Nine-Month Period of the Fiscal Year Ending March 2009 Consolidated Financial Highlights

February 5, 2009

Nine-Month Period of the Fiscal Year Ending March 2009 (April 1, 2008, to December 31, 2008) Consolidated Financial Highlights

Consolidated Statements of Income

Record high operating income on nine-month basis

Consolidated net sales were 1,982.2 billion yen (76.5 billion yen or 3.7% decrease year-on-year).
The principal reason was a 23% year-on-year decline in handset sales.
Record high operating income of 274.6 billion yen (14.5 billion yen or 5.6% increase year-on-year).
In addition to favorable profit growth at Yahoo Japan Corporation, contributions were made by continued cost reductions at SOFTBANK TELECOM Corp. and SOFTBANK BB. Corp.
Ordinary income was 174.4 billion yen (57.5 billion yen or 24.8% decrease year-on-year).
Recorded 57.2 billion yen in equity in earnings under the equity-method related to the new listing of Alibaba.com Limited in the third quarter of the previous fiscal year.
Net income was 58.1 billion yen (35.0 billion yen or 37.6% decrease year-on-year).

Segment Information

Continued profit improvement in Fixed-line Telecommunications, Broadband Infrastructure segments

Net sales in the Mobile Communications segment were 1,150.8 billion yen (69.7 billion yen or 5.7% decrease year-on-year).
Handset sales decreased due to decline in number of handsets sold, however telecom service revenue grew due to the increase in subscribers and end of first installment discount cycle.
Operating income in the Mobile Communications segment was 134.9 billion yen (13.0 billion yen or 8.8% decrease year-on-year).
Net sales in the Broadband Infrastructure segment were 178.4 billion yen (15.7 billion yen or 8.1% decrease year-on-year).
Operating income in the Broadband Infrastructure segment was 36.6 billion yen (6.3 billion yen or 20.8% increase year-on-year).
Net sales in the Fixed-line Telecommunications segment were 268.6 billion yen (2.7 billion yen or 1.0% decrease year-on-year).
Operating income in the Fixed-line Telecommunications segment was 11.3 billion yen (6.6-times increase year-on-year).
Net sales in the Internet Culture segment were 189.8 billion yen (12.9 billion yen or 7.3% increase year-on-year).
Operating income in the Internet Culture segment was 92.0 billion yen (8.2 billion yen or 9.9% increase year-on-year).

Consolidated Balance Sheets / Consolidated Statements of Cash Flows

Achieve 213.5 billion yen of improvement in operating cash flows, 264.0 billion yen improvement in free cash flow

Total assets were 4,302.6 billion yen (256.2 billion yen or 5.6% decline from the end of the previous fiscal year).
The principal reasons were a decrease in cash and deposits due to the acquisition of treasury stock by Yahoo Japan Corporation and repayment of borrowings in SOFTBANK MOBILE, in addition to a decrease in investment securities of Yahoo! Inc due to the decline of its share price etc.
Total liabilities were 3,458.9 billion yen (251.2 billion yen or 6.8% decline from the end of the previous fiscal year).
Progress was made in reducing payables, such as accounts payable-other and accounts payable-trade, and interest-bearing debt.
Total equity was 843.6 billion yen (5.0 billion yen or 0.6% decrease from the end of the previous fiscal year).
Accumulated deficit decreased by 55.3 billion yen, however due to the decline in the share price of Yahoo! Inc. in the U.S., unrealized gain on available-for-sale securities decreased by 54.6 billion yen and the yen's appreciation during the period resulted in a 33.2 billion yen decrease in foreign currency translation adjustments.
Shareholder's equity ratio was 9.0% (0.6 percentage point improvement from the end of the previous fiscal year).
Net cash provided by operating activities was 270.7 billion yen (compared to 57.2 billion yen provided in the same period of the previous fiscal year).
Due to an increase in repayments by subscribers on the installment plan, receivables trade decreased by 8.5 billion yen, while an increase of 221.5 billion yen was recorded in the same period of the previous fiscal year. This resulted in an improvement of 230.0 billion yen year-on-year.
Net cash used in investing activities was 223.1 billion yen (compared to 273.6 billion yen used in investing activities in the same period of the previous fiscal year).
Free cash flow ^*1 was 47.6 billion yen positive (compared to 216.3 billion yen negative in the same period of the previous fiscal year).
Net cash used in financing activities was 149.5 billion yen (compared to 301.2 billion yen provided by financing activities in the same period of the previous fiscal year).

*1 The combined net cash flow from operating activities and investing activities.

Progress on Earnings Forecasts for Fiscal Year Ending March 2009

Free cash flow for fiscal year revised upwardly by 10.0 billion yen to 150.0 billion yen

80.8% progress on operating income forecast for fiscal year ending March 31, 2009 during third quarter.
Initial forecast of consolidated operating income for the fiscal year has not been changed at 340.0 billion yen.
The forecast of consolidated cash flows from operating activities for the fiscal year has been revised upwardly, due to the improvement of working capital in the Mobile Communications segment, to 420.0 billion yen - 430.0 billion yen.
The forecast of consolidated cash flows from investing activities for the fiscal year has been revised upwardly, due to improved efficiency of capital expenditure, to (280.0) billion yen - (270.0) billion yen.
The forecast of consolidated free cash flow for the fiscal year has been revised upwardly by 10.0 billion yen to 150.0 billion yen. Further efforts will be put into cash flow focused operations in order to enhance free cash flow.

Mobile Communications Segment: Key Indicators

No. 1 in monthly net additions in subscribers for 20 consecutive months

Total number of subscribers as of the end of December 2008 was 19.99 million yen (1.41 million yen increase from the end of the previous fiscal year).
No. 1 in monthly net additions for 20 consecutive months through December 2008.
3G subscription ratio as of the end of December 2008 was 86.2% (10.6 percentage point increase from the end of the previous fiscal year).
Total ARPU ^*2 in the third quarter was 4,090 yen (a decline of 220 yen from the end of the previous fiscal year and a decline of 0 yen from the second quarter).
Voice ARPU in the third quarter was 2,300 yen (a decline of 410 yen from the end of the previous fiscal year and a decline of ・160 yen from the second quarter).
Data ARPU in the third quarter was 1,790 yen (an increase of 190 yen from the end of the previous fiscal year and an increase of ・80 yen from the second quarter).
The churn rate for the third quarter was 0.91% (0.28 percentage point improvement from the end of the previous fiscal year).
The upgrade rate for the third quarter was 1.67% (0.26 percentage point improvement from the end of the previous fiscal year).

*2 Average Revenue Per User

Third Quarter of the Fiscal Year Ending March 2009 (October 1, 2008, to December 30, 2008) Consolidated Financial Highlights

Consolidated Statements of Income

Record high operating income on quarterly basis

Consolidated net sales were 653.2 billion yen (40.7 billion yen or 5.9% decrease year-on-year).
The main factor was a 28% year-on-year decline in handset sales
Operating income was 94.6 billion yen (2.2 billion yen or 2.4% increase year-on-year).
Ordinary income was 57.1 billion yen (63.6 billion yen or 52.7% decrease year-on-year).
Recorded 57.2 billion yen earnings under the equity-method related to the new listing of Alibaba.com Limited in the same period of the previous fiscal year.
Net income was 17.0 billion yen (29.6 billion yen or 63.5% decrease year-on-year).

Segment Information

Other than Mobile Communications, operating income improved in all segments

Net sales in the Mobile Communications segment were 376.8 billion yen (29.2 billion yen or 7.2% decrease year-on-year).
Operating income in the Mobile Communications segment was 46.7 billion yen (7.0 billion yen or 13.0% decrease year-on-year).
Net sales in the Broadband Infrastructure segment were 58.3 billion yen (5.9 billion yen or 9.3% decrease year-on-year).
Operating income in the Broadband Infrastructure segment was 14.3 billion yen (3.0 billion yen or 26.8% increase year-on-year).
Net sales in the Fixed-line Telecommunications segment were 90.1 billion yen (0.2 billion yen or 0.2% increase year-on-year).
Operating income in the Fixed-line Telecommunications segment was 5.7 billion yen (4.4 billion yen or 320.1% increase year-on-year).
Net sales in the Internet Culture segment were 64.2 billion yen (2.2 billion yen or 3.4% decrease year-on-year).
Operating income in the Internet Culture segment was 30.8 billion yen (2.0 billion yen or 7.0% increase year-on-year).

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.

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