Softbank Reports Fiscal 2005

TOKYO -- Results of Operations and Financial Position
1. Management’s Analysis of Results of Operations and Financial Position
During fiscal 2005, the Group continued to concentrate on the broadband business. Actions continued tofocus on acquiring more customers to expand the scale of operations with the goal of maximizing futureearnings and cash flows. We acquired JAPAN TELECOM CO., LTD. and other companies with the aim ofexpanding our customer base—corporate customers, in particular—and began our Otoku Line service, a newfixed-line telephone service. In the Broadband Infrastructure business, solid increases in the number ofsubscribers supported continuing improvements in net sales and operating income. Due to start-up costs forOtoku Line business in the Fixed-line Telecommunications segment, in the latter half of the year, earningsworsened temporarily; however, we are striving to quickly return consolidated operating income toprofitability with an improvement in Otoku Line business and the realization of synergies among allbusinesses.

Regarding our financial position, while SOFTBANK INVESTMENT CORPORATION was excluded fromyear-end consolidation, the Company pushed forward with a succession of acquisitions—JAPAN TELECOMCO., LTD., Cable & Wireless IDC Inc., and the Fukuoka Daiei Hawks—to expand the scope of our business,and increased the size of our assets. Moving forward, we aim to leverage Group synergies to maximumeffect, thereby realizing even further growth.

* Cable & Wireless IDC Inc.’s new name is JAPAN TELECOM IDC INC., and the new name of the FukuokaDaiei Hawks is Fukuoka Softbank Hawks Corp. In addition, JAPAN TELECOM IDC INC. was divided intoSOFTBANK IDC INC. and JAPAN TELECOM IDC INC. on May 1, 2005. SOFTBANK INVESTMENTCORPORATION will change its name to SBI Holdings Inc., shifting to a holding company structure on July 1,2005.

2. Consolidated Results of Operations

Net sales increased ¥319,624 million, or 62%, to ¥837,018 million. The increase was primarily attributableto a ¥166,878 million increase from the Fixed-line Telecommunications segment resulting from the newconsolidation of JAPAN TELECOM CO., LTD. Furthermore, the Broadband Infrastructure segment’smaintenance of its steady trend of expansion, along with net sales increases in the Internet Culture ande-Finance segments, also constituted significant factors.The operating loss decreased ¥29,534 million to ¥25,359 million. In the Broadband Infrastructure segment,the continuing increase in paying customers reduced the operating loss by ¥33,849 million to ¥53,747 million.Also, due to the start-up costs of JAPAN TELECOM CO., LTD.’s Otoku Line services, the Fixed-lineTelecommunications segment recorded a ¥36,065 million operating loss.Aggregated operating income for all segments other than the Broadband Infrastructure segment and theFixed-line Telecommunications segment continued to grow, increasing ¥31,750 million, or 97%, to ¥64,453million, backed by higher operating income in the Internet Culture, e-Finance, and e-Commerce segments.

The ordinary loss decreased ¥26,652 million to ¥45,248 million. While the Group recorded ¥5,425 million ina net equity in earnings under the equity method, an increase in interest-bearing debt caused interest expense toincrease ¥10,919 million to ¥22,971 million. Although the Group recorded ¥6,508 million in foreignexchange gains in fiscal 2004, the yen’s depreciation against both the dollar and euro in fiscal 2005 resulted inan exchange loss of ¥4,040 million.

The net loss decreased ¥47,222 million to ¥59,871 million. Due to the sale of shares held in BB Call Corp.and E*TRADE SECURITIES CO., LTD., and other companies, the gain on the sale of investment securitieswas ¥59,121 million. And the Group recorded a ¥26,269 million dilution gain from changes in equity interestaccompanied by the issuance of new shares in E*TRADE SECURITIES CO., LTD., SOFTBANKINVESTMENT CORPORATION, and other companies. As a result, the Group recorded a special income of¥89,360 million. However, due to a eurobond covenant amendment fee of ¥4,071 million, a loss on the saleof investment securities of ¥3,081 million resulting from the sale of eAccess Ltd. and other stock, and avaluation loss on investment securities of ¥7,161 million, the Group recorded a special loss of ¥53,660 million,resulting in a net loss before income taxes and minority interest of ¥9,548 million. Taxes of ¥9,879 million(after refunds and adjustments) and minority interest of ¥40,444 million have been recorded.

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