Receipt of the Correction Notice by Yahoo Japan CorporationJune 30, 2010
SOFTBANK CORP. (hereafter “the Company”) announces that the Company was informed by Yahoo Japan Corporation (Head office: Minato-ku, Tokyo; President and CEO: Masahiro Inoue, hereafter “Yahoo Japan”), a consolidated subsidiary of the Company, that it received a correction notice from Tokyo Regional Taxation Bureau (hereafter “TRTB”).
Yahoo Japan acquired all the shares of SOFTBANK IDC Solutions Corp. (hereafter “IDC”) from the Company in February 2009, and merged IDC by absorption in March 2009. The correction notice Yahoo Japan received is the result of the regular tax audit of Yahoo Japan by TRTB and it corrects the tax treatment of the merger. For the points made by TRTB in the correction notice and Yahoo Japan's counter-opinion, please refer to the press release “Regarding the Correction and Ruling Notice Received Concerning the Merger with SOFTBANK IDC Solutions Corp.” Yahoo Japan issued today. The Company believes that Yahoo Japan's merger of IDC and its subsequent business development was conducted based on Yahoo Japan's reasonable judgment of the business perspective. The Company also believes that its tax treatment was legitimate and appropriate. Impact on the financial results of the Company resulting from this event is as follows.
1. Impact on consolidated financial results of the Company
As a result of the correction by Yahoo Japan, the Company will record additional tax expenses of approximately JPY 26.5 billion as prior-year income taxes on a consolidated basis, for the first quarter of FY2010 ending March 2011. Impact on net income will be approximately JPY 24.8 billion, after reducing income taxes of approximately JPY 1.7 billion due to tax deductible enterprise tax and interest tax paid, included in the additional tax expenses.
2. Impact on non-consolidated financial results of the Company
The agreement on the transfer of IDC shares between Yahoo Japan and the Company states that the sale price shall be adjusted should the tax bureau deny the utilization of the loss carryforwards that was a part of the basis of the sale price calculation. As a result of the aforementioned correction, the Company will record approximately JPY 24.8 billion as special loss on a non-consolidated basis for FY2010 ending March 2011.
Please note that there is no change to the SOFTBANK Group (hereafter “the Group”) 's forecast of JPY 500.0 billion of consolidated operating income for FY2010 ending March 2011, which the Company previously announced. In addition, the Group's aim to reduce its net interest-bearing debt of JPY 1,939,520 million as of the end of March 2009 by half over three years (by the end of March 2012) and to zero over six years (by the end of March 2015), and generate an aggregate total of at least JPY1 trillion in free cash flow over the three years from FY2009 (period from April 1, 2009 to March 31, 2012), is also unchanged.
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