costs
Less:
Amount equivalent to accumulated depreciation

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

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

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

Net book value

Long-term prepaid expense relating to mainly ten year term lease contract with payment completed in initial five years which isincluded in "Other assets" of "Investments and other assets" in the consolidated balance sheets for the period ended December
31, 2006 and for the fiscal year ended March 31, 2006 were ¥6,118 million and ¥1,989 million, respectively.
(2) The future lease payments for capital leases at the end of each period are as follows:
March 31, 2006
December 31, 2006
Due within one year
Due after one year

December 31, 2005

Total

33,707 million yen
170,739
204,447 million yen

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

38,065 million yen
159,759
197,824 million yen

Balance of allowance for impairment loss on leased assets

19,406 million yen

23,427 million yen

5,013 million yen

37

(3) Lease payments and amounts equivalent to depreciation and interest expense for each period are as follows:
Nine-month period
FY2006Nine-month period
ended December 31,
April 2005 throughended December 31,
2006
March 2006
2005
Lease payments
56,517 million yen
42,425 million yen
40,447 million yen
Reversal of allowance for impairment loss on
300
4,020
leased assets
Amount equivalent to depreciation expense
44,59533,70831,853
Amount equivalent to interest expense
15,80812,070
10,638
Impairment loss
23,7275,013(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 period are as follows:
March 31, 2006
December 31, 2005
December 31, 2006
Property and equipment - others
164 million yen
Acquisition costs
164 million yen
62 million yen(127)
Less: accumulated depreciation
(137)
(62)
36 million yen
Net book value
26 million yen- million yen(2) The future lease receivables for capital leases at the end of each period are as follows:
March 31, 2006
December 31, 2006
Due within one year
29 million yen- million yen
Due after one year
Total
29 million yen- million yen

December 31, 2005
40 million yen
40 million yen(3) Lease income, depreciation and amount equivalent to interest income for each period are as follows:
Nine-month period
FY2006Nine-month period
ended December 31,
April 2005 throughended December 31,
2006
March 2006
2005
Lease income
46 million yen
35 million yen
29 million yen
Depreciation expense
41
30
29
Amount equivalent to interest income
320(4) Calculation method used to determine the amount equivalent to interest income
The amount equivalent to interest income is calculated by subtracting acquisition costs from the total of lease income andestimated residual value and allocated over the lease periods based on the interest method.
2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating leases at the end of each period are as follows:

Due within one year
Due after one year
Total

December 31, 2006
11,810 million yen
4,444
16,254 million yen

March 31, 2006
December 31, 2005
9,904 million yen
9,012 million yen
11,041
9,203
20,946 million yen
18,215 million yen(as a lessor)
The future lease receivables for non-cancelable operating leases at the end of each period are as follows:

Due within one year
Due after one year
Total

December 31, 2006
1,191 million yen
1,763
2,954 million yen

39

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

December 31, 2005
1,151 million yen
1,965
3,116 million yen

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

March 31, 2006

December 31, 2006

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

Investment

Carrying

costs

amounts

Differences

Investment

Carrying

costs

amounts¥36,097 ¥192,912 ¥156,815
-

-

-

225
225
0
¥36,323 ¥193,138 ¥156,815

Differences¥34,810 ¥234,319-

December 31, 2005

¥199,509

-

-

59
59
¥34,869 ¥234,379¥199,509

Investment

Carrying

costs

amounts

Differences¥37,709 ¥281,059 ¥243,349
5,023

5,023

0

18
28
9
¥42,751 ¥286,111 ¥243,359

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

December 31, 2006
Carrying amounts

March 31, 2006
Carrying amounts

December 31, 2005
Carrying amounts

¥170

¥-

¥-

¥119,627
5,386
4,669
2,000
1,000
615
¥133,469¥26,759
2,959
6,494
2,000
1,000
614
¥39,827¥21,178
2,372
5,962
2,000
2,000
624
¥34,137

1. Debt securities (held-to-maturity)
Unlisted debt securities
2. Other securities
Unlisted equity securities
Money Management Fund
Investments in limited partnerships
Preferred fund certificate
Designated money trust
OthersTotal40