Announcement of capital reduction with compensation by a consolidated subsidiary

December 26, 2005

SOFTBANK Holdings Inc. (Head Office: Delaware, USA; Representative: Ronald Fisher; hereafter “SBH”), a wholly-owned subsidiary of SOFTBANK CORP. (“the Company”), today reduced its paid-in capital with compensation. The Company is to book the difference between the value of the refund for this capital reduction and the book value of the investment of the Company in SBH, as special income in its stand-alone financial results. The Company assumes to apply the refund to repay a part of its borrowings from SBH. Details to be explained below

1. Outline of capital reduction with compensation

(1) Amount of capital reduced with compensation: approx. $803.6 million
(approx. 93.3 billion yen; converted amount in yen at an exchange rate of 116.13 yen/ $ as of December 26, 2005)
(2) Date of execution for capital reduction with compensation: December 26, 2005

2. Impact on both Stand-alone and Consolidated financial results

As a result of the capital reduction, the Company assumes to book special income of approximately 4.9 billion yen on a stand-alone basis, for the difference between the value of the refund and the book value of the investment of the Company in SBH, in the 3rd quarter of the fiscal year ending March 2006. In parallel, the Company assumes to book foreign exchange loss of approximately 1.2 billion yen, which arises from offsetting the refund with its borrowings from SBH. As a result on the whole, the Company expects a decrease of 1.2 billion yen in non-operating income and increase of 2.2 billion yen in net income, after deducting tax expenses of 1.5 billion yen, on a stand-alone basis.

On a consolidated basis, the difference between the value of refund from SBH and the book value of investment of the Company in SBH will be eliminated. Therefore the Company expects to book foreign exchange loss of 1.2 billion yen arising from offsetting its borrowings from SBH, which results in decrease of 1.2 billion yen in non-operating income, while the impact on net income will be a decrease of 2.7 billion yen after deducting tax expenses of 1.5 billion yen.

Reference

Corporate income tax is tentatively calculated by multiplying the above-mentioned amount of the impact with the effective tax rate of 40.69%.)

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