SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the nine-month period ended December 31, 2004
Tokyo, February 9, 2005

FINANCIAL HILIGHTS
1.

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

Net sales

Operating loss

Ordinary loss

Net lossAmount%Amount%Amount%Amount%Nine-month period ended
December 31, 2004

¥561,793

55.1¥(14,326)-¥(33,942)-¥(32,605)-

Nine-month period ended
December 31, 2003

¥362,154-¥(46,009)-¥(62,275)-¥(93,683)-

FY2004
April 2003 throughMarch 2004

¥517,393-¥(54,893)-¥(71,901)-¥(107,094)-

Nine-month period ended
December 31, 2004
Nine-month period ended
December 31, 2003
FY2004
April 2003 throughMarch 2004

Net loss per share—
primary (yen)Net loss per
share— diluted(yen)¥(92.79)-¥(278.18)-¥(314.72)-

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

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

Total assets

Shareholders'equityEquity ratio (%)

Shareholders' equity
per share (yen)December 31, 2004

¥2,090,043¥204,685

9.8¥582.39

December 31, 2003

¥1,194,036¥265,650

22.2¥755.97

FY2004
March 31,2004¥1,421,206¥238,080

16.8¥677.401

3.

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

Nine-month period ended
December 31, 2004
Nine-month period ended
December 31, 2003
FY2004
April 2003 throughMarch 2004

4.

Investingactivities

Financing
activities¥(30,709)¥(177,564)¥153,724¥381,948¥(72,447)¥61,785¥172,237¥308,374¥(83,829)¥81,878¥306,390¥437,132

Scope of Consolidation at December 31, 2004
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

Cash and cash
equivalents
at the end of the period

Operatingactivities

198
7
103

Changes in Scope of Consolidation
Consolidated subsidiaries:
Newly added:
35
Excluded:
14
Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
14
Excluded:72Management Policies
The core management philosophy of the SOFTBANK Group (hereafter “the Group”) is “Endeavoring tobenefit society and the economy by fostering the sharing of wisdom and knowledge gained through the IT
revolution.” By conducting business activities in a creative manner, the Group focuses its energy on bothcontributing to the development of society and increasing its corporate value.

The rising use of broadband

connections along with rapid advances in data communications technology is steadily bringing the worldcloser to the advent of the ubiquitous information age.

SOFTBANK CORP. (hereafter “the Company”) isconcentrating on developing Japan’s broadband market with the aim of becoming a lifestyle company that can
provide broadband for every aspect of people’s lives.
The Group concentrated its resources on Broadband-related businesses from an early stage of this market’s
development, launching in September 2001 the Yahoo! BB comprehensive broadband service.

The

cumulative number of lines installed in the Group’s Yahoo! BB service exceeded 4.65 million at the end of
December 2004, enabling the Group to retain its leading position in the ADSL service market among Japan’scommunications carriers and ISPs.

The Group also continues to hold an overwhelming lead in the IP

telephony market, where the cumulative lines installed for its BB Phone IP telephony service rose to 4.39
million at the end of December 2004 (based on Company data).
The Group, having played a pioneering role in offering ADSL services in Japan and consistently serving as aleader in driving market growth, is now entering a new stage of establishing itself as a comprehensive
communications company.

In October 2004, the Group launched Yahoo! BB hikari, a new comprehensive

broadband service that uses optical fiber to achieve a maximum access line speed of 1 Gbps. In December
2004, a direct-collection-type (see note) fixed-line telephone service called Otoku Line was started that isoffered by JAPAN TELECOM CO., LTD.
phone business.

In addition, preparations are under way for the start of a cellular

In December 2004, a license application for 800MHz frequency band wireless stations was

submitted in this regard.
In January 2005, the Company acquired the Fukuoka Daiei Hawks, a Japanese professional baseball team, andsigned a contract with Hawks Town Co. concerning a business transfer related to the Fukuoka Dome.

The

objectives are to expand communication infrastructure services as well as to enhance broadband content, raise
public awareness of the Company, and reap benefits in terms of advertising and publicity.

With this team,which was renamed the Fukuoka SoftBank HAWKS, the Group will pursue numerous synergies in the
broadband business and e-commerce.
The medium- and long-term strategies are to conduct a comprehensive communications business offering avariety of communication methods and to generate added value in a manner that captures synergies among
Internet-based Group companies.

The objectives are to further expand the customer base of the broadband

infrastructure business and the fixed-line telecommunications business and to generate stable earnings andmaximize cash flows.

Along with the ADSL business, the new Otoku Line service is positioned as a key

3

strategy for increasing the customer base.
service.

The Company plans to conduct high-profile sales activities for thisRegarding numerical goals, the Company has established the goal of raising cumulative lines

installed for Yahoo! BB and Otoku Line to 6.5 million by September 2005.

The Group is taking a series ofactions to implement its strategy of expanding business activities. Following the July 2004 acquisition ofJAPAN TELECOM CO., LTD., the Company in October announced its decision to acquire Cable & Wireless
IDC Inc.

The Group aims to achieve further growth in its customer base by using these acquisitions togenerate synergies quickly and offering a variety of communication services, including ADSL, optical fiber,
fixed-line telephone, and IP telephony.

Internet-based Group companies, including Yahoo Japan Corporation,

operator of Japan’s number-one portal site, and E*TRADE SECURITIES CO., LTD., which was listed on the
JASDAQ market in November 2004, are working hard on creating a variety of content offered on thiscommunications infrastructure and on expanding their operations.

With the addition of the Fukuoka

SoftBank HAWKS, which represents both a powerful form of content and communication medium, the Groupplans to raise its overall profitability by creating even more added value.
Important management issues include rapidly achieving profitability in the broadband infrastructure businessand fixed-line telecommunications business, strengthening the information security management framework,and building a more powerful corporate brand.

In the ADSL business of the Broadband Infrastructure

segment, the operating loss has been declining steadily each quarter, demonstrating the steady progress being
made toward achieving profitability at the operating level.

In the fixed-line telecommunications business,there was a loss in the third quarter because of start-up costs for the new Otoku Line service. The Company
will continue to work hard to acquire customers.

By simultaneously offering several communication services,

the Company plans to raise the efficiency of customer acquisition, capital expenditures and other activities
across the entire Group, thereby conducting operations in a manner that places even more importance on
improving earnings, including at Otoku Line and other new businesses.

To upgrade the information security

management framework, SOFTBANK BB Corp. already implemented customer information protection
initiatives covering 649 items.

In July 2004, a Group Information Security Department was established tostrengthen the information management framework within the Group.

The Group will continue to take steps

to protect all of its information resources, maintaining the highest level of security management systems.

Tostrengthen the corporate brand as the rapid diversification and expansion of business activities continues, aBranding Strategy Department was established in September 2004. The department is working on building aunified brand image for the Group and raising the value of the SOFTBANK brand. Along with the birth of
the Fukuoka SoftBank HAWKS, the Group in December 2004 announced a new corporate identity logo.

The

new symbol is inspired by the flag of the fleet that was led by Ryoma Sakamoto, a famous samurai who playeda key role in the modernization of Japan in the 1800s.

The logo symbolizes the IT revolution that the Groupis driving forward, and the Group will further strengthen its brand as a comprehensive communications
company.
Note: A direct connection to the homes of users by using dry copper (copper circuits) owned and leased by
NTT and placing the Company’s own switching facilities at NTT central offices.

4

Results of Operations and Financial Position
1. Consolidated Results of Operations<Overview of First Three Quarters of Fiscal 2005>(comparison with the first three quarters of fiscal 2004)
In the first three quarters of fiscal 2005, net sales increased ¥199,639 million, or 55%, to ¥561,793 million.
The largest component of this growth was a contribution of ¥82,075 million to net sales due to the addition ofJAPAN TELECOM CO., LTD. as a consolidated subsidiary.

Other major contributors were steady growth in

Broadband Infrastructure segment sales and higher net sales in the Internet Culture and e-Finance segments.
The operating loss decreased ¥31,683 million to ¥14,326 million compared with the same period of theprevious fiscal year.

The operating loss in the Broadband Infrastructure segment is declining along withgrowth in the number of paying customers.

Aggregate operating income for all segments other than the

Broadband Infrastructure segment and Fixed-line Telecommunications segment continued to grow, increasing¥25,486 million, or 118%, to ¥47,123 million, backed by higher operating income in the Internet Culture,
e-Finance and e-Commerce segments.
The ordinary loss decreased ¥28,332 million to ¥33,942 million.

Net equity in losses under the equity

method increased ¥1,111 million to ¥2,892 million mainly due to the exclusion from the equity method of
Aozora Bank, Ltd., which was sold in September 2003.

There was an exchange loss of ¥920 million due tothe yen’s depreciation versus the euro during the third quarter compared with a gain of ¥5,075 million in theprevious fiscal year. An increase in interest-bearing debt caused net interest expense to increase ¥8,178
million to ¥16,496 million.

As a result, there was an increase of ¥3,350 million in net non-operating

expenses to ¥19,616 million.
The net loss decreased ¥61,077 million to ¥32,605 million.

Special income includes a ¥52,650 million gainon the sale of investment securities, including the sale of shares held in BB Call Corp., E*TRADE
SECURITIES CO., LTD., and other companies.

In addition, there was a ¥10,944 million dilution gain fromchanges in equity interest accompanied by the issuance of new shares in E*TRADE SECURITIES CO., LTD.
and other companies.

The result was special income of ¥67,119 million.

Special loss totaled ¥29,164

million and includes a ¥2,985 million loss on the sale of investment securities, including the sale of shares andwarrants held in eAccess Ltd., a bond covenant amendment fee of ¥4,071 million, and a valuation loss on
investment securities of ¥5,189 million. As a result, there was a net special income of ¥37,955 million
compared with a net special loss of ¥13,572 million in the previous fiscal year.
<Overview of the Third Quarter of Fiscal 2005>(comparison with the second quarter of fiscal 2005)
In the third quarter of fiscal 2005, net sales totaled ¥258,087 million, ¥101,692 million higher than in thesecond quarter, mainly because of the addition of JAPAN TELECOM CO., LTD. as a consolidated subsidiary.

5

The operating loss increased ¥4,565 million to ¥7,536 million compared with the second quarter.

Althoughthe operating loss in the Broadband Infrastructure segment declined, the total operating loss rose because ofstart-up costs associated with the Otoku Line service that JAPAN TELECOM CO., LTD. started during thethird quarter.
The ordinary loss decreased ¥6,205 million to ¥8,034 million.

There was an exchange gain of ¥4,605

million because the yen appreciated versus the U.S. dollar compared with the end of the second quarter,
following an exchange loss of ¥3,830 million in the second quarter.

Net equity in income under the equity

method was ¥1,682 million compared with net equity in loss under the equity method of ¥2,280 million in thesecond quarter.

As a result, there was a decrease of ¥10,770 million in net non-operating expenses to ¥498

million.
The net loss was ¥26,560 million, compared with net income of ¥11,830 million in the second quarter.
Special income includes a ¥6,335 million gain on the sale of investment securities, including the sale of shares
held in SOFTBANK TECHNOLOGY CORP., Nexyz. Corporation, and other companies.

In addition, there

was a ¥10,375 million dilution gain from changes in equity interest accompanied by the issuance of new sharesin E*TRADE SECURITIES CO., LTD. and other companies.

Special loss totaled ¥18,272 million andincludes a ¥2,854 million loss on the sale of investment securities, including the sale of shares and warrants
held in eAccess Ltd., and a bond covenant amendment fee of ¥4,071 million.

As a result, there was a net

special loss of ¥1,607 million compared with net special income of ¥32,164 million in the second quarter.
<Results by Business Segment for the First Three Quarters>(comparison with the first three quarters of fiscal 2004)
Broadband Infrastructure—Segment sales increased ¥60,473 million, or 69%, to ¥148,445 million.
number of paying customers in the Yahoo! BB ADSL service continued to grow steadily.

The

There was also an

increase in the share of customers using value-added services such as higher-speed services and wireless LAN.
The result was strong sales at SOFTBANK BB Corp. and Yahoo Japan Corporation.
decreased ¥20,494 million to ¥47,152 million.

The operating loss

The improvement in the operating margin was due to growthin the number of customers and average revenue per user (ARPU), as well as to a decline in the cost of
acquiring customers in the ADSL business and slower growth in fixed expenses compared to businessexpansion.

In services for corporate users, sales continued to grow at IP Revolution, Inc., which offers an

optical fiber Internet connection service.

Results in this segment include special income of ¥38,706 million

from the gain on the sale of investment securities resulting from the sale of shares held in BB Call Corp. inAugust 2004.
Fixed-line Telecommunications—Segment sales totaled ¥82,075 million and there was an operating loss of¥14,297 million.

The operating results of JAPAN TELECOM CO., LTD., which was consolidated from theend of September 2004, are classified as this newly established business segment beginning with the third
quarter.

There was an operating loss because of start-up costs for Otoku Line, a new service that was

introduced in December 2004.

6

e-Commerce—Segment sales increased ¥2,039 million, or 1%, to ¥182,999 million and operating income rose
¥1,669 million, or 70%, to ¥4,072 million. SOFTBANK BB Corp. continued to post healthy sales in its IT
product distribution business, particularly license sales to high-volume customers.

This was the result of amarketing strategy focused on highly profitable products and of measures to reinforce the sales organization.
SOFTBANK BB Corp. is also working on the development of new services.

One example is BB Security, asecurity service for Yahoo! BB members that is offered in conjunction with the Broadband Infrastructure
segment.

Another is a software distribution service called BB Soft.

e-Finance—Segment revenue increased ¥27,750 million, or 98%, to ¥56,064 million.
up ¥9,190 million, or 257%, to ¥12,772 million.

Operating income was

The revenue growth was mainly attributable to theacquisition of a controlling stake in WORLD NICHIEI Securities Co., Ltd. (see note) along with higher
brokerage commission revenue and financial income from interest and dividends at E*TRADE SECURITIESCO., LTD. due to continuing strength in Japan’s stock markets.

Also contributing to earnings was a strong

performance by the asset management business, where a total of 12 portfolio companies, including E*TRADE
SECURITIES CO., LTD., conducted a public offer.

There was special income of ¥2,909 million from a gainon the June 2004 sale of investment securities from the partial sale of shares held in E*TRADE SECURITIESCO., LTD., and a ¥9,974 million dilution gain from changes in equity interest accompanied by the issuance of
new shares in E*TRADE SECURITIES CO., LTD. in November 2004.
Note: WORLD NICHIEI Securities Co., Ltd. and SOFTBANK FRONTIER SECURITIES CO., LTD. mergedin February 2004 to form WORLD NICHIEI FRONTIER Securities Co., Ltd.
Media & Marketing—Segment sales decreased ¥1,368 million, or 13%, to ¥9,426 million.
loss decreased ¥44 million to ¥797 million.

The operatingThis performance is mainly a reflection of declining sales ofmagazines and books at SOFTBANK Publishing Inc., which continues to be impacted by the contraction of
the market for IT publications. Although the performance of the content business for paper media remains
weak, sales are rising steadily at SOFTBANK ITmedia Inc., which operates a comprehensive IT information
site.

This company will continue to concentrate on using the Internet to develop new markets.

Broadmedia—Segment sales increased ¥1,651 million, or 17%, to ¥11,442 million.

This was mainly the

result of higher sales at Broadmedia Studios Corporation, to which was transferred the operations of MOVIETELEVISION INC. (see note), a company undergoing procedures under the Civil Rehabilitation Law, aJapanese Chapter 11 procedure.

The operating loss decreased ¥1,019 million to ¥1,357 million.

Since BB

Cable Corporation was transferred to SOFTBANK BB Corp. on September 30, 2004, the burden ofinvestments associated with the BBTV business was shifted to the Broadband Infrastructure segment beginningwith the third quarter.

However, this segment continued to post a loss because of expenses associated withBBTV investments during the first half.
Note: In July 2004, Broadmedia Studios Corporation, a wholly owned subsidiary of SOFTBANK Broadmedia
Corporation, took over all operations of MOVIE TELEVISION INC.

7

Internet Culture—Segment sales increased ¥25,708 million, or 57%, to ¥70,784 million and operating
income was up ¥11,898 million, or 51%, to ¥35,046 million.

Yahoo Japan Corporation posted record-highadvertising revenue as this company continued to work on capturing advertising orders, mainly from national
clients (see note), against a backdrop of rising interest in Internet advertising. The auction business also
posted strong sales, mainly a reflection of year-end demand and sales promotion activities.

In addition tosteady growth in existing businesses, the segment is preparing to launch full-scale businesses involving
payment processing services.

Yahoo Japan Corporation made an announcement concerning the company’s

entry in an Internet banking business conducted jointly with Aozora Bank, Ltd. and in the credit card businessthrough an alliance with Nippon Shinpan Co., Ltd.
Note: Advertisers with a high degree of exposure in other mass media.
Technology Services—Segment sales increased ¥2,712 million, or 17%, to ¥18,661 million. The primaryreason was an increase in sales relating to the back-office service of e-commerce sites, network systemdevelopment, operation and maintenance services, security equipment, and IP communication-related devices
and other products of SOFTBANK TECHNOLOGY CORP. Due to the higher sales and steady growth inhigh-margin services and solution businesses, operating income increased ¥458 million, or 150%, to ¥765
million.
2. Financial Position<Balance Sheet>
The consolidation of JAPAN TELECOM CO., LTD., which was consolidated from the end of September, 2004,
significantly increased consolidated assets compared with the end of the previous fiscal year.

The following

balance sheet analysis includes comparisons with the end of the second quarter, when this company became aconsolidated subsidiary, as well as comparisons with the end of the previous fiscal year, which are greatly
affected by the consolidation of JAPAN TELECOM CO., LTD.
<Balance Sheet Analysis> (comparison with the end of fiscal 2004)
Current assets increased ¥189,429 million to ¥1,077,370 million.

This increase was mainly due to a

¥58,674 million increase in trade notes and accounts receivable (including ¥54,004 million from JAPANTELECOM CO., LTD.) and a ¥101,116 million increase in cash segregated as deposits related to securities
business and receivables related to margin transactions at E*TRADE SECURITIES CO., LTD. and othersecurity companies.

There was a ¥25,292 million increase in cash and deposits.

Property and equipment increased ¥306,251 million to ¥421,431 million.

Telecommunications equipment

and service lines increased ¥199,424 million (including ¥204,321 million from JAPAN TELECOM CO.,LTD.), buildings and structures increased ¥46,261 million (including ¥45,028 million from JAPANTELECOM CO., LTD.), and other property and equipment, including land, construction in progress, andfixtures, increased ¥60,565 million (including ¥46,099 million from JAPAN TELECOM CO., LTD.).

8

Intangible assets increased ¥66,870 million to ¥83,898 million.

The main reason was an additional goodwillof ¥38,836 million associated with the acquisition of JAPAN TELECOM CO., LTD. and its subsidiaries,
causing goodwill to increase ¥39,588 million compared with the end of the previous fiscal year.
Investments and other assets increased ¥106,178 million to ¥505,180 million. This was mainly due to a
¥68,619 million increase in investment securities, which was caused by growth in the market values of shares
held in Yahoo! Inc. and certain other companies.
Total liabilities increased ¥647,129 million to ¥1,737,467 million.

The sum of short-term borrowings andlong-term debts increased ¥168,361 million (including ¥106,000 million from JAPAN TELECOM CO., LTD.),
there was a ¥69,876 million increase in bonds, and there was a ¥73,366 million increase in payables related tomargin transactions and guarantee deposits received from customers related to securities business at
E*TRADE SECURITIES CO., LTD. and other security companies.

There was an increase of ¥90,000

million in cash receipt as collateral under security deposit agreements.

In other long-term liabilities, there

was a ¥65,462 million increase in derivative liabilities associated with derivative transactions utilizing Yahoo!
Inc. stock as the market value of these shares climbed.
Shareholders’ equity decreased ¥33,395 million to ¥204,685 million.

Net unrealized gain on other securities

increased ¥44,713 million compared with the end of the previous fiscal year because of the increase in themarket value of Yahoo! Inc. stock and other items, while there was an increase of ¥41,695 million in net
unrealized loss on derivative instruments resulting from changes in the market value of derivative transactions
in relation to stock in Yahoo! Inc.

In addition, accumulated deficits increased ¥35,380 million compared withthe end of the previous fiscal year because of the net loss and other factors.
<Balance Sheet Analysis> (comparison with the end of the second quarter)
Property and equipment increased ¥30,289 million to ¥1,010,510 million.

This was due to increases of¥7,168 million in telecommunications equipment and ¥14,657 million in construction in progress in otherproperty and equipment mainly in conjunction with the Otoku Line service offered by JAPAN TELECOM CO.,LTD.
Total liabilities increased ¥38,501 million to ¥1,737,467 million. There was a ¥94,228 million increase inbonds because of a ¥60,000 million issue of unsecured bonds by JAPAN TELECOM CO., LTD. and a ¥32,400
million issue of euroyen subordinated bonds by a subsidiary of the Company.

As the proceeds of these bondissues were used to repay loans, there were decreases of ¥39,767 million in short-term borrowings and ¥42,535
million in long-term debts.

9<Cash Flows Analysis>
Cash flows were a negative ¥55,157 million during the first three quarters of the fiscal year as cash was used inoperating and investing activities while cash was provided by financing activities.

The main reason was apayment of ¥158,837 million for the acquisition of JAPAN TELECOM CO., LTD. As a result, cash and cash
equivalents decreased ¥55,184 million to ¥381,948 million compared with the end of the previous fiscal year.
Net cash used in operating activities was ¥30,709 million.

Income before income taxes and minority

interest was ¥4,012 million and depreciation and amortization was ¥41,654 million, while there was adeduction of ¥49,670 million for gain on sale of marketable and investment securities, net, including stock of
BB Call Corp.

In addition, interest payments of ¥11,198 million and income tax payments of ¥31,382 million

at Yahoo Japan Corporation and other companies contributed to the negative cash flows.
Net cash used in investing activities was ¥177,564 million.

There were payments of ¥159,337 million for

the acquisition of JAPAN TELECOM CO., LTD. and other subsidiaries and ¥52,731 million for purchase ofproperty and equipment and intangibles, mainly telecommunications equipment at SOFTBANK BB Corp.,
while there were proceeds of ¥38,912 million from the sale of stock of BB Call Corp. and other subsidiaries
and proceeds of ¥39,001 million from the sale of marketable and investment securities, including stock andwarrants held in eAccess Ltd.

There were payments of ¥14,838 million for other investing activities, theresult of the payment of a deposit associated with the purchase of the Fukuoka Daiei Hawks and a transfer toan escrow account of the amount due for the acquisition of Cable & Wireless IDC Inc.
Net cash provided by financing activities was ¥153,724 million.

This was mainly due to proceeds of¥112,184 million from the issuance of bonds, including convertible bonds by SOFTBANK INVESTMENTCORPORATION and unsecured bonds by JAPAN TELECOM CO., LTD., and proceeds of ¥90,000 million
from cash receipt as collateral under security deposit agreements.

In addition, there were proceeds of¥28,757 million from the issuance of stock to minority shareholders by E*TRADE SECURITIES CO., LTD
and other companies, and ¥33,908 million was used for the redemption of preferred stock held by Vodafone
K.K., a former shareholder of JAPAN TELECOM CO., LTD.

10

The SOFTBANK GroupAs of December 31, 2004, the SOFTBANK Group comprised 308 companies with operation in nine segments as follows.

Business segment
1.
2.

Broadband
Infrastructure
Fixed-line
Telecommunications

Consolidated
subsidiaries

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

17

7(Note 2)12

2(Note 1)

18

8

3.

e-Commerce

4.

e-Finance

47

7

5.

Media & Marketing

10

8

6.

Broadmedia(Note 3)

11

2

7.

Internet Culture(Note 1)

20

7

8.

Technology Services

7

3

9.

Overseas Funds

37

62

10.

Others

19

4

198

110

Total

Principal products and operational content of each business
ADSL and fiber-optic high-speed Internet connection service; IP
telephony service; provision of content and other operations
Fixed-line telecommunications such as voice transmission service,data transmission service and private leased circuit
Distribution of PC software and such hardware as PCs andperipherals; enterprise solutions; diversified e-commerce businesses,
including business transaction platform (B2B) and consumer-related
e-commerce (B2C)
All-inclusive financial operations, including on-line security
business; management of domestic venture capital funds; incubationof portfolio companies
Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc.; development of web content specialized in IT
Promoting the spread of broadband service such as broadcasting andcommunications; support for procurement of contents
Internet-based advertising operations; broadband portal business;
Internet-based auction business
System solution business; business solution business
U.S.- and Asia-focused global venture capital business with a main
focus on Internet-related companies
Holding company functions for overseas operations; back-officeservices in Japan

Notes:
1. SOFTBANK BB Corp. and Yahoo Japan Corporation are included in consolidated subsidiaries of Broadband infrastructure segment and Internet Culture segment,
respectively, while both SOFTBANK BB Corp. and Yahoo Japan Corporation operate multiple businesses, and their operating results are allocated to multiple
segments.
2. “Fixed-line telecommunications” business segment is newly established as the Company newly consolidated JAPAN TELECOM CO., LTD. and its ninesubsidiaries at September 30, 2004 as the deemed acquisition date.
3. BB Cable Corporation (“BB Cable”) is included in the Broadband Infrastructure segment from the third quarter of the fiscal year because BB Cable was acquired by
SOFTBANK BB Corp. at September 30, 2004.
［ Overseas ］

Broadband Infrastructure

Fixed-line
Telecommunications［ Domestic ］
BB Cable Corporation

Internet Culture

SOFTBANK BB Corp.

JAPAN TELECOM CO., LTD.

e-Finance

IP Revolution, Inc.
Yahoo Japan Corporation

SOFTBANK INVESTMENTCORPORATION(Operating Holding
Companies）

E*TRADE SECURITIES CO., LTD.
Morningstar Japan K.K.

Tavigator, Inc. Tavigator, Inc.

SOFTBANKFINANCECORPORATION

e-Shopping! Books CORP.

［ Overseas ］［ Domestic ］(Operating Holding
Companies）

SOFTBANK CORP.
(Pure Holding Company)

Vector Inc.

Finance All Corporation（Operatinng Holding
Companies）［Domestic ］［Overseas ］

SOFTBANK
Holdings Inc.

Dee Corp.

e-Commerce

Morningstar Inc.

WORLD NICHIEI FRONTIER
Securities Co., Ltd.

Overseas Funds

SOFTBANK BB Corp.

SOFTBANK Korea Co., Ltd.

Carview Corporation

SOFTBANK
Broadmedia
Corporation

Club iT Corporation

SOFTBANK Media &Marketing Corp.

(Operating Holding
Companies）

SB CHINA HOLDINGS PTE LTD
SOFTBANK US Ventures VI LP

SOFTBANK Publishing Inc.
Softbank ITmedia Inc.
cyber communications inc.

SOFTBANK TECHNOLOGY CORP.

［Domestic］
Broadmedia

Media & MarketingTechnology Services［ Overseas ］

Note:
e-Shopping! Books CORP. altered its corporate name toSeven and Y Corp. as of January 5, 2005.

・・・・ Segment・・・・ Consolidated subsidiary・・・・ Equity-method subsidiaryor affiliate

11

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

March 31, 2004

Amount%Amount%Increase(Decrease)

December 31, 2003
Amount%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable tradeMarketable securities¥352,316¥327,023¥25,292¥309,720

146,656

87,98258,67470,09748,086113,659(65,572)

1,661

Inventories

47,59825,064

22,53432,743

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

4,571

5,255

(683)

4,899

148,663

95,53253,13075,899229,029

181,043

47,986

117,712

107,716

64,10543,61071,312(7,269)(11,726)

4,457(9,011)

189,429

675,035

1,077,370

51.5

887,940

62.5

56.5

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

50,253

3,992

46,261

3,570

Telecommunications equipment

192,672

91,542

101,129

84,722

Telecommunications service lines

98,983688

98,294689

Others

79,521

18,95560,565

14,537

Total tangible assets

421,431306,251

103,52020.2

115,179

8.1

8.7

Intangible assets, net:
Goodwill

39,588-39,588-Other intangibles

44,31017,02827,282

15,031

Total intangible assets

83,89866,87015,031

4.0

17,0281.2

1.2

Investments and other assets:
Investment securities

331,526

262,906

68,619262,631

Investments in partnerships

87,73086,654

1,075

90,497

Deferred tax assets

40,52829,303

11,22528,555

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

56,746

24,46132,284

23,675(11,351)(4,324)(7,026)(5,660)505,18024.2

399,001

28.1

106,178

399,699

33.5

Deferred charges

2,162

0.1

2,056

0.1

106

749

0.1

Total assets¥2,090,043

100.0¥1,421,206

100.0 ¥668,836¥1,194,036

100.0

12

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

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

March 31, 2004%

AmountIncrease(Decrease)%

December 31, 2004

Amount¥46,981¥47,613¥(632)¥41,660

Short-term borrowings

149,61388,841

60,772

127,585

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

15,00011,0004,000

16,00048,14536,154

11,991

44,584

165,397

66,42098,97755,696

16,986

18,858(1,872)

9,144

1,755

233

1,521

311

185,147

160,382

24,76599,416

132,713

84,111

48,60173,020100,000

10,00090,000-

Other current liabilities

86,451

32,12554,32534,369Total current liabilities

948,194

392,451

501,787

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

45.4

555,742

39.1

%

42.0

Long-term liabilities:
Corporate bonds

366,944

297,067

69,876245,560

Long-term debt

250,067

142,477

107,589

18,932

Deferred tax liabilities

58,54058,212328

67,352

Accrued retirement benefits

15,38934

15,355

106

-

1,721

(1,721)

2,713

Other liabilities

96,031

33,71162,31919,392

Total long-term liabilities

786,972

253,748

354,059

Consolidation adjustment

Reserves under special laws:
Reserve for securities
trading liabilities
Reserve for commodities
trading liabilities
Total reserves under special laws

37.6

533,224

37.5

2,159

1,267

892

1,043

140

103

37

92

29.7

2,300

0.1

1,371

0.1

929

1,135

0.1

1,737,467

83.1

1,090,337

76.7

647,129

856,982

71.8

147,890

7.1

92,787

6.5

55,102

71,403

6.0

Common stock

162,390

7.8

162,303

11.4

87

162,303

13.6

Additional paid-in capital

186,7778.9

186,69013.1

87

186,690

15.6

Accumulated deficit
Net unrealized gain on othersecurities
Net unrealized loss on derivative
instruments
Translation adjustments(246,006)(11.8)(210,625)(14.8)(35,380)(197,416) (16.5)

149,9127.2

105,198

7.4

44,713

107,623

9.0(51,158)(2.4)(9,462)(0.6)(41,695)

-

-

2,867

0.1

4,044

0.3

(1,176)

6,510

0.5

(97)

(0.0)

(66)

(0.0)

(30)

(60)

(0.0)

204,6859.8

238,080

16.8(33,395)

265,650

22.2¥2,090,043

100.0¥1,421,206

100.0¥668,836¥1,194,036

100.0

Total liabilities
Minority interestin consolidated subsidiaries
Shareholders' equity:

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

13

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

Nine-month period
ended
December 31, 2004

Nine-month period
ended
December 31, 2003

Amount%Amount%Net sales
Cost of sales
Gross Profit¥561,793
362,967

100.0
64.6

¥362,154
273,886

100.0
75.6

198,826

35.4

88,268Selling, general and administrative expenses

213,15237.9

134,277(14,326)(2.5)

Operating loss
Interest income
Foreign exchange gain
Income from investments in partnerships
Other non-operating income
Non-operating income
Interest expense
Foreign exchange loss
Equity in loss under the equity method
Valuation loss on inventories
Other non-operating expenses
Non-operating expenses

Increase(Decrease)

FY2004(April 2003 throughMarch 2004)
Amount%¥199,639
89,081¥517,393
384,024

100.0
74.2

24.4

110,558

133,369

25.8

37.1

78,874

188,26336.4(46,009) (12.7)

31,683(54,893)(10.6)

1,812
3,868

504
5,075
755

1,307
(5,075)
3,113

799
6,508
1,165

3,129

1,939

1,190

4,000

536
8,178
920

12,473
12,052-

8,811
16,496
920

1.6

8,274
8,317
-

2.3

2,892

1,780

1,111

2,276

8,117

10,052
4,388(10,052)
3,728

10,0525,100

2.4

28,427

5.1

24,5406.8

3,887

29,481

5.7

Ordinary loss

(33,942)(6.0)(62,275) (17.2)

28,332(71,901)(13.9)

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

52,65010,944
3,524

20,5401,272
1,195

32,1099,672
2,329

37,601
1,650
3,534

44,11042,786

Special income
Loss on sale of investment securities
Valuation loss on investment securities
Valuation loss on investment in affiliates
Provision for doubtful accounts
Bond covenant amendment fee
Provision for office relocation expenses
Settlement losses on dispute resolution
Additions to reserves under special laws
Other special losses
Special loss
Income (loss) before income taxes andminority interest
Income taxes:
Current
Deferred
Minority interest
Net loss

67,11911.9

23,009

6.4

8.3

2,985
5,189
1,287
2,363
4,071
1,892
1,099

10,512
4,237
7,592
732
-

(7,527)951(6,304)
1,631
4,071
1,892
1,099

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

801
9,474
29,1645.2

507
12,99936,58210.1

293(3,525)(7,417)742
20,99647,629

9.2

4,012

0.7

(75,847) (20.9)

79,860(76,744)(14.8)

22,2693.9

13,806

3.8

8,462

24,5304.8(15,941)(2.8)(4,481)(1.2)(11,459)(9,336)(1.8)

30,290¥(32,605)

5.4
(5.8)

8,511
2.4
¥(93,683) (25.9)

21,779¥61,077

15,156¥(107,094)

2.9(20.7)

Note: SOFTBANK CORP. had presented the results of investments in partnerships on a gross basis in “Income from investments in partnerships” and“Expenses from investments in partnerships” in the consolidated statements of operations. Effective from April 1, 2004, SOFTBANK CORP. haspresented the combined, net results of investments in partnerships in the account of “Income from investments in partnerships” or “Expenses frominvestments in partnerships” in the consolidated statements of operations. The results for the nine-month period ended December 31, 2003 and thefiscal year ended March 31, 2004 have been reclassified to the net basis.

14

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

FY2004
April 2003 throughMarch 2004

Nine-month period ended
December 31, 2004

Nine-month period ended
December 31, 2003

¥186,690¥162,231¥162,231

87

24,42524,425-32

32¥186,777¥186,690¥186,690

ADDITIONAL PAID-IN CAPITAL
Additional paid-in capitalat the beginning of the period
Increase due to issuance of shares
Increase in paid-in capital due tosale of treasury stock
Additional paid-in capitalat the end of the period(Millions of yen; amounts less than one million yen are omitted.)

FY2004
April 2003 throughMarch 2004

Nine-month period ended
December 31, 2004

Nine-month period ended
December 31, 2003¥(210,625)¥(101,031)¥(101,031)

Net loss(32,605)(93,683)(107,094)

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

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

(176)

(73)

(73)

(145)

(286)

(287)

14

-

202

(7)

-

-

¥(246,006)¥(197,416)¥(210,625)

ACCUMULATED DEFICIT
Accumulated deficit
at the beginning of the period

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

Note: Under Japanese GAAP, the cumulative effect arising from any changes in the scope of consolidation is treated as an adjustment
to retained earnings in the consolidated statements of additional paid-in capital and retained earnings.

15

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, 2004
December 31, 2003

FY2004
April 2003 throughMarch 2004

Ⅰ Cash flows from operating activities:

Income (loss) before income taxes and minority interest¥4,012¥(75,847)¥(76,744)

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

41,65423,86832,864

2,892

1,780

2,276

(10,861)

36

(657)

6,477

11,83014,274(49,670)(10,023)(27,032)

Foreign exchange loss (gain), net

2,518(4,098)(5,366)

Interest and dividend income(2,126)(754)(1,323)

Interest expense

16,496

8,317

12,052

Increase in receivables – trade(761)(6,992)(25,023)

Decrease in payables - trade(11,509)(15,496)(9,531)

Increase in other receivables(27,990)(53,384)(75,485)

Increase in other payables

61,76646,19473,831(24,466)

22,077

24,672

8,432(52,492)(61,194)

2,218

870

978

Interest paid

(11,198)(8,497)(11,206)

Income taxes paid

(31,382)(16,095)(16,174)

1,221

3,767

3,767

(30,709)(72,447)(83,829)

Equity in loss under the equity method, net
Dilution (gain) loss from changes in equity interest, net
Valuation loss on investment securities
Gain on sale of marketable and investment securities, net

Others, net
Sub-totalInterest and dividends received

Refund of income taxes
Net cash used in operating activities- Continued -16

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

Nine-month period ended
December 31, 2004

Nine-month period ended
December 31, 2003

FY2004
April 2003 throughMarch 2004

Purchase of property and equipment and intangibles¥(52,731)¥(54,520)¥(61,472)

Purchase of marketable and investment securities
Proceeds from sale of marketable
and investment securities
Acquisition of interestsin subsidiaries newly consolidated, net
Sale of interests in subsidiaries
previously consolidated, net
Proceeds from sale of interests
in consolidated subsidiaries
Increase in loan receivables(21,790)(25,623)(38,945)

39,001

142,414151,136(159,337)

321

1,693

38,912(1,158)(1,167)

7,552

2,393

29,212(9,916)(16,108)(23,028)

5,955

11,167

22,577(25,210)

2,899

1,871

(177,564)

61,78581,878

Increase (decrease) in short-term borrowings, net

22,668(67,442)(76,851)

Proceeds from issuance of commercial paper

71,00059,50077,500

Redemption of commercial paper(67,000)(47,500)(70,500)

Proceeds from long-term debt

166,400

66,312

204,828

Repayment of long-term debt

(191,151)(5,138)(50,993)

Proceeds from issuance of bonds

112,184

162,761

216,636

Redemption of bonds(36,124)(48,470)(56,870)

174

48,861

48,631

28,757

2,520

3,704

(33,908)--(2,452)(2,312)(2,317)

Cash dividends paid to minority shareholders(2,057)

(97)

(112)

Increase in cash receipt as collateral

90,000-10,000

Others, net(4,765)

3,243

2,735

153,724

172,237

306,390

(608)

620

(13,459)(55,157)

162,196

290,980

12

-

-

(45)

(1,348)(1,373)

6--437,132

147,526

147,526¥381,948¥308,374¥437,132

Ⅱ Cash flows from investing activities:

Collection of loans
Others, net
Net cash (used in) provided by investing activities
Ⅲ Cash flows from financing activities:

Proceeds from issuance of shares
Proceeds from issuance of shares
to minority shareholders
Redemption of preferred shares
held by minority shareholder
Cash dividends paid

Net cash provided by financing activities
Ⅳ Effect of exchange rate changes
Ⅴ Net (decrease) increase in cash and cash equivalents
Ⅵ Increase in cash and cash equivalents due to
newly consolidated companies
Ⅶ Decrease in cash and cash equivalents due to
exclusion of previously consolidated entities
Ⅷ Increase in cash and cash equivalents due to merger
Ⅸ Cash and cash equivalents at the beginning of theperiodⅩ Cash and cash equivalents at the end of the period

17

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

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

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

October 1, 2004 to
December 31, 2004

AmountAmountAmountAmountAmountAmountAmount¥103,881
83,82420,057¥121,572
92,526
29,046¥136,699
97,535
39,164¥155,239
110,137
45,101¥147,311
92,77054,540¥156,395
99,70756,687¥258,087
170,489
87,59744,25544,20545,81653,98658,35959,658

95,134(24,197)
2,573
9,009
(30,633)
12,362
6,667(15,159)
4,064
11,917(23,011)
7,815
25,020(6,652)
2,924
4,901(8,630)
2,830
4,894

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

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

17,925(9,641)

9,360
(721)
1,156
¥(34,734)

3,668(4,009)2,729¥(42,603)

777
248
4,624
¥(16,344)

10,723(4,854)
6,645¥(13,410)

8,927(3,949)8,626¥(17,876)

3,817(4,542)
6,819¥11,830

9,524(7,449)14,843¥(26,560)

Note: Exchange gain (loss), equity in gain (loss) under the equity method, and income (expenses) from investments in partnerships
were netted on quarterly basis.
Condensed Statement of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)

Ⅰ Net cash (used in) provided
by operating activities
Ⅱ Net cash (used in) provided
by investing activities
Ⅲ Net cash provided by (usedin) financing activities
of exchange rate
Ⅳ Effectchanges

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

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

April 1, 2003 toJune 30, 2003

July 1, 2003 to
September 30, 2003

October 1, 2003 to
December 31, 2003

January 1, 2004 to
March 31, 2004

April 1, 2004 toJune 30, 2004

July 1, 2004 to
September 30, 2004

October 1, 2004 to
December 31, 2004

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

22,791(10,785)

160,231

134,152

98,752

20,46934,503

213

(44)

451

(14,080)

3,778

2,977

(7,364)(22,716)

46,273

138,640

128,783

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

-

-

-

-

10

1

-

(149)

(1,198)

(0)

(25)

(45)

-

-

-

-

-

-

6

-

-

147,526

124,660

169,734

308,374

437,132

504,395

397,578¥124,660¥169,734¥308,374¥437,132¥504,395¥397,578

381,948¥7,587¥8,129¥8,151¥8,996¥9,850¥8,956¥22,847

18

Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of December 31, 2004, SOFTBANK CORP．
（the “Company”）consolidated 198 subsidiaries. 18 subsidiaries were notconsolidated due to their immateriality in terms of the consolidated total assets, net sales, net loss and accumulated deficit of
the SOFTBANK consolidated financial statements.
Main changes in the scope of the consolidation were as follows:<Increase>
JAPAN TELECOM CO.,LTD.
Newly acquired
ACE SECURITIES CO.,LTD.
Newly acquired
E*TRADE KOREA CO.,LTD.
Change from an affiliate due to acquisition of additional shares
Other 32 companies<Decrease>
SOFTBANK TECHNOLOGY HOLDINGS CORP. Merger
BB Call Corp.
Sale of all shares
Other 12 companies
2. Changes in scope of equity method
As of December 31, 2004, the Company held seven non-consolidated subsidiaries and 103 affiliates, all of which were
accounted for under the equity method.
Main changes in application of the equity method were as follows:<Increase>
All About, Inc.
Newly acquired
Other 13 companies<Decrease>
Change to a consolidated subsidiary due to acquisition of
E*TRADE KOREA CO., LTD.
additional shares
Other six companies

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 shareholders' equity, net oftax, while cost is primarily determined using the moving-average method)
Without market quotations:
Carried at cost, primarily based on the moving-average method(2) Derivative instruments:
Stated at fair value(3) Inventories:
Carried at cost, primarily based on the moving-average method19[2] Depreciation and amortization(1) Property and equipment
Buildings and structures:
Telecommunications equipment:
Telecommunications service lines:
Others:Computed primarily using the straight line method
Computed using the straight line method
Computed using the straight line method
Computed primarily using the declining balance method<Additional information for change of estimated useful life>
Backbone equipment used for mainly ADSL service had been depreciated over five years. Effective from April 1, 2004,
the Company changed the estimated useful life of the backbone equipment, which is included in “Telecommunications
equipment” in the Company’s consolidated balance sheets, to ten years, to be consistent with other telecommunications
equipment for optical fiber, since the backbone equipment is also used for the optical Internet connection service, “Yahoo!
BB hikari” which started commercial operation in October 2004.
As a result, depreciation expense included in cost of sales decreased by ¥2,193 million, operating loss and ordinary loss
decreased by the same amount, and income before income taxes and minority interest increased by the same amount for
the nine-month period ended December 31, 2004 as compared with the amount which would have been recognized if theprevious estimated useful life had been applied consistently.
(2) Intangible assets:

Computed using the straight-line method[3] Accounting principles for major allowances and accruals(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses on doubtfulreceivables, plus an amount for receivables other than doubtful receivables calculated using historical write-off
experience ratios from certain prior periods.
(2) Accrued retirement benefits:
JAPAN TELECOM CO., LTD. (“JAPAN TELECOM”), which became a newly consolidated subsidiary of theCompany at the interim period ended September 30, 2004, and certain of its subsidiaries have defined benefit pension
plans for their employees. JAPAN TELECOM and certain of its subsidiaries accounted for the liability for retirement
benefits based on the projected benefit obligations and estimated plan assets at the end of December 2004.
(3) Allowance for office relocation expenses:
Allowance for office relocation expenses is calculated based on the reasonably estimated amounts of disposal losses on
fixed assets, expenditures for lease restoration, and other expenses for office relocation of the Company and somedomestic consolidated subsidiaries planned in February 2005. Allowance for office relocation expenses is included in“Other current liabilities” in the Company’s consolidated balance sheet.
[4] Translation of foreign currency transactions and accounts
All assets and liabilities in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance
sheet dates. Exchange gains or losses are charged to the net income when incurred.
The translation of revenues and expenses in the financial statements of foreign consolidated subsidiaries into Japanese yen is
performed by using the average exchange rate for the period. Assets and liabilities are translated using the foreignexchange rates prevailing at the balance sheet dates, and capital stock is translated using the historical rates. Foreign
currency financial statement translation differences are presented as a separate component of “Shareholders' equity,” except
for the portion pertaining to minority shareholders, which is included in “Minority interest in consolidated subsidiaries.”[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.

20[6] Accounting for significant hedge transactions(1) Collar transaction① Hedge accounting
Unrealized gains and losses, net of tax, on derivative instruments that are qualified as an effective cash flow hedge at aconsolidated subsidiary in the United States of America are reported as a separate component of “Shareholders’ equity”
in the Company’s consolidated balance sheets. As such, unrealized gains and losses associated with the derivative
instruments will be recognized into earnings in the same period during which the hedged assets and liabilities arerecognized in earnings.
②

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

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

(2) Interest rate swap and interest rate cap① Hedge accounting
A certain domestic consolidated subsidiary defers recognition of gains or losses resulting from fluctuations in fair value ofderivative instruments until the maturity of the hedged transactions.
② Derivative instruments for hedging and hedged items
Derivative instruments for hedging:Interest rate swap and interest rate cap contracts
Hedged items:
Interest expense on borrowings③ Hedging policy
The domestic consolidated subsidiary uses derivative financial instruments to hedge the risk of exposures to fluctuationsin interest rates in accordance with its internal policies, regarding the authorization and credit limit amount.
[7] Accounting method for consumption taxes
Consumption taxes are accounted for using net-of-tax method.
4. Scope of cash and cash equivalents in the consolidated statements of cash flows“Cash and cash equivalents” comprises cash on hand, demand deposits at banks and highly liquid investments with initial
maturities of three months or less and a low risk of fluctuation in value.

21

Additional Information
1. Acquisition of Fukuoka Softbank Hawks Corp.
On January 28, 2005, the Company acquired 14,432,000 shares (ownership: approximately 98%) of the Fukuoka Daiei
Hawks for ¥4.9 billion (including interest-bearing debt assumed), and it has become a consolidated subsidiary of theCompany, accordingly. The Fukuoka Daiei Hawks altered its corporate name to Fukuoka Softbank Hawks Corp.

2. Business transfer to Fukuoka Softbank Hawks Marketing Corp. (“FSBHM”) from Hawks Town Co. (“HT”)
On January 28, 2005, FSBHM, a wholly-owned consolidated subsidiary of the Company, entered into an agreementwith HT on the transfer of the operations related to Fukuoka Dome, a baseball stadium, (hereinafter referred to as “theDome business”) from HT for ¥15 billion and completed the transfer of the Dome business on the same date.

3. Lease agreement of Fukuoka DomeIn accordance with the above-mentioned agreement on the transfer of the Dome business, FSBHM entered into a leaseagreement of Fukuoka Dome and commenced the lease on the same date.
Outline of the agreement(1) Lease payments: ¥4.8 billion per annum(2) Period of the lease: 30 years
FSBHM and HT are to revise the lease payments every five years. FSBHM holds the right to cancel the leaseagreement without penalty after the lease period of initial twenty years.

22Notes
1. Accumulated depreciation of property and equipment
December 31, 2004
576,282 million yen

March 31, 2004
49,426 million yen

December 31, 2003
38,608 million yen

2. Receivables and payables related to margin transactions
Receivables and payables related to margin transactions in securities businesses engaged by certain consolidated subsidiaries
are as follows:
December 31, 2004

March 31, 2004

December 31, 2003

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

216,049 million yen

168,484 million yen

113,093 million yen

12,98012,558

4,619

144,199 million yen

126,721 million yen

77,603 million yen

40,94833,661

21,812

Payables Loans payable to securities companies
for margin transactions
Proceeds from securities sold for margintransactions

3. Assets pledged as collateral(1) For future lease liabilities
December 31, 2004

March 31, 2004

December 31, 2003

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

10,621 million yen

8,727 million yen

7,407 million yen

12

36

48

6 million yen

57 million yen

117 million yen

Secured liabilities:
Notes and accounts payable - trade

Note: The collateral for the future lease liabilities was provided by mortgaging against the aggregate of the current andfuture receivables due from customers of certain consolidated subsidiaries and a broadcasting company, based onmarketing agreements, etc. The future lease liabilities at the end of periods are as follows:
December 31, 2004
Future lease liabilities (including the above“Notes and accounts payable-trade”)

34,289 million yen

23

March 31, 2004
33,558 million yen

December 31, 2003
42,881 million yen

3. Assets pledged as collateral (continued)(2) For short-term borrowings and long-term debt
December 31, 2004

March 31, 2004

December 31, 2003

Assets pledged as collateral:
Cash and deposits

3,264 million yen

902 million yen

181 million yen

Notes and accounts receivable - trade

1,118

1,124

1,129

Marketable securities

-

-

329

Inventories

-

544

3,182

6,391

405

410

Telecommunications equipment

Buildings and structures

15,545

5,486

6,201

Telecommunications service lines

14,224--

Property and equipment- others
Investment securities

732

1,102

1,102

211,989

138,064

185,490

Secured liabilities:
Notes and accounts payable - trade
Short-term borrowings
Accounts payable – other and accrued expenses
Other current liabilities
Long-term debt
Other long-term liabilities

478 million yen

592 million yen

268 million yen

22,401

13,08153,852

20

-

93

-

346

374

216,998

118,483

5,328

373

-

280

Note:
Following assets, which are included in the above, are pledged as factory foundation collateral.
Buildings and structures

6,237 million yen- million yen- million yen

Telecommunications equipment

12,061--

Telecommunications service lines

14,224--

Property and equipment- others

580

-

-

Following liabilities, which are included in the above, are guaranteed by factory foundation collateral.
Accounts payable – other and accrued expenses
Long-term debt (see note below)

5 million yen
106,000- million yen- million yen--

Note: The long-term debt of ¥106,000million at JAPAN TELECOM CO., LTD., a wholly owned subsidiary of theCompany, is secured by investment securities in JAPAN TELECOM CO., LTD. held by the Company andthree consolidated subsidiaries of JAPAN TELECOM CO., LTD.
(3)

For long-term debt owed by a third party
December 31, 2004

March 31, 2004

December 31, 2003

Assets pledged as collateral:
Investments in partnerships- million yen

1,842 million yen

1,993 million yen- million yen

2,349 million yen

2,358 million yen

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

24

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

December 31, 2004

March 31, 2004

100,000 million yen

10,000 million yen

December 31, 2003
- million yen

5. Reserves required under special laws
Reserve for securities trading liabilities:

Securities Exchange Law, No. 51

Reserve for commodity trading liabilities:

Commodity Exchange Act, No. 136-22

6. Net unrealized gains/losses on derivative instruments
Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”(“SFAS 133”) is adopted on derivative instruments which the Company’s consolidated subsidiary in the United States ofAmerica utilized.
The consolidated subsidiary in the United States of America has entered into a variable share prepaid forward contract (the“collar transaction”) utilizing its shares of an equity security. The purpose of this collar transaction is to hedge the variabilityof cash flows associated with the future market price of the underlying security, which is used for the settlement of the loans.
According to SFAS 133, unrealized gains and losses, net of tax, on the effective portion of the cash flow hedge as defined arereported as a separate component of “Shareholders’ equity”, until gains and losses on the hedged item are recognized inearnings.
7. Line of credit as a creditor (not used)
December 31, 2004
785 million yen

March 31, 2004
204 million yen

December 31, 2003
109 million yen

8. Balance of accounts receivable sold
December 31, 2004
6,697 million yen

9.

March 31, 2004
6,581 million yen

December 31, 2003
6,713 million yen

Valuation loss on investment in subsidiaries and affiliates“Valuation loss on investment in affiliates” recognized as a special loss in the consolidated statements of income are as follows:
December 31, 2004
Valuation loss on investment in consolidated
subsidiaries
Valuation loss on investment in affiliates
accounted for under equity method

December 31, 2003

March 31, 2004

- million yen

5,668 million yen

7,275 million yen

1,287 million yen

1,923 million yen

1,913 million yen

10. Consolidated statements of cash flows
Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets
December 31, 2004

December 31, 2003

March 31, 2004

309,720 million yen

327,023 million yen

Cash and deposits

352,316 million yen

Marketable securities

48,086

1,661

113,659(4,387)(1,723)(2,331)

(923)

(104)

(75)

(12,338)

-

-

(804)

(1,180)(1,143)308,374 million yen

437,132 million yen

Time deposits with original maturity
over three months
Deposits received from customers
in the commodities businessTransfer to escrow accounts
Stocks and bonds with original
maturity over three months
Cash and cash equivalents

381,948 million yen

25Significant Subsequent Events
Unsecured straight bonds issue
The Company issued straight bonds on January 31, 2005 in accordance with an approval at the Board of Directors’ meeting held on
January 11, 2005, as follows.
1. SOFTBANK CORP. 18th Series unsecured straight bonds(1) Issued amount: ¥20 billion(2) Offered amount: ¥20 billion(3) Interest rate: 1.23% per annum(4) Redemption date: January 29, 2008
(5) Redemption: Full redemption of issued amount at maturity, January 29, 2008
(6) Use of proceeds: Proceeds from the bond will be used to reduce borrowings.

2. SOFTBANK CORP. 19th Series unsecured straight bonds(1) Issued amount: ¥20 billion(2) Offered amount: ¥20 billion(3) Interest rate: 1.97% per annum(4) Redemption date: January 29, 2010
(5) Redemption: Full redemption of issued amount at maturity, January 29, 2010
(6) Use of proceeds: Proceeds from the bond will be used to reduce borrowings.

26

27

¥(47,152)¥(14,297)

96,372

82,075

148,445

195,597474¥81,600

203¥148,241

Telecommunications

Infrastructure

Operating income (loss)

Operating expenses

Total(2) Inter-segment(1) Customers¥(67,646)

155,618

87,971

109¥87,862

¥-

-

-

-

¥-

Fixed-line

Telecommunications

Broadband

Infrastructure¥2,402

178,557

180,959

8,389¥172,569

e-Commerce¥4,072

178,926

182,999

7,242¥175,756

e-Commerce

For the nine-month period ended December 31, 2003

Net sales(2)

Operating income (loss)

Operating expenses

Total(2) Inter-segment(1) Customers

Fixed-line

Broadband

For the nine-month period ended December 31, 2004

Net sales(1)

Business segment information¥3,581

24,732

28,314

2,643¥25,670

e-Finance¥12,772

43,29256,064

4,234¥51,830

e-Finance¥(842)

11,637

10,795925¥9,869MarketingMedia &¥(797)

10,224

9,426

1,046

¥8,380MarketingMedia &¥(2,376)

12,168

9,791

2,998

¥6,792

Broadmedia¥(1,357)

12,79911,442

4,285¥7,156

Broadmedia

Segment Information¥23,147

21,92845,075356¥44,719

CultureInternet¥35,046

35,73770,784413¥70,371

CultureInternet¥306

15,642

15,9486,079¥9,869ServicesTechnology¥765

17,896

18,661

7,023¥11,638

ServicesTechnology¥(3,181)

9,790

6,608

1,487

¥5,121Others¥(12,966)

601,171588,205

26,411¥561,793

Total

Elimination¥(1,359)(25,051)(26,411)(26,411)¥-or corporate¥(14,326)

576,120561,793-¥561,793

Consolidated¥1,043

820

1,863

-

¥1,863

Funds

Overseas¥(2,935)

7,047

4,111

1,175

¥2,936

Others¥(43,319)

428,151

384,832

22,678¥362,154

Total¥(2,690)(19,987)(22,678)(22,678)¥-or corporate

Elimination¥(46,009)

408,163

362,154-¥362,154

Consolidated(Millions of yen; amounts less than one million yen are omitted.)¥1,163

533

1,696

-

¥1,696

Funds

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

28¥(87,597)

¥-

-

-

128,906

216,504

-

¥-

195

¥128,711

Telecommunications

Infrastructure¥3,647251,241

254,888

10,985¥243,902

e-Commerce¥5,91135,51541,427

3,477¥37,949e-Finance¥(1,092)

15,50014,4071,221¥13,186

MarketingMedia &¥(3,305)

16,19812,892

4,122¥8,770Broadmedia¥32,582

31,47264,054441¥63,613

CultureInternet¥736

21,86722,603

8,167¥14,435

ServicesTechnology¥1,375

1,067

2,443

-

¥2,443

Funds

Overseas¥(3,965)

9,837

5,871

1,489

¥4,382Others¥(51,709)

599,205

547,496

30,102¥517,393

Total¥(3,184)(26,918)(30,102)(30,102)¥-or corporate

Elimination¥(54,893)

572,287

517,393-¥517,393

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

Notes: 1. Business segments are categorized primarily based on the nature of business operations, type of services, and similarity of sales channels, etc., which the SOFTBANK Group uses
for its internal management purpose.
2. Please refer to the chart of “The SOFTBANK Group” for main businesses by segments.
3. Unallocated operating expenses for the periods ended December 31, 2004, December 31, 2003, and March 31, 2004 in the column "Elimination or corporate", which mainly
represent expenses of the corporate division of the Company, were ¥3,402 million, ¥2,996 million and ¥3,482 million, respectively.
4. “Fixed-line Telecommunications” business segment is newly established as the Company newly consolidated JAPAN TELECOM CO., LTD. and its subsidiaries at September 30,
2004, the deemed acquisition date. Net sales and operating expenses of JAPAN TELECOM CO., LTD. and its subsidiaries are included in the Company’s results from the third
quarter of the fiscal year 2005.
5. Net sales and operating expenses of BB Cable Corporation, which was acquired by SOFTBANK BB Corp. at September 30, 2004, were included in the Broadmedia segment for
the interim period ended September 30, 2004. Net sales and operating expenses of BB Cable Corporation for the three-month period ended December 31, 2004 are included in
the Broadband Infrastructure segment.

Operating income (loss)

Operating expenses

Total(2) Inter-segment(1) Customers

Fixed-line

Broadband

FY2004 (for the year ended March 31, 2004)

Net sales(3)

Business segment information (continued)

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

December 31, 2004

March 31, 2004

December 31, 2003

115,987

49,11458,879(29,865)
86,122 million yen(17,250)
31,863 million yen(19,397)
39,482 million yen

16,617

11,175

15,231(9,382)
7,234 million yen(5,328)
5,847 million yen(8,094)
7,136 million yen

2,975

928

1,977

(887)
2,087 million yen(187)
741 million yen(595)
1,382 million yen

135,579

61,21876,089(40,135)
95,444 million yen(22,766)
38,452 million yen(28,087)
48,001 million yen

December 31, 2004

March 31, 2004

December 31, 2003

27,40572,838100,244 million yen

15,15427,90143,056 million yen

17,10932,441
49,550 million yen(2) The future lease payments for capital lease at the end of the periods

Due within one year
Due after one year
Total(3) Lease payments, amounts equivalent to depreciation and interest expense
Nine-month period ended
December 31, 2004

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

15,776 million yen
14,2972,254

FY2004
April 2003 throughMarch 2004

15,836 million yen
13,7472,408

Nine-month period
ended December 31,
2004

11,734 million yen
10,751
1,812(4) Calculation method of amount equivalent to depreciation and interest expense
The amount equivalent to depreciation is computed using the straight-line method over the period of the capital leases,
assuming no residual value except in cases where the residual value is guaranteed in the lease contract.
The amount equivalent to interest expense, which is calculated by subtracting acquisition costs from total lease payments, isallocated over the lease periods based on the interest method.

29

1.

Capital leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods(continued)(as a lessor)(1) Acquisition costs, accumulated depreciation and net book value at the end of the periods
March 31, 2004
December 31, 2004
Property and equipment - others
617
Acquisition costs
3,215
Less: accumulated depreciation(284)(2,755)332 million yen
Net book value
460 million yen

December 31, 2003

- million yen

Intangible assets
Acquisition costs
Less: accumulated amortization
Net book value

317
(65)
251 million yen

168
(38)
129 million yen- million yen

Total
Acquisition costs
Less: accumulated depreciation
Net book value

3,533(2,821)
711 million yen

785
(323)
461 million yen- million yen(2) The future lease receivables for capital leases at the end of the periods
December 31, 2004
Due within one year397
Due after one year
342
Total
739 million yen

March 31, 2004
176
307
483 million yen

December 31, 2003

- million yen(3) Lease income, depreciation and amount equivalent to interest income
Nine-month period ended
December 31, 2004

Lease income
Depreciation expense
Amount equivalent to interest income

405 million yen
309
31

FY2004
April 2003 throughMarch 2004

156 million yen
134
23

Nine-month period ended
December 31, 2004

108 million yen
9315(4) Calculation method of amount equivalent to interest income
The amount equivalent to interest income, which is calculated by subtracting acquisition costs from total of lease income andestimated residual value, is allocated over the lease periods based on the interest method.

2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating lease
December 31, 2004

Due within one year
Due after one year
Total

588
520
1,108 million yen

March 31, 2004
599
285
884 million yen

December 31, 2003

March 31, 2004
- million yen

December 31, 2003

377
226
603 million yen(as a lessor)
The future lease receivables for non-cancelable operating lease
December 31, 2004

Due within one year
Due after one year
Total

871
1,565
2,437 million yen
30- million yen

Investment in Debt and Equity Securities

1. Trading securities(Millions of yen; amounts less than one million yen are omitted.)

March 31, 2004
Carrying amounts(at fair value)
AssetsLiabilities

December 31, 2004
Carrying amounts(at fair value)
AssetsLiabilities
1. Equity securities

¥341

¥21

¥56

December 31, 2003
Carrying amounts(at fair value)
AssetsLiabilities
¥4

¥715

¥177
-

2. Debt securities

2,154

-

1,285

-

2,172

3. Others

100

-

-

-

117

3

¥2,597¥56¥1,307¥4¥3,006

¥180

Total

2. Non-trading securities(1) Available-for-sale and other securities at fair value(Millions of yen; amounts less than one million yen are omitted.)

March 31, 2004

December 31, 2004

1. Equity securities
2. Debt securities:
Government bonds
3. Others
Total

Investment

Carrying

costs

amounts¥45,059¥281,674

5,180
627¥50,868

5,187
615¥287,477

Investment

Carrying

costs

amounts¥236,614¥38,573¥206,606

7(12)¥236,609

5,381
378¥44,3335,365
413¥212,384

Differences

December 31, 2003
Investment

Carrying

costs

amounts¥168,032¥38,320¥208,143¥169,823(16)
34¥168,050

100
382¥38,802100
328¥208,5720(53)¥169,770

Differences

Differences(2) The carrying amounts of the unlisted investment securities(Millions of yen; amounts less than one million yen are omitted.)

December 31, 2004
Carrying amounts

Available-for-sale and other securities
Unlisted equity securities (w/o OTC stocks)
Unlisted domestic debt securities
Unlisted foreign debt securities
Money Management Fund
Mid-term government bond funds
Preferred fund certificate
Designated money trust
Investment trust without market quotations
OthersTotal¥19,654
34
1,123
2,681
191
2,000
46,60010¥72,296

31

March 31, 2004
Carrying amounts¥19,237
0
1,081
3,272
261
2,000
5,000
106,427
0¥137,279

December 31, 2003

Carrying amounts¥20,529
71
1,086
2,978
261
2,000
0
¥26,927