Fiscal Year Ending March 2009 (April 1, 2008, to March 31, 2009) Consolidated Financial Highlights

Fiscal Year Ending March 2009 (April 1, 2008, to March 31, 2009)
Consolidated Financial Highlights

1. Consolidated Statements of Income

Record high operating income for 4 consecutive fiscal years, achieved raised forecasts.

• Consolidated net sales were 2,673.0 billion yen (103.1 billion yen or 3.7% decrease year-on-year).
  There was an increase in telecom service revenue at the Mobile Communications segment, on the other hand there was a decline in handset sales.
• Record high operating income of 359.1 billion yen (34.8 billion yen or 10.7% increase year-on-year).
  Record in operating income has been renewed for 4 fiscal years, raised forecasts were achieved.
  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 225.6 billion yen (32.9 billion yen or 12.7% decrease year-on-year).
  Recorded 57.2 billion yen in equity in earnings under the equity-method related to the listing of Alibaba.com Limited in the previous fiscal year.
• Net income was 43.1 billion yen (65.4 billion yen or 60.3% decrease year-on-year).
  Sustain net income for the fiscal year, loss on additional entrustment for debt assumption of 75.0 billion yen and impairment loss of 28.9 billion yen were recorded in special loss for the fourth quarter of the fiscal year.

2. Segment Information

Continued profit improvement by synergy between the Group's three telecommunication companies

Mobile Communications

• Net sales were 1,562.8 billion yen (67.9 billion yen or 4.2% 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 was 171.3 billion yen (3.1 billion yen or 1.8% decrease year-on-year).

Broadband Infrastructure

• Net sales were 235.1 billion yen (22.8 billion yen or 8.9% decrease year-on-year).
• Operating income was 47.2 billion yen (7.5 billion yen or 19.0% increase year-on-year).

Fixed-line Telecommunications

• Net sales were 363.6 billion yen (7.1 billion yen or 1.9% decrease year-on-year).
• Operating income was 18.9 billion yen (15.6 billion yen or 467.9% increase year-on-year).

Internet Culture

• Net sales were 254.2 billion yen (6.5 billion yen or 2.7% increase year-on-year).
• Operating income was 125.0 billion yen (9.8 billion yen or 8.6% increase year-on-year).

3. Consolidated Balance Sheets / Consolidated Statements of Cash Flows

Free cash flow was 181.5 billion yen, achieved the raised forecast

• Total assets were 4,386.6 billion yen (172.2 billion yen or 3.8% decline from the end of the previous fiscal year).
  The principal reason was a decrease in cash and deposits due to decrease in investment securities associated with a decline in the share price of Yahoo! Inc. and the acquisition of treasury stock by Yahoo Japan Corporation.
• Total liabilities were 3,561.8 billion yen (148.3 billion yen or 4.0% decline from the end of the previous fiscal year).
  In addition to the redemption of corporate bonds by 109.1 billion yen, borrowings, and payables decreased.
• Total equity was 824.7 billion yen (23.9 billion yen or 2.8% decrease from the end of the previous fiscal year).
  Retained earnings increased by 40.4 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 49.5 billion yen and the yen's appreciation at the end of the fiscal year resulted in a 37.9 billion yen decrease in foreign currency translation adjustments.
• Shareholdersequity ratio was 8.5% (0.1 percentage point improvement from the end of the previous fiscal year).
• Net cash provided by operating activities was 447.8 billion yen (compared to 158.2 billion yen provided in the previous fiscal year).
  Receivables trade decreased by 1.6 billion yen, (compared to 309.1 billion yen increased provided in the previous fiscal year,) and improved 310.8 billion yen year-on-year.
• Net cash used in investing activities was 266.2 billion yen (compared to 322.4 billion yen used in investing activities in the previous fiscal year).
• Free cash flow ^*1 was 181.5 billion yen positive (compared to 164.2 billion yen negative in the previous fiscal year).
  Achieved the earnings forecasts disclosed at the 2nd quarter earnings results which were raised twice after that.
• Net cash used in financing activities was 210.3 billion yen (compared to 284.7 billion yen provided by financing activities in the previous fiscal year).

4. Mobile Communications Segment: Key Indicators

No. 1 in net additions in subscribers for 2 consecutive years ^*2 , achieved double-digit growth

• Total number of subscribers as of the end of March 2009 was 20.63 million (2.04 million or 11.0 % increase from the end of the previous fiscal year).
• No. 1 in net additions for 2 consecutive years.
• No. 1 in monthly net additions for 23 consecutive months.
• 3G ratio as of the end of March 2009 was 90.4% (14.8 percentage point increase from the end of the previous fiscal year).
• Total ARPU ^*3 for the fiscal year was 4,070 yen (a decline of 580 yen from the previous fiscal year).
• Voice ARPU for the fiscal year was 2,320 yen (a decline of 830 yen from the previous fiscal year).
• Data ARPU for the fiscal year was 1,740 yen (an increase of 250 yen from the previous fiscal year).
• The churn rate for the fiscal year was 1.00% ( 0.32 percentage point improvement from the previous fiscal year).
• The upgrade rate for the fiscal year was 1.71% ( 0.49 percentage point improvement from the previous fiscal year).

5. Progress on Earnings Forecasts for Fiscal Year Ending March 2010

Forecast a double-digit growth in consolidated operating income for the next fiscal year

• Expect revenue and profit growth, forecast operating income increase to 420.0 billion yen (an increase of 17% from this fiscal year).

Free cash flow for the next fiscal year is forecasted to expand to 250.0 billion yen.

• The forecast of consolidated free cash flow for the next fiscal year is 250.0 billion yen (an increase of 38% from this fiscal year).

Generate approximately 1 trillion yen of free cash flow (over the next 3 fiscal years) by reinforcing cash flow focused operations.

• Aim to generate approximately 1 trillion yen of free cash flow for the fiscal year ending in 2010 to the fiscal year ending in 2012.

Aim to reduce net interest-bearing debt by half after two fiscal years, reduce to zero after 5 fiscal years

• Set target for reducing the amount of net interest-bearing debt by half after two fiscal years (the fiscal year ending March 2012) and to zero after 5 fiscal years (the fiscal year ending March 2015).
• No major investments to be made until the achievement of zero net interest-bearing debt.

Revised the dividend policy, dividend increase for the next fiscal year

• The dividend for this fiscal year is scheduled to be 2.5 yen per share.
• For the next fiscal year, great improvements in the free cash flow are forecasted. In order to return profits to the shareholders the dividend for the next fiscal year is scheduled to be double the amount the 5.0 yen per share.
• After the next fiscal year, increased dividends are scheduled to be distributed in accordance with the aimed reduction in net interest-bearing debt.