3rd Quarter Results

RNS Number : 8553M
Softbank Corp
05 February 2009
 





SOFTBANK CORP.

CONSOLIDATED FINANCIAL REPORT

For the nine-month period ended December 31, 2008


Tokyo, February 5, 2009



1. FINANCIAL HIGHLIGHTS

(Percentages are shown as year-on-year changes)

 

  (1)    Results of Operations

 

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


Net sales

Operating income

Ordinary income

Net income

Amount

%

Amount

%

Amount

%

Amount

%

 Nine-month period ended December 31, 2008

1,982,262

-

274,690

-

174,494

-

58,182

-

 Nine-month period ended 

December 31, 2007

2,058,765

13.0

260,188

31.9

231,998

107.9

93,196

324.9



Net income

 per sharebasic 

(yen)

Net income

 per sharediluted (yen)

 Nine-month period ended December 31, 2008

53.84

51.29

 Nine-month period ended 

December 31, 2007

87.57

82.34

 

(2)  Financial Condition

 

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


Total assets

Total equity

Equity ratio (%)

Shareholders' equity

per share (yen)

As of December 31, 2008

4,302,673

843,697

9.0

359.16

 As of March 31, 2008

4,558,901

848,725

8.4

355.15

Note: Shareholders'equity (consolidated)     

As of December 31, 2008:   388,193million

As of March 31, 2008:        383,742 million


2. Dividends 



Dividends per share

(Record date)

First quarter

Second quarter

  Third quarter

Fourth quarter

Total



(yen) 

(yen) 

(yen) 

(yen)     

(yen)   

FY 2008

-

0.00

  -

2.50

2.50

FY2009

-

0.00

-



FY 2009

(Forecasted)




2.50

2.50


Revision of forecasts on the dividendsNo



 



3.     Forecasts othe consolidated operation results for the fiscal year ending in March 2009 (April 1, 2008 - March 31, 2009)

                                                                                                              (Percentages are shown as year-on-year changes)

                                                                                                                                                                (Millions of yen)
 


Operating income

 Full financial year

340,000

4.8  (%)


Revision of forecasts on the consolidated operation results: No




4. Others
 
(1) Significant Changes in Scope of Consolidation(Changes in Scope of Consolidation of Specified Subsidiaries):   None
 
(2) Application of simple accounting methods or special accounting methods for preparation for the consolidated financial statements:    None
 
(3) Changes in accounting principles, procedures, disclosure methods, etc., used in the presentation of the consolidated financial statements (Changes described in “(5) Basis of Presentation of Quarterly Consolidated Financial Statements”)
[1] Changes due to revisions in accounting standards: Yes
[2] Changes other than those in [1]: Yes
 Note: Please see “Qualitative Information / Financial Statements 5. Others” in details on page 21.
 
(4) Number of shares issued (Common stock)     
[1] Number of shares issued (including treasury stock):   
As of December 31, 2008:   1,081,008,978 shares
As of March 31, 2008:         1,080,664,578 shares
[2] Number of treasury stock:
As of December 31, 2008:             167,932 shares
As of March 31, 2008:                   163,811 shares
[3] Weighted average number of common stock :
As of December 31, 2008:   1,080,653,361 shares
As of December 31, 2007:   1,064,263,539 shares


  

* Notes to forecasts on the consolidated operating results and another item
 
1. The forecast figures are estimated based on the information which the company is able to obtain at present point and the assumption which is deemed to be reasonable. However, actual results may be different due to various factors. 
 
2. The forecasts of the consolidated cash flows from operating activities, the consolidated cash flows from investing activities and the consolidated free cash flow for the fiscal year ending March 31, 2009 were upwardly revised on February 5, 2009.  No changes have been made in the forecast of consolidated operating income.  For more details, please refer to “3. Qualitative Information on Consolidated Earnings Forecasts” on page 19 and the related press release “Announcement Regarding Revision of Earnings Forecasts” issued on February 5, 2009.
 
3. “Accounting Standard for Quarterly Financial Reporting and its Implementation Guidance ” (ASBJ Statement No.12 issued on March 14, 2007) and “Guidance on Accounting Standard for Quarterly Financial Reporting (ASBJ Guidance No.14 issued on March14, 2007) were applied for the period ended December 31, 2008. The consolidated financial statements for the period ended December 31, 2008 were prepared by following Regulations for Quarterly Consolidated Financial Statements”.












Qualitative Information / Financial Statements













1. Qualitative Information on Consolidated Results of Operations


<<Summary of Results of Operations>>

Net sales

¥ 1,982,262 million (3.7% decrease year-on-year)

Operating income

¥274,690 million (5.6% increase year-on-year)

Ordinary income

¥174,494 million (24.8% decrease year-on-year)

Net income

¥58,182 million (37.6% decrease year-on-year)



<Overview of results for the period ended December 31, 2008 (nine-month period from April 1, 2008 to December 31, 2008)>

Net sales for the first three quarters of the fiscal year ending March 2009 (nine-month period from April 1, 2008 to December 31, 2008; hereinafter 'the period') totaled ¥1,982,262 million, and operating income came to ¥274,690 million, the highest level of operating income since the SOFTBANK Group (hereinafter 'the Group') was established. Net sales declined in comparison to the same period in the previous fiscal year (nine-month period ended December 31, 2007; hereinafter 'year-on-year'), primarily because of a decline in handset sales in the Mobile Communications segment. Even though operating income in the Mobile Communications segment declined, all other businesses recorded higher operating income, and consolidated operating income increased year-on-year as a result.


<Quarterly Results>


(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Net sales

663,084

701,660

694,020

717,402

647,255

681,742

653,264

-

Operating income

78,746

89,000

92,441

64,098

85,086

94,913

94,690

-

Ordinary income

51,154

60,010

120,833

26,615

54,272

63,043

57,178

-

Net income

25,130

21,331

46,734

15,427

19,368

21,747

17,066

-


  




(1) Net Sales

Net sales declined ¥76,502 million to ¥1,982,262 million, or 3.7% year-on-year. This decrease was primarily the result of a ¥69,769 million decline in net sales in the Mobile Communications segment on lower handset sales.


(2) Operating Income

Operating income totaled ¥274,690 million, an increase of ¥14,501 million, or 5.6%, year-on-year. The main contributions to this growth came from continued cost reductions at SOFTBANK TELECOM Corp. (hereinafter 'SOFTBANK TELECOM') and SOFTBANK BB Corp. (hereinafter 'SOFTBANK BB'), combined with steady income growth at Yahoo Japan Corporation. The Fixed-line Telecommunications segment recorded an increase of 6.6-times to ¥9,611 million, the Internet Culture segment recorded an increase of 9.9% to ¥8,280 million, and the Broadband Infrastructure segment recorded an increase of 20.8% year-on-year, to ¥6,310 million.

The cost of sales for the period was ¥1,019,719 million, down ¥66,388 million, or 6.1%, year-on-year. This decline was due primarily to a lower cost of goods sold for handsets at the Mobile Communications segment and lower telecommunications equipment usage fees at the three telecommunications companies: SOFTBANK TELECOM, SOFTBANK BB and SOFTBANK MOBILE Corp. (hereinafter 'SOFTBANK MOBILE'). Selling, general and administrative expenses came to ¥687,852 million, a decrease of ¥24,615 million, or 3.5%, year-on-year. This decline was primarily attributable to lower sales commissions and sales promotion expenses in the Mobile Communications and Broadband Infrastructure segments.


(3) Non-operating Income

Non-operating income came to ¥7,727 million, a decrease of ¥63,690 million, or 89.2%, year-on-year. While recording a ¥61,570 million gain from equity in earnings of affiliated companies in the same period of the previous fiscal year, in the period, a ¥8,471 million equity in loss of affiliated companies was recorded as a non-operating expense. The primary component of the year-earlier gain was ¥57,223 million from the new listing of Alibaba.com Limited, a subsidiary of the Group's equity-method affiliate, Alibaba Group Holding Limited, on the Hong Kong Stock Exchange on November 6, 2007.


(4) Non-operating Expenses

Non-operating expenses were ¥107,923 million, an increase of ¥8,315 million, or 8.3% year-on-year. This rise was principally due to interest expense of ¥85,220 million, which grew ¥1,647 million year-on-year. In addition, the deterioration in equity prices during the period led to a downturn in the performance of equity-method applied investment funds, resulting in an equity-method investment loss of ¥8,471 million.


(5) Special Income

Special income totaled ¥9,740 million. This came primarily from the recognition of a ¥2,980 million gain from the sale of investment securities and a ¥2,972 million gain on the liquidation of a subsidiary.

  




(6) Special Loss

The special loss came to ¥10,137 million. This was mainly from the recognition of a ¥3,907 million valuation loss on investment securities and a ¥3,673 million unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S., net.


(7) Income Taxes and Others

Current income taxes totaled ¥53,247 million, deferred income taxes came to ¥29,361 million, and ¥33,306 million was recorded as minority interests in net income.

  

The consolidated financial statements for the period ended December 31, 2008 were prepared following the Regulations for Quarterly Consolidated Financial Statements. Therefore, the financial results of the same period of the previous fiscal year and year-on-year comparisons have been included for reference purposes.




Results by business segment are as follows:


[Mobile Communications]

<<Summary of Segment Results>>

Net sales

¥1,150,822 million

(5.7% decrease year-on-year)

Operating income

¥134,911 million

(8.8% decrease year-on-year)

Net subscriber additions totaled 1,413,600 for the nine-month period of the fiscal year.

No. 1 in monthly net additions for 20 consecutive months through December 2008.

Total number of subscribers reached 19.99 million, of which 17.25 million were 3G subscribers.


<Analysis of Results>

Net sales were ¥1,150,822 million, down ¥69,769 million, or 5.7%, lower year-on-year. Operating income decreased by ¥13,068 million, or 8.8% year-on-year, to ¥134,911 million. The decrease in net sales was primarily a reflection of a decline in handset sales at SOFTBANK MOBILE, the segment's core company. The decline in operating income reflected the increase of fixed assets depreciation and amortization of software.


<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

391,668

422,841

406,081

410,260

372,585

401,375

376,861

-

Operating income

43,528

50,691

53,760

26,589

44,273

43,890

46,747

-


<Number of Mobile Phone Subscribers>

Net subscriber additions (new subscribers minus cancellations) at SOFTBANK MOBILE for January - December 2008 totaled 2,386,300, a record number, including the period SOFTBANK MOBILE operated as J-PHONE and Vodafone. The number of SOFTBANK MOBILE subscribers totaled 19,999,800*1 as of the end of the period, for an increase of 1,413,600 subscribers from the end of the previous fiscal year, while market share rose 1.4 percentage points, to 18.9%. In addition, the number of applications for White Plan, which has a basic monthly charge of ¥980 (including tax), exceeded 15 million as of November 2008. The number of 3G subscribers totaled 17.25 million, representing more than 80% of total subscribers. SOFTBANK MOBILE continues its efforts to promote the migration to 3G in advance of the scheduled termination of its 2G service on March 31, 2010.

The total number of subscribers surpassed 20 million on January 1, 2009.


*1. The total number of subscribers for SOFTBANK MOBILE includes communication module service subscribers. The number of communication module service subscribers at the end of the period was 32,100.


  





(Thousands of lines)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Net additions

530.8

612.0

561.0

972.7

525.5

521.4

366.6

-

Total

16,440.5

17,052.5

17,613.5

18,586.2

19,111.7

19,633.2

19,999.8

-

.


<Churn Rate and Upgrade Rate>

The churn rate for the third quarter was 0.91%, a 0.28 percentage point improvement from the previous fiscal year, and a 0.07 percentage point improvement from the second quarter. The upgrade rate for the third quarter was 1.67%, a 0.26 percentage point improvement from the previous fiscal year, and a 0.24 percentage point improvement from the second quarter.

(% per month)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Churn rate

1.46

1.42

1.21

1.19

0.98

0.98

0.91

-

(3G only)*2

1.07

1.05

0.88

0.85

0.72

0.76

0.69

-

Upgrade rate

2.25

2.67

2.00

1.93

1.27

1.91

1.67

-

*2. Excludes 3G Prepaid Service.


<ARPU and Average Acquisition Commission per User>

Total ARPU*3 in the period was ¥4,090, a decline of ¥220 from the end of the previous fiscal year and a ¥80 decline from the second quarter. This decline in total ARPU was a reflection of the special discount for subscribers to Monthly Discounts*4 and the growth in the number of subscribers to White Plan, which has a basic monthly charge of ¥980 (including tax). On the other hand, data ARPU in the third quarter rose ¥190 from the end of the previous fiscal year to ¥1,790, and accounted for 43.7% of total ARPU.  

The average acquisition commission per user during the third quarter was ¥38,300.

(Yen per month)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Total

5,000

4,800

4,520

4,310

4,180

4,170

4,090

-

(Voice)

3,590

3,340

3,040

2,710

2,530

2,460

2,300

-

(Data)

1,410

1,470

1,490

1,600

1,650

1,710

1,790

-

*3. Average Revenue Per User

*4. The name of the New Super Bonus discount was changed to Monthly Discounts on November 1, 2008.











[Broadband Infrastructure]

<<Summary of Segment Results>>

Net sales

¥178,415 million

( 8.1% decrease year-on-year)

Operating income

¥36,606 million

( 20.8% increase year-on-year)

Total installed lines for Yahoo! BB ADSL: 4,427,000 (at the end of December 2008). 

Progress was made in improving the operating margin by reducing expenses.


<Analysis of Results>

Net sales totaled ¥178,415 million, down ¥15,744 million, or 8.1%, year-on-year. Operating income was ¥36,606 million, which was ¥6,310 million, or 20.8%, higher year-on-year. Revenue from the ADSL business of core company SOFTBANK BB is trending lower on a decline in installed lines, but the trend of profit growth continues because of lower depreciation for telecommunications equipment and leasing expenses etc.


<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

65,747

64,072

64,340

63,908

60,127

59,911

58,376

-

Operating income

8,665

10,320

11,309

9,404

10,475

11,789

14,341

-


<Overview of Operations>

The number of installed lines for Yahoo! BB ADSL, the comprehensive broadband service provided by SOFTBANK BB, totaled 4,427,000 lines at the end of the third quarter, and ARPU on a customer payment basis for the quarter was ¥4,278. 

SOFTBANK BB launched the Yahoo! BB White Plan two ceilings ADSL service, with a basic rate of as low as ¥980, on December 1, 2008. The SoftBank Keitai Set Discount, a bundled service for users of both the Yahoo! BB White Plan and SOFTBANK MOBILE 3G phones, was also launched on the same day. By cross-selling with SOFTBANK MOBILE, SOFTBANK BB is creating synergies across the Group companies, which leads to enhanced competitiveness.  

  




[Fixed-Line Telecommunications]

<<Summary of Segment Results>>

Net sales

¥268,655 million

( 1.0% decrease year-on-year)

Operating income

¥11,335 million

( 6.6 times increase year-on-year)

Total installed lines for OTOKU Line1,544,000 (at the end of December 2008).

As a result of fixed cost reduction and increase in number of lines for OTOKU Line, operating income increased 6.6 times year-on-year.


<Analysis of Results>

Net sales were ¥268,655 million, down ¥2,797 million, or 1.0%, year-on-year. Operating income totaled ¥11,335 million, an increase of 6.6 times year-on-year. At the core company SOFTBANK TELECOM, revenue from the OTOKU Line direct connection fixed-line voice service and from corporate sales of mobile phones continued to increase steadily, but the downward trend in revenue from existing voice services including MY LINE and from international telephone services continued. Nevertheless, the segment is showing a trend of profit growth through the improvement of management efficiency including continued fixed cost reduction, and also from the increase in the number of lines with high profitability such as OTOKU Line and Ether Connect.


<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

90,486

90,986

89,979

99,288

88,453

90,005

90,196

-

Operating income (loss)

(111)

460

1,375

1,615

798

4,759

5,777

-


<Overview of Operations>

SOFTBANK TELECOM continues to utilize its core OTOKU Line service to expand its corporate customer base. The number of OTOKU Line lines installed is increasing steadily, and stood at 1,544,000 as of the end of the period, for an increase of 143,000 from the end of the previous fiscal year. Corporate customers constituted 75.8% of the total number of lines, and this figure continues to rise.

SOFTBANK TELECOM launched the White Line 24 discount service in June 2008, which provides free domestic voice calls, 24 hours a day, between subscribers of SOFTBANK TELECOM's OTOKU Line service and SoftBank mobile phones (White Plan). In December 2008, SOFTBANK TELECOM announced the launch of White Office, a corporate FMC*5 service that will allow mobile phones to be used as extension lines of fixed-line telephones, scheduled for the end of March 2009. SOFTBANK TELECOM will keep working to enhance synergies with the Mobile Communications segment and further strengthen the corporate business.  

*5. FMC: Fixed Mobile Convergence service, telecommunications services that integrate the functions of mobile communications and fixed-line telecommunications.













 [Internet Culture]

<<Summary of Segment Results>>

Net sales

¥189,833 million

(7.3% increase year-on-year)

Operating income

¥92,060 million

(9.9% increase year-on-year)


<Analysis of Results>

Net sales increased by ¥12,908 million year-on-year, or 7.3%, to ¥189,833 million. Operating income increased by ¥8,280 million, or 9.9%, to ¥92,060 million.


<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

52,796

57,623

66,505

70,717

62,326

63,259

64,247

-

Operating income

27,148

27,766

28,864

31,457

30,542

30,645

30,872

-


<Overview of Operations>

In the advertising business of Yahoo Japan Corporation, the core company of the segment, display advertising sales grew firmly on the strength of substantial growth in behavioral targeting and demographic targeting advertising compared with the same period in the previous fiscal year, and expansion in the number of partner sites due to the progress in developing the ad network. Paid search advertising sales also advanced favorably compared with the same period in the previous fiscal year due to the full scale start of the interest-linked advertising Interest Match™ and the increase in use of paid search advertising by companies outside the Yahoo Group based on the it's pursuit of an open strategy. 

In business services other than advertising, Yahoo! Shopping continued its efforts during the period such as developing sales promotions in line with its sales drive during the year-end shopping season as well as simplification of the shopping procedures and the addition of shopping item review functions. As a result, monthly transaction volume for December hit a record high and mobile transaction volume also expanded substantially. Based on their continued efforts to acquire new stores, at the end of December, the number of merchant stores registered on Yahoo! Shopping and Yahoo! Auctions totaled 32,673, expanding by 2,450 stores, or 8.1% year-on-year. Tenant and commission fees for Yahoo! Shopping and Yahoo! Auctions also expanded favorably helped by the upward revision in Yahoo! Auctions store royalties that began in December.

In the personal service business, due to efforts by the Yahoo! Premium service to add special benefits for members, such as member-exclusive services, and to increase value-added content, the number of Yahoo! Premium membership IDs rose to a record high and sales expanded favorably. At the end of December, the number of Yahoo! Premium membership IDs amounted to 7.26 million IDs, rising 7.7% year-on-year.














 [e-Commerce]

<<Summary of Segment Results>>

Net sales

¥192,687 million

(1.2% decrease year-on-year)

Operating income

¥3,802 million

(30.7% increase year-on-year)


<Analysis of Results>

Net sales were ¥192,687 million, which was ¥2,420 million, or 1.2%, lower year-on-year. Operating income was ¥3,802 million, for a ¥892 million, or 30.7%, year-on-year increase.


<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

61,660

63,812

69,634

75,615

62,459

65,522

64,706

-

Operating income

1,167

933

809

246

1,009

1,737

1,055

-


<Overview of Operations>

Core company SOFTBANK BB's commerce & service division posted solid sales of hardware and software to retail customers, but the deterioration in the market environment in autumn 2008 led to a large decline in corporate sales, and net sales declined as a result. On the other hand, continuous improvement of operational efficiency and readjustment of the product mix supported revenue. In addition, SoftBank SELECTION, launched in November 2007, began to contribute to earnings as the lineup of mobile phone accessories was expanded and the number of stores handling these products increased. 

SOFTBANK BB will continue to pursue additional synergies with the Group's telecommunications companies as it strengthens its sales of mobile phone accessories, PC software and corporate business.


[Others]

<Analysis of Results>

Net sales decreased by ¥8,399 million year-on-year, or 11.2%, to ¥66,564 million. The operating loss was ¥230 million, compared with a loss of ¥3,268 million in the same period of the previous fiscal year.

This segment includes the Technology Services business (SOFTBANK TECHNOLOGY CORP.), the Media & Marketing business (mainly SOFTBANK Creative Corp. and ITmedia Inc.), the Overseas Funds business, and Other businesses (mainly TV Bank Corporation and Fukuoka Softbank Hawks Corp.).

Broadmedia Corporation, which belonged to the Broadmedia segment that was previously included in this segment, changed from a consolidated subsidiary to an equity-method affiliate as the result of a capital increase via third-party allotment of shares carried out on May 16, 2008. The Broadmedia segment was therefore disbanded in the first quarter.












<Quarterly Results>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Sales

24,871

26,907

23,184

24,909

21,818

24,189

20,556

-

Operating income (loss)

(689)

38

(2,617)

(1,852)

(758)

3,383

(2,855)

-



(Reference: Quarterly Results)

Net sales for the third quarter (three-month period from October 1 to December 31, 2008) totaled ¥653,264 million, a decrease of ¥40,755 million, or 5.9%, year-on-year. Operating income was ¥94,690 million, an increase of ¥2,248 million, or 2.4%, year-on-year.  

Ordinary income came to ¥57,178 million, a decrease of ¥63,654 million, or 52.7%, year-on-year. While recording a ¥58,433 million gain from equity in earnings of affiliated companies in the same period of the previous fiscal year, in the third quarter of the current fiscal year, a ¥6,050 million equity in loss under the equity-method, was recorded as a non-operating expense, as the deterioration in equity prices during the period led to a downturn in the performance of equity-method applied investment funds. The primary component of the year-earlier gain was ¥57,223 million from the new listing of Alibaba.com Limited, a subsidiary of the Group's equity-method affiliate, Alibaba Group Holding Limited, on the Hong Kong Stock Exchange on November 6, 2007.

Net income for the third quarter was ¥17,066 million, a decrease of ¥29,667 million, or 63.5%, year-on-year.


Results by business segment are as follows:


[Mobile Communications]

Net sales totaled ¥376,861 million, a decrease of ¥29,220 million, or 7.2%, year-on-year. Operating income decreased by ¥7,013 million, or 13.0%, year-on-year to ¥46,747 million. There was a decline in handset sales at SOFTBANK MOBILE. In addition, commissions on handset upgrades declined, but depreciation of fixed assets and amortization of software increased. As a result, operating income decreased. 


[Broadband Infrastructure] 

Net sales came to ¥58,376 million, a decrease of ¥5,964 million, or 9.3%, year-on-year, with a ¥3,032 million, or 26.8%, year-on-year increase in operating income to ¥14,341 million. Net sales at SOFTBANK BB's ADSL business is trending lower on declines in the total number of installed lines, but the steady trend of profit growth continues because of lower depreciation for telecommunications equipment and leasing expenses etc. 


 



[Fixed-line Telecommunications]

Net sales were ¥90,196 million, an increase of ¥217 million, or 0.2%, year-on-year. Operating income totaled ¥5,777 million, an increase of ¥4,402 million, or 320.1%, year-on-year. At SOFTBANK TELECOM, revenue from the MY LINE and other existing voice services continued to decline.  Nevertheless, the segment is showing a trend of profit growth through the improvement of management efficiency including continued fixed cost reduction, and also from the increase of lines with high profitability such as OTOKU Line and Ether Connect.


[Internet Culture]

Net sales totaled ¥64,247 million, a decrease of ¥2,257 million, or 3.4%, year-on-year. Operating income came to ¥30,872 million, an increase of ¥2,007 million, or 7.0%, year-on-year.


[e-Commerce]

Net sales were ¥64,706 million, a decrease of ¥4,928 million, or 7.1% year-on-year. However, a ¥246 million, or 30.5%, year-on-year increase in operating income to ¥1,055 million was recorded.


[Others]

Net sales were ¥20,556 million, a decrease of ¥2,627 million, or 11.3%, year-on-year. The operating loss amounted to ¥2,855 million compared to ¥2,617 million in the same period of the previous fiscal year.


 

2. Qualitative Information on Consolidated Financial Position


<<Summary of the Consolidated Financial Position>>

Total assets

¥4,302,673 million

(5.6% decrease year-on-year)

Total liabilities

¥3,458,976 million

(6.8% decrease year-on-year)

Equity

¥843,697 million

(0.6% decrease year-on-year)

Cash flows from operating activities

¥270,768 million provided

Cash flows from investing activities

¥223,120 million used

Cash flows from financing activities

¥149,508 million used

Balance of cash and cash equivalents

¥383,703 million

(¥106,563 million decrease from the end of March 2008)


1. Assets, Liabilities and Equity

Assets, liabilities, and equity as of the end of the third quarter were as follows:


(1) Current Assets

Current assets decreased by ¥147,261 million from the end of the previous fiscal year, to ¥1,435,483 million. This decrease was primarily due to a decline of ¥107,814 million in cash and deposits as the result of the acquisition of treasury stock by Yahoo Japan Corporation, and the repayment of interest-bearing debt by Yahoo Japan Corporation, SOFTBANK MOBILE and SOFTBANK CORP. (hereinafter 'the Company'). In addition a decrease of ¥22,952 million in deferred tax assets occurred.

 

In the Mobile Communications segment, SOFTBANK MOBILE procured cash by securitizing a portion of the installment sales receivables from installment sales of mobile handsets. Total cash procured from this securitization in the third quarter came to ¥45,655 million, with ¥57,278 million having been procured during the second quarter (see '(2) Major Financing Activities' on page 17). These procured funds were recorded as borrowings, and entrusted installment sales receivables were recorded as notes and accounts receivable-trade.

  




(2) Fixed Assets

Property and equipment, net, decreased by ¥18,669 million from the end of the previous fiscal year, to ¥1,010,595 million. This decline was primarily due to depreciation and amortization.  Intangible assets decreased by ¥700 million from the end of the previous fiscal year, to ¥1,237,608 million. This included a ¥46,398 million increase in goodwill associated with making SOFTBANK TELECOM PARTNERS Corp. a consolidated subsidiary of SOFTBANK TELECOM, and from the acquisition of treasury stock by Yahoo Japan Corporation.  This was more than offset, however, by ¥45,992 million in amortization of goodwill mainly relating to SOFTBANK MOBILE and SOFTBANK TELECOM.  Investments and other assets decreased by ¥88,443 million from the end of the previous fiscal year, to ¥617,319 million. This decrease was primarily the result of a ¥134,775 million decrease in investment securities associated with a decline in the share price of Yahoo! Inc. in the U.S.


(3) Current Liabilities

Current liabilities increased by ¥9,946 million from the end of the previous fiscal year, to ¥1,250,650 million. Although accounts payable-trade decreased by ¥58,963 million and accounts payable-other and accrued expenses decreased by ¥51,435 million, short-term borrowings increased by ¥109,117 million and lease obligations grew ¥13,411 million. Short-term borrowings, primarily by the Company under the credit line facility, increased by ¥85,499 million, and of the funds procured by SOFTBANK MOBILE via the securitization of installment sales receivables, the current portion increased by ¥20,127 million.


 (4) Long-term Liabilities

Long-term liabilities decreased by ¥261,146 million from the end of the previous fiscal year, to ¥2,208,325 million. This decrease consisted primarily of declines of ¥151,733 million in long-term debt and ¥50,556 million in corporate bonds.

At the Mobile Communications segment, the balance of long-term debt procured by SOFTBANK MOBILE through the whole business securitization financing scheme decreased by ¥68,777 million from the end of the previous fiscal year, to ¥1,207,711 million.


(5) Equity

Equity decreased by ¥5,027 million from the end of the previous fiscal year, to ¥843,697 million.  Retained earnings increased by ¥55,344 million, but the net unrealized gain on other securities and foreign currency translation adjustments decreased by ¥54,639 million and ¥33,221 million, respectively. The decline in foreign currency translation adjustments was the result of the yen's appreciation at the end of the period, which led to a decline in the value of equity at overseas subsidiaries.


  




2. Cash Flows 

During the nine-month period, net cash provided by operating activities was ¥270,768 million, net cash used in investing activities was ¥223,120 million, and net cash used in financing activities was ¥149,508 million. As a result, free cash flow (the combined net cash flows from operating activities and investing activities) for the nine-month period totaled ¥47,647 million. At the end of the period, cash and cash equivalents totaled ¥383,703 million, a decrease of ¥106,563 million from the end of the previous fiscal year.


<Trend of Cash Flows>

(Millions of yen)


Fiscal year ended March 31, 2008

Fiscal year ending March 31, 2009

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Cash flows from operating activities

(27,478)

27,922

56,812

101,001

52,899

124,307

93,561

-

Cash flows from investing activities

(111,519)

(115,766)

(46,349)

(48,826)

(90,769)

(74,334)

(58,016)

-

(Reference) free cash flow*

(138,997)

(87,843)

10,462

52,175

(37,869)

49,972

35,545

-

Cash flows from financing activities

218,480

85,045

(2,311)

(16,487)

(32,254)

(49,689)

(67,564)

-

Cash and cash equivalents, beginning of period

377,520

457,727

452,771

460,278

490,266

419,498

419,186

-

Cash and cash equivalents, end of period

457,727

452,771

460,278

490,266

419,498

419,186

383,703

-

* The combined net cash flows from operating activities and investing activities


(1) Cash Flows from Operating Activities: ¥270,768 million net inflow

Income before income taxes and minority interests for the period totaled ¥174,097 million, while non-cash items included depreciation and amortization of ¥174,736 million and amortization of goodwill of ¥45,992 million. Other adjustment items included interest expense of ¥85,220 million, which were added to income before income taxes and minority interests for the period. Receivables-trade turned to a decline, having an ¥8,528 million positive impact on operating cash flow, while a decline in payables-trade had a negative impact of ¥63,991 million. In addition, interest paid was ¥77,812 million, and income taxes paid by Yahoo Japan Corporation and other entities came to ¥60,576 million.


(2) Cash Flows from Investing Activities: ¥223,120 million net outflow

Capital expenditure in the form of purchases of property and equipment and intangibles, mainly at the telecommunications segments, totaled ¥196,347 million. Purchases of securities and investment securities totaled ¥29,305 million. In addition, SOFTBANK TELECOM's acquisition of additional shares of SOFTBANK TELECOM PARTNERS Corp., making it a consolidated subsidiary of SOFTBANK TELECOM etc., resulted in an outlay of ¥17,530 million for the acquisition of interests in subsidiaries newly consolidated.  

As a result, free cash flow for the period was positive at ¥47,647 million.


(3) Cash Flows from Financing Activities: ¥149,508 million net outflow

Proceeds from long-term debt totaled ¥153,276 million, and short-term borrowings increased ¥83,312 million. Proceeds of ¥67,225 million were recorded from the sale and lease back of equipment newly acquired, mainly at the Mobile Communications segment. In terms of outflows, the repayment of long-term debt and lease obligations totaled ¥268,347 million and ¥60,294 million, respectively. Bond redemptions came to ¥57,703 million, and there was a ¥53,579 million outlay for the purchase of treasury stock of consolidated subsidiaries, mainly at Yahoo Japan Corporation.


 



[Reference]

(1) Major Investing Activities

The major investing activities in the nine-month period were as follows:

Investee Company

Investor Company

Net Cash Outflow

Voting Rights

SOFTBANK TELECOM PARTNERS Corp.

SOFTBANK TELECOM Corp.

17,204 million(*)


100.0%

Oak Pacific Interactive

SOFTBANK CORP.

10,240 million


14.1%

* This is the amount after subtracting ¥8,325 million of cash and cash equivalents and others, which SOFTBANK TELECOM PARTNERS Corp. held at the acquisition, from acquisition cost of ¥25,530 million.


(2) Major Financing Activities

The major financing activities in the nine-month period were as follows: 

Item

Company Name

Details

Summary

Stock buyback by subsidiaries in consolidation

Yahoo Japan Corporation

Implementation of the stock buyback by Yahoo Japan Corporation

Buyback Period: 

June 2, 2008 to July 10, 2008

Total amount of buyback: ¥51,639 million

Securitization of receivables

SOFTBANK MOBILE Corp.

Procurement of funds totaling ¥45,343 million accompanying securitization of mobile phone installment sales receivables (recorded as borrowings)

Procurement date: June 27, 2008

Redemption method:

 monthly pass-through repayment

Use: capital investment and repayment of funds raised via the whole business securitization financing scheme

Procurement of funds totaling ¥57,278 million accompanying securitization of mobile phone installment sales receivables (recorded as borrowings)

Procurement date: September 29, 2008

Redemption method:

 monthly pass-through repayment

Use: capital investment and repayment of funds raised via the whole business securitization financing scheme



Procurement of funds totaling ¥45,655 million accompanying securitization of mobile phone installment sales receivables (recorded as borrowings)

Procurement date: December 29, 2008

Redemption method:

 monthly pass-through repayment

Use: capital investment and repayment of funds raised via the whole business securitization financing scheme

Increase or decrease in debt and others

SOFTBANK CORP.

Increase 70,499 million (net)


SOFTBANK MOBILE Corp.

Decrease 68,777 million

Repayment of funds raised via the whole business securitization financing scheme

SOFTBANK TELECOM Corp.

Decrease 11,382 million


Yahoo Japan Corporation

Decrease20,000 million


  




Item

Company Name

Details

Summary

Bond redemption


SOFTBANK CORP.


20th Unsecured Straight Bond

Date of redemption: June 9, 2008

Aggregate amount of redemption:

 12,500 million

21st Unsecured Straight Bond

Date of redemption: September 12, 2008

Aggregate amount of redemption:

 20,000 million



23rd Unsecured Straight Bond

Date of redemption: November 28, 2008

Aggregate amount of redemption:

 20,000 million

Implementation of capital investment through finance lease agreements

SOFTBANK MOBILE Corp. etc.

Implementation of capital expenditure mainly for mobile communications utilizing lease agreements

Funds procured during this period :

 67,225 million


  




3. Qualitative Information on Consolidated Earnings Forecasts

In the Consolidated Financial report for the interim period ended September 30, 2008 (six-month period from April 1 to September 30, 2008) released on October 29, 2008, the Group disclosed the business forecast of consolidated operating income, consolidated cash flows from operating activities, consolidated cash flows from investing activities and consolidated free cash flow. In view of the latest earnings trends, the consolidated cash flows from operating activities, the consolidated cash flows from investing activities and the consolidated free cash flow have been revised upwardly.  No changes have been made in the forecast of consolidated operating income. For more details, please refer to the related press release 'Announcement Regarding Revision of Earnings Forecasts' issued on February 5, 2009. 

The Group will continue to put efforts into cash flow focused operations in order to further enhance the free cash flow.


<Business Forecast>

(Billions of yen)


Actual of fiscal year ended March 31, 2008 (FY2007)

Forecast of fiscal year ending March 31, 2009 (FY2008)

Forecast of fiscal year ending March 31, 2010 (FY2009)

Consolidated operating income

324.2

340.0

420.0

Consolidated cash flows from operating activities

158.2

420.0 - 430.0

500.0

Consolidated cash flows from investing activities

(322.4)

(280.0) - (270.0)

(250.0)

Consolidated free cash flow*

(164.2)

150.0

250.0

    * The combined net consolidated cash flows from operating activities and investing activities


Consolidated net sales are greatly influenced by the sales method used for mobile handsets and this makes forecasting the business results difficult. The Company holds a variety of investment securities and invests in funds that are vulnerable to the market environment, and this makes equity in earnings under the equity-method and special income/loss difficult to estimate. Therefore business forecasts for consolidated ordinary income and consolidated net income are also difficult to disclose at this point.  

  




4. The SOFTBANK Group

As of December 31, 2008, the Group comprises of the Company (pure holding company) and the following nine business segments. The number of consolidated subsidiaries and equity-method companies in each business segment is as follows.


Business segments

Consolidated subsidiaries

Equity-method non-consolidated subsidiaries and affiliates

Main business of segment and name of business

Mobile Communications

6

2

Provision of mobile communication services and sale of mobile phones accompanying the services etc.

(Core company: SOFTBANK MOBILE Corp.)

Broadband Infrastructure

4

3

Provision of ADSL and fiber-optic high-speed Internet connection service, IP telephony service, and provision of content etc. (Core company: SOFTBANK BB Corp.(*1))

 

Fixed-line Telecommunications

4

-

Provision of fixed-line telecommunications and data center service etc.

(Core companies: SOFTBANK IDC Corp., SOFTBANK TELECOM Corp. (*1))

 

Internet Culture

15

19

Internet-based advertising operations, portal business and auction business etc. 

(Core company: Yahoo Japan Corporation (*1))

 

e-Commerce

7

4

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

(Core companies: SOFTBANK BB Corp. 

(*1) Vector Inc., Carview Corporation)

 

Others(*2)

69

50

Technology Services, Media & Marketing, Overseas Funds, and Other businesses

(Core companies: SOFTBANK TECHNOLOGY CORP., SOFTBANK Creative Corp., ITmedia Inc., Fukuoka Softbank Hawks Marketing Corp.)

Total

105

78



Notes

*1. SOFTBANK BB Corp., SOFTBANK TELECOM Corp. and Yahoo Japan Corporation are included in as consolidated subsidiaries in the Broadband Infrastructure, Fixed-line Telecommunications and Internet Culture segments, respectively, while SOFTBANK BB Corp., SOFTBANK TELECOM Corp. and Yahoo Japan Corporation operate multiple businesses and their operating results are allocated to multiple business segments.


*2. Broadmedia Corporation, which belonged to the Broadmedia segment that was previously included in Others above, changed from a consolidated subsidiary to an equity-method affiliate as the result of a capital increase via third-party allotment of shares implemented on May 16, 2008. The Broadmedia segment was therefore disbanded in the first quarter.


Listed Companies

The following 5 SOFTBANK subsidiaries are listed on domestic stock exchanges as of December 31, 2008: 

Company Name

Listed Exchange

Yahoo Japan Corporation

Tokyo Stock Exchange 1st section

Jasdaq Securities Exchange

SOFTBANK TECHNOLOGY CORP.

Tokyo Stock Exchange 1st section

Vector Inc.

Osaka Securities Exchange Hercules

ITmedia Inc.

Tokyo Stock Exchange Mothers 

Carview Corporation

Tokyo Stock Exchange Mothers



 




5. Others


                 (1) Significant Changes in Scope of Consolidation (Changes in Scope of Consolidation of Specified Subsidiaries)

                There are no significant changes in scope of consolidation as of December 31, 2008.


(2) Application of simple accounting methods or special accounting methods for preparation for the consolidated financial statements

  There are no applicable items.


(3) Changes in accounting principles, procedures, disclosure methods, etc., used in the presentation of the consolidated financial statements 


[1] Application of accounting standard for quarterly financial reporting and its implementation guidance

'Accounting Standard for Quarterly Financial Reporting and its Implementation Guidance' (ASBJ Statement No.12 issued on March 14, 2007) and 'Guidance on Accounting Standard for Quarterly Financial Reporting' (ASBJ Guidance No.14 issued on March14, 2007) were applied for the period ended December 31, 2008. The consolidated financial statements for the period ended December 31, 2008 were prepared by following 'Regulations for Quarterly Consolidated Financial Statements'.


                   [2] Application of accounting standard for measurement of inventories

  Prior to April 1, 2008, inventories held for sale in the ordinary course of business were measured by primarily cost determined by the moving-average method. 'Accounting Standard for Measurement of Inventories'(ASBJ Statement No.9 issued on July 5, 2006), which is effective for fiscal years beginning on or after April 1, 2008, was adopted for the period ended December 31, 2008. Due to the application of the accounting standard, inventories are measured by primarily net selling value determined by the moving-average method. The effect of this change is not material.


[3] Application of practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements

  'Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements' (ASBJ PITE No.18 issued on May 17, 2006) was applied for the period ended December 31, 2008 and the necessary adjustments are reflected in the consolidated financial statements. The effect of this change is not material. 


[4]Application of accounting standard for lease transactions

  Prior to April 1, 2008, finance lease in which the ownership of leased assets was not transferred to lessees was permitted to be accounted for as operating lease transactions. 'Accounting Standard for Lease Transactions'(ASBJ Statement No.13 issued on June 17, 1993 and revised on March 30, 2007) and 'the Guidance on Accounting Standard for Lease Transactions (ASBJ Guidance No.16 issued on January 18, 1994 and revised on March 30, 2007) were early adopted from the fiscal year beginning on April 1 , 2008. They were applied for all lease transactions contracted after April 1, 2008, and the finance lease transactions are capitalized recognizing lease assets and lease obligations in the balance sheet. The effect of this change is not material. 

Finance lease transactions in which the ownership of leased assets was not transferred to lessees and contracted before April 1, 2008 are permitted to be accounted for as operating lease transactions if certain 'as if capitalized' information is disclosed in the notes to the lessee's financial statements. 


 




6. Consolidated Financial Statements

(1) Consolidated Balance Sheets

                                                                                                                                                                                                  (Millions of yen)


As of 

December 31, 2008

As of 

March 31, 2008


Amount

Amount

ASSETS



Current assets:



Cash and deposits

¥383,346

¥491,161

Notes and accounts receivable - trade

883,263

887,723

Marketable securities

3,960

4,928

Merchandise

48,025

58,118

Deferred tax assets

82,897

105,850

Other current assets

129,410

103,351

Less:

Allowance for doubtful accounts

(95,421)

(68,388)

Total current assets

1,435,483

1,582,744




Fixed assets:



Property and equipment, net:



Buildings and structures

73,797

75,781

Telecommunications equipment

741,680

744,037

Telecommunications service lines

81,170

86,062

Land

22,559

23,442

Construction in progress

38,231

45,576

Other

53,154

54,364

Total property and equipment

1,010,595

1,029,265




Intangible assets, net:



Goodwill

974,321

974,435

Software

224,930

224,180

Other intangibles

38,356

39,693

Total intangible assets

1,237,608

1,238,309




Investments and other assets:



Investment securities and 

investments in unconsolidated subsidiaries 

and affiliated companies

330,222

464,997

Deferred tax assets

124,547

126,887

Other assets

167,461

118,491

Less:

Allowance for doubtful accounts

(4,911)

(4,613)

Total investments and other assets

617,319

705,763

  Total fixed assets

2,865,523

2,973,337

Deferred charges

1,666

2,818

Total assets

¥4,302,673

¥4,558,901

  


Consolidated Balance Sheets

(Millions of yen)


As of 

December 31, 2008

As of 

March 31, 2008


 Amount

 Amount

LIABILITIES AND EQUITY



Current liabilities:



Accounts payable - trade

¥128,315

¥187,279

Short-term borrowings

557,689

448,571

Current portion of corporate bonds

45,000

52,540

Accounts payable - other and accrued expenses

313,015

364,450

Income taxes payable

34,656

35,079

Current portion of lease obligations

83,181

69,770

Other current liabilities

88,791

83,012

Total current liabilities

1,250,650

1,240,704

Long-term liabilities:



Corporate bonds

394,655

445,211

Long-term debt

1,434,912

1,586,645

Deferred tax liabilities

32,463

41,977

Liability for retirement benefits

15,583

16,158

Allowance for point mileage

40,272

43,809

Lease obligations

236,038

241,496

Other liabilities

54,400

94,172

Total long-term liabilities

2,208,325

2,469,472

Total liabilities

3,458,976

3,710,176

Equity:



Common stock

187,670

187,422

Additional paid-in capital

211,988

211,740

Accumulated deficit

(36,400)

(91,744)

Less: Treasury stock

(212)

(206)

Total shareholders' equity

363,046

307,213

Unrealized gain on available-for-sale securities

26,274

80,914

Deferred gain (loss) on derivatives under hedge accounting

24,655

(11,823)

Foreign currency translation adjustments

(25,783)

7,437

Total valuation and translation adjustments

25,146

76,529

Stock acquisition rights

245

120

Minority interests

455,259

464,862

Total equity

843,697

848,725

Total liabilities and equity

¥4,302,673

¥4,558,901

  

(2) Consolidated Statements of Income

For the nine-month period ended December 31, 2008

(Millions of yen)


Nine-month period ended 

December 31, 2008


April 1, 2008 to

December 31, 2008


Amount

Net sales

¥1,982,262

Cost of sales

1,019,719

Gross Profit

962,543

Selling, general and administrative expenses

687,852

Operating income

274,690

Interest income

1,092

Foreign exchange gain, net

1,309

Other non-operating income

5,325

Non-operating income

7,727

Interest expense

85,220

Equity in loss of affiliated companies

8,471

Other non-operating expenses

14,231

Non-operating expenses

107,923

Ordinary income

174,494

Gain on sale of investment securities

2,980

Dilution gain from changes in equity interest

2,407

Gain on liquidation of a subsidiary

2,972

Other special income

1,380

Special income

9,740

Valuation loss on investment securities

3,907

Unrealized loss on valuation of investments and gain on sale of investments

at subsidiaries in the U.S., net

3,673

Other special losses

2,556

Special loss

10,137

Income before income taxes and minority interests

174,097

Income taxes:


Current

53,247

Deferred

29,361

Total income taxes

82,609

Minority interests in net income

33,306

Net income 

¥58,182




  


For the three-month period ended December 31, 2008

(Millions of yen)


Three-month period ended 

December 31, 2008


October 1, 2008 to

December 31, 2008


Amount

Net sales

653,264

Cost of sales

329,582

Gross Profit

323,682

Selling, general and administrative expenses

228,992

Operating income

94,690

Interest income

226

Foreign exchange gain, net

691

Other non-operating income

2,142

Non-operating income

3,059

Interest expense

28,159

Equity in loss of affiliated companies

6,050

Other non-operating expenses

6,360

Non-operating expenses

40,570

Ordinary income

57,178

Gain on liquidation of a subsidiary

2,972

Other special income

553

Special income

3,525

Valuation loss on investment securities

784

Unrealized loss on valuation of investments and gain on sale of investments

at subsidiaries in the U.S., net

497

Other special losses

541

Special loss

1,822

Income before income taxes and minority interests

58,881

Income taxes:


Current

18,814

Deferred

11,959

Total income taxes

30,774

Minority interests in net income

11,040

Net income 

¥17,066















(3) Consolidated Statements of Cash Flows

(Millions of yen)


Nine-month period ended 

December 31, 2008


April 1, 2008 to

December 31, 2008



Cash flows from operating activities:


Income before income taxes and minority interests

¥174,097

Adjustments for:


Depreciation and amortization

174,736

Amortization of goodwill

45,992

Equity in loss of affiliated companies

8,471

Dilution gain from changes in equity interest, net

(2,333)

Valuation loss on investment securities

3,907

Unrealized loss on valuation of investments and gain on sale of investments 

at subsidiaries in the U.S., net

3,673

Gain on sales of marketable and investment securities, net

(2,917)

Foreign exchange gain, net

(714)

Interest and dividend income

(1,875)

Interest expense

85,220

Changes in operating assets, and liabilities


Decrease in receivables - trade

8,528

Decrease in payables - trade

(63,991)

Other, net

(25,567)

Sub-total

407,226



Interest and dividends received

1,930

Interest paid

(77,812)

Income taxes paid

(60,576)

  Net cash provided by operating activities

270,768


- Continued -

  


Consolidated Statements of Cash Flows (Continued)

                                                     (Millions of yen)


Nine-month period ended 

December 31, 2008


April 1, 2008 to

December 31, 2008



Cash flows from investing activities:


Purchase of property and equipment, and intangibles

(196,347)

Purchase of marketable and investment securities

(29,305)

Proceeds from sale of marketable and investment securities

14,625

Acquisition of interests in subsidiaries newly consolidated, net of cash acquired

(17,530)

Other, net

5,437

  Net cash used in investing activities

(223,120)



Cash flows from financing activities:


Increase in short-term borrowings, net

83,312

Proceeds from long-term debt

153,276

Repayment of long-term debt

(268,347)

Redemption of bonds

(57,703)

Exercise of warrants

495

Proceeds from issuance of shares to minority shareholders

952

Cash dividends paid

(2,674)

Cash dividends paid to minority shareholders

(4,121)

Purchase of treasury stock of subsidiaries in consolidation

(53,579)

Proceeds from sale and lease back of equipment newly acquired

67,225

Repayment of lease obligations

(60,294)

Other, net

(8,048)

  Net cash used in financing activities

(149,508)



Effect of exchange rate changes 

on cash and cash equivalents

(3,062)

Net decrease in cash and cash equivalents

(104,922)

Increase in cash and cash equivalents due to inclusion of newly consolidated subsidiaries

169

Decrease in cash and cash equivalents due to exclusion of previously consolidated subsidiaries

(1,810)

Cash and cash equivalents, beginning of the period

490,266

Cash and cash equivalents, end of the period

383,703



 



'Accounting Standard for Quarterly Financial Reporting and its Implementation Guidance' (ASBJ Statement No.12 issued on March 14, 2007) and 'Guidance on Accounting Standard for Quarterly Financial Reporting' (ASBJ Guidance No.14 issued on March14, 2007) were applied for the period ended December 31, 2008. The consolidated financial statements for the period ended December 31, 2008 were prepared by following 'Regulations for Quarterly Consolidated Financial Statements'.


(4) Notes to Assumption of a Going Concern

There are no applicable items.


(5) Basis of Presentation of Quarterly Consolidated Financial Statements

  (Items descried 'Qualitative Information/Financial Statements 5. Others' on page 21 are excluded.)

 

 

1.   Changes in scope of consolidation

 

 (1) Changes in scope of consolidation are as follows:

<Increase>

7 companies

Significant changes: 

SOFTBANK TELECOM PARTNERS Corp.  



Additionally acquired

<Decrease>

11 companies

 Significant changes:

  Broadmedia Corporation



Decreased in interest due to allocation of new stock to a third party

   

(2) The number of consolidated subsidiaries after the changes:

  105 companies 

 

 

2.   Changes in scope of equity method

 

(1) Changes in scope of equity method are as follows:

<Increase>

15 companies    

Significant changes:

  Broadmedia Corporation



Changed from a consolidated subsidiary

<Decrease>

4 companies


   

(2) The number of non-consolidated subsidiaries and affiliated companies under the equity method after the changes:

  Non-consolidated subsidiaries under the equity method: 4 companies

  Affiliated companies under the equity method: 74 companies 

 

 

3.    Application of consolidated taxation system

BB Mobile Corp., SOFTBANK MOBILE Corp., and its 4 subsidiaries, all of which are subsidiaries of the Company, adopted the consolidated taxation system.


 



(6) Notes


(Consolidated Balance Sheets)


  • Accumulated depreciation of property and equipment

    As of December 31, 2008

    As of March 31, 2008

    940,230

    million yen

    837,286

    million yen

 

2.  Contingent liability

SOFTBANK MOBILE Corp. (SOFTBANK MOBILE) has entrusted cash for the repayment of the straight bonds listed in the following table, based on debt assumption agreements with a financial institution. The bonds are derecognized in the Company's consolidated balance sheets.

The trust has collateralized debt obligations (CDO) issued by a Cayman Islands based Special-Purpose Company (SPC). The SPC has contracted a credit default swap agreement secured by debt securities (corporate bond), which refers to a certain portion of the portfolio consisting of 160 referenced entities.  

In case that defaults (credit events under the agreement) occur in excess of certain numbers of the referenced entities, the amount of redemption of the CDO will be reduced. In case of 7 defaults and in case of 8 or more defaults, the amount of redemption will be reduced by ¥45,696 million and 75,000 million, respectively. Since SOFTBANK MOBILE continues to be legally responsible for repayments of the bonds, losses equal to the reduced amount, which effects income before income taxes and minority interests, will be recorded in the consolidated statements of income of the Company.  

Mizuho Corporate Bank, Ltd and the Company set up a credit line facility contract in order to support the repayments of the bonds issued by SOFTBANK MOBILE.

SOFTBANK MOBILE received notices of the default of 6 referenced entities as of December 31, 2008 from Goldman Sachs International, the arranger of the CDO.




As of December 31, 2008

Subject Bonds


Issue date


Maturity date


Amount of transferred bond

Third Series Unsecured Bond


August 19, 1998


August 19, 2010


25,000 

Fifth Series Unsecured Bond


August 25, 2000


August 25, 2010


25,000 

Seventh Series Unsecured Bond


September 22, 2000


September 22, 2010


25,000 

Total






75,000 million yen









3.  Assets pledged as collateral

 

(1)  For future lease liabilities


As of December 31, 2008

As of March 31, 2008

Assets pledged as collateral:





Notes and accounts receivable - trade

9,595

million yen

10,181

million yen


In addition to above, amounts eliminated in the consolidated balance sheets as an intercompany balance:

Notes and accounts receivable - trade

13,413

million yen

13,787

million yen

Note: The collateral for the future lease liabilities (finance lease accounted for as operating lease transactions) was provided by mortgaging against the aggregate of the current and future receivables due from customers of certain consolidated subsidiaries. The future lease liabilities at the end of each period are as follows:



As of December 31, 2008

As of March 31, 2008

Future lease liabilities

(finance lease accounted for as operating lease transactions)

5,321

million yen

8,121

million yen

 

(2)  For short-term borrowings and long-term debt

 

Assets pledged as collateral and secured liabilities by consolidated subsidiaries are as follows: 



As of December 31, 2008


As of March 31, 2008

Assets pledged as collateral:







Cash and deposits


158,243



220,801


Notes and accounts receivable - trade


359,837



330,157


Other current assets


-



10


Buildings and structures


13,411



13,872


Telecommunications equipment


249,181



268,494


Telecommunications service lines


191



170


Land


15,611



15,576


Investment securities and investments in unconsolidated  subsidiaries and affiliated companies


59,023



152,638


Investments and other assets - other assets


-



240


 Total


855,500

million yen


1,001,961

million yen






As of December 31, 2008


As of March 31, 2008

Secured liabilities:







Accounts payable - trade


1,204



1,447


Short-term borrowings


3,818



4,724


Long - term debt


1,302,484



1,378,900


  Total


1,307,508

million yen


1,385,072

million yen















SOFTBANK MOBILE shares owned by BB Mobile Corp. and BB Mobile Corp. shares owned by Mobiletech Corporation are pledged as collateral for long-term debt (totaled to ¥1,207,711 million) resulting from the acquisition of SOFTBANK MOBILE, in addition to the assets pledged as collateral above.


The funds procured through the securitization of installment sales receivables of SOFTBANK Mobile, in the amount of ¥185,999 million and ¥32,830 million, are recorded as 'Short-term borrowings' and 'Long-term debt,' respectively, as of December 31, 2008. The installment sales receivables, equivalent to ¥218,829 million which is the amount of senior trust certificate of the securitized installment sales receivables for this procurement, is included in 'Notes and account receivable-trade,' along with the amount of trust beneficial certificate held by the SOFTBANK MOBILE. Trustee procured the funds through asset backed loans, which are backed by these installment sales receivables.




(Consolidated Statements of Income)


For the nine-month period ended December 31, 2008

1. Selling, general and administrative expenses



Nine-month period ended

December 31, 2008

Sales commission and sales promotion expense

292,357

million yen

Provision for allowance for doubtful accounts

30,181


 

2.  Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the United States of America, net

Certain subsidiaries of the Company in the United States of America qualify as investment companies under the provisions of 

'American Institute of Certified Public Accountants Audit and Accounting Guide' investment companies (the AICPA Guide) 

and account for the investment securities in accordance with the AICPA Guide. 


The net changes in the fair value of the investments are recorded as 'Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S., net' and gain or loss on sale of investments, computed based on the acquisition cost, is also included in this account. The unrealized gain or loss on valuation of investments and gain or loss on sale of investments included in 'Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S., net' are as follows:




Nine-month period ended

December 31, 2008

Unrealized loss on valuation of investment

at subsidiaries in the U.S.,net


(3,725)


Gain on sale of investments

at subsidiaries in the U.S.,net


52


Total


(3,673)

million yen


 




For the three-month period ended December 31, 2008

1. Selling, general and administrative expenses



Three-month period ended

December 31, 2008

Sales commission and sales promotion expense

97,778

million yen

Provision for allowance for doubtful accounts

7,433


 

2.  Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the United States of America, net

Certain subsidiaries of the Company in the United States of America qualify as investment companies under the provisions of 

'American Institute of Certified Public Accountants Audit and Accounting Guide' investment companies (the AICPA Guide) 

and account for the investment securities in accordance with the AICPA Guide. 


The net changes in the fair value of the investments are recorded as 'Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S., net' and gain or loss on sale of investments, computed based on the acquisition cost, is also included in this account. The unrealized gain or loss on valuation of investments and gain or loss on sale of investments included in 'Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S., net' are as follows:




Three-month period ended

December 31, 2008

Unrealized loss on valuation of investment

at subsidiaries in the U.S.,net


(558)


Gain on sale of investments

at subsidiaries in the U.S.,net


61


Total


(497)

million yen



(Consolidated Statements of Cash Flows)


For the nine-month period ended December 31, 2008

 

1.  Reconciliation of cash and cash equivalents to the amounts presented in the accompanying consolidated balance sheets




As of December 31, 2008

Cash and deposits


383,346


Marketable securities


3,960


Time deposits with original maturity over three months 


(460)


Stocks and bonds with original maturity over three months 


(3,143)


Cash and cash equivalents


383,703

million yen

 

2.  Scope of Purchase of property and equipment, and intangibles in the consolidated statements of cash flows


'Purchase of property and equipment, and intangibles' are comprised of cash outflows from purchasing property and equipment, and intangible assets (excluding goodwill) and long-term prepaid expenses.

 

3.  Proceeds from sale and lease back of equipment newly acquired


Once SOFTBANK MOBILE purchases telecommunications equipment for the purpose of assembly, installation and inspection, SOFTBANK MOBILE sells the equipment to lease companies for sale and lease back purpose. The leased asset and lease obligation are recorded in the consolidated balance sheets.

The cash outflows from the purchase of the equipment from vendors are included in 'Purchase of property and equipment, and intangibles' and the cash inflows from the sale of the equipment to lease companies are included in 'Proceeds from sale and lease back of equipment newly acquired.'





(Leases)


Finance lease transactions

'Accounting Standard for Lease Transactions'(ASBJ Statement No.13) and 'the Guidance on Accounting Standard for Lease Transactions (ASBJ Guidance No.16 ) were early adopted from the fiscal year beginning on April 1 , 2008.


(As a lessee)

(1) Finance leases in which the ownership of leased assets is transferred to lessees at the end of lease periods

[1] Details of lease assets are as follows:

Tangible assets, mainly telecommunications equipment in the Mobile Communications segment.

[2] Depreciation method for lease assets

   The depreciation method is the same as the method used for fixed assets possessed by each subsidiary.

(2) Finance leases in which the ownership of leased assets is not transferred to lessees at the end of lease periods

[1] Details of lease assets are as follows:

Tangible assets, mainly telecommunications equipment in the Fixed-line Telecommunications segment.

[2] Depreciation method for lease assets

The straight-line method is adopted over the period of the finance leases, assuming no residual value.


Lease transactions contracted before April 1, 2008 are continuously permitted to be accounted for as operating lease transactions, and the note of as if capitalized information is as follows:

[1] Amounts equivalent to acquisition costs, accumulated depreciation, and accumulated impairment loss of leased property for each period:



As of December 31, 2008


As of March 31, 2008


Telecommunications equipment and 

telecommunications service lines









Acquisition cost


172,415



179,479




Accumulated depreciation


(74,022)



(66,202)




Accumulated impairment loss


(30,521)



(30,521)




Net leased property


67,871

million yen


82,755

million yen


Buildings and structures









Acquisition cost


47,004



47,005




Accumulated depreciation


(9,212)



(7,429)

 



Accumulated impairment loss


-



-




Net leased property


37,792

million yen


39,575

million yen


Property and equipment - others









Acquisition cost


16,701



17,979




Accumulated depreciation


(7,503)



(6,302)

 



Accumulated impairment loss


(1,077)



(1,253)




Net leased property


8,120

million yen


10,423

million yen


Intangible assets









Acquisition cost


9,856



9,373




Accumulated depreciation


(4,835)

 


(3,353)

 



Accumulated impairment loss


(171)



(169)




Net leased property


4,849

million yen


5,851

million yen


Total









Acquisition cost


245,978



253,838




Accumulated depreciation


(95,573)



(83,288)




Accumulated impairment loss


(31,770)



(31,943)




Net leased property


118,633

million yen


138,606

million yen






Long-term prepaid expenses relating to a lease contract, in which the contract term and payment term are different, for the period ended December 31, 2008 and March 31, 2008 are 20,924 million and 15,053 million, respectively and are included in 'Other assets' of investments and other assets in the consolidated balance sheets.



[2]Obligations under finance lease at the end of each period:

    


As of December 31, 2008


As of March 31, 2008










Due within one year 


31,717



32,482



Due after one year


117,789



141,179



Total


149,506

million yen


173,662

million yen










Balance of allowance for impairment loss on leased property


16,499

million yen


21,601

million yen



[3]Lease payments, reversal of allowance for impairment loss on leased property, amounts equivalent to depreciation, interest expense and impairment loss for each period:

    


Nine-month period ended 

December 31, 2008


Fiscal year ended 

March 31, 2008


Lease payments


31,357

million yen


44,329

million yen


Reversal of allowance for impairment loss on leased property


5,036



5,387



Depreciation expense


20,310



30,917



Interest expense


8,241



12,788



Impairment loss


-



8,818




[4] Calculation method used to determine the amount equivalent to depreciation and interest expense:

The amount equivalent to depreciation is computed using the straight-line method over the period of the finance leases, assuming no residual value.

        

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
















(Investment in Debt and Equity Securities)

 

1.  Marketable and investment securities at fair value   

 (Millions of yen)


As of December 31, 2008

As of March 31, 2008

Investment Cost

Carrying Amount

Differences

Investment Cost

Carrying Amount

Differences

(1)

Equity securities

27,447

73,519

46,071

29,219

171,676

142,456

(2)

Debt securities

 Corporate bonds


142


142


-


-


-


-

(3)

Others

2,861

2,845

(16)

1,320

1,318

(2)

Total

30,452

76,507

46,054

30,540

172,994

142,454


2. Carrying amounts of the unlisted investment securities

 (Millions of yen)

 

 

 

 

 

As of December 31, 2008

As of March 31, 2008





Carrying Amounts

Carrying Amounts

 (1)Held-to-maturity debt securities






  Foreign debt securities


700


¥700


Debt securities


398


368


 (2)Available-for-sale and other securities

 


 


 

 


Equity securities

 

78,582

 

91,446

 



Investments in limited partnerships


6,748


6,725




Money Management Fund


-


2,519


 


Foreign debt securities

 

-

 

958

 

 


Others

 

722

 

1,058

 

 

 

Total

 

87,152

 

103,777

 


3.  Investment securities evaluated at fair value under the provisions of 'American Institute of Certified Public Accountants Audit and Accounting Guide' Investment Companies


Certain subsidiaries of the Company in the United States of America qualify as investment companies under the provisions of 'American Institute of Certified Public Accountants Audit and Accounting Guide' investment companies (the AICPA Guide) and account for the investment securities in accordance with the AICPA Guide. 

The carrying amounts of the investment securities at fair value recorded in the consolidated balance sheets at December 31, 2008 and March 31, 2008 are as follows: 


As of December 31, 2008

  Carrying amounts of investment securities at fair value recorded in consolidated balance sheets: 18,392 million yen


As of March 31, 2008

Carrying amounts of investment securities at fair value recorded in consolidated balance sheets: 26,042 million yen







(Per Share Data)

 

1.  Shareholders' equity per share



As of 

December 31, 2008


As of

March 31, 2008

Shareholders' equity per share (yen)


¥359.16 


355.15


2.  Net income per share and basic data for computation of the per share data


For the nine-month period ended December 31, 2008



April 1, 2008 to

December 31, 2008


Net income per share - primary (yen)


53.84


Net income per share - diluted (yen)


51.29




Basic data for computation of the per share data

April 1, 2008 to

December 31, 2008

1. Net income (in millions of yen)


58,182

 2. Amounts not allocated to shareholders 
  (in millions of yen) 


- 

3. Net income allocated to common stock outstanding
(in millions of yen)


58,182

4. Weighted average number of common stock outstanding 
during period (unit: thousand of shares)


1,080,653

5. Adjustment for net income used to calculate diluted net income per share 

(in millions of yen) 



- Adjustments for net income used to calculate diluted net income 

per share in consolidated subsidiaries and affiliated companies


(27)

- Interest expense (net of tax)


1,167

- Total


1,140

6. Increase of common stock used to calculate diluted net income per share

(unit: thousand of shares) 


75,975

7. Residual securities which do not dilute net income per share and

have significant changes from the end of previous fiscal year


-





 



For the three-month period ended December 31, 2008



October 1, 2008 to

December 31, 2008


Net income per share - primary (yen)


¥15.79


Net income per share - diluted (yen)


15.09




Basic data for computation of the per share data

October 1, 2008 to

December 31, 2008

1. Net income (in millions of yen)


17,066

 2. Amounts not allocated to shareholders 
  (in millions of yen) 


- 

3. Net income allocated to common stock outstanding
(in millions of yen)


17,066

4. Weighted average number of common stock outstanding 
during period (unit: thousand of shares)


1,080,783

5. Adjustment for net income used to calculate diluted net income per share 

(in millions of yen) 



- Adjustments for net income used to calculate diluted net income 

per share in consolidated subsidiaries and affiliated companies


(7)

- Interest expense (net of tax)


389

- Total


381

6. Increase of common stock used to calculate diluted net income per share

(unit: thousand of shares) 


75,648 

7. Residual securities which do not dilute net income per share and

have significant changes from the end of previous fiscal year


-



 



(7) Segment Information


1. Business segment information


For the nine-month period ended December 31, 2008 (From April 1, 2008 to December 31, 2008)

(Millions of yen)


Mobile Communications

Broadband Infrastructure

Fixed-line

Telecommunications

Internet Culture

e-Commerce

Others

Total

Elimination 

or Corporate

Consolidated

Net sales

 

 

 

 

 

 

 

 

 

(1) Customers

1,144,846

173,958

235,976

187,278

184,460

55,742

1,982,262

 -

1,982,262

(2) Inter-segment

5,975

4,456

32,678

2,555

8,227

10,822

64,715

(64,715)

-

Total

1,150,822

178,415

268,655

189,833

192,687

66,564

2,046,978

(64,715)

1,982,262

Operating income (loss)

134,911

36,606

11,335

92,060

3,802

(230)

278,485

(3,795)

274,690


For the three-month period ended December 31, 2008 (From October 1, 2008 to December 31, 2008)

(Millions of yen)


Mobile Communications

Broadband Infrastructure

Fixed-line

Telecommunications

Internet Culture

e-Commerce

Others

Total

Elimination 

or Corporate

Consolidated

Net sales

 

 

 

 

 

 

 

 

 

(1) Customers

374,679

56,988

79,347

63,136

62,168

16,944

653,264

-

653,264

(2) Inter-segment

2,181

1,388

10,849

1,111

2,537

3,611

21,680

(21,680)

-

Total

376,861

58,376

90,196

64,247

64,706

20,556

674,945

(21,680)

653,264

Operating income (loss)

46,747

14,341

5,777

30,872

1,055

(2,855)

95,938

(1,248)

94,690

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. Regarding the main business segments, please see 'Qualitative Information / Financial Statements 4. The SOFTBANK Group' in details on page 20.



 





2. Geographic segment information


For the nine-month period ended December 31, 2008 (From April 1, 2008 to December 31, 2008)

            (Millions of yen)


Japan

North 
America

Others

Total

Elimination
or corporate

Consolidated

Net sales

 

 

 

 

 

 


(1)Customers

1,971,335 

811 

10,115 

1,982,262 

- 

1,982,262 


(2)Inter-segment

308

-

-

308

(308)

-

 

Total

1,971,644

811

10,115

1,982,571

(308)

1,982,262

Operating income (loss)

277,254 

2,459 

(390) 

279,322 

(4,632) 

274,690 



For the three-month period ended December 31, 2008 (From October 1, 2008 to December 31, 2008)

              (Millions of yen)


Japan

North 
America

Others

Total

Elimination
or corporate

Consolidated

Net sales

 

 

 

 

 

 


(1)Customers

¥649,496 

¥242 

¥3,525 

¥653,264 

¥ - 

¥653,264 


(2)Inter-segment

88

-

-

88

(88)

-

 

Total

649,585

242

3,525

653,353

(88)

653,264

Operating income (loss)

96,565 

(451) 

(151) 

95,961 

(1,271) 

94,960 

Notes: 

1. Net sales by geographic region are recognized based on geographic location of the operation. 


2. Significant countries in each region are as follows:

North America : United States of America and Canada

Others   : Europe, Korea, China, Singapore, and others


3. In the North America segment, Softbank Holdings Inc., a consolidated subsidiary of the company in the United States of Americareversed a tax reserve for net worth taxes of 3,502 million and credited it to operating expenses.


3.  Overseas sales

 Disclosure of overseas sales for the nine-month and the three-month period ended December 31, 2008 is omitted because the total overseas sales are less than 10% of total consolidated sales.


(8) Notes to Significant Changes in Shareholder's Equity

There are no applicable items.






[For Reference]

Consolidated Financial Statements for the nine-month and three-month period ended December 31, 2007


(1) Summary of Consolidated Statements of Income

(Millions of yen)


Nine-month period ended 

December 31, 2007


April 1, 2007 to

December 31, 2007


 Amount

Net sales

2,058,765

Cost of sales

1,086,108

Gross Profit

972,656

Selling, general and administrative expenses

712,467

Operating income

260,188

Interest income

2,201

Foreign exchange gain, net

3,750

Equity in earnings of affiliated companies

61,570

Other non-operating income

3,894

Non-operating income

71,417

Interest expense

83,573

Other non-operating expenses

16,034

Non-operating expenses

99,607

Ordinary income

231,998

Gain on sale of investment securities

5,925

Dilution gain from changes in equity interest

3,123

Unrealized appreciation on investments and gain on sale of investments 

at subsidiaries in the U.S., net

17,341

Other special income

5,479

Special income

31,870

Valuation loss on investment securities

11,760

Loss on disposal of fixed assets

9,493

Impairment loss

8,818

Loss on unused telecommunications supplies

12,006

Other special losses

4,525

Special loss

46,603

Income before income taxes and minority interests

217,265

Income taxes:


Current

30,266

Deferred

63,875

Total income taxes

94,142

Minority interests in net income

29,925

Net income 

¥93,196



 



(Millions of yen)


Three-month period ended

 December 31, 2007


October 1, 2007 to

December 31, 2007


 Amount

Net sales

¥694,020

Cost of sales

367,244

Gross Profit

326,775

Selling, general and administrative expenses

234,333

Operating income

92,441

Interest income

663

Foreign exchange gain, net

1,144

Equity in earnings of affiliated companies

58,433

Other non-operating income

989

Non-operating income

61,231

Interest expense

28,198

Other non-operating expenses

4,642

Non-operating expenses

32,840

Ordinary income

120,833

Gain on sale of fixed assets

2,731

Gain on sale of investment securities

1,218

Other special income

575

Special income

4,525

Valuation loss on investment securities

1,594

Unrealized loss on investments and gain on sale of investments 

at subsidiaries in the U.S., net

1,483

Loss on disposal of fixed assets

5,500

Impairment loss

8,818

Loss on unused telecommunications supplies

12,006

Other special losses

1,621

Special loss

31,024

Income before income taxes and minority interests

94,334

Income taxes:


Current

13,458

Deferred

24,800

Total income taxes

38,258

Minority interests in net income

9,341

Net income 

¥46,734












(2) Summary of Consolidated Statements of Cash Flows

(Millions of yen)


Nine-month period ended 

December 31, 2007 


April 1,2007 to

December 31, 2007



Cash flows from operating activities:


Income before income taxes and minority interests

217,265

Adjustments for:


Depreciation and amortization

163,277

Amortization of goodwill

44,261

Equity in earnings of affiliated companies

(61,570)

Dilution gain from changes in equity interest, net

(848)

Impairment loss

8,818

Valuation loss on investment securities

11,760

Unrealized appreciation on investments and gain on sale of investments 

at subsidiaries in the U.S., net

(17,341)

Gain on sale of marketable and investment securities, net

(6,190)

Foreign exchange gain, net

(3,572)

Interest and dividend income

(2,577)

Interest expense

83,573

Changes in operating assets, and liabilities


Increase in receivables-trade

(221,519)

Decrease in payables-trade

(41,614)

Other, net

10,674

Sub-total

184,392



Interest and dividends received

2,349

Interest paid

(76,925)

Income taxes paid

(52,560)

  Net cash provided by operating activities

57,256



- Continued -

  



Summary of Consolidated Statements of Cash Flows (Continued)

(Millions of yen)


Nine-month period ended 

December 31, 2007 


April 1,2007 to

December 31, 2007



Cash flows from investing activities:


Purchase of property and equipmentand intangibles

(283,706)

Purchase of marketable and investment securities

(36,087)

Proceeds from sale of marketable and investment securities

31,526

Acquisition of interests in subsidiaries newly consolidated, net of cash acquired

2,674

Sale of interests in subsidiaries previously consolidated, net

(134)

Proceeds from sale of interests in consolidated subsidiaries

1,012

Other, net

11,080

  Net cash used in investing activities

(273,635)



Cash flows from financing activities:


Decrease in short-term borrowings, net

(78,309)

Decrease in commercial paper, net

(5,000)

Proceeds from long-term debt

224,542

Repayment of long-term debt

(174,891)

Proceeds from issuance of bonds

89,463

Redemption of bonds

(23,932)

Exercise of warrants

44,768

Proceeds from issuance of shares to minority shareholders

6,865

Cash dividends paid

(2,635)

Cash dividends paid to minority shareholders

(3,547)

Purchase of treasury stock of subsidiaries in consolidation

(316)

Proceeds from sale and lease back of equipment newly acquired

282,726

Decrease in cash receipts as collateral, net

(20,000)

Repayment of lease obligations

(33,412)

Other, net

(5,105)

  Net cash provided by financing activities

301,215



Effect of exchange rate changes 

on cash and cash equivalents

(1,307)

Net increase in cash and cash equivalents

83,529

Decrease in cash and cash equivalents due to exclusion of previously consolidated subsidiaries

(771)

Cash and cash equivalents, beginning of the period

377,520

Cash and cash equivalents, end of the period

¥460,278




  





(3) Summary of Segment Information

1. Business segment information


For the nine-month period ended December 31, 200(From April 1, 2007 to December 31, 2007)

(Millions of yen)


Mobile Communications

Broadband Infrastructure

Fixed-line

Telecommunications

Internet Culture

e-Commerce

Others

Total

Elimination 

or Corporate

Consolidated

Net sales

 

 

 

 

 

 

 

 

 

(1) Customers

1,212,068

189,592

236,279

174,033

184,069

62,721

2,058,765

 -

2,058,765

(2) Inter-segment

8,523

4,567

35,172

2,891

11,038 

12,242

74,435

(74,435)

-

Total

1,220,591

194,160

271,452

176,925

195,107

74,963

2,133,201

(74,435)

2,058,765

Operating income (loss)

147,980

30,295

1,724

83,779 

2,910 

(3,268)

263,421

(3,232)

260,188


For the three-month period ended December 31, 200(From October 1, 2007 to December 31, 2007)

(Millions of yen)


Mobile Communications

Broadband Infrastructure

Fixed-line

Telecommunications

Internet Culture

e-Commerce

Others

Total

Elimination 

or Corporate

Consolidated

Net sales

 

 

 

 

 

 

 

 

 

(1) Customers

403,153

62,842

78,404

65,171

65,558

18,889

694,020

 -

694,020

(2) Inter-segment

2,928

1,498

11,574

1,333

4,076 

4,295

25,705

(25,705)

-

Total

406,081

64,340

89,979

66,505

69,634

23,184

719,726

(25,705)

694,020

Operating income (loss)

53,760

11,309

1,375

28,864 

809 

(2,617)

93,501

(1,059)

92,441

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. The main business segments are as follows:

Mobile Communications   : Provision of mobile communication services and sale of mobile phones accompanying 

the services etc.

Broadband Infrastructure : Provision of ADSL and fiber-optic high-speed Internet connection service, IP telephony service, and provision of contents etc.

Fixed-line Telecommunications: Provision of fixed-line telecommunications service and data center service etc.

Internet Culture : Internet-based advertising operations, portal business, and auction business etc.

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

Others : Broadmedia, Technology Services, Media & Marketing, Overseas funds, and other businesses



 




2. Geographic segment information


For the nine-month period ended December 31, 200(From April 1, 2007 to December 31, 2007)

       (Millions of yen)


Japan

North 
America

Others

Total

Elimination
or corporate

Consolidated

Net sales

 

 

 

 

 

 


(1)Customers

2,046,951 

1,050 

10,763 

2,058,765 

- 

2,058,765 


(2)Inter-segment

406

-

212

619

(619)

-

 

Total

2,047,358

1,050

10,976

2,059,385

(619)

2,058,765

Operating income (loss)

265,414 

(839) 

(383) 

264,191 

(4,002) 

260,188 


For the three-month period ended December 31, 200(From October 1, 2007 to December 31, 2007)

       (Millions of yen)


Japan

North 
America

Others

Total

Elimination
or corporate

Consolidated

Net sales

 

 

 

 

 

 


(1)Customers

690,221 

286 

3,511 

694,020 

- 

694,020 


(2)Inter-segment

106

-

63

169

(169)

-

 

Total

690,328

286

3,574

694,190

(169)

694,020

Operating income (loss)

94,338 

(430) 

156 

93,751 

(1,309) 

92,441 

Notes: 

1. Net sales by geographic region are recognized based on geographic location of the operation. 

2. Significant countries in each region are as follows:

North America : United States of America and Canada

Others   : Europe, Korea, China, Singapore, and others

 

3.  Overseas sales

 Disclosure of overseas sales for the nine month and three-month period ended December 31, 2007 is omitted because the total overseas sales are less than 10% of total consolidated sales.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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