SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORTFor the six-month period ended September 30, 2005
Tokyo, November 10, 2005

FINANCIAL HILIGHTS
1.

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

Operatingincome (loss)

Net sales

Ordinary loss

Net lossAmount%Amount%Amount%Amount%Six-month period ended
September 30, 2005

¥522,787

72.1¥4,400-¥(13,483)-¥(4,182)-

Six-month period ended
September 30, 2004

¥303,706

34.7¥(6,790)-¥(25,908)-¥(6,045)-

Fiscal year ended
March 31, 2005

¥837,018-¥(25,359)-¥(45,248)-¥(59,871)-

Net loss per share—
primary (yen)Net loss per share—
diluted (yen)Six-month period ended
September 30, 2005¥(11.90)-

Six-month period ended
September 30, 2004¥(17.20)-

Fiscal year ended
March 31, 2005¥(171.03)-

Notes:
1.

Equity in earnings (loss) under the equity method
Six-month period ended September 30, 2005:
Six-month period ended September 30, 2004:
Fiscal year ended March 31, 2005:¥ 4,378 million¥ (4,575) million¥ 5,425 million

2.

Weighted-average number of shares issued and outstanding during each fiscal period (consolidated)
Six-month period ended September 30, 2005:
351,456,370 shares
Six-month period ended September 30, 2004:
351,402,492 shares
351,418,709 sharesFiscal year ended March 31, 2005:

3.

Changes in accounting methods: Yes

4.

Percentage changes for net sales, operating loss, ordinary loss and net loss are compared with the corresponding period of theprevious 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)

As ofSeptember 30, 2005

¥1,578,924¥170,342

10.8¥484.67

As of
September 30, 2004

¥2,080,360¥231,84611.1¥659.78

As ofMarch 31,2005¥1,704,853¥178,016

10.4¥505.86

Note: Number of shares outstanding (consolidated)
As of September 30, 2005:
As of September 30, 2004:
As of March 31, 2005:
3.

351,457,486 shares
351,400,767 shares
351,457,170 shares

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

Six-month period ended
September 30, 2005¥(17,981)¥(74,296)¥1,843¥231,408

Six-month period ended
September 30, 2004¥(5,292)¥(160,211)¥119,221¥397,578

Fiscal year ended
March 31, 2005¥(45,989)¥(242,944)¥277,770¥320,194

4.

Scope of Consolidation at September 30, 2005
Consolidated subsidiaries:
Equity-method non-consolidated subsidiaries:
Equity-method affiliates:

5.

153
5
94

Changes in Scope of Consolidation
Consolidated subsidiaries:
Newly added:
Excluded:99Equity-method non-consolidated subsidiaries and affiliates:
Newly added:
7
Excluded:16

Management Policies

1. Fundamental Management Policies
The core management philosophy of the SOFTBANK CORP. (hereafter “the Company”) and the
SOFTBANK Group (hereafter “the Group”) is “Endeavoring to benefit 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 both contributing to the development of society andincreasing its corporate value.
The household penetration rate of broadband connections in Japan is already more than 41%. The rising use ofbroadband connections along with rapid advances in data communications technology is steadily bringing theworld closer to the advent of the ubiquitous information age. As a 21st century lifestyle company that uses
broadband technologies to make people's lifestyles richer and more fun, the Group aims to be the number one
broadband corporate group in Japan, providing comprehensive telecommunications infrastructure as well as theportals and content that are deployed over such infrastructure. The Group is creating more affluent and enjoyable
lifestyles that will allow people to communicate via broadband anywhere they may be and with anyone.

As of September 30, 2005, the Yahoo! BB ADSL, comprehensive broadband service had 4.97 million
accumulated lines installed, and the BB Phone, IP telephony service had 4.72 million accumulated lines
installed.

Beginning in April 2005, BB Phone sought to arrange for connections with other IP telephonyservice providers, and from October 2005 onward, connections were established with NTT Communications
Corporation, and three other service providers, thus further increasing convenience for BB Phone users. In
addition, in October 2005, Yahoo! BB Mobile, the public wireless LAN service, completed its free trial
services, and merged with Mobile Point, wireless LAN service of JAPAN TELECOM CO., LTD. (hereafter“JAPAN TELECOM”). The integrated service is now available as BB Mobile Point at an attractive price of¥304 per month. Moreover, the service area will gradually expand to approximately 3,200 spots from
December 2005, and BB mobile point will have one of the largest number of service spots in Japan, including
nation-wide’s stores of McDonald’s Company (Japan), Ltd.

Otoku Line, a direct connection voice service that was first offered in December 2004, reported 680 thousand
accumulated lines installed as of September 30, 2005. JAPAN TELECOM strengthens the direct marketing
channels of its enterprise marketing department and in August 2005, entered into operating and capitalalliance with INVOICE INC. which is expected to further enhance the agency sales system for Otoku Line.
These initiatives are expected to improve profitability in this business and enable it to attain operating profit atan early date.
In September 2005, with the aim of entering the mobile phone market, wholly-owned subsidiary BB Mobile
Corp. applied for a license to operate in the 1.7GHz frequency band and submitted an application to the
Ministry of Internal Affairs and Communication for approval of related plans to establish specified basestations. The Group is conducting R&D in preparation for entering this field and in October 2005, became
the first in the world to link third-generation mobile communications (wideband code division multiple access,
W-CDMA), the Yahoo! BB ADSL wireless LAN network, and the Worldwide Interoperability for Microwave
Access WiMAX network in handover* experiments.

The Group is working toward the realization of a truly

ubiquitous society through the creation of revolutionary services based on a broadband environment that will
enable anyone to communicate anywhere they may be and with anyone.
In addition, the Group is working to expand and enhance the service content that it can offer on the broadband
infrastructure it has created thus far. In October 2005, test trials began of a new Internet-based video service,
TV Bank (provisional name), that will enable all broadband users to access brilliant contents offered by major
content providers in Japan and overseas using their PCs. The Group will continue to expand its lineup of
broadband video services, mainly through the new TV Bank service.
Along with these developments, in August 2005, the Company reached basic agreement to form a strategic
partnership in the Internet business in China with Alibaba.com Corporation, the leading business-to-business(B2B) site in China and Yahoo! Inc., operator of portal sites in countries around the world.

The objective of

this partnership will be to respond to the rapid growth of the Internet market in China. The Group plans tobuild a strong position in the Internet market of China, using the customer recognition and brand merits ofboth companies.
* Handover: Switching over to connections with base stations without breakups in voice and movie communications

2. Policy Regarding Allocation of Earnings
The fundamental policy of the Company is to increase the profits of shareholders by raising its corporate
value, returning earnings to shareholders and all other stakeholders in a suitable manner.
The Company’s policy regarding dividends is to set dividend payments while taking into consideration theneed to maintain the proper balance between measures to bolster the operating base and to preserve a stabledividend from a medium- and long-term perspective. Please note that the dividend for the interim period
under review has not been decided as of this date.

3. Position and Policies Regarding Reduction of the Investment Unit
As reducing the investment unit is generally regarded as one of the effective means to broaden the shareholder
base among individuals and increase market liquidity, the Company reduced its share trading unit to 100
shares in August 1995. Looking forward, the Company plans to give consideration to this issue from acomprehensive perspective, including the promotion of long-term, stable holdings of its shares as well as its
performance, market conditions, and other factors.

4. Target Management Indices
In addition to actual figures and changes in the principal management indices—including net sales, operating
income, ordinary income, net income, cash flows, and EBITDA* —for each of our internal management segments,
we attach great importance to such indices, particularly in the telecommunications businesses, that track such user
trends as the number of subscribers, market share, churn rate, and average revenue per user (ARPU). The target isto achieve consolidated operating income on a full-year basis during the current fiscal year.

*EBITDA: Operating income + Depreciation and loss from disposal of fixed assets (which are included in operating
expenses)

5. Medium- and Long-Term Strategies(1) Becoming a Comprehensive Telecommunications Provider
The Group aims to become a comprehensive telecommunications provider capable of offering a broad range ofcommunication modes, with effectively utilizing the customer base, technology, and services it has developed inits Broadband Infrastructure and Fixed-line Telecommunications businesses. Once a license is granted forentering into the mobile-phone market, the Group seeks to achieve stable and sustained expansion in themobile-phone business.

(2) Establishing a Unique Business Model
The Group has established a foundation as a comprehensive telecommunications group, and it is also a
corporate group based on the Internet related business.

The Group includes many companies that are using

the Yahoo! BB and other broadband infrastructures to provide a diverse range of services and content in suchareas as music, broadcasting, games, sports, and e-commerce.

The Group will establish a unique businessmodel for the broadband era that will generate long-term, stable profits from its infrastructure business,increasing returns from its portal business, and diverse sources of income from its services and content,
thereby maximizing Group profits.

6. Important Management Issues(1) Achieving Consolidated Operating Profit for the Fiscal Year as a Whole
The Company is working to achieve consolidated operating profit for the full fiscal year. Especially inOtoku Line business, in order to bring operating profit at an early date, JAPAN TELECOM strengthens its
direct marketing channels and creates a more efficient agency sales system by way of using a strategic
alliance with INVOICE INC. In addition, efforts to shorten the time between the receipt of orders andconnections of lines are also expected to strengthen profitability.

(2) Expansion of Service Content
The Group is taking steps to further expand the service content available on broadband infrastructure. Alongwith the growth in the household penetration rate of access to broadband services, the ability to offer
attractive service content going forward will result in improvement of ARPU and keep churn rates to a low
level. In addition to substantially improving the service content available under the Company’s brand,arranging tie-ups with leading content providers in Japan and overseas will make it possible to offer a wide
range of service content.

(3) Strengthening the Internal Management Systems
To respond to needs associated with growth in the scale of its operations, in the number of employees and in
the size of the organizational structure, the Company is reassessing its organizational systems while also
taking steps to enhance its internal management systems employing internal auditing functions.
Strengthening the internal management systems is intended to establish appropriate management systems.

(4) Enhancement of Information Security Management Systems
As a part of its corporate social responsibility (CSR) programs, the Group is continuing to build and maintain
top-level Groupwide information security management systems while maintaining existing Privacy Mark andInformation Security Management System (ISMS) certifications and obtaining such certifications for
additional Group units. In addition, the Group has launched a project aimed at developing a common
platform for information security and is working to achieve a unified across-the-board rise in the level of
information security through the implementation of measures such as those involving the construction of
portal sites, the establishment of guidelines, the distribution of handbooks, and the implementation ofe-learning programs.

Looking ahead, through the continuation of these initiatives, the Group intends towork to raise the information security consciousness of its employees.

7. Fundamental Policy and Measures Regarding Corporate Governance<Fundamental Policy for Corporate Governance>
The Company believes that corporate governance is essential to conducting management that places priority
on shareholders and cash flows. As a pure holding company, the Company manages and coordinates theGroup’s diverse businesses, mainly through its Board of Directors and CEO Conference, while respecting theindependence and specialized knowledge of each Group company, and is working to strengthen its Groupmanagement system.

<Enactment of Measures Regarding Corporate Governance>(1) Management Organization and Other Corporate Governance Items Related to Management Decision
Making and the Execution and Supervision of Business Operations.
(a) Corporate Governance Units
The Board of Directors of the Company has eight members, including two from outside the Group. The
directors make decisions regarding important management issues and supervise the execution of business
operations. Directors serve terms lasting two years, and an election for Board members was held at theAnnual General Meeting of Shareholders in June 2005. In addition, a CEO Conference composed of theCompany’s representative director and the CEOs of each business segment and others is held each month.
The Conference coordinates management policies for the entire Group, manages operating results of Group
companies, and performs other tasks.

A consulting attorney provides advice and guidance as necessary

regarding daily business operations and management decisions.

This attorney also attends all meetings ofthe Board of Directors and CEO Conferences to provide advice and guidance. This adds transparency toGroup management and reinforces compliance activities.
The Company has adopted the Corporate Auditor System, and the Board of Auditors consists of four members,
three of whom are external auditors. The auditors perform their duties together with the Internal Audit
Department and the independent auditors.

The auditors monitor the performance of directors in theexecution of their duties with regard to business activity, with the aim of ensuring objectivity, fairness, andtransparency of management.

(b) Internal Controls
The Group has an internal control framework for the purpose of minimizing operational risks and promoting
compliance activities.

Based on a plan, the Internal Audit Department conducts operational audits covering

the Group’s significant management and business activities. These audits evaluate and verify compliance by
the Company and the entire Group with management policies, laws, articles of incorporation, regulations,guidelines, and other applicable rules. Furthermore, this department gives specific suggestions anddirectives in order to improve operations as well as to prevent problems from occurring in advance.

(c) Independent Public Accountants
The Company has signed an engagement agreement with ChuoAoyama PricewaterhouseCoopers to perform
audits of its accounts as required by Japan’s Securities and Exchange Law and the Commercial Code of Japan.
For the six-month period ended September 30, 2005, the following certified public accountants, belonging to
the previously mentioned accounting firm, were engaged in the audit on a continuous basis. The number ofyears they have audited the Company are shown in parentheses.

Names of Certified Public Accountants Engaged in the Audit
Engagement Partners
Hiroshi Koyama (two accounting terms)
Kiyoshi Ichimura (10 accounting terms)
Hiroshi Suzuki (two accounting terms)

Note: In October 2005, ChuoAoyama PricewaterhouseCoopers, the auditor of the Company, issued thefollowing statement regarding those of its employees who audit a single company for more than seven years:
the auditor will be changed after auditing one company for seven years.

Therefore, in accordance with theauditor’s rules, Mr. Kiyoshi Ichimura, a member of engagement partners, will be replaced by another auditor
at the completion of the current fiscal year.

(2) Measures Taken During the Past Year to Improve Corporate Governance(a) The companies of the Group, as part of their activities to improve information security, are strengthening
their security policies and internal regulations as well as their supervisory systems.

As a result, Group

companies have established their own Information Security committees consisting of personnel in charge of
information security in each department.

In addition, to ensure that matters decided by the Group

Information Security Committee, which oversees the Information Security committees of Group companies,
are communicated fully to employees, a cross-Group portal site has been created, with the objective ofimproving the level of information security in the Group as a whole.

Among Group companies,

SOFTBANK BB Corp. has established an Information Security Committee and has implemented various
measures, including the placement of Information Security Committee representatives in each of its divisions

(organizational measure), the implementation of continuous training such as e-learning for all employees(individual measure), the classification of all operations areas as having one of five security levels (physicalmeasure), and the implementation of surveillance tools and biometrics (technological measure).

The Group

is working to further strengthen its management systems for information security, reassessing security
regulations timely.

In July 2005, the Technical Subcommittee, a subcommittee to the Group Information

Security Committee, was formed to be in charge of comparing and evaluating the security tools adopted byGroup companies.

The Company plans to continue to conduct activities aimed at acquiring suchcertifications as information security management system (ISMS) and P-Mark, with a particular focus on
Group companies that handle personal information.

(b) The Company has adopted the Group Representative Oath System and certification of the appropriatenessof the financial statements of SOFTBANK CORP., under which a representative of each consolidated
subsidiary and each company accounted for under the equity method must submit a representative.

This

system ensures that there is no misconduct or violations of the law or articles of incorporation; that an internalmanagement system is in place, functioning properly; that reports are being made to top management; andthat the information security system is cohesive, enabling the Group to disclose company information in atimely and appropriate manner as well as promote stronger corporate governance and risk management.
Furthermore, with the establishment of this system, Group companies conduct periodic self-assessments
covering more than 100 items related to internal control and are required to report the results of theseassessments to the Company. This allows the Company to verify whether information is disclosed toinvestors in an accurate and timely manner while developing internal control of the entire Group andimproving the Company’s internal management system.

Results of Operations and Financial Position

1. Consolidated Results of Operations<Overview of First-half Result> (comparison with the first half of fiscal 2005)
Net sales increased ¥219,080 million, or 72% over the same period of the previous fiscal year, to ¥522,787
million. The financial results of JAPAN TELECOM, which was consolidated on its deemed acquisition dateof September 30, 2004, were newly included starting in the latter half of the previous fiscal year, which has
added ¥171,904 million to net sales in the Fixed-line Telecommunications segment. In the Broadband
Infrastructure segment, sales rose ¥29,650 million, or 31%, to ¥125,645 million as a result of increases in thenumber of paying customers and ARPU. In addition, sales of Internet Culture segment continued to berobust and reported a ¥27,735 million increase, or 63%, to ¥71,531 million.

As SOFTBANKINVESTMENT CORPORATION (See Note 1.) changed to an equity-method affiliate from a consolidated
subsidiary at March 31, 2005, sales were not recorded in the e-Finance segment compared with ¥30,771
million in sales recorded in that segment for the same period of the previous year.

Operating income of ¥4,400 million was reported while operating loss of ¥6,790 million was reported for thesame period of the previous fiscal year.

In the Broadband Infrastructure segment, the operating loss

decreased ¥33,667 million to ¥1,010 million as a consequence of steady increases in sales and efforts to
reduce costs, including customer acquisition cost. Moreover, as a result of the steady improvement in
profitability, the Broadband Infrastructure segment reported operating income of ¥3,483 million in the second
quarter of the current fiscal year. In the Internet Culture segment, operating income rose ¥11,439 million, or
52%, to ¥33,636 million, due to the continued robustness of advertising-related business. On the other hand,
the Fixed-line Telecommunications segment reported an operating loss of ¥26,299 million, owing to initialinvestments in the Otoku Line service of JAPAN TELECOM. The operating income of the e-Financesegment for the same period of the previous year was ¥7,135 million.

Ordinary loss decreased ¥12,424 million from the same period of the previous fiscal year, to ¥13,483 million.
As a result of the transition of SOFTBANK INVESTMENT CORPORATION to an equity-method affiliate

from a consolidated subsidiary, equity in earnings under the equity method recorded ¥4,378 million
improving from equity in loss under the equity method by ¥8,954 million. On the other hand, an increase ininterest-bearing debt caused interest expense to increase ¥3,568 million, to ¥13,799 million, and othernon-operating expense amounted to ¥7,698 million.

Net loss decreased ¥1,863 million compared with the same period of the previous year to ¥4,182 million.

As

special income, the company recorded a gain on sale of investment securities of ¥52,475 million in relation
primarily to the sale of investment securities in IT Fund (See Note 2.), Advanced Media, Inc., BroadBand
Tower, Inc., and other companies, while the Company reported losses amounting to ¥7,608 million inconnection with the contract revision relating to sales operation following a review of the sales systems for
the Otoku Line services, and refinance arrangement fee of ¥3,153 million as a special loss.

Moreoverincome taxes of ¥16,886 million (after refunds and adjustments) were recorded mainly due to the performanceof Yahoo Japan Corporation. In addition, minority interest of ¥13,197 million was recorded.
Notes:*1 Current SBI Holdings, Inc.
*2 SOFTBANK INTERNET TECHNOLOGY FUND No.1 and No.2

<First-half Results by Business Segment> (comparison with the first half of fiscal 2005)

Broadband Infrastructure
Segment sales increased ¥29,650 million, or 31% compared with the same period of the previous fiscal year, to¥125,645 million. The operating loss decreased by ¥33,667 million to ¥1,010 million. Of particular note wasthe attainment of operating income of ¥3,483 million reported in the second quarter of the current fiscal year.
(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
Sales
61,20564,439Operatingincome(4,494)
3,483(loss)(Million yen)
2005/Q4
56,861(6,594)

FY2005
2005/Q3
2005/Q2
52,45049,819(12,474)(16,340)

2005/Q1
46,175(18,337)ADSL BusinessYahoo! BB ADSL, the driving force for expanding the usage of broadband internet services, reported 4.97 million
accumulated lines installed as of September 30, 2005. In addition, the churn rate remained at a low level of 1%.
As a result, even though competing companies aggressively attempted to expand their fiber optic
telecommunications service, Yahoo! BB ADSL was able to report a net increase in the number of paid customer.
ARPU of the ADSL business continued to increase during the six-month period ended September 30, 2005 asa result of the rise in the number of users of high-value-added services such as higher-speed service plans andwireless LAN services. The percentage of Yahoo! BB 50M users is rising, and the accumulated number ofsubscribers is approaching 20% in total. In addition, the number of wireless LAN users has exceeded 1.2
million and remains on a rising trend leading accumulated number of subscribers to close to 25% in total.
The accumulated lines installed of BB Phone, the Group’s IP telephony service, totaled 4.72 million as of
September 30, 2005, and it retained its No.1 share position in Japan. The connectivity with other IP
telephony service providers is being expanded to increase convenience for customers.
In October 2005, Yahoo! BB Mobile, the public wireless LAN service, completed its free trial services, andmerged with Mobile Point, JAPAN TELECOM’s wireless LAN service. The integrated service is now
available as BB Mobile Point at an attractive price of ¥304 per month.

Moreover, the service area will

expand to approximately 3,200 spots in December 2005, largest service area in Japan, including nation-wide’s

McDonald’s Company (Japan), Ltd. stores.
Regarding costs, customer acquisition costs have been substantially reduced. This is attributed to the decline
of incentive cost which is caused by more gradual rise in the number of new customers and the increase in theefficient customer-acquisition, which is collaborated with large appliance discount stores.

BBTV BusinessIn the broadband TV broadcasting service (BBTV) business, the Yahoo! BB hikari TV Package and full-scale
Yahoo! BB ADSL services have been introduced in nationwide in Japan in July 2005. This has enabled“triple play” service at the lowest-price in the market.

FTTH BusinessIn the FTTH business, a strategy focusing on cost efficiency has been adopted. While aggressive marketing forcustomer acquisition is now restrained, activities are under way to expand the service lineup in preparation for
full-fledged services, such as Yahoo! BB hikari TV Package and Wireless TVBOX, which allow users to watch
TV broadcast from terrestrial stations on their PCs, and the BB Phone hikari, a fiber optic telephony service.

With an aim to achieve operating income on a consolidated basis, broad-ranging efforts have been conducted
to reduce costs in this business segment.

These efforts sought to increase operating efficiency with the

scrutiny of all expenditures, including a cut back on outsourcing costs by reducing the number ofsubcontracted employees and a reduction of selling and general administrative expenses.

Proactive capital

investments for the establishment of the broadband infrastructure have largely been completed, and, as aresult of strict costs control, operating income was achieved in the second quarter, not only in the ADSL
business but also in the broadband infrastructure segment as a whole.
In this segment, the financial results of the Broadband Infrastructure business of Yahoo Japan Corporation andJAPAN TELECOM such as ISP revenues and others are reflected, as well as the results of BB Mobile Corp.,
which plans to enter the mobile telephone market in the future.

Fixed-line Telecommunications

Segment sales totaled ¥171,904 million and the operating loss was ¥26,299 million, due to the burden of
initial investments associated with the start of Otoku Line services launched by JAPAN TELECOM. The
segment’s operating loss for the second quarter amounted to ¥12,209 million.
Quarterly trends of the Segment(Million yen)

FY2006
2006/Q2
2006/Q1
Sales

83,30088,604

2005/Q4
84,803

FY2005
2005/Q3
2005/Q2

2005/Q1

82,075
Newly established at
September 30, 2004

Operating (loss)(12,209)(14,089)(21,767)(14,297)

Regarding Voice Transmission Services, JAPAN TELECOM launched the Otoku Line direct connection voiceservice in December 2004, and the cumulative number of lines installed for this service reached 680 thousand
as of September 30, 2005. As with top strategic priority on the Otoku Line operations, JAPAN TELECOM
has proactively undertaken large scale of capital investments and recorded business start-up expenses
associated with these operations. These investments have led to the substantial operating losses in the
Fixed-line Telecommunications segment.

During the six-month period ended September 30, 2005, JAPANTELECOM took the following fundamental countermeasures aiming at the improvement of its profitability inOtoku Line services.
(1) In August 2005, aiming to further strengthen its sales agent system, the Company arranged a capitalalliance with INVOICE INC.

From October 2005, JAPAN TELECOM INVOICE Co., Ltd, a joint

venture established in cooperation with INVOICE INC. was launched.

While JAPAN TELECOM

directly handled sales agencies of Otoku Line in the past, the operation of sales agents is shifting to JAPANTELECOM INVOICE Co., Ltd. As a result of the transformation, it would reduce agency administration
expenses and other expenses, which would considerably improve profitability in the business.
(2) Building up of the sales representatives for corporate customers, JAPAN TELECOM has continued tostrengthen its direct marketing capabilities for Otoku Line services through measures that include those toaugment its sales engineer (SE)s who set up customers’ voice network and back-office departments’capabilities for managing the progress of work by NTT and other engineering companies.

By

improving all the management processes prior to the installation of Otoku Line services, the company isstriving to enhance profitability in the business.

As a result of these profitability enhancement measures, JAPAN TELECOM projects that operating losses in
the Otoku Line services bottomed out and would restore operating profitability for the Fixed-line
Telecommunications segment during the current fiscal period.
In addition, to expand its operations with greater efficiency, in April 2005, JAPAN TELECOM merged threewholly owned subsidiaries—Telecom Service Co., Ltd., JENS Corporation. and Digital Foundations Co., Ltd.
In July 2005, JAPAN TELECOM merged with JAPAN TELECOM IDC INC., which had inherited thetelecommunications business of Cable & Wireless IDC Inc., and then strategically shifted personnel tostrategic departments and streamlined its organizational structure through the unification of the twocompanies’ corporate sales departments, network operating departments, and administration departments.
JAPAN TELECOM has emphasized measures to realize additional cost reductions and synergies through the
integration of its technical, corporate sales departments, and consumer marketing departments with those of
SOFTBANK BB Corp.
JAPAN TELECOM plans to quickly attaining operating profitability through cost reductions centered on its
administrationand network departmentsaswell asmeasuresto progressively

integrate all

telecommunications infrastructure throughout the Group.

E-Commerce
Segment sales increased ¥8,546 million, or 7%, to ¥128,157 million. Operating income decreased ¥1,036
million, or 40%, to ¥1,544 million.
(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
Sales
60,46967,688Operating income
726
817(Million yen)
2005/Q4
71,922
1,168

FY2005
2005/Q3
2005/Q2
63,38861,574
1,491
1,039

2005/Q1
58,0351,540

As a result of the strengthening of sales of PC and peripheral equipment through large appliance discount storesand sales of PC servers and software to business users, sales of SOFTBANK BB Corp. were strong. Alongwith these sales activities reinforcement, personnel costs increased, leading to a decline in operating income.

Internet Culture
Segment sales increased ¥27,735 million, or 63%, to ¥71,531 million. Operating income increased ¥11,439
million, or 52%, to ¥33,636 million.
(Quarterly trends of the Segment)
FY2006
2006/Q1
2006/Q2
Sales
34,63536,896
Operating income
16,46917,167(Million yen)
2005/Q4
31,663
15,033

FY2005
2005/Q3
2005/Q2
26,98922,725
12,849
11,093Among advertising sales, revenues from “Sponsor Site” have increased.

2005/Q1
21,070
11,103The sales of “branding

advertisements” also were strong, supported by a growing awareness of the effectiveness of Internet advertisingamong a broader range of advertisers. In business services other than advertising, sales of employment
information and Business Express services by the Listing Business expanded. In addition, the sales of the
Shopping Business grew on the strength of higher transaction volumes due to an increase in the number of storeson its shopping site. In the consumer business, sales of Yahoo! Premium reported a robust performance.

Other Segments
In the Broadmedia segment, Sales of the Broadmedia Studios Corporation, to which the operations of MOVIETELEVISION INC. were transferred during the second quarter of the previous fiscal year, increased
compared with the same period of the previous fiscal year.

In addition, profitability in this segment wasconsiderably improved by the shift of BB Cable Corporation to the Broadband Infrastructure segment in thethird quarter of the previous fiscal year.
reflected in the other segment.

The performance of Fukuoka Softbank Hawks related business is2. Financial Position<Balance Sheet Analysis> (comparison with the end of fiscal 2005)
Current assets decreased ¥96,645 million, to ¥509,472 million.

The principal reasons were a decline in

cash and deposits of ¥55,488 million and decrease in marketable securities of ¥31,775 million.

Property and equipment increased ¥5,752 million, to ¥457,470 million. The rate of increase was only 1%
owing to the completion of proactive investment by SOFTBANK BB Corp. and JAPAN TELECOM.

Intangible assets increased ¥1,089 million, to ¥104,630 million.

Other intangibles, such as software,

increased ¥3,025 million, but goodwill decreased ¥1,935 million due to amortization.

Investments and other assets decreased ¥36,033 million, to ¥505,939 million. This mainly reflected a¥31,570 million decrease in investment securities due to the sale of investment securities of IT Fund and othercompanies.

Current liabilities decreased ¥167,954 million, to ¥522,841 million.

The principal reasons were a ¥120,657

million decrease in accounts payable-other and accrued expenses and a ¥48,051 million decrease in current
portion of corporate bonds.

Long-term liabilities increased ¥35,611 million, to ¥802,708 million. Although corporate bonds increased¥66,240 million, the decrease in long-term liabilities mainly reflected a ¥22,246 million decrease in long-term
debt and a ¥8,964 million decrease in deferred tax liabilities.

Shareholders’ equity decreased ¥7,674 million, to ¥170,342 million. The principal reasons were that, while
the foreign currency translation adjustment increased ¥7,662 million, retained earnings declined ¥6,916
million and the net unrealized gain on other securities decreased ¥8,856 million.

<Cash Flow Analysis>(1)Overview of First-half Results
During the first half, cash was used in operating and investing activities, while cash was provided byfinancing activities. As a result, cash and cash equivalents at the end of the period totaled ¥231,408 million,a decrease of ¥88,786 million compared to March 31, 2005.

Net cash used in operating activities was ¥17,981 million. Income before income taxes and minority
interest amounted to ¥25,901 million, and depreciation and amortization totaled ¥42,586 million. However,the sale of shares in IT Fund and other securities caused a gain on sales of marketable and investment
securities of ¥52,348 million to be posted as an adjustment item (affecting special income and loss in the
consolidated statements of operations). Other major factors affecting net cash used in operating activities
were interest paid of ¥11,789 million and payment of ¥18,134 million in corporate income taxes by Yahoo
Japan Corporation and others.

Net cash used in investing activities was ¥74,296 million. This mainly reflected the payment of accounts
payable-otherassociatedwithcapitalinvestmentsinBroadband

Infrastructure

andFixed-line

Telecommunications segments, causing ¥157,476 million in cash outflow for the purchase of property andequipment and intangibles. Cash outflows of ¥30,718 million were reported for purchases of investment
securities. However, ¥98,370 million in proceeds from the sale of marketable and investment securities
were recorded in connection with the sale of shares in IT Fund and other securities.

Net cash provided by financing activities was ¥1,843 million.

The principal reasons were ¥71,978 million

for proceeds from issuance of bonds and an increase of ¥20,000 million for cash received as collateral under
security deposit agreements, but cash outflows of ¥53,515 million were reported for the redemption of bonds,
and short-term borrowings declined ¥18,273 million.

(2) Factors That May Have a Material Impact on Cash Flows in the Second Half
-Need for Funds to Support Growth in the Group’s Telecommunications Business
The Group has concentrated management resources in the telecommunications businesses to expand various
services, including focused on Yahoo! BB services and Otoku Line services.

Furthermore, in September

2005, with the aim of entering the mobile phone market, the Group applied for a license and submitted anapplication to Ministry of Internal Affairs and Communications. If the Group obtains the license, with thisbusiness expansion, prior investment generated in the form of capital investment as well as customer
acquisition costs would aim at strengthening our customer base.

Since the license has not been obtained by

the Group and the Group has not decided detailed business plan of the mobile business at this point, theimpact to future operating cash flows and free cash flows have not be expected.

-Commitment-line Contract
Upon the end of the term of a commitment-line established in the previous fiscal year, in October 2005, theCompany entered into a ¥109,000 million commitment-line contract with eight financial institutions, which
was arranged by Mizuho Corporate Bank, Ltd. With respect to commitment-line, the Company is in theprocess of negotiations in order to increase the size of the commitment-line facility.

The total size of thecommitment-line facility is expected to be ¥160,000 million upon the increase of the size.
change depending on further negotiations.

The size might

Borrowings through the commitment line will be made inconsideration of the current level of liquidity, the availability of other fund procurement methods, and otherfactors. At first-half year-end, the balance of commitment-line borrowings totaled ¥75,000 million.

-Sales of Equity StockOn October 2005, the consolidated subsidiary of the Company sold 4.5 million shares held in Tao Bao
Holding Limited for US$360 million (Approximately ¥41.7 billion, $1=¥115.98).
On November 2005, the company and three consolidated subsidiaries have entered into an agreement with
Yahoo! Inc. that the companies sell their entire respective stocks of Yahoo! Deutschland GmbH, Yahoo! UK
Limited, Yahoo! France SAS, and Yahoo! Korea Corporation to Yahoo! Inc. for a total of $500 million(approximately ¥59.0 billion, $1=¥118.16).

-Redemption of Bonds
As of September 30, 2005, outstanding Group bonds totaled ¥444,582 million, of which ¥94 million is
expected to be redeemed within one year from September 30, 2005.

<Trends in Cash Flow Indicators>
A summary of trends in cash flow indicators is presented below.
Year ended
Six months
March.31, 2005
ended Sept.30,
2005
Equity ratio
10.4%
10.8%
Equity ratio (Market cap.)
91.1%
140.2%
Debt repayment period−−
Interest coverage ratio−−
Notes:
1.

Six months
ended Sept.30,
2004
11.1%
86.3%
−
−

Year ended
March.31, 2005
16.8%
120.4%−−

The above indicators are calculated using the following formulas based on consolidated figures.
Equity ratio
Equity ratio (Market cap.)
Debt repayment period
Interest coverage ratio

Shareholders’ equity divided by total assets
Market capitalization divided by total assets
Interest-bearing debt divided by net operating cash inflows
Net operating cash inflows divided by interest expenses

2. Market capitalization is calculated by multiplying the closing stock price by the number of shares
outstanding, net of treasury stock, as at September 30, 2005.
3.

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

4.

Net operating cash inflows and interest expenses are the corresponding figures shown on the consolidated
statements of cash flows.

5.

Negative figures are indicated by a “−” sign.

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

Furthermore, factors other than those listed below

could have a significant effect on business. The following risks associated with the business are thoseapparent to the Company at present and are not intended to be all-inclusive.

(1) Risks Related to Economic Environment and Market Trends
The Group is active in a broad range of markets, including broadband-related markets, fixed-line
telecommunications markets, IT-related distribution markets and other markets. Demand for services andproducts supplied by the Group are dependent on economic conditions, trends in these markets, and other factors.
Specifically, in the Broadband Infrastructure segment, in addition to the risk of increased costs of acquiring
customers with the emergence of new market trends, the growth in this business could be severely restricted if
Japan’s broadband market shrinks.

Turning to the Fixed-line Telecommunications segment, JAPAN TELECOM launched Otoku Line services
aimed at capturing new customers.

However, due to changes in demand whereby customers are moving

away from fixed-line telephone services while the use of mobile phones and the Internet has permeated themarket and is expanding, shrinkage in the market for fixed-line telephone services is advancing. It may costmore than initially estimated to acquire customers, or it may be difficult or take longer to realize projected
profit in this business.
In the e-Commerce segment, although this business is enjoying strong sales for highly profitable
Internet-based security software and corporate applications software, if we are not able to respond to suchchanges in the market environment as a change in the distribution channels of Group products or a rapid shift
in consumer trends, the business could be detrimentally affected.
The Internet Culture segment is extremely sensitive to general economic trends in the advertising industry,
particularly in times of sluggishness, when the tendency in all industries is to put high priority on controlling
advertising spending. Furthermore, as the Internet advertising business has a short history, it is also easily
affected by overseas markets, such as the United States, that are ahead of Japan in this field.

(2) Risks Related to Technological Innovation and Competition
In the IT and telecommunications industries in which the Group is developing business, rapid technologicalinnovations—including those in the field of telecommunications, such as networks and systems—areprogressing while competition intensifies, and there is a possibility that the services offered by the Group in
the IT and telecommunications sectors could lose their competitiveness.
In the fields of telecommunications networks and systems as well as equipment, rapid technologicalinnovation is constantly occurring both in hardware and software. With such technological advances,services offered by the Group could become obsolete or mismatched with market trends in demand, making it
impossible to realize profits as forecast.
Past deregulation of the telecommunications industry has facilitated easier market entry, resulting in
extremely tough competition in Japan’s broadband and fixed-line telecommunications markets. As a result,broadband usage fees in Japan are some of the lowest in the world, but it is possible that price competition

will continue. Some competitors boast capital strength, price competitiveness, customer bases, and brandrecognition that exceeds those of the Group, which could reduce the Group’s competitiveness.

(3) Risks Related to Rules and Regulations
A number of laws and regulations—including the Telecommunications Business Law, the Law concerning
Nippon Telegraph and Telephone Corporation, and the Personal Information Protection Act—apply to theGroup’s business. Due to changes in these laws and regulations or the implementation of new laws andregulations in the future, the Group may not be able to develop its business as expected. For example, achange in the Telecommunications Business Law that revises the interconnection charge of the NTT would
decrease profitability in the Broadband Infrastructure segment and Fixed-line Telecommunications segment.
With regard to intellectual property, because a number of companies are aggressively promoting thedevelopment of Internet technologies and business models that include broadband technology, there is thepossibility that the Group might be sued by a third party for compensatory damages for patent violation andthat, in the future, the Group’s business activities may be restricted. Also, due to the fact that there are few
laws focusing on Internet-related business in Japan, it is unclear how laws regarding user privacy, consumer
protection, and content regulation will be applied to the Internet Culture segment. In addition to this,although the Group has implemented policies to protect leaks of personal information by significantly
strengthening its customer information management system, establishing handling methods for personal
information acquired and possessed by the Group, and limiting access to its personal information database,even with these measures in place, it may be possible that we cannot completely protect against personal
information leaks.

(4) Risks Related to Foreign Exchange, Financial, and Stock Markets
The value of investment securities in the Group’s possession depends on movement in the domestic andoverseas markets as well as the foreign exchange and stock markets, and imports of telecommunications
equipment can be also influenced by the direction of the foreign exchange market.
As of September 30, 2005, the Company’s foreign currency bonds include straight bonds denominated ineuros worth €400 million and approximately $1,400 million in borrowings owed to an overseas subsidiary,
and, due to market influences, the consolidated foreign exchange loss during the six-month period ended
September 30, 2005, amounted to ¥3,937 million, while during the six-month period ended September 30,
2004, the consolidated foreign exchange loss of ¥4,040 million was recorded.
As of September 30, 2005, consolidated interest-bearing debt totaled ¥850,743 million, and interest expense
was ¥13,799 million.

It is possible that the payment of interest could increase in recent increase in interest

rates stemming from financial market trends. Investing activities are a primary source of cash flows for theGroup, and a total crash in market prices of these investments could adversely affect the Group’s capitalprocurement capabilities. Stocks of Internet-related companies in Japan, the United States, and othercountries constitute the majority of the Group’s investments.

Changes in the stock prices of these companies

could be extreme, and a decline in the value of these assets could have a significant effect on the Group’s
funding capabilities.

At September 30, 2005, the unrealized gain on other marketable securities totaled¥127,805 million. In addition, the Group’s equity in publicly traded consolidated subsidiaries and affiliates
accounted for under the equity method, amounted to ¥2,089,246 million at market value. The consolidated
book value of these securities was ¥106,549 million and the unrealized gain (the difference between themarket value of the portion held by the Group and the book value) was ¥1,982,697 million.

(5) Risks Associated with New Business
Regarding new businesses that the Group wishes to develop, it is possible that the Group will not be able todevelop as expected. The Group has applied for a license to conduct mobile telephone business activities
using the 1.7GHz frequency band. However, the Group may not be able to enter the mobile business anddevelop its activities as planned because this will depend on whether the previously mentioned license is
granted and such business operations will be influenced by trends in demand.

(6) Risks Related to Other Companies’ Equipment and Brands
In developing the Group’s Broadband Infrastructure segment and Fixed-line Telecommunications segment,
dark fiber of NTT Group is used, and telecommunications equipment is installed at their central offices, so theGroup depends on them. In addition, the Broadband Infrastructure segment’s primary service, Yahoo! BB,
employs the Yahoo! brand of Yahoo! Inc.

If, in the future, there was a significant change in either of these

relationships, it is possible that the Group could not realize business development as forecast. Furthermore,
the success of the Group businesses is affected not only by Group trends, but also by relationships with its
content providers, Internet service providers (ISPs), and hardware makers.

(7) Risks of Interruption of System Services
To provide comprehensive telecommunications services, the Group has created networks for fixed-line
telephone, FTTH, ADSL, and other modes of telecommunication. To prevent interruption of services onthese networks, the Group pays maximum attention through internal control activities, but there is apossibility of interruption due to human error. In addition, it is also possible that major natural and otherdisasters (such as typhoons, earthquakes, and terrorist activity) could result in interruption of services. In
such cases, these disasters may not only have a serious impact on the ability to provide continuing
telecommunication services but also require considerable time to restore these services.

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

(8) Risks Associated with Unforeseen Situations Concerning the Management
The Company’s existing and new businesses are planned and promoted by the Group’s executives and regular
employees. Unforeseen situations concerning top management—President and Chief Executive Officer
Masayoshi Son, in particular—may create an obstacle to a business’s smooth progress and influence theGroup’s business.

The SOFTBANK GroupAs of September 30, 2005, the SOFTBANK Group included 252 companies with operations in nine business segments as follows.
Consolidated
subsidiaries

Equity-method
non-consolidated
subsidiaries andaffiliates(Note 1)

19

5

ADSL and fiber-optic high-speed Internet connection service, IP telephonyservice, provision of content and other operations(Note 1)

12

3

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

3. e-Commerce(Note 1)16

11

4. Internet Culture(Note 1)

23

11

Broadmedia

102

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

Technology Services

73

System solution business and business solution businessMedia & Marketing

96Book and magazine publication in such areas as PCs, the Internet,
entertainment, etc., and development of web content specializing in IT

Overseas Funds

34

51

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

Others23

7

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

153

99

Business segment

Broadband
Infrastructure
Fixed-line
2.
Telecommunications
1.

Principal products and operational content of each businessDistribution 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)
Internet-based advertising operations, broadband portal business, andInternet-based auction business

5 Others:

Total
Note: 1.

2.

SOFTBANK BB Corp., JAPAN TELECOM CO., LTD. and Yahoo Japan Corporation are included in the consolidated
subsidiaries of the Broadband Infrastructure, Fixed-line Telecommunications and Internet Culture segments, respectively,
while SOFTBANK BB Corp., JAPAN TELECOM CO., LTD. and Yahoo Japan Corporation operate multiple businesses andtheir operating results are allocated to multiple business segments.
The former e-Finance business segment ended as SOFTBANK INVESTMENT CORPORATION (current SBI Holdings,Inc.) changed to an equity-method affiliate from a consolidated subsidiary on March 31, 2005.
Broadband InfrastructureIntern et Culture

Fixed-line
Telecommunications

BB Cable Corporation

SOFTBANK BB Corp.
Yahoo Japan Corporation

JAPAN TELECOM CO., LTD

IP Revolution, Inc.

Tavigator, Inc.
［ Overseas ］

SOFTBANK IDC Corp.

［ Overseas ］

Seven & Y Corp.

［ Domestic ］

Club iT Corporation

Broadme dia［ Do mestic ］
Vector Inc.

（Operatin g Holding
Companies）
SOFTBANK Broadmedia
Corporation（ Operating Holdin g
Companies）

SOFTBANK CORP.
（Pu re Holding Compan y）

DeeCorp Limited

e-Comme rce

SOFTBANK BB Corp.
Carview Corporation
SOFTBANKMedia Marketing
Holdings Corp.

（ Operating Holdin g
Companies）
SOFTBANKTECHNOLOGY Corp.

SOFTBANK
Holdings Inc.

SOFTBANK Publishing Inc.
Itmedia Inc.

cyber communications inc.

Tec hnology Se rvices

SBI Holdings, Inc.

［ Domestic ］
Me dia & Marketing

Fukuoka Softbank Hawks
Marketing Corp.
SOFTBANK Korea Co., Ltd.

［ Overseas ］ SB CHINA HOLDINGS PTE LTD
SOFTBANK US Ventures VI LP

OthersOverse as Fu nds

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

SOFTBANK subsidiaries listed on domestic stock exchanges as of September 30, 2005:
Subsidiary

Listed exchange

1.Yahoo Japan Corporation

Tokyo Stock Exchange 1st section

2.SOFTBANK TECHNOLOGY CORP.

Tokyo Stock Exchange 2nd section

3.Vector Inc.

Hercules4.Club iT Corporation

HerculesCONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
As of September 30, 2005

As of March 31, 2005

AmountAmount%%Increase(Decrease)

As of September 30, 2004
Amount%ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable –tradeMarketable securities¥232,490¥287,978¥(55,488)¥349,884

159,443

168,262(8,819)150,108

7,628

39,403(31,775)

53,084Inventories

52,64147,224

5,416

40,158Deferred 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

3,264

3,025

239

4,996

-

-

-

137,983---

253,113

61,22767,542(6,314)

117,776(7,224)(7,319)95(8,559)(96,645)

1,098,547

509,472

32.3

606,117

35.5

52.8

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

58,28456,8601,424

50,344

Telecommunications equipment

217,350

198,598

18,751

185,504

Telecommunications service lines

95,06899,133(4,064)

101,084

Land

19,396

19,396-

15,769Construction-in-progress

40,19749,354(9,157)

20,400

Others27,171

28,373(1,201)

26,577

Total tangible assets

457,470

5,752

399,68229.0

451,717

26.5

19.2

Intangible assets, net:
Goodwill

46,37748,313(1,935)38,499Other intangibles

58,25255,227

3,025

40,750Total intangible assets

104,630

1,089

79,249Investments and other assets:
Investment securities andinvestments in partnerships
Other investments

6.6

103,5406.1

402,871434,441(31,570)

331,144---

90,176

Deferred tax assets

43,20640,472

2,734

38,397

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

68,82775,728(6,901)

51,322(8,965)(8,669)(295)(9,751)3.8

505,93932.0

541,97231.8(36,033)

501,288

24.1

Deferred charges

1,411

0.1

1,504

0.1

(92)

1,592

0.1

Total assets¥1,578,924

100.0¥1,704,853

100.0¥ (125,929)¥2,080,360

100.0

CONSOLIDATED BALANCE SHEETS(Millions of yen; amounts less than one million yen are omitted.)
As of September 30, 2005

As of March 31, 2005

AmountAmount%Increase(Decrease)%

As of September 30, 2004

AmountLIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Accounts payable - trade¥45,242¥63,684¥(18,441)¥57,063

Short-term borrowings

185,070

181,186

3,883

189,381Commercial paper
Current portionof corporate bonds
Accounts payable - otherand accrued expenses
Income taxes payable

12,50015,500(3,000)5,000

9448,145(48,051)

54,945

107,607228,264(120,657)

116,895

21,885

21,600284

19,278

104

527

(422)

1,218

-

-

-

215,442

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

-

-

-

124,155

120,000

100,000

20,00070,000

Other current liabilities

30,33631,887(1,550)119,913

Total current liabilities

522,841(167,954)

973,29433.1

690,796

40.5

%

46.8

Long-term liabilities:
Corporate bonds

444,488378,248

66,240272,716Long-term debt

208,591

230,837(22,246)

292,602

Deferred tax liabilities

48,45457,419(8,964)61,041

Accrued retirement benefits

17,812

17,359452

15,021Other liabilities

83,362

83,232130

84,290Total long-term liabilities

802,70850.8

767,09645.1

35,611

725,672

34.9

Total liabilities
Minority interestin consolidated subsidiaries
Shareholders' equity:

1,325,550

83.9

1,457,893

85.6(132,342)

1,698,966

81.7

83,032

5.3

68,9434.0

14,088

149,546

7.2

Common stock

162,40710.3

162,397

9.5

10

162,303

7.8

Additional paid-in capital

186,79411.8

186,78310.9

10186,690

9.0

Accumulated deficit
Net unrealized gain on othersecurities
Net unrealized loss on derivative
instruments
Foreign currency translation
adjustments
Less: Treasury stock(280,278)(17.7)(273,362) (16.0)(6,916)(219,257) (10.6)

127,805

8.1

136,662

8.0(8,856)

133,484

6.4(40,619)(2.6)(41,056)

(2.4)

436

(41,673)(2.0)

14,360

0.9

6,697

0.4

7,662

10,382

0.5

(126)

(0.0)

(106)

(0.0)

(20)

(82)

(0.0)

Total shareholders' equity
Total liabilities andshareholders' equity

170,34210.8

178,016

10.4(7,674)

231,846

11.1¥1,578,924

100.0¥1,704,853

100.0¥(125,929)¥2,080,360

100.0

CONSOLIDATED STATEMENTS OF OPERATIONS(Millions of yen; amounts less than one million yen are omitted.)Six-month period ended
September 30, 2005

Net sales
Cost of sales
Gross Profit
Selling, general and administrative expenses
Operating income(loss)

Six-month period ended
September 30,2004

Amount%Amount%¥522,787
354,250

100.0
67.8

¥303,706
192,478

100.0
63.4

168,53632.2

111,228

164,13631.4

118,018

4,400

0.8

(6,790)(2.2)

Increase(Decrease)

Fiscal year ended
March 31, 2005

Amount%¥219,080
161,772¥837,018
547,402

100.0
65.4

36.6

57,308289,615

34.6

38.8

46,118314,975

37.6

11,190(25,359)(3.0)

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

716
4,378
741

1,446
980

(729)
4,378
(239)

2,398
5,425
3,711

Other non-operating income

1,715

2,207

(492)

4,931

2,916

16,466

Non-operating income

7,551Interest expense

13,79910,231

3,568

22,971

Foreign exchange loss

3,937

5,526

(1,588)

4,040

-

4,575

(4,575)

-

7,698

3,419

4,278

9,343

Equity in loss under the equity method
Other non-operating expenses

1.5

4,634

1.5

2.0

Non-operating expenses

25,435

4.9

23,7527.8

1,682

36,356

4.4

Ordinary loss

(13,483)(2.6)(25,908)(8.5)

12,424(45,248)

(5.4)

6,161
3,795
(1,579)59,121
26,269
3,969

8,377

89,360Gain on sales of investment securities
Dilution gain from changes in equity interest
Other special income

52,4754,364
1,990

46,314568
3,570

Special income

58,831

Valuation loss on investment securities
Loss on contract revision relating to sales
operation change
Penalty for unfulfilled contract commitment
Refinance arrangement fee
Bond covenant amendment fee
Other special loss
Special loss
Income (loss) before income taxes andminority interest
Income taxes:

2,088

3,493

(1,404)

8,840

7,608

-

7,608

-

3,307
3,153
3,287
19,445

3.7

7,398
10,891

3.6

3,307
3,153
(4,110)
8,554

6,147
4,071
34,60153,660

6.4

25,901

5.0

13,654

4.5

12,247(9,548)(1.1)

Current

19,853

3.8

12,7444.2

7,108

34,740

4.2

Refunded

-

2,897

0.3

(2,967)

(0.6)

5,524

(21,963)(2.6)

13,197¥(4,182)

2.6
(0.8)

(2.8)
5.1
(2.0)

-

Deferred(8,491)
15,446¥(6,045)(2,248)¥1,86340,444¥(59,871)

4.8
(7.2)

Minority interest
Net loss

11.3

50,454

16.6

10.7

CONSOLIDATED STATEMENTS OF ADDITIONAL PAID-IN CAPITALAND RETAINED EARNINGS(Millions of yen; amounts less than one million yen are omitted.)Six-month period ended
September 30, 2005

Six-month period ended
September 30,2004

Fiscal year ended
March 31, 2005

ADDITIONAL PAID-IN CAPITAL
Additional paid-in capitalat the beginning of the period
Increase due to issuance of shares
Additional paid-in capitalat the end of the period¥186,783¥186,690¥186,690

10

-

93

¥186,794¥186,690¥186,783(Millions of yen; amounts less than one million yen are omitted.)Six-month period ended
September 30, 2005

Six-month period ended
September 30,2004

Fiscal year ended
March 31, 2005

ACCUMULATED DEFICIT
Accumulated deficit
at the beginning of the period
Net loss¥(273,362)¥(210,625)¥(210,625)(4,182)(6,045)(59,871)(2,460)(2,459)(2,459)

(86)

(176)

(176)

Net adjustments to accumulated deficit due tochange in scope of the consolidation

-

42

(98)

Increase due to merger

-

14

17

(187)

(7)

(147)

¥(280,278)¥(219,257)¥(273,362)

Cash dividends
Bonuses to directors

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions of yen; amounts less than one million yen are omitted.)Six-month period ended Six-month period ended
September 30, 2005
September 30,2004

Fiscal year ended
March 31, 2005

Ⅰ. Cash flows from operating activities:
Income (loss) before income taxes and minority interest¥25,901¥13,654¥(9,548)

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

42,58618,806

66,417

Equity in (earnings) loss under the equity method, net(4,378)

4,575(5,425)

Dilution gain from changes in equity interest, net(4,354)(523)(25,200)

Valuation loss on investment securities

2,088

3,493

8,840

(52,348)(46,190)(56,049)

Foreign exchange loss, net

3,266

5,385

5,324

Interest and dividend income(934)(1,692)(2,862)

13,79910,231

22,971

Decrease (increase) in receivables - trade

5,915

808

(15,854)(Decrease) increase in payables - trade(12,721)(7,102)

2,371

Increase in other receivables(5,015)(27,782)(70,813)(Decrease) increase in other payables(16,395)

55,43097,0959,269(8,938)(17,519)

6,680

20,153(251)

Gain on sales of marketable and investment securities, net

Interest expense
Changes in operating assets, liabilities and others

Others, net
Sub-totalInterest and dividends received

2,298

1,640

2,506

Interest paid

(11,789)(8,990)(17,924)

Income taxes paid

(18,134)(19,334)(31,533)

2,964

1,238

1,213

¥(17,981)¥(5,292)¥(45,989)

Refund of income taxes
Net cash used in operating activities- Continued -CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(Millions of yen; amounts less than one million yen are omitted.)Six-month period ended Six-month period ended
September 30, 2005
September 30,2004

Fiscal year ended
March 31, 2005

Ⅱ. Cash flows from investing activities:
Purchase of property and equipment and intangibles¥(157,476)¥(30,594)¥ (90,943)

Purchase of marketable and investment securities(30,718)(14,637)(29,582)

Proceeds 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

98,3709,599

57,099(842)(158,205)(172,320)

957

39,451

34,840

Proceeds from sales of interests in consolidated subsidiaries

5,853

5,536

8,110

Increase in loan receivables(10,211)(5,321)(21,387)

Collection of loans

10,799

3,339

9,105

-

-

(13,113)

8,971(9,380)(24,753)(74,296)(160,211)(242,944)(Decrease) increase in short-term borrowings, net(18,273)

51,40053,468(Decrease) increase in commercial paper(3,000)(6,000)4,500

Proceeds from long-term debt

110,020

27,400166,400

Repayment of long-term debt

Purchase of business rights and others
Others, net
Net cash used in investing activities
Ⅲ. Cash flows from financing activities:(119,892)(5,498)(192,836)

Proceeds from issuance of bonds

71,97820,529153,378

Redemption of bonds(53,515)(29,324)(36,124)

Proceeds from issuance of shares

20

-

187

Proceeds from issuance of shares to minority shareholders

533

3,475

30,298Proceeds from issuance of shares through public offering andallocation to a third party in SOFTBANK INVESTMENTCORPORATION--

51,362

Redemption of preferred shares held by minority shareholder--(33,908)

Cash dividends paid

(2,397)(2,445)(2,457)

Cash dividends paid to minority shareholders(2,380)(1,836)(2,160)

Increase in cash receipt as collateral

20,00060,00090,000

Others, net(1,249)1,521(4,336)

1,843

119,221277,770

1,790

6,755

1,474

(88,643)(39,527)(9,688)Net cash provided by financing activities
Ⅳ. Effect of exchange rate changes on cash and cash
equivalents
Ⅴ. Net decrease 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 exclusionof previously consolidated entities

-

12

12

(142)

(45)

(107,529)

Ⅷ. Increase in cash and cash equivalents due to merger

-

6

267

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

320,194

437,132

437,132

Ⅹ. Cash and cash equivalents at the end of the period¥231,408¥397,578¥320,194

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

First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

January 1, 2005 to
March 31, 2005

October 1, 2004 to
December 31, 2004

July 1, 2004 to
September 30, 2004

April 1, 2004 toJune 30, 2004

AmountAmountAmountAmountAmountAmountNet sales¥264,149¥258,637¥275,224¥147,311¥258,087¥156,395
Cost of sales
178,575
175,674
184,434
92,770170,489
99,707Gross profit
85,57382,96290,78954,54087,59756,687
Selling, general and administrative
77,98386,153
101,82258,35995,13459,658expenses
Operating income (loss)
7,590(3,190)(11,032)(3,819)(7,536)(2,970)Non-operating income (Note)
4,442
3,122
10,704
3,068
10,465
1,846
Non-operating expenses (Note)
12,49912,95010,978
10,918
10,963
13,114
Ordinary loss
(466)
(13,017)(11,306)(11,669)(8,034)(14,239)
Special income
35,916
22,914
22,2409,763
16,66540,690Special loss
10,3099,136
24,4962,365
18,272
8,526
Income (loss) before income
25,141760(13,561)(4,271)(9,641)
17,925
taxes and minority interest
Income taxes - Current
11,6238,230
12,470
8,927
9,524
3,817
Income taxes - Refunded
2,897
Income taxes - Deferred(187)(2,779)(6,022)(3,949)(7,449)(4,542)
Minority interest
6,734
6,463
10,153
8,626
14,843
6,819
Net income (loss)¥6,971¥(11,153)¥(27,266)¥(26,560)¥11,830¥(17,876)
Note: Exchange gain (loss), equity in earnings (loss) under the equity method, and income (expenses) from investments in partnerships
were netted on quarterly basis for presentation purposes.
Condensed Statement of Cash Flows(Millions of yen; amounts less than one million yen are omitted.)

Net cash provided by (used in)
Ⅰ operating activities
Ⅱ Net cash used in investing activities
Net cash (used in) provided by
Ⅲ financing activities
Effect of exchange rate changes on
Ⅳ cash and cash equivalents
Ⅴ Net (decrease) increase in cash andcash equivalents
Increasein cash and cash
Ⅵ equivalents
due to newly
consolidated companies
in cash and cash
Ⅶ Decreaseequivalents due to exclusion ofpreviously consolidated entities
Ⅷ Increase in cash and cash
equivalents due to merger
Cashand cash equivalents at the
Ⅸ
beginning of the period
Cash and cash equivalents at the
Ⅹ end of the period
Note:
Depreciation and amortization included
in net cash provided by (used in)operating activities

Second quarter

First quarter

Fourth quarter

Third quarter

Second quarter

First quarter

July 1, 2005 to
September 30, 2005

April 1, 2005 toJune 30, 2005

January 1, 2005 to
March 31, 2005

October 1, 2004 to
December 31, 2004

July 1, 2004 to
September 30, 2004

April 1, 2004 toJune 30, 2004

AmountAmountAmountAmountAmountAmount¥232¥(18,213)¥(15,280)¥(25,416)¥6,644¥(11,937)(45,593)(28,703)(65,379)(17,352)(136,910)(23,301)(11,081)

12,925

124,046

34,503

20,46998,752

639

1,150

2,082

(7,364)

2,977

3,778

(55,802)(32,840)

45,468(15,630)(106,819)

67,291

-

-

-

-

1

10

-

(142)

(107,483)

-

-

(45)

-

-

261

-

-

6

287,211

320,194

381,948397,578

504,395

437,132¥231,408¥287,211¥320,194¥381,948¥397,578¥504,395¥21,643¥20,942¥24,763¥22,847¥8,956¥9,850Basis of Presentation of Consolidated Financial Statements
1. Changes in scope of consolidation
As of September 30, 2005, SOFTBANK CORP．
（the “Company”）consolidated 153 subsidiaries. Nine 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.
Changes in the scope of the consolidation were as follows:<Increase>
Softbank Media Marketing Holdings Corp.
Newly established
Eight other companies<Decrease>
Nine companies
2. Changes in scope of equity method
As of September 30, 2005, the Company held five non-consolidated subsidiaries and 94 affiliates, all of which were
accounted for under the equity method.
Main changes in application of the equity method were as follows:<Increase>
ValueCommerce Co., Ltd.
Newly acquired
Six other companies<Decrease>
Sale of all shares
Morningstar, Inc.
Fifteen other companies
3. Fiscal year end
Fiscal year ends of consolidated subsidiaries in terms of domestic and overseas are as follows:<Fiscal year end>
<Domestic><Overseas>
March end (as same as the consolidated balance sheet date)
79
30
May end1−
June end
1−
September end
1−
December end
630
January end
1−
February end
4−
4. Summary of significant accounting policies[1] Evaluation standards and methods for major assets(1) Marketable securities and investment securities
Held-to-maturity debt securities: Stated at amortized cost
Other securities:
With market quotations:
Stated at fair value, which represents the market prices at the balance sheet date(unrealized gain/loss is included as a separate component in shareholders' equity, net oftax, while cost is primarily determined using the moving-average method)
Without market quotations:
Carried at cost, primarily based on the moving-average method(2) Derivative instruments:
Stated at fair value(3) Inventories:
Carried at cost, primarily based on the moving-average method

[2] Depreciation and amortization(1) Property and equipment
Buildings and structures:
Telecommunications equipment:
Telecommunications service lines:
Others:Computed primarily using the straight line method
Computed using the straight line method
Computed using the straight line method
Computed primarily using the straight line method for Broadband Infrastructure andFixed-line Communications segments and computed primarily using the decliningbalance method for other segments<Additional information for change of estimated useful life>
Transmitters, exchangers and power supply facilities of JAPAN TELECOM CO., LTD. had primarily been depreciatedover a period of six years. Effective from April 1, 2005, the Company changed the estimated useful life of a portion of
the equipment, which is included in “Telecommunications equipment” in the Company’s consolidated balance sheets, toten years based on a reassessment of the assets’ operational lives taking into consideration of years of service provided by
the equipment, technological innovation cycles in the telecommunications industry and other relevant factors.
As a result, depreciation expense included in cost of sales decreased by ¥5,903 million. Operating income increased,
ordinary loss decreased and income before income taxes and minority interest increased by the same amount for thesix-month period ended September 30, 2005 as compared with the amounts which would have been recognized if theprevious estimated useful life had not been changed.
<Change in method of depreciation>
The depreciation method of assets used internally by SOFTBANK BB Corp. and another subsidiary (mainly fixturesand equipment presented as “Buildings and structures” and “others” in “Property and equipment, net”) has been changed
from the declining balance method to the straight-line method.
The Company relocated the headquarters to Tokyo Shiodome Building in fiscal year 2005 and purchased a large amountof assets internally used in SOFTBANK BB Corp. and other subsidiaries. Based on a reassessment of expense
allocation, the change of the depreciation method has been made because the straight line method represents a more
appropriate allocation of expense, while equally recording depreciation expense for each period to reflect the decline in
usefulness of property and equipment from period to period.
As a result, for the six-month period ended September 30, 2005, cost of goods sold and selling, general andadministrative expense decreased by ¥183 million and ¥247 million, respectively. Operating income and income
before income taxes increased by ¥431 million and ordinary loss decreased by the same amount as compared to theamounts that would have been recognized if the declining balance method had been applied.
(2) Intangible assets:

Computed using the straight-line method<Change in accounting policy of network line construction expense>
Beginning April 1, 2005, accounting policy of network line construction expense has been changed to capitalize theexpense as non-current assets which was previously recognized as selling, general and administrative expense. The
capitalized network line construction expenses relate to cost incurred for each individual network set up prior to network
activation. This change in accounting policy is considered a more appropriate way to reflect the allocation of suchnetwork line construction costs over the period of future economic benefit.
As a result, for the six-month period ended September 30, 2005, cost of goods sold increased by ¥6 million and selling,
general and administrative expense decreased by ¥1,340 million. Operating income increased by ¥1,334 million,
ordinary loss decreased and income before income taxes increased by the same amount as compared to the amounts thatwould have been recognized under the original 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. and certain other subsidiaries have defined benefit pension plans for their employees.
Those companies account for the obligation for retirement benefits based on the projected benefit obligations as of
September 30, 2005.
[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 gain or loss 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 “Shareholders' equity,” except for the portion pertaining to minority shareholders, which is includedin “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 the 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 “Shareholders’ equity”
in the Company’s consolidated balance sheets. As such, unrealized gains and losses associated with the collartransaction 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
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 borrowings

③ <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.
5. 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.
6. Impairment on fixed assets
The Company applied “Accounting Standards for Impairment on Fixed Assets” (“Opinions Concerning Establishment of
Accounting Standards for Impairment of Fixed Assets” issued on August 9, 2002 by the Business Accounting Council inJapan), and “Application Guideline for Accounting Standards for Impairment of Fixed Assets” (Financial AccountingStandards Implementation Guideline No. 6 issued on October 31, 2003) beginning April 1, 2005.
The impact of the application of these standards and guideline on the consolidated statements of operations was notconsidered material.
7. Change in presentation
Following the application of a partial revision to the Japanese securities and exchange laws effective from December 1, 2004,
and the release of revised practical guidelines for financial instruments accounting on February 15, 2005, investments in limited
partnerships and similar investments have been classified as investment securities since the fiscal year ended March 31, 2005.
The amounts of applicable investments in partnerships which are included in “Investment securities and investments inpartnerships” balance within the consolidated balance sheets were ¥45,087 million and ¥101,020 million as of September 30,
2005 and March 31, 2005, respectively.
As a result, there were “Other investments” of ¥98 million and ¥40 million as of September 30, 2005 and March 31, 2005,
respectively. Due to the decrease in materiality, other investments are included in “Other assets” as of September 30, 2005
and March 31, 2005.

Notes
1. Accumulated depreciation of property and equipment
As of September 30, 2005
609,452 million yen

As of March 31, 2005
625,280 million yen

As of September 30, 2004
558,439 million yen

2. Number of treasury stock held by the Company
As of September 30, 2005
Shares held by the Company

common stock

Number of shares issued

common stock

As of March 31, 2005

As of September 30, 2004

45,340 shares

40,956 shares

36,059 shares

351,502,826 shares

351,498,126 shares

351,436,826 shares

As of September 30, 2005

As of March 31, 2005

As of September 30, 2004

3. Assets pledged as collateral(1) For future lease liabilities
Assets pledged as collateral:
Notes and accounts receivable - trade
Other current assets(accounts receivable – other)

11,887 million yen

11,247 million yen

10,035 million yen

2 million yen

7 million yen

18 million yen

2 million yen

5 million yen

8 million yen

Secured liabilities:
Accounts payable - trade

Note:
The collateral for the future lease liabilities was provided by mortgaging against the aggregate of the current and future
receivables due from customers of certain consolidated subsidiaries and a broadcasting company, based on marketing
agreements, etc. The future lease liabilities at the end of periods are as follows:
As of September 30, 2005
Future lease liabilities (including the above“Accounts payable-trade”)

31,035 million yen

As of March 31, 2005
37,263 million yen

As of September 30, 2004
31,921 million yen

3. Assets pledged as collateral (continued)(2) For short-term borrowings and long-term debt
As of September 30, 2005

As of March 31, 2005

As of September 30, 2004

Cash and deposits

483 million yen

446 million yen

735 million yen

Notes and accounts receivable - trade

1,060

1,120

1,117

Buildings and structures

884

6,660

15,123

Telecommunications equipment

2,113

14,172

16,929-13,68914,739

5,001

5,582

-

Assets pledged as collateral:

Telecommunications service lines
Land
Property and equipment- others

0

0

6,467

Investment securities

203,486

193,398

207,115

Total

213,030 million yen

235,070 million yen

262,228 million yen

407 million yen

493 million yen

552 million yen

Secured liabilities:
Notes and accounts payable - trade
Short-term borrowings

15,85925,882

57,390Accounts payable- other and accrued expenses

21

18

6

Other current liabilities

-

-

364

116,313212,119

246,723

207

289

-

Long-term debt
Other long-term liabilities
Total

132,809 million yen

238,804 million yen

305,037 million yen

Note:
In connection with JAPAN TELECOM CO., LTD’s loan refinancing on April 27, 2005, assets pledged as factory foundation collateraland investment securities in JAPAN TELECOM CO., LTD. held by the Company and three consolidated subsidiaries of JAPANTELECOM CO., LTD. as of March 31, 2005 were released.

4. Securities loaned
Certain consolidated subsidiaries lend a portion of their investment securities to financial institutions according to stock lending
agreements. The amounts of investment securities lent under these arrangements and reflected in the Company’s consolidatedbalance sheets are as follows:
As of September 30, 2005
Investment securities

259 million yen

As of March 31, 2005
- million yen

As of September 30, 2004
- million yen

5. Cash receipts as collateral
Cash receipts as collateral from financial institutions, to whom the Company has lent shares of its subsidiary under security
deposit agreements, is presented as follows:
As of September 30, 2005
Cash receipts as collateral

120,000 million yen

As of March 31, 2005
100,000 million yen

As of September 30, 2004
70,000 million yen

According to the security deposit agreements, the Company paid a fixed rate amount as stock bailment fees and other fees totaling ¥1,482
million, ¥1,692 million and ¥713 million for the six-month period ended September 30, 2005, the year ended March 31, 2005 and thesix-month ended September 30, 2004, respectively, and recorded the fees as other non-operating expenses in the consolidated statements ofoperations.

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)
As of September 30, 2005

As of March 31, 2005

As of September 30, 2004

15,809 million yen

200 million yen

143 million yen

8. Balance of accounts receivable sold
As of September 30, 2005

As of March 31, 2005

As of September 30, 2004

7,461 million yen

7,855 million yen

5,030 million yen

Six-month period ended
September 30, 2005
35,071 million yen

Six-month period ended
September 30, 2004
15,562 million yen

Fiscal year ended
March 31, 2005
45,550 million yen

9. Selling, general and administrative expenses
Payroll and bonuses
Sales promotion expense

29,85547,978

95,131Fees for outsourced services

22,8998,566

37,665

Allowance for doubtful accounts

2,315

1,875

3,720

10. Consolidated statements of cash flows
Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets
As of September 30, 2005
Cash and deposits
Marketable securities
Time deposits with original maturity
over three months
Deposits received from customers
in the commodities business
Stocks and bonds with original
maturity over three months
Cash and cash equivalents

As of March 31, 2005

As of September 30, 2004

349,884 million yen

287,978 million yen

7,628

53,08439,403(1,489)(4,534)(1,455)

-

(49)

-

(7,221)(807)(5,732)

232,490 million yen

231,408 million yen

397,578 million yen

320,194 million yen

Significant Subsequent Events<Sale of partial shareholding of Tao Bao Holding Limited>
The Company sold its 4,500,000 shares held in Tao Bao Holding Limited to Yahoo! Inc. through its wholly-owned subsidiary,
SB TB Holding Limited for approximately $360 million (approximately ¥41.7 billion, $1=¥115.98) on October 24, 2005.
The gain on the sale of investment securities of approximately ¥40.6 billion will be recorded in the third quarter of the fiscal
year ending March 31, 2006. As a result, Tao Bao Holding Limited is to be excluded from a consolidated subsidiary.
<Sale of entire stocks of Yahoo! group companies in Europe and Korea>
On November 7, 2005, the Company and its consolidated subsidiaries, have entered into an agreement with Yahoo! Inc. thatthey sell their entire holding stocks (30%) of Yahoo! UK Limited, Yahoo! France SAS, and Yahoo! Deutschland GmbH andtheir entire holding stocks (33%) of Yahoo! Korea Corporation to Yahoo! Inc. for a total of $500 million (approximately ¥59.0
billion, $1=¥118.16).
The gain on the sale of investment securities of approximately ¥53.3 billion will be recorded in the third quarter of the fiscal
year ending March 31, 2006.

Segment Information
1. Business segment information(1) For the six-month period ended September 30, 2005
(Millions of yen; amounts less than one million yen are omitted.)
Broadband

Fixed-line

Infrastructure

Telecommunications¥124,947¥168,963

e-Commerce

Internet
Culturee-Finance

OthersTotal¥34,011¥522,787

Elimination
or Corporate

Consolidated（Note 5）Net sales(1) Customers(2) Inter-segment¥123,640¥71,224¥-¥-¥522,787

697

2,941

4,517

307

-

6,881

15,344(15,344)-

125,645

171,904

128,157

71,531-40,893538,132(15,344)522,787

Operating expenses

126,655

198,204

126,61337,894-

41,892531,261(12,874)

518,387

Operating income (loss)¥(1,010)¥(26,299)¥1,544¥33,636¥-¥(999)¥6,871¥ (2,470)¥4,400Total(2) For the six-month period ended September 30, 2004
(Millions of yen; amounts less than one million yen are omitted.)
Broadband

Fixed-line

Infrastructure

Telecommunications

Net sales

e-Commerce

Internet
Culturee-Finance

OthersTotal

Elimination

Consolidated

or Corporate(Note 4)

(1) Customers(2) Inter-segment
Total¥95,901¥-¥114,289¥43,525¥27,962¥22,027¥303,706

93

-

5,320

269

2,808

9,258

17,751¥-¥303,706(17,751)-

95,994-

119,610

43,79530,771

31,286

321,457(17,751)

303,706

Operating expenses

130,673-

117,029

21,59823,63533,697

326,635(16,138)

310,496

Operating income (loss)¥(34,678)¥-¥2,580¥22,196¥7,135¥(2,411)¥(5,177)¥ (1,612)¥(6,790)(3) For the fiscal year ended March 31, 2005
(Millions of yen; amounts less than one million yen are omitted.)
Broadband

Fixed-line

Infrastructure

Telecommunications¥204,974¥165,969¥244,971

331

909

9,950

e-Commerce

Internet

e-Finance

OthersTotal¥101,913¥73,235¥45,954¥837,018

534

5,562

18,22135,510CultureElimination

Consolidated

or Corporate

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

¥

-

¥837,018(35,510)-205,306

166,878

254,921

102,448

78,79764,175872,528(35,510)

837,018

Operating expenses

259,054

202,944249,681

52,36859,08370,060893,192(30,815)

862,377

Operating income (loss)¥(53,747)¥(36,065)¥5,240¥50,079¥19,714¥(5,885)¥(20,663)¥ (4,695)¥(25,359)

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 segments.
3. Unallocated operating expenses for the six-month period ended September 30, 2005, and September 30, 2004, and for the year ended
March 31, 2005 in the column "Elimination or Corporate", mainly represents expenses of the corporate division of the Company,
totaled ¥2,305 million, ¥1,674 million and ¥6,867 million, respectively.
4. The “Fixed-line Telecommunications” business segment was established as of September 30, 2004, consequently this segment did
not exist for the six-month period ended September 30, 2004
5. The former “e-Finance” business segment ended as SOFTBANK INVESTMENT CORPORATION (current SBI Holdings, Inc.)changed to an equity-method affiliate from a consolidated subsidiary on March 31, 2005.

<Change in presentation>
In fiscal year 2005, segment information for net sales and operating income (loss) of Broadmedia, Technology Services, Media &Marketing, and Overseas Funds segments were presented although the portions of net sales and operating income (loss) were lessthan 10% of consolidated net sales and operating income (loss). Due to the relative significance of these businesses, beginningwith the six-month period ended September 30, 2005, they are included in the “Others” segment. This change in presentation ofbusiness segment information is due to increase in importance on the Broadband Infrastructure, Fixed-line Telecommunications,e-Commerce, and Internet Culture operations.
2. Geographic segment information(1) For the six-month period ended September 30, 2005
(Millions of yen; amounts less than one million yen are omitted.)
North
AmericaJapan

OthersEliminationorCorporate

Total

Consolidated

Net sales(1)

Customers(2)

Inter-segment¥519,240¥633¥2,913¥522,787

187

308

173

669

¥

(669)

-

¥522,787-

Total

519,428

942

3,086

523,457(669)

522,787

Operating expenses

510,543

1,419

4,913

516,875

1,511

518,387

Operating loss

¥8,885¥(476)¥(1,826)¥6,581¥(2,181)¥4,400(2) For the six-month period ended September 30, 2004
(Millions of yen; amounts less than one million yen are omitted.)
North
AmericaJapan

OthersEliminationorCorporate

Total

Consolidated

Net sales(1)

Customers(2)

Inter-segment¥299,324¥1,060¥3,321¥303,706

283

26

56

366

¥

-

¥303,706

(366)

-

Total

299,607

1,087

3,378

304,073(366)

303,706

Operating expenses

303,529

1,287

4,343

309,161

1,335

310,496

Operating loss¥(3,922)¥(200)¥(965)¥(5,088)¥(1,702)¥(6,790)(3) For the fiscal year ended March 31, 2005
(Millions of yen; amounts less than one million yen are omitted.)
North
AmericaJapan

OthersTotal

EliminationorCorporate

Consolidated

Net sales(1)

Customers(2)

Inter-segment¥828,768¥1,910¥6,339¥837,018-¥837,018

464

371

223

1,060

¥

(1,060)-

Total

829,233

2,281

6,563

838,078(1,060)837,018

Operating expenses

845,650

3,220

9,742

858,613

3,763

862,377

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

Notes:
1. Net sales by geographic region are recognized based on geographic location of the operation.
Significant countries in each region are shown below:
North America: United States of America and Canada
Others: Europe, Korea, China, Hong Kong and Singapore
2. Unallocated operating expenses for the six-month periods ended September 30, 2005, and September 30, 2004, and for theyear ended March 31, 2005 in the column “Elimination or Corporate”, mainly represents expenses of the corporate division of
the Company, were ¥2,305 million, ¥1,674 million and ¥6,867 million, respectively.
3. Overseas sales
Disclosure of overseas sales was omitted because the total overseas sales were less than 10% of total consolidated sales.

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
As of September 30, 2005

Telecommunications equipment andtelecommunications service lines
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Buildings and structures
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Property and equipment - others
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value
Intangible assets
Equivalent to acquisition costsLess:amount equivalent to accumulated amortization
Net book value
Total
Equivalent to acquisition costsLess:amount equivalent to accumulated depreciation
Net book value

As of March 31, 2005

As of September 30, 2004

212,136

195,681

55,414(61,532)(45,685)(24,140)

150,604 million yen

149,996 million yen

31,273 million yen

46,97547,056-(1,485)(349)-

45,489 million yen

46,706 million yen- million yen

13,954

15,93817,579(7,263)(10,293)(9,319)6,691 million yen

5,644 million yen

8,260 million yen

2,876

2,727

2,832

(1,311)(1,076)(752)

1,565 million yen

1,651 million yen

2,080 million yen

275,943

261,404

75,827(71,593)(57,404)(34,213)204,350 million yen

203,999 million yen

41,614 million yen(2) The future lease payments for capital lease at the end of the periods
As of September 30, 2005

Due within one year
Due after one year
Total

42,355
168,127
210,483 million yen

As of March 31, 2005

40,342
167,676
208,018 million yen

As of September 30, 2004

18,83526,44945,285 million yen(3) Lease payments, amounts equivalent to depreciation and interest expense
Six-month period ended
September 30, 2005

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

28,527 million yen
22,5598,141

Fiscal year ended
March 31,2005

27,366 million yen
24,2095,179

Six-month period ended
September 30, 2004

8,257 million yen
7,303
1,099

(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 each capital lease,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.

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
As of September 30, 2005

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

164
(117)
47 million yen

Intangible assets
Acquisition costs
Less: accumulated amortization
Net book value
Total
Acquisition costs
Less: accumulated depreciation
Net book value-

million yen

164
(117)
47 million yen

As of March 31, 2005

As of September 30, 2004

2,644
(2,576)67 million yen

3,288(2,576)712 million yen-

million yen

342
(61)
281 million yen

2,644(2,576)67 million yen

3,631(2,637)994 million yen

As of March 31, 2005

As of September 30, 2004

43
29
72 million yen

610
419
1,030 million yen(2) The future lease receivables for capital leases at the end of the periods
As of September 30, 2005

Due within one year
Due after one year
Total

45
6
51

million yen(3) Lease income, depreciation and amount equivalent to interest income
Six-month period ended
September 30, 2005

Lease income
Depreciation expense
Amount equivalent to interest income

23
20
2

million yen

Fiscal year ended
March 31, 2005

349 million yen
211
3

Six-month period ended
September 30, 2004

114 million yen
9917(4) Calculation method of amount equivalent to interest income
The amount equivalent to interest income is calculated by subtracting acquisition costs from total lease income and estimatedresidual value and allocated over the lease periods based on the interest method.
2. Non-cancelable operating lease transactions(as a lessee)
The future lease payments for non-cancelable operating leases
As of September 30, 2005

Due within one year
9,081
Due after one year
11,362
Total
20,443(as a lessor)
The future lease receivables for non-cancelable operating leases

million yen

As of September 30, 2005

Due within one year
Due after one year
Total

1,161
1,864
3,026

million yen

As of March 31, 2005

6,264
15,551
21,815

million yen

As of March 31, 2005

972
1,816
2,789

million yen

As of September 30, 2004

353
300
654 million yen

As of September 30, 2004

376
959
1,335 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.)

As of March 31, 2005

As of September 30, 2005

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

Investment

Carrying

costs

amounts¥35,709¥235,731

5,060
18¥40,7885,064
23¥240,818

Investment

Carrying

costs

amounts¥200,022¥29,924¥229,4123
4¥200,030

5,134
18¥35,0775,141
18¥234,572

Differences

As of September 30, 2004
Investment

Carrying

costs

amounts¥199,488¥60,722¥270,308¥209,5857
0¥199,495

5,207
4,193
¥70,124

5,207
4,174
¥279,689(0)

Differences

Differences(19)¥209,565

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

Other securities
Unlisted equity securities
Investments in limited partnerships (see Note)
Money Management Fund
Preferred fund certificate
Mid-term government bond funds
Unlisted foreign debt securities
Investment trust without market quotations
Designated money trust
OthersTotal

As of September 30, 2005

As of March 31, 2005

As of September 30, 2004

Carrying amounts

Carrying amounts

Carrying amounts

21,482
5,388
2,167
2,000
191
145
10
¥31,386

16,466
63,373
1,836
2,000
191
1,108
30,3883,000
10¥118,374

20,930
3,019
2,000
191
1,157
51,210
10¥78,519

Note:
With respect to “Investments in limited partnerships,” the difference between cost and fair value of limited partnerships, net of tax, isrecorded in “Net unrealized gain on other securities” in the consolidated balance sheets.

Derivative Transactions
1 Currency related derivatives(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2005

September 30, 2005
Contract amounts
Over 1year

Nature of transaction

Fair
value

Unrealized
gain (loss)¥¥

Contract amounts

September 30, 2004
Contract amounts

Fair
value

Unrealized
gain (loss)

¥ 12

¥12

¥1,000¥1,000¥40¥40Over 1year

Fair UnrealizedOver 1 value gain (loss)year

Off-market transactions
Swap transactions to・ Receive Australian dollars and pay
Japanese yen¥1,000

Option transactions to・ Purchase U.S. dollar call option andJapanese yen put option

5,369

・ Sell U.S. dollar put option andJapanese yen call option

4,725

¥

-

34

34

¥1,000

¥-

-

237

177

-

-

-

-

-

-

-

-

-

(3)

56

-

-

-

-

-

-

-

-

15,61014,645

(286)

(286)

-

-

-

-

-

-

-

-

・ Purchase U.S. dollars andsell Japanese yen

85,040-87,977

2,936

3,193

-

3,249

56

418

-

426

8

・ Purchase Euro and sell Japanese yen

8,347

8,347

8,685

338

-

-

-

-

-

-

-

-

(60)

(60)

・ Purchase Japanese yen put option andeuro call option and sell Japanese yencall option and euro put option
Forward exchange contracts to-

Total

¥68

¥3,256¥48

Notes:
1. The amounts in ( ) under “Contract amounts” represents option fees.
2. Fair value is based on information provided by financial institutions.
2 Interest related derivatives(Millions of yen; amounts less than one million yen are omitted.)
March 31, 2005

September 30, 2005
Notional amounts
Over 1Nature of transaction

Notional amounts

Fair

Unrealized

value

gain (loss)

Over 1

September 30, 2004

Fair

Unrealized

value

gain (loss)

Notional amounts
Over 1

year

year

Fair

Unrealized

value

gain (loss)year

Off-market transactions
Swap transactions to・Receive fixed rate andpay floating rate

-

¥-

¥ -

¥ -

¥1,142

¥-

¥ 39

¥ 39

¥1,142

¥

-

¥ 42

¥ 42

・Receive floating rate andpay fixed rate

10,000

-

(48)

(48)

11,571

-

(149)

(149)

11,571

10,000

(194)

(194)

・Receive fixed rate (receipt later)
and pay fixed rate (prepayment)

1,000

-

35

35

1,000

-

35

35

1,000

1,000

35

35

¥

Total

¥(12)

Notes:
1. Fair value is based on information provided by the financial institutions.
2. Derivative transactions on which the Company applied hedge accounting are excluded.
3 Securities related derivatives
There are no applicable items.
Note:
Derivative transactions on which the Company applied hedge accounting are excluded.

¥(73)¥(116)

Per Share Data
Six-month period ended Six-month period ended
September 30, 2004
September 30, 2005

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

Fiscal year ended
March 31, 2005¥(11.90)484.67¥(17.20)659.78¥(171.03)
505.86¥(4,182)¥(6,045)¥(59,871)¥(4,182)¥(6,045)¥(60,101)

¥-

¥-

¥229

351,456,370

351,402,492

351,418,709