TIDM56ID
RNS Number : 5510L
Softbank Corp
02 August 2011
Replacement
The following amendments have been made to the 'Annual Financial
Report' announcement released on May 9, 2011 at 7:31 under RNS No
1819G.
Amendments are underlined.
Amended Items
1. Results of Operations
(1) Analysis of Consolidated Results of Operations
Reference 1: Principal Operational Data
(a) Mobile Communications
<Before revision>
SoftBank mobile phones
--------------------------------------------------- ----------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2011
2010
-------------- --------------------------------------------- ------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
-------------- ======= ======= ======= ======== ======== ====== ====== ====== ======== ========
(Thousands)
---------------------------------------------------------------------------------------------------------
Net
additions(1) 323.3 360.7 350.3 209.4 1,243.7 696.6 901.0 925.7 1,008.8 3,532.1
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
(Postpaid) 359.5 394.9 383.3 506.8 1,644.5 645.3 833.6 865.4 975.3 3,319.6
(Prepaid) (36.2) (34.2) (33.0) (297.4) (400.8) 51.3 67.4 60.3 33.5 212.5
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
Market
share(2)
(%) 32.3 31.5 35.6 13.4 26.5 45.4 53.5 55.8 40.0 48.0
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
<After revision>
SoftBank mobile phones
--------------------------------------------------- ----------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2011
2010
-------------- --------------------------------------------- ------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
-------------- ======= ======= ======= ======== ======== ====== ====== ====== ======== ========
(Thousands)
---------------------------------------------------------------------------------------------------------
Net
additions(1) 323.3 360.7 350.3 209.4 1,243.7 696.6 901.0 925.7 1,008.8 3,532.1
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
(Postpaid) 359.5 394.9 383.3 506.8 1,644.5 645.3 833.6 865.4 975.3 3,319.6
(Prepaid) (36.2) (34.2) (33.0) (297.4) (400.8) 51.3 67.4 60.3 33.5 212.5
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
Market
share(2)
(%) 32.3 31.5 35.6 13.4 26.5 45.4 53.5 55.8 40.8 48.0
-------------- ------- ------- ------- -------- -------- ------ ------ ------ -------- --------
The full amended text is shown below.
------------------------------------------------------------------------
----------------------------------------------------
This English translation of the financial report was prepared
for reference purposes only and is qualified in its entirety by the
original Japanese version. The financial information contained in
this report is derived from our unaudited consolidated financial
statements appearing in item 4 of this report.
SOFTBANK CORP.
CONSOLIDATED FINANCIAL REPORT
For the fiscal year ended March 31, 2011
Tokyo, May 9, 2011
1. FINANCIAL HIGHLIGHTS
(Percentages are shown as year-on-year changes)
(1) Results of Operations
(Millions of yen; amounts less than one million yen are omitted.)
--------------------------------------------------------------------------------------------------------
Ordinary
Net sales Operating income income Net income
--------------- -------------------- ------------------------ ------------------- ------------------
Amount % Amount % Amount % Amount %
--------------- ----------- ------- -------- -------------- ----------- ------ --------- -------
Fiscal year
ended March
31, 2011 3,004,640 8.7 629,163 35.1 520,414 52.6 189,712 96.2
--------------- ----------- ------- -------- -------------- ----------- ------ --------- -------
Fiscal year
ended March
31, 2010 2,763,406 3.4 465,871 29.7 340,997 51.1 96,716 124.0
--------------- ----------- ------- -------- -------------- ----------- ------ --------- -------
Note: Comprehensive income
Fiscal year ended March 31, 2011: JPY 219,942
million (51.4%)
Fiscal year ended March 31, 2010: JPY 145,265
million ( - %)
---------------------------------------------------------------
Net income Ordinary Operating
per share Net income income / income /
basic per share Return on Total assets Net sales
(yen) diluted (yen) Equity (%) (%) (%)
--------------- ---------------- ---------------- -------------- --------------- ----------
Fiscal year
ended March
31, 2011 175.28 168.57 34.8 11.4 20.9
--------------- ---------------- ---------------- -------------- --------------- ----------
Fiscal year
ended March
31, 2010 89.39 86.39 22.9 7.7 16.9
--------------- ---------------- ---------------- -------------- --------------- ----------
Note: Equity in earnings (losses) of affiliated companies
Fiscal year ended March 31, 2011: JPY 2,874 million
Fiscal year ended March 31, 2010: JPY (3,616) million
(2) Financial Condition
(Millions of yen; amounts less than one million yen are omitted.)
------------------------------------------------------------------------------
Shareholders'
Total Equity ratio equity
Total assets equity (%) per share (yen)
-------------- ------------- ------------- ------------- -----------------
As of March
31, 2011 4,655,725 879,618 13.3 572.14
------------- -----------------
As of March
31, 2010 4,462,875 963,971 10.5 434.74
-------------- ------------- ------------- ------------- -----------------
Note: Shareholders' equity (consolidated)
As of March 31, 2011: JPY 619,252 million
As of March 31, 2010: JPY 470,531 million
(3) Cash Flows
(Millions of yen; amounts less than one million yen are omitted.)
------------------------------------------------------------------------------
Cash and cash
equivalents
Operating Investing Financing at the end
activities activities activities of the year
--------------- ------------- -------------- -------------- --------------
Fiscal year
ended March
31, 2011 825,837 (264,447) (397,728) 847,155
--------------- ------------- -------------- -------------- --------------
Fiscal year
ended March
31, 2010 668,050 (277,162) (159,563) 687,681
--------------- ------------- -------------- -------------- --------------
2. Dividends
Total Amount of Dividends on
dividends Payout ratio equity
Dividends per share (Annual) (Consolidated) (Consolidated)
---------------- ---------------------------------------------- ------------------ --------------- ---------------
First Second Third Fiscal
Fiscal years quarter quarter quarter year
ended March 31 end end end end Total
---------------- --------- -------- -------- ------- ------ ------------------ --------------- ---------------
(yen) (yen) (yen) (yen) (yen) (millions of yen) % %
FY 2010 - 0.00 - 5.00 5.00 5,411 5.6 1.3
FY 2011 - 0.00 - 5.00 5.00 5,411 2.9 1.0
---------------- --------- -------- -------- ------- ------ ------------------ --------------- ---------------
FY 2012 - - - - - -
(Forecasted)
---------------- --------- -------- -------- ------- ------ ------------------ --------------- ---------------
Note: Dividend for the fiscal year ending March 31, 2012 is
planned to be increased from JPY 5 for the fiscal year ended March
31, 2011, however it is not determined at this point. The concrete
amount of dividend will be announced promptly upon resolution.
3. Forecasts on the consolidated operation results for the
fiscal year ending in March 2012 (April 1, 2011 - March 31,
2012)
The SOFTBANK Group is forecasting an increase in revenue and
profit, however it is difficult to disclose numerical earnings
forecasts. This is because the customer acquisition initiatives
need to be planned and adjusted flexibly according to circumstances
involving numerous unconfirmed elements which could impact revenue
and profit. On the other hand an increase in consolidated CAPEX
(acceptance basis) has been resolved up to approximately JPY 500.0
billion. To improve disclosure of information for shareholders and
investors, the earnings forecasts will be disclosed when deemed to
be reasonable.
4. Others
(1) Significant Changes in Scope of Consolidation (Changes in
Scope of Consolidation of Specified Subsidiaries): No
(2) Changes in accounting principles, procedures, disclosure
methods, etc., used in the presentation of the consolidated
financial statements
[1] Changes due to revisions in accounting standards: Yes
[2] Changes other than those in [1]: No
(3) Number of shares issued (Common stock)
[1] Number of shares issued (including treasury stock):
As of March 31, 2011: 1,082,530,408 shares
As of March 31, 2010: 1,082,503,878 shares
[2] Number of treasury stock:
As of March 31, 2011: 180,503 shares
As of March 31, 2010: 174,775 shares
[3] Weighted average number of common stock:
As of March 31, 2011: 1,082,345,444 shares
As of March 31, 2010: 1,081,990,217 shares
[For Reference]
FINANCIAL HIGHLIGHTS (Non-Consolidated)
1. Non-Consolidated Results of Operations
(Millions of yen; amounts less than one million yen are omitted.)
-------------------------------------------------------------------------------------------
Ordinary Net income
Net sales Operating income income (loss) (loss)
------------- ----------------- ------------------- --------------- -------------------
Amount % Amount % Amount % Amount %
------------- --------- ------ ---------- ------- --------- ---- -------- ---------
Fiscal year
ended March
31, 2011 35,161 172.6 23,296 903.0 24,653 - (2,296) -
------------- --------- ------ ---------- ------- --------- ---- -------- ---------
Fiscal year
ended March
31, 2010 12,900 4.5 2,322 (24.2) (20,581) - 33,095 -
------------- --------- ------ ---------- ------- --------- ---- -------- ---------
Net income Net income
(loss) (loss)
per share basic per share diluted
(yen) (yen)
------------- ----------------- -------------------
Fiscal year
ended March
31, 2011 (2.12) -
------------- ----------------- -------------------
Fiscal year
ended March
31, 2010 30.59 30.13
------------- ----------------- -------------------
2. Non-Consolidated Financial Condition
(Millions of yen; amounts less than one million yen are omitted.)
------------------------------------------------------------------------------
Shareholders'
Net Equity ratio equity
Total assets Assets (%) per share (yen)
------------- ------------- -------------- ------------- -----------------
As of March
31, 2011 2,185,506 419,752 19.2 387.72
-----------------
As of March
31, 2010 1,491,232 435,211 29.2 402.11
------------- ------------- -------------- ------------- -----------------
Note: Shareholders'equity (non-consolidated)
As of March 31, 2011: JPY 419,652 million
As of March 31, 2010: JPY 435,211 million
* Implementation status of audit procedures
This consolidated financial report is not subject to audit
procedures based on Financial Instruments and Exchange Act and the
audit procedures for the consolidated financial statements were
being conducted when this report was disclosed.
* Note to forecasts on the consolidated operating results and
other items
The forecast figures are estimated based on the information
which SOFTBANK CORP. is able to obtain at the present point and
assumptions which are deemed to be reasonable. However, actual
results may be different due to various factors. Please refer to
page 12 "1. Results of Operations (1) Analysis of Consolidated
Results of Operations 3. Earnings Forecasts" for details of
forecasts on the consolidated operating results.
(Appendix)
Content
1. Results of Operations p. 2
(1) Analysis of Consolidated Results of Operations p. 2
1. Consolidated Results of Operations p. 2
2. Results by Business Segment p. 5
Reference 1: Principal Operational Data p. 9
Reference 2: Capital Expenditure and Depreciation p.11
3. Earnings Forecasts p.12
(2) Analysis of Financial Position p.13
1. Assets, Liabilities and Equity p.13
2. Cash Flows p.16
Reference: Major Financing Activities p.18
(3) Fundamental Policy for Distribution of Profit, p.20
and Dividends for Current and Following Years
2. The SOFTBANK Group p.21
3. Management Policies p.22
(1) Basic Management Approach p.22
(2) Medium- to Long-term Strategies p.22
(3) Important Management Issues for the Company p.23
4. Consolidated Financial Statements p.25
(1) Consolidated Balance Sheets p.25
(2) Consolidated Statements of Income and p.27
Consolidated Statements of Comprehensive Income (3) p.29
Consolidated Statements of Changes in Equity
(4) Consolidated Statements of Cash Flows p.31
(5) Significant Doubt About Going Concern Assumption p.33
(6) Basis of Presentation of Consolidated Financial p.33
Statements p.37
(7) Changes in Basis of Presentation of Consolidated p.37
Financial Statements p.38
(8) Additional information p.38
(9) Notes p.42
(Consolidated Balance Sheets) p.44
(Consolidated Statements of Income) p.45
(Consolidated Statements of Comprehensive Income)
(Consolidated Statements of Changes in Equity)
(Consolidated Statements of Cash Flows) p.47
(Leases) p.49
(Financial Instruments) p.51
(Investment in Debt and Equity Securities) p.59
(Derivative Transactions) p.62
(Income Taxes) p.65
(Segment Information) p.66
(Per Share Data) p.68
(Significant Subsequent Events) p.69
Qualitative Information/Financial Statements
1. Results of Operations
(1) Analysis of Consolidated Results of Operations
1. Consolidated Results of Operations
<Overview of results for the fiscal year from April 1, 2010
to March 31, 2011>
For the fiscal year from April 1, 2010 to March 31, 2011
(hereafter "this fiscal year"), the SOFTBANK Group (hereafter "the
Group") achieved consolidated net sales of JPY 3,004,640 million, a
JPY 241,234 million (8.7%) increase compared with the same period
of the previous fiscal year (April 1, 2009 to March 31, 2010,
hereafter "year on year"), with a JPY 163,291 million (35.1%)
increase in operating income to JPY 629,163 million. This
consolidated revenue and profit growth was driven by strong
performance at the Mobile Communications segment. Ordinary income
grew JPY 179,416 million (52.6%) to JPY 520,414 million. Net income
rose JPY 92,996 million (96.2%) to JPY 189,712 million.
Note:
Definition of terms: as used in this consolidated financial
report for the fiscal year ended March 31, 2011, references to "the
Company," "the Group" and "the SOFTBANK Group" are to SOFTBANK
CORP. and its consolidated subsidiaries except as the context
otherwise requires or indicates.
The main factors affecting earnings for this fiscal year were as
follows:
(a) Net Sales
Net sales totaled JPY 3,004,640 million, for a JPY 241,234
million (8.7%) year-on-year increase. This was mainly the result of
strong growth in the number of mobile phone subscribers, combined
with a rise in ARPU(1) and the number of mobile handsets
shipped,(2) in the Mobile Communications segment.
Notes:
1. Average Revenue Per User.
2. Handsets shipped: handsets shipped (sold) to agents.
(b) Cost of Sales
Cost of sales rose JPY 47,045 million (3.5%) year on year to JPY
1,373,617 million. This was mainly due to higher cost of goods on
the increase in the number of mobile handsets shipped, while
depreciation and amortization expenses relating to the 2G mobile
phone service decreased due to termination of this service in March
2010, in the Mobile Communications segment.
(c) Selling, General and Administrative Expenses
Selling, general and administrative expenses grew JPY 30,896
million (3.2%) year on year to JPY 1,001,859 million. This was
mainly because of increased sales commissions(3) associated with
the increase in the number of mobile handsets sold(4) in the Mobile
Communications segment.
Notes:
3. Sales commissions paid to sales agents per new subscription
and upgrade purchase.
4. Handsets sold: total of new subscriptions and handset
upgrades.
(d) Operating Income
As a result, operating income totaled JPY 629,163 million, for a
JPY 163,291 million (35.1%) year-on-year increase. The operating
margin rose 4.1 percentage points year on year, to 20.9%.
(e) Non-operating Income / Expenses
Non-operating income totaled JPY 17,320 million, a JPY 8,001
million year-on-year increase. Non-operating expenses stood at JPY
126,069 million, a JPY 8,122 million year-on-year decrease. The
primary item of non-operating expenses was interest expense, which
totaled JPY 104,019 million.
(f) Ordinary Income
Ordinary income therefore totaled JPY 520,414 million, for a JPY
179,416 million (52.6%) year-on-year increase.
(g) Special Income
Special income totaled JPY 14,252 million, the main components
were a JPY 6,623 million gain on sale of investment securities and
a JPY 4,187 million gain on repurchase of minority interests and
long-term debt.
Gain on repurchase of minority interests and long-term debt was
the result of an acquisition made by the Company during this fiscal
year, amounting to a total of JPY 412,500 million. This acquisition
was of all class 1 preferred stock series 1 and stock acquisition
rights issued by BB Mobile Corp. (hereafter "BB Mobile") to
Vodafone International Holdings B.V. and the entire amount of the
principal and accrued interest of a long-term loan receivable,
which was recorded as long-term debt in the Company's consolidated
balance sheets, from SOFTBANK MOBILE Corp. (hereafter "SOFTBANK
MOBILE") to Vodafone Overseas Finance Limited.
(h) Special Loss
Special loss was JPY 54,053 million, which included a JPY 14,416
million loss on disaster, a JPY 9,521 million valuation loss on
option, a JPY 8,739 million valuation loss on investment
securities, and a JPY 7,099 million loss on adjustment for changes
of the accounting standard for asset retirement obligations.
Loss on disaster was recorded in connection with the Great East
Japan Earthquake that occurred in March 2011. Refer to page 43, "4.
Consolidated Financial Statements - (9) Notes to Consolidated
Statements of Income - 4. Loss on disaster" for details.
The Company has entered into agreements containing a put
option(5) and a call option(6) for shares of Wireless City Planning
Inc. (hereafter "WCP"), which is the Company's affiliate under
equity method, with its shareholders other than the Company. These
options are measured at fair value and the valuation loss is
recorded as described above.
Notes:
5. Put option: the right of the other shareholders of WCP to
sell the WCP shares to the Company.
6. Call option: the Company's right to buy the WCP shares from
the other shareholders of WCP.
(i) Income Taxes
Provisions for current income taxes were JPY 173,509 million,
provisions for deferred income taxes were JPY 32,047 million, and
additional tax expenses of JPY 27,391 million were recorded as
income taxes - correction. The income taxes - correction includes
additional income taxes paid by Yahoo Japan Corporation (hereafter
"Yahoo Japan") in response to a correction and ruling notice which
it received from the Tokyo Regional Taxation Bureau. Refer to page
43, "4. Consolidated Financial Statements - (9) Notes to
Consolidated Statements of Income - 6. Income taxes - corrections"
for details.
(j) Minority Interests in Net Income
Minority interests in net income totaled JPY 57,950 million.
This was mainly the portion of net income recorded at Yahoo Japan
and SB Asia Infrastructure Fund L.P., a consolidated subsidiary
from this fiscal year, attributable to the shareholders other than
the Company.
(k) Net Income
As a result of the above, net income totaled JPY 189,712
million, for a JPY 92,996 million (96.2%) year-on-year
increase.
(l) Comprehensive Income
Comprehensive income was JPY 219,942 million. Of this,
comprehensive income attributable to owners of the parent was JPY
159,777 million and comprehensive income attributable to minority
interests came to JPY 60,165 million.
2. Results by Business Segment
The "Accounting Standard for Disclosures about Segments of an
Enterprise and Related Information" (ASBJ Statement No.17, March
27, 2009) and the "Guidance on the Accounting Standard for
Disclosures about Segments of an Enterprise and Related
Information" (ASBJ Guidance No.20, May 21, 2008) are being applied
from this fiscal year.
Net sales and operating income for the previous fiscal year are
also shown based on the new standard.
Note:
Principal operational data is shown on pages 9-10 "(Reference 1:
Principal Operational Data)."
(a) Mobile Communications
(Millions of yen)
------------------------------------------------------------------------------
Fiscal Year Fiscal Year
Ended March Ended March (Reference) (Reference)
31, 2010 31, 2011 Change Change %
---------------- --------------- --------------- ------------ ------------
Net sales 1,701,414 1,944,551 243,136 14.3
---------------- --------------- --------------- ------------ ------------
Operating
income 260,895 402,411 141,516 54.2
---------------- --------------- --------------- ------------ ------------
3,532,100 cumulative net subscriber additions(7) for this fiscal
year
ARPU(8) for this fiscal year was JPY 4,210, a JPY 140
year-on-year increase. Out of this, data ARPU amounted to JPY
2,310, a JPY 290 year-on-year increase
Notes:
7. The number of net subscriber additions includes prepaid
mobile phones and communication module service subscribers. Net
communication module service subscriber additions for this fiscal
year totaled 771,100.
8. Average Revenue Per User (rounded to the nearest JPY 10).
Revenue and number of mobile phone subscribers include prepaid
mobile phones and communication module service subscribers. For the
Mobile Communications segment, the term "ARPU" used alone indicates
the total of the basic monthly charge plus voice ARPU plus data
ARPU.
< Overview of Operations >
The segment's net sales increased by JPY 243,136 million (14.3%)
year on year to JPY 1,944,551 million. The revenue growth was
driven by continued strong upward trend of mobile phone subscribers
combined with increases in ARPU and the number of mobile handsets
shipped. Operating income increased by JPY 141,516 million (54.2%)
year on year to JPY 402,411 million.
<Number of Mobile Phone Subscribers>
Net subscriber additions (new subscribers minus cancellations)
for this fiscal year totaled 3,532,100. This net increase was
primarily the result of strong sales of iPhone.(9) As a result, the
cumulative number of subscribers(10) at the end of this fiscal year
stood at 25,408,700, raising SOFTBANK MOBILE's cumulative
subscriber share by 1.8 of a percentage point year on year, to
21.3%.(11)
Notes:
9. iPhone is a trademark of Apple Inc. The iPhone trademark is
used under license from Aiphone K.K.
10. The number of cumulative subscribers includes prepaid mobile
phones and communication module service subscribers. The cumulative
number of communication module service subscribers at the end of
this fiscal year was 1,308,600.
11. Calculated by the Company based on Telecommunications
Carriers Association statistical data.
< Number of Mobile Handsets Sold/ Shipped >
The number of mobile handsets sold and handsets shipped for this
fiscal year increased by 1,108,000 year on year to 10,242,000 and
1,199,000 year on year to 10,016,000, respectively. These increases
were mainly the result of a favorable sales and shipment trend of
mobile handsets especially iPhone and communication modules.
<ARPU>
ARPU for this fiscal year rose JPY 140 year on year to JPY
4,210. Out of this, the sum of the basic monthly charge and voice
ARPU declined JPY 160 year on year to JPY 1,890, reflecting an
increase in devices which do not have voice communication
functionality, and revised access charges between carriers. On the
other hand, data ARPU rose JPY 290 year on year to JPY 2,310. This
was mainly the result of an increase in the number of
data-intensive iPhone subscribers, combined with the after-effect
of the termination of the non-data-intensive 2G service in March
2010.
<Churn Rate and Upgrade Rate>
The churn rate(12) for this fiscal year was 0.98%, which was
0.39 of a percentage point lower year on year. This was primarily
because the churn rate was no longer inflated by the termination of
the 2G service, and there was a decline in the churn rate of
customers who have completed their installment handset
payments.
The upgrade rate(12) for this fiscal year was 1.40%, which was
0.31 of a percentage point lower year on year. The upgrade rate was
no longer inflated by upgrades from 2G to 3G, in association with
the termination of the 2G service completed in March 2010, while
the number of upgrades to iPhone 4 increased.
Note:
12. Calculated with prepaid mobile phones and communication
module service subscribers included in the number of subscribers,
churn and upgrades, respectively.
<Average Acquisition Cost per Subscriber>
The average acquisition cost per subscriber(13) for this fiscal
year declined JPY 3,600 year on year to JPY 36,900. This was
primarily because of the increase in the number of mobile handsets
shipped, especially for those handsets without voice communication
functionality whose acquisition cost per subscriber is lower.
Note:
13. Average commission paid to sales agents per new
subscription. New subscriptions include prepaid mobile phones and
communication modules.
(b) Broadband Infrastructure
(Millions of yen)
------------------------------------------------------------------------------
Fiscal Year Fiscal Year
Ended March Ended March (Reference) (Reference)
31, 2010 31, 2011 Change Change %
---------------- --------------- --------------- ------------ ------------
Net sales 202,127 190,055 (12,072) (6.0%)
---------------- --------------- --------------- ------------ ------------
Operating
income 48,399 43,154 (5,245) (10.8%)
---------------- --------------- --------------- ------------ ------------
<Overview of Operations>
The segment's net sales decreased by JPY 12,072 million (6.0%)
year on year to JPY 190,055 million. This was mainly because of the
continued decreasing trend in revenue, on a decline in the number
of charged lines(14) for the ADSL service. Operating income
decreased by JPY 5,245 million (10.8%) year on year to JPY 43,154
million. This was primarily due to a decrease in net sales, and an
increase in sales-related expenses led by customer acquisition for
Yahoo! BB hikari with FLET'S.(15)
Net subscriber additions for Yahoo! BB hikari with FLET'S for
this fiscal year totaled 695,000, bringing the cumulative number of
contracts at the end of this fiscal year to 932,000. Combined with
installed lines(16) for the ADSL service, this brought the total
number of users to 4,082,000.
Notes:
14. Number of installed lines excluding customers whose basic
monthly charge is free under promotion campaigns or other
promotional initiatives.
15. A broadband connection service that combines the Internet
connection service Yahoo! BB and the FLET'S HIKARI fiber-optic
connection provided by NIPPON TELEGRAPH AND TELEPHONE EAST
CORPORATION ("NTT East") and NIPPON TELEGRAPH AND TELEPHONE WEST
CORPORATION ("NTT West"). FLET'S and FLET'S HIKARI are registered
trademarks of NTT East and NTT West.
16. Number of lines for which connection construction for ADSL
line at central office of NTT East or NTT West is complete.
(c) Fixed-line Telecommunications
(Millions of yen)
------------------------------------------------------------------------------
Fiscal Year Fiscal Year
Ended March Ended March (Reference) (Reference)
31, 2010 31, 2011 Change Change %
---------------- --------------- --------------- ------------ ------------
Net sales 348,692 356,561 7,869 2.3
---------------- --------------- --------------- ------------ ------------
Operating
income 23,065 38,006 14,941 64.8
---------------- --------------- --------------- ------------ ------------
<Overview of Operations>
The segment's net sales increased by JPY 7,869 million (2.3%)
year on year to JPY 356,561 million. Inter-segment sales increased
due to network provision to the Group telecommunication companies
such as SOFTBANK MOBILE, and contributed to the overall segment's
revenue growth. On the other hand, net sales to third-parties
decreased, primarily as a result of the continued decrease in
revenue from relay connection voice services such as MYLINE, and
despite an increase in revenue from the OTOKU Line, a direct
connection voice service.
Operating income increased by JPY 14,941 million (64.8%) to JPY
38,006 million. This was mainly due to an increase in net sales,
combined with a decrease in lease expenses on equipment for the
OTOKU Line service.
(d) Internet Culture
(Millions of yen)
------------------------------------------------------------------------------
Fiscal Year Fiscal Year
Ended March Ended March (Reference) (Reference)
31, 2010 31, 2011 Change Change %
---------------- --------------- --------------- ------------ ------------
Net sales 270,755 283,615 12,860 4.7
---------------- --------------- --------------- ------------ ------------
Operating
income 136,585 150,305 13,719 10.0
---------------- --------------- --------------- ------------ ------------
<Overview of Operations>
The segment's net sales increased by JPY 12,860 million (4.7%)
year on year to JPY 283,615 million. This was mainly due to revenue
growth at Yahoo Japan on an increase in listing and display
advertising. Operating income increased by JPY 13,719 million
(10.0%) year on year to JPY 150,305 million. This was primarily a
result of the growth in net sales, in addition to a decrease in
communications expenses in connection with the improved operational
efficiency as a result of direct ownership of data centers.
(Reference 1: Principal Operational Data
(a) Mobile Communications
SoftBank mobile phones
----------------------------------------------------------- ---------------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31,
2010 2011
---------------- ---------------------------------------------------- ----------------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
---------------- ========= ========= ========= ======== ========= ========= ========= ========= ======== =========
(Thousands)
----------------------------------------------------------------------------------------------------------------------------
Net
additions(1) 323.3 360.7 350.3 209.4 1,243.7 696.6 901.0 925.7 1,008.8 3,532.1
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(Postpaid) 359.5 394.9 383.3 506.8 1,644.5 645.3 833.6 865.4 975.3 3,319.6
(Prepaid) (36.2) (34.2) (33.0) (297.4) (400.8) 51.3 67.4 60.3 33.5 212.5
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Market share(2)
(%) 32.3 31.5 35.6 13.4 26.5 45.4 53.5 55.8 40.8 48.0
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Cumulative
subscribers(1) 20,956.2 21,316.9 21,667.2 21,876.6 22,573.2 23,474.2 24,399.9 25,408.7
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
3G 19,455.0 20,237.7 20,885.4 21,876.6 22,573.2 23,474.2 24,399.9 25,408.7
2G 1,501.2 1,079.2 781.8 - - - - -
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Market share(2)
(%) 19.3 19.4 19.6 19.5 19.9 20.3 20.8 21.3
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(Thousands)
----------------------------------------------------------------------------------------------------------------------------
Number of
handsets
sold(3) 2,059 2,300 2,078 2,697 9,134 2,162 2,712 2,605 2,763 10,242
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Number of
handsets
shipped(4) 2,001 2,101 2,215 2,500 8,817 2,051 2,687 2,736 2,542 10,016
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(Yen per month)
----------------------------------------------------------------------------------------------------------------------------
ARPU(5) 4,030 4,150 4,200 3,890 4,070 4,290 4,300 4,310 3,940 4,210
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(Basic monthly
charge +
voice) 2,150 2,160 2,150 1,750 2,050 2,030 2,020 1,980 1,570 1,890
(Data) 1,880 1,990 2,060 2,140 2,020 2,250 2,290 2,330 2,370 2,310
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(Yen)
----------------------------------------------------------------------------------------------------------------------------
Average
acquisition
cost per
subscriber(6) 50,100 35,900 37,400 40,200 40,500 37,200 37,500 37,800 35,400 36,900
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
(% per month)
----------------------------------------------------------------------------------------------------------------------------
Churn rate(7) 1.05 1.24 1.16 2.01 1.37 1.02 0.96 0.91 1.02 0.98
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
( )
(3G postpaid) 0.87 1.07 0.99 1.28 1.06 0.99 0.92 0.86 0.98 0.94
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Upgrade
rate(7) 1.73 1.81 1.53 1.78 1.71 1.18 1.67 1.43 1.33 1.40
---------------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Notes:
1. Includes the number of prepaid mobile phones and
communication module service subscribers.
2. Calculated by the Company based on Telecommunications
Carriers Association statistical data.
3. Handsets sold: total of new subscriptions and handset
upgrades.
4. Handsets shipped: handsets shipped (sold) to agents.
5. Average Revenue Per User (rounded to the nearest JPY 10).
Revenue and number of mobile phone subscribers include prepaid
mobile phones and communication modules.
For the Mobile Communications segment, the term "ARPU" used
alone indicates the total of the basic monthly charge plus voice
ARPU plus data ARPU.
6. Average commissions paid to sales agents per new
subscription.
New subscriptions include prepaid mobile phones and
communication modules.
7. Calculated with prepaid mobile phones and communication
module service subscribers included in the number of subscribers,
churn and upgrades, respectively.
(b) Broadband Infrastructure
Yahoo! BB ADSL (Thousands)
----------------------------------- ---------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2011
2010
=========== -------------------------------------- -----------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
=========== ====== ====== ====== ====== ====== ====== ====== ====== ====== =========
Installed
lines(8) 4,158 4,040 3,908 3,769 3,609 3,457 3,291 3,150
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
Charged
lines(9) 3,769 3,657 3,533 3,389 3,221 3,066 2,903 2,752
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
(Yen per month)
----------------------------------------------------------------------------------------------
Average
user
payment
per
charged
line(10) 4,260 4,260 4,250 4,210 4,200 4,200 4,160 4,120
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
(% per month)
----------------------------------------------------------------------------------------------
Churn
rate(11) 2.12 1.80 1.96 2.20 2.02 2.26 2.32 2.47 2.43 2.37
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
Notes:
8. Number of lines for which connection construction for ADSL
line at central office of NTT East or NTT West is complete.
9. Number of installed lines excluding customers whose basic
monthly charge is free under campaigns or other promotional
initiatives.
10. Rounded to the nearest JPY 10.
11. Average ratio of customer lines with a history of payment,
for which a cancellation application has been filed during the
relevant period.
(c) Fixed-line Telecommunications
OTOKU
Line (Thousands)
---------- ---------------------------------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2011
2010
========== -------------------------------------- -----------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
========== ====== ====== ====== ====== ====== ====== ====== ====== ====== =========
Lines 1,631 1,652 1,657 1,669 1,668 1,667 1,662 1,671
---------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
(Yen per month)
---------------------------------------------------------------------------------------------
ARPU(12) 6,390 6,280 6,450 6,830 6,600 6,570 6,610 6,930
---------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ---------
Note:
12. Average Revenue Per User: average revenue per line (rounded
to the nearest JPY 10).
(d) Internet Culture
(Millions)
-------------- ----------------------------------------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2011
2010
============== ------------------------------------------ --------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
============== ======= ======= ======= ======= ====== ======= ======= ======= ======= ========
Yahoo! JAPAN
Total monthly
page
views(13) 46,445 46,378 42,779 46,882 48,722 49,671 46,756 54,631
------- ------- ------- ------- ------ ------- ------- ------- ------- --------
Unique
browsers(14) 229 189 197 209 224 226 222 238
-------------- ------- ------- ------- ------- ------ ------- ------- ------- ------- --------
Yahoo! Auctions
Average
number of
total listed
items(15) 20 20 23 23 22 22 22 22
-------------- ------- ------- ------- ------- ------ ------- ------- ------- ------- --------
Notes:
13. Number of accesses to Yahoo! JAPAN Group websites during the
last month of each quarter.
14. Number of browsers accessing a Yahoo! JAPAN service during
the last month of each quarter.
15. Daily average number of items posted during the last month
of each quarter.
(Reference 2: Capital Expenditure and Depreciation)(16)
(a) Capital Expenditure (acceptance basis)
Millions of yen
------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31,
2010 2011
==================== -------------------------------------------- ----------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==================== ======= ======= ======= ======= ======== ======= ======= ======== ======== ========
Mobile
Communications 32,408 39,148 47,921 65,291 184,770 25,987 65,387 116,324 143,826 351,525
-------------------- ------- ------- ------- ------- -------- ------- ------- -------- -------- --------
Broadband
Infrastructure 1,588 1,590 2,095 4,068 9,343 3,319 3,294 5,076 5,160 16,850
-------------------- ------- ------- ------- ------- -------- ------- ------- -------- -------- --------
Fixed-line
Telecommunications 3,710 3,939 3,436 6,893 17,979 5,112 6,362 9,095 15,665 36,236
-------------------- ------- ------- ------- ------- -------- ------- ------- -------- -------- --------
Internet Culture 1,085 1,264 1,450 2,327 6,128 1,906 1,908 2,783 4,114 10,713
-------------------- ------- ------- ------- ------- -------- ------- ------- -------- -------- --------
Others 1,571 915 678 1,528 4,693 1,216 1,559 1,148 1,340 5,265
-------------------- ------- ------- ------- ------- ======== ======= ------- -------- -------- --------
Consolidated
total 40,364 46,858 55,582 80,109 222,915 37,542 78,513 134,428 170,107 420,591
-------------------- ------- ------- ------- ------- -------- ------- ------- -------- -------- --------
(b) Depreciation (excluding amortization of goodwill)
Millions of yen
----------------------------------------------------------------------------------------------------------------
Fiscal Year Ended March 31, Fiscal Year Ended March 31,
2010 2011
==================== -------------------------------------------- --------------------------------------------
Full Full
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==================== ======= ======= ======= ======= ======== ======= ======= ======= ======= ========
Mobile
Communications 42,732 43,377 44,656 45,569 176,337 36,636 37,636 40,051 42,668 156,993
-------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Broadband
Infrastructure 4,373 4,366 4,095 4,188 17,023 4,234 3,968 3,965 3,672 15,840
-------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Fixed-line
Telecommunications 8,982 8,837 8,669 8,803 35,292 9,104 9,242 9,290 8,997 36,634
-------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Internet Culture 2,366 2,441 2,492 2,563 9,864 2,169 2,307 2,412 2,533 9,422
-------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Others 1,353 1,243 1,401 1,427 5,426 1,445 1,482 1,608 1,508 6,045
-------------------- ------- ------- ------- ------- -------- ======= ======= ------- ------- --------
Consolidated
total 59,809 60,266 61,314 62,553 243,944 53,590 54,637 57,329 59,379 224,937
-------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Note:
16. Capital expenditure and Depreciation for this fiscal year
ended March 31, 2010 are calculated based on the new standard.
Capital expenditure and Depreciation for the e-Commerce segment
for the fiscal year ended March 31, 2010 are included in
"Others."
3. Earnings Forecasts
(a) Forecast for fiscal year ending March 2012 to fiscal year
ending March 2014
The Group is forecasting continuous increasing trend in
consolidated net sales and consolidated operating income year on
year for both the fiscal year ending March 2012 and March 2014,
however the earnings growth rate is expected to be below that of
the fiscal year ended March 2011. This is due to enhanced
initiatives on network expansion and customer acquisition over the
two fiscal years to come in the Group's core business the Mobile
Communications segment, aimed at medium-term growth, which may
increase the expense and decrease the profit. The Group expects to
finish these initiatives by the fiscal year ending March 2014, and
profit to turn to a new growth path.
(b) Forecast for fiscal year ending 2012
The Group is planning to focus on network expansion and customer
acquisition in the Mobile Communications segment. The Group is
forecasting an increase in revenue and profit, however it is
difficult to disclose numerical earnings forecasts. This is because
the customer acquisition initiatives need to be planned and
adjusted flexibly according to circumstances and this involves
numerous unconfirmed elements which could impact revenue and
profit. On the other hand an increase in consolidated CAPEX
(acceptance basis) has been resolved up to approximately JPY 500.0
billion.
To improve disclosure of information for shareholders and
investors, the earnings forecast will be disclosed when deemed to
be reasonable.
Reference: trend (actual figures) of the Company's consolidated
CAPEX (acceptance base)
Fiscal year ended March 2009: JPY 259.0 billion
Fiscal year ended March 2010: JPY 222.9 billion
Fiscal year ended March 2011: JPY 420.5 billion
(2) Analysis of Financial Position
1. Assets, Liabilities and Equity
Assets, liabilities and equity at the end of this fiscal year
were as follows:
(Millions of yen)
As of As of
March 31, 2010 March 31, 2011 YoY YoY %
------------------- ---------------- ---------------- --------- -------
Total assets 4,462,875 4,655,725 192,850 4.3 %
------------------- ---------------- ---------------- --------- -------
Total liabilities 3,498,903 3,776,107 277,203 7.9%
------------------- ---------------- ---------------- --------- -------
Total equity 963,971 879,618 (84,353) (8.8%)
------------------- ---------------- ---------------- --------- -------
(a) Current Assets
Current assets at the end of this fiscal year totaled JPY
1,862,617 million, for a JPY 168,176 million (9.9%) increase from
the previous fiscal year-end. The primary components of the change
were as follows:
Notes and accounts receivable-trade decreased by JPY 158,776
million. This was mainly because of sales of installment sales
receivables at SOFTBANK MOBILE.
Marketable securities increased by JPY 73,757 million from the
previous fiscal year-end. This was mainly from the transfer of
shares of Yahoo! Inc. that were previously recorded as investment
securities under fixed assets, to current assets. In February 2004,
one of the Company's U.S. subsidiaries entered into a loan
involving a portion of the proceeds from a forward contract under
which its Yahoo! Inc. shares are expected to be delivered in August
2011. Because the subsidiary intends to deliver these shares in
accordance with the settlement of the forward contract beginning
August 2011 or within one year, the corresponding shares of Yahoo!
Inc. were transferred to current assets.
Other current assets increased by JPY 55,335 million from the
previous fiscal year-end, primarily from increases in derivative
assets and accrued revenue included in other current assets. A
derivative contract ("collar transaction") was concluded with
regard to the shares of Yahoo! Inc. to limit the risk from market
price fluctuations of those shares for this fiscal year until the
repayment. However, with the remaining period until the repayment
having become less than one year, the corresponding derivative
assets were transferred to current assets during this fiscal
year.
(b) Fixed Assets
Fixed assets totaled JPY 2,791,726 million at the end of this
fiscal year, for a JPY 25,243 million (0.9%) increase from the
previous fiscal year-end. The primary components of the change were
as follows:
Total property and equipment increased JPY 162,744 million from
the previous fiscal year-end, primarily on a JPY 315,955 million
increase from new acquisitions of telecommunications equipment. The
increase, reflecting the adjustment for changes of accounting
standard for asset retirement obligations as of April 1, 2010,
amounted to JPY 10,595 million.
Investments and other assets decreased by JPY 105,460 million
from the previous fiscal year-end. This was mainly because of a JPY
43,508 million decrease in deferred tax assets, JPY 41,590 million
decrease in other assets, and a JPY 29,591 million decrease in
investment securities. Other assets decreased due to the transfer
of derivative assets related to the shares of Yahoo! Inc. to
current assets. The decrease in investment securities is attributed
to the transfer of shares of Yahoo! Inc. to current assets which
outweighed additional investments in Renren inc.(1) and investment
in PPLive Corporation(2) among others.
Total intangible assets decreased JPY 32,041 million from the
previous fiscal year-end. This was mainly because of a JPY 61,530
million decrease resulting from regular amortization of the
goodwill recorded when the Company acquired SOFTBANK MOBILE and
SOFTBANK TELECOM Corp. (hereafter "SOFTBANK TELECOM"). On the other
hand, software increased by JPY 39,957 million as a result of new
acquisitions of telecommunications equipment.
Notes:
1. Changed from Oak Pacific Interactive in December 2010.
2. Changed from Synacast Corporation in April 2011.
(c) Current Liabilities
Current liabilities at the end of this fiscal year totaled JPY
1,644,407 million, for a JPY 265,529 million (19.3%) increase from
the previous fiscal year-end. The primary components of the change
were as follows:
Accounts payable-other and accrued expenses increased by JPY
110,012 million from the previous fiscal year-end. This was mainly
the result of an increase of JPY 177,038 million in
equipment-related payables, while a decrease of JPY 75,000 million
came from the payment of additional entrustment for debt
assumption, at SOFTBANK MOBILE.
The current portion of corporate bonds increased by JPY 74,100
million from the previous fiscal year-end. Transfers were made from
corporate bonds under long-term liabilities in the amounts of JPY
53,500 million for the 25(th) Unsecured Straight Corporate Bond,
JPY 60,000 million for the 27(th) Unsecured Straight Corporate
Bond, and JPY 15,000 million for SOFTBANK TELECOM's 2(nd) series
Unsecured Straight Corporate Bond, as the redemption dates came to
be within one year. On the other hand, payments of JPY 54,400
million in total were made for the redemptions of the 22(nd)
Unsecured Straight Corporate Bond and the 24(th) Unsecured Straight
Corporate Bond.
Accounts payable-trade increased by JPY 34,701 million from the
previous fiscal year-end. This was mainly due to an increase in
purchases of mobile phones for resale.
Short-term borrowings decreased by JPY 27,010 million from the
previous fiscal year-end. This was mainly because SOFTBANK MOBILE
continued to repay borrowings procured via the securitization of
installment sales receivables. On the other hand, there was an
increase in the Company's short-term borrowings, and the borrowings
at one of the Company's U.S. subsidiaries were transferred to
current liabilities as the redemption dates came to be within one
year.
The balance of commercial paper at the end of this fiscal year
totaled JPY 25,000 million (recorded as JPY 0 at the previous
fiscal year-end).
(d) Long-term Liabilities
Long-term liabilities totaled JPY 2,131,699 million at the end
of this fiscal year, for a JPY 11,674 million (0.6%) increase from
the previous fiscal year-end. The primary components of the change
were as follows:
Long-term borrowings decreased by JPY 250,626 million. This was
mainly because of SOFTBANK MOBILE's ongoing repayment of its SBM
loan,(3) and the elimination in consolidation of the long-term loan
receivable acquired by the Company from Vodafone Overseas Finance
Limited, which was long-term debt owed by SOFTBANK MOBILE to
Vodafone Overseas Finance Limited, and the long-term debt of
SOFTBANK MOBILE (refer to page 3, "(1) Results of Operations - 1.
Consolidated Results of Operations - (g) Special Income"). In
addition, long-term borrowings at the Company's U.S. subsidiaries
and SOFTBANK MOBILE that came to be payable within one year were
transferred to current liabilities. On the other hand, there was an
increase in the Company's long-term borrowings.
Long-term accounts payable increased JPY 217,600 million from
the previous fiscal year-end. The increase chiefly represents the
recording of a scheduled payment of JPY 200,000 million as
long-term accounts payable. This amount is scheduled to be paid to
Vodafone International Holdings B.V. and Vodafone Overseas Finance
Limited (hereafter "the Vodafone Group") in April 2012, in relation
to the transaction with the Vodafone Group which was carried out in
December 2010 (refer to page 3, "(1) Results of Operations - 1.
Consolidated Results of Operations - (g) Special Income").
Corporate bonds increased JPY 58,866 million from the previous
fiscal year-end. This increase mainly reflects a total of JPY
235,000 million from the issuance of the 31(st) to 35(th) Unsecured
Straight Corporate Bond. On the other hand, the transfers were made
for corporate bonds from long-term to current liabilities in the
amounts of JPY 53,500 million for the 25(th) Unsecured Straight
Corporate Bond, JPY 60,000 million for the 27(th) Unsecured
Straight Corporate Bond, and JPY 15,000 million for SOFTBANK
TELECOM's 2(nd) series Unsecured Straight Corporate Bond, as the
redemption dates came to be within one year. Payments of JPY 47,625
million were also made for the accelerated redemption of
Euro-denominated Senior Notes due 2013, "refer to (Reference: Major
Financing Activities)" on page 18 for the main items in this early
redemption.
Note:
3. The funds procured for the acquisition of Vodafone K.K. were
refinanced in November 2006 via a whole business securitization
program.
(e) Equity
Equity totaled JPY 879,618 million at the end of this fiscal
year, for a JPY 84,353 million (8.8%) decline from the previous
fiscal year-end. While retained earnings increased JPY 179,205
million, totaling JPY 222,277 million at the end of this fiscal
year, minority interests came to JPY 259,661 million, for a
decrease of JPY 233,301 million. This was primarily due to the
elimination in consolidation of JPY 300,000 million of minority
interests caused by the Company's acquisition of class 1 preferred
stock series 1 issued by BB Mobile to Vodafone International
Holdings B.V (refer to page 3, "(1) Results of Operations - 1.
Consolidated Results of Operations - (g) Special Income"). On the
other hand, there were increases in minority interests of JPY
41,346 million from the recording of earnings by Yahoo Japan and
JPY 24,839 million from a change in the scope of consolidation of
SB Asia Infrastructure Fund L.P. from an equity method affiliate to
a consolidated subsidiary.(4)
Note:
4. This change reflects the adoption of Accounting Standards
Codification Topic (ASC) 810, Consolidations formerly SFAS No.167,
Amendments to FASB Interpretation No. 46 (R) (SFAS 167) applied at
certain overseas subsidiaries of the Company in the United States
of America.
2. Cash Flows
Cash flow activities during this fiscal year were as
follows:
Cash and cash equivalents at the end of this fiscal year totaled
JPY 847,155 million, for a JPY 159,473 million increase from the
previous fiscal year-end.
(Millions of yen)
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011 YoY
-------------------------- ------------------ ------------------ ----------
Cash flows from operating
activities 668,050 825,837 157,786
-------------------------- ------------------ ------------------ ----------
Cash flows from investing
activities (277,162) (264,447) 12,714
-------------------------- ------------------ ------------------ ----------
(Reference) Free cash
flow 390,888 561,389 170,501
-------------------------- ------------------ ------------------ ----------
Cash flows from financing
activities (159,563) (397,728) (238,165)
-------------------------- ------------------ ------------------ ----------
(a) Cash Flows from Operating Activities
Net cash provided by operating activities totaled JPY 825,837
million (compared with JPY 668,050 million provided in the previous
fiscal year).
Income before income taxes and minority interests totaled JPY
480,612 million and non-cash items were recorded as positive. The
main components of non-cash items are JPY 224,937 million in
depreciation and amortization and JPY 62,688 million in
amortization of goodwill. Receivables-trade decreased (increase in
cash flow) by JPY 167,452 million mainly due to sales of
installment sales receivables at SOFTBANK MOBILE.
In addition, income taxes paid of JPY 186,162 million were
recorded, for a JPY 146,971 million year-on-year increase. This was
mainly because of increased income tax payments for BB Mobile's
income tax under consolidated tax return and at Yahoo Japan, and
includes JPY 26,450 million of additional income taxes paid by
Yahoo Japan in response to a correction and ruling notice it
received.
(b) Cash Flows from Investing Activities
Net cash used in investing activities was JPY 264,447 million
(compared with JPY 277,162 million used in the previous fiscal
year).
Capital expenditures, mainly at telecommunications-related
businesses, resulted in outlays of JPY 208,553 million for property
and equipment and intangibles. Purchases of marketable and
investment securities resulted in JPY 79,441 million in cash
outlays.
As a result, free cash flow (the combined net cash flows from
operating activities and investing activities) was a positive JPY
561,389 million (compared with a positive JPY 390,888 million in
the previous fiscal year), for a year-on-year increase of JPY
170,501 million.
(c) Cash Flows from Financing Activities
Net cash used in financing activities was JPY 397,728 million
(compared with JPY 159,563 million used in the previous fiscal
year).
Outlays were recorded in the amounts of JPY 459,165 million for
repayments of long-term borrowings, JPY 213,564 million for the
repurchase of minority interests and long-term borrowings, JPY
155,063 million for the repayment of lease obligations, JPY 105,508
million for the redemption of corporate bonds, and JPY 75,000
million as payment for additional entrustment for debt assumption.
The outlay for repurchase of minority interests and long-term
debtrepresents the portion of the transaction with the Vodafone
Group (refer to page 3, "(1) Results of Operations - 1.
Consolidated Results of Operations - (g) Special Income"), carried
out during this fiscal year, which was paid to the Vodafone Group
during this fiscal year in addition to acquisition-related
expenses. On the other hand, long-term borrowings raised JPY
252,900 million and corporate bond issues generated JPY 233,936
million, in addition to JPY 117,596 million recorded as proceeds
from the sale and lease back of equipment newly acquired.
(d) Trends in Cash Flow-related Indicators
A summary of trends in cash flow related indicators is presented
below.
Fiscal year Ended Fiscal year Ended Fiscal year Ended
March 31, 2009 March 31, 2010 March 31, 2011
================== ================== ================== ==================
Equity ratio 8.5 % 10.5 % 13.3%
------------------ ------------------ ------------------ ------------------
Equity ratio
(Market cap.) 30.9 % 55.9 % 77.2%
------------------ ------------------ ------------------ ------------------
Debt repayment
period 3.5 years 2.7 years 2.2 years
------------------ ------------------ ------------------ ------------------
Interest coverage
ratio 6.0 7.0 8.9
------------------ ------------------ ------------------ ------------------
Notes:
1. The above indicators are calculated using the following
formulas based on consolidated figures: Equity ratio: shareholders'
equity divided by total assets. Equity ratio (market cap.): market
capitalization divided by total assets. Debt repayment period:
interest-bearing debt divided by EBITDA. Interest coverage ratio:
EBITDA divided by interest expenses.
2. EBITDA: operating income (loss) + depreciation and
amortization (including amortization of goodwill), and loss on
disposal of fixed assets included in operating expenses.
3. Market capitalization is calculated based on the number of
shares outstanding, net of treasury stock.
4. Interest-bearing debt: short-term borrowings + commercial
paper + current portion of corporate bonds + corporate bonds +
long-term borrowings. Lease obligations are excluded. This also
excludes the corporate bonds (WBS Class B2 Funding Notes, issued by
J-WBS Funding K.K.) with a face value of JPY 27,000 million
acquired by the Company during this fiscal year that were issued
under the whole business securitization scheme associated with the
acquisition of Vodafone K.K.
5. Interest expense is the corresponding figure on the
Consolidated Statements of Income
A summary of cash flow-related indicators excluding the Mobile
Communications Segment is shown below.
Fiscal year Ended Fiscal year Ended Fiscal year Ended
March 31, 2009 March 31, 2010 March 31, 2011
================== ================== ================== ==================
Debt repayment
period 3.1 years 3.0 years 3.5 years
------------------ ------------------ ------------------ ------------------
Interest coverage
ratio 10.2 9.8 11.7
------------------ ------------------ ------------------ ------------------
(Reference: Major Financing Activities)
The major financing activities in this fiscal year were as
follows:
Item Company Details Summary
Name
------------------------- ------------ ------------------ ---------------------------
Bond issuances SOFTBANK 31st Unsecured Issue date: June 2, 2010
CORP. Straight Redemption date: May 31,
Corporate Bond 2013 Procured amount: JPY
25,000 million Interest
rate: 1.17%/year Use:
redemption of bonds which
will mature by the end of
June 2011
------------------------- ------------ ------------------ ---------------------------
32nd Unsecured Issue date:
Straight June 2, 2010
Corporate Bond Redemption
date: June 2,
2015 Procured
amount: JPY
25,000 million
Interest rate:
1.67%/year
Use:
redemption of
bonds which
will mature by
the end of
June 2011
------------------------- ------------ ------------------ ---------------------------
33rd Unsecured Issue date:
Straight September 17,
Corporate Bond 2010
(Fukuoka SoftBank Redemption
HAWKS Bond) date:
September 17,
2013 Procured
amount: JPY
130,000
million
Interest rate:
1.24%/year
Use:
redemption of
bonds which
will mature by
the end of
June 2011
------------------ ---------------------------
34th Unsecured Issue date:
Straight January 25,
Corporate Bond 2011
Redemption
date: January
25, 2016
Procured
amount: JPY
45,000 million
Interest rate:
1.10%/year
Use:
redemption of
bonds which
will mature by
the end of
June 2011 and
acquisition of
proffered
stock issued
by a
consolidated
subsidiary
------------------ ---------------------------
35th Unsecured Issue date:
Straight January 25,
Corporate Bond 2011
Redemption
date: January
25, 2018
Procured
amount: JPY
10,000 million
Interest rate:
1.66%/year
Use:
redemption of
bonds which
will mature by
the end of
June 2011 and
acquisition of
proffered
stock issued
by a
consolidated
subsidiary
------------------------- ------------ ------------------ ---------------------------
Bond redemption SOFTBANK 24th Unsecured Redemption date: April 26,
CORP. Straight 2010 Redeemed amount: JPY
Corporate Bond 20,000 million
(Fukuoka SoftBank
HAWKS Bond)
------------------------- ------------ ------------------ ---------------------------
22(nd) Unsecured Redemption date: September
Straight 14, 2010 Redeemed amount:
Corporate Bond JPY 34,400 million
------------------------- ------------ ------------------ ---------------------------
Euro-denominated Redemption date: October
Senior Notes Due 15, 2010 Redeemed amount:
2013 (redeemed JPY 47,269 million (EUR
before maturity) 352 million)
------------------------- ------------ ------------------ ---------------------------
Securitization of SOFTBANK Procurement of Procurement
receivables (recorded as MOBILE funds totaling date: June 29,
borrowings) Corp. JPY 10,000 2010
million Redemption
accompanying method:
securitization of monthly
mobile handsets pass-through
installment sales repayment Use:
receivables capital
expenditure
and repayment
of funds
procured via
the whole
business
securitization
program
------------------------- ------------ ------------------ ---------------------------
Repayment of SOFTBANK Repayment of JPY Repayment of funds
securitization of MOBILE 179,910 million procured via
receivables Corp. securitization of mobile
handsets installment sales
receivables
------------------ ---------------------------
Increase or SOFTBANK Increase of JPY Mainly
decrease in debt CORP. 217,000 million increase of
(excluding long-term
securitization of borrowings
receivables)
------------------------- ------------ ------------------ ---------------------------
SOFTBANK Decrease of JPY Repayment of
MOBILE 214,124 million funds raised
Corp. via the whole
business
securitization
financing
scheme
------------------------- ------------ ------------------ ---------------------------
Yahoo Japan Decrease of JPY
Corporation 10,000 million
------------------------- ------------ ------------------ ---------------------------
Capital expenditure by SOFTBANK New capital Funds newly procured
financial lease MOBILE expenditure via during this fiscal year:
Corp. etc. leases JPY 117,596 million
------------------------- ------------ ------------------ ---------------------------
Additional entrustment SOFTBANK Payment of JPY Bonds in scope: Former
for debt assumption MOBILE 75,000 million Vodafone K.K. corporate
Corp. bonds 3(rd) Unsecured
Straight Corporate Bond
JPY 25,000 million
(redeemed on August 19,
2010) 5(th) Unsecured
Straight Corporate Bond
JPY 25,000 million
(redeemed on August 25,
2010) 7(th) Unsecured
Straight Corporate Bond
JPY 25,000 million
(redeemed on September
22, 2010)
------------------------- ------------ ------------------ ---------------------------
Acquisition of preferred SOFTBANK Payment of JPY Acquisition cost: JPY
stock etc., issued by CORP. 212,500 million 412,500 million in total
the Company's (refer to page 3, Payment date: December 10,
consolidated subsidiary "(1) Results of 2010 JPY 212,500 million
and held by the Vodafone Operations - 1. April 2012 (tentative) JPY
Group Consolidated 200,000 million
Results of
Operations - (g)
Special Income")
------------------------- ------------ ------------------ ---------------------------
(3) Fundamental Policy for Distribution of Profit, and Dividends
for Current and Following Years
The Company strives to increase returns to shareholders by
raising corporate value and has a fundamental policy of returning
appropriate amounts of profit to shareholders and other
stakeholders. The Company's policy regarding dividends to
shareholders is to balance the strengthening of the financial base
by reducing interest-bearing debt while maintaining a stable
dividend over the medium- to long-term.
Based on this policy the dividend for this fiscal year is
scheduled to be the same as the previous fiscal year at JPY 5 per
share.
The Company intends to increase the dividend for the fiscal year
ending March 2012 from JPY 5 per share and increase it further in
the fiscal year ending March 2015. The concrete amount of dividend
will be announced promptly upon resolution.
2. The SOFTBANK Group
As of March 31, 2011, the Group's business segments were
comprised of the following consolidated subsidiaries and equity
method companies. The segments' main businesses were as
follows.
WILLCOM, Inc. is in the process of reorganization under the
Corporate Reorganization Act and the Company does not have
effective control over WILLCOM, Inc. Therefore, WILLCOM, Inc. is
not treated as a subsidiary.
Equity Method
Non-consolidated Main Business of
Consolidated Subsidiaries and Segment and Name
Business Segments Subsidiaries Affiliates of Business
================================== ============= ================= ===================
Provision of
mobile
communication
services and sale
of mobile phones
accompanying the
services etc.
(Core company:
Reportable Mobile SOFTBANK MOBILE
segments Communications 3 1 Corp.)
------------ -------------------- ------------- ----------------- -------------------
Provision of
high-speed
Internet
connection
service, IP
telephony service,
and provision of
content etc. (Core
Broadband company: SOFTBANK
Infrastructure 3 BB Corp.(1) )
------------ -------------------- ------------- ----------------- -------------------
Provision of
fixed-line
telecommunications
etc. (Core
company: SOFTBANK
Fixed-line TELECOM Corp.(1)
Telecommunications 2 )
-------------------- ------------- ----------------- -------------------
Internet-based
advertising
operations,
e-commerce site
operations such as
Yahoo! Auctions
and Yahoo!
Shopping,
membership
services, etc.
(Core company:
Yahoo Japan
Internet Culture 13 9 Corporation(1) )
--------------------------------- ------------- ----------------- -------------------
Distribution of PC
software and
peripherals,
Fukuoka SOFTBANK
HAWKS related
Others 96 63 businesses, etc.
Total 117 73
---------------------------------- ------------- ----------------- -------------------
Note:
1. Although SOFTBANK BB Corp., SOFTBANK TELECOM Corp. and Yahoo
Japan Corporation are included as consolidated subsidiaries in the
Broadband Infrastructure, Fixed-line Telecommunications and
Internet Culture segments, respectively, SOFTBANK BB Corp.,
SOFTBANK TELECOM Corp. and Yahoo Japan Corporation operate multiple
businesses and therefore their operating results are allocated to
multiple business segments.
Listed Companies
The Company's five following consolidated subsidiaries were
listed on domestic stock exchanges as of March 31, 2011:
Company Name Listed Exchange
======================== ======================
Yahoo Japan Corporation Tokyo Stock Exchange
First section
Osaka Stock Exchange
JASDAQ (Standard)
------------------------ ----------------------
SOFTBANK TECHNOLOGY Tokyo Stock Exchange
CORP. First section
------------------------ ----------------------
Vector Inc. Osaka Stock Exchange
JASDAQ (Standard)
------------------------ ----------------------
ITmedia Inc. Tokyo Stock Exchange
Mothers
------------------------ ----------------------
Carview Corporation Tokyo Stock Exchange
Mothers
------------------------ ----------------------
3. Management Policies
(1) Basic Management Approach
1. Fundamental Management Policy
Since its establishment, the SOFTBANK Group has consistently
operated under the fundamental management policy of "endeavoring to
benefit society and the economy and to maximize enterprise value by
fostering the sharing of wisdom and knowledge gained through the IT
revolution."
2. Next 30-Year Vision
As last year marked the 30(th) year since its founding, the
Group announced "SOFTBANK's Next 30-Year Vision." The vision is a
statement of what the Group aims to achieve over the next 30 years,
and what the Group aims to look like after this period. Through its
various businesses the Group will strive to achieve the stated goal
of this vision: to be a group that provides the technologies and
services most needed by people around the world.
(2) Medium- to Long-Term Strategies
1. Forming and Expanding a Strategic Synergy Group Focused on
Asia
The information industry in which the Group's businesses operate
sees a steady stream of new technologies and business models. The
industry's ups and downs will likely become more pronounced going
forward. The Group seeks to provide lifestyle-changing services on
a continuous basis in this fluctuating environment. The strategy
the Group has adopted to achieve this is to be flexible in
implementing technologies or business models and to invest in or
form joint ventures with companies that have the best technologies
or business models at the time, eventually forming and expanding a
"strategic synergy group" focused on Asia. Each company in the
strategic synergy group will make decisions autonomously, enabling
it to continue to grow while creating synergies with other group
companies.
2. Focus on Mobile Internet
Forecasts for trends in Japan five years from now suggest the
number of smartphones shipped will have increased almost five-fold,
and that of tablet PC will have increased more than seven-fold.(1)
These trends point to a world-wide shift toward using these mobile
devices as a means for accessing the Internet, in preference to
PCs. The Group's strategy is to develop its businesses focused on
the domain of mobile internet, which will expand in line with this
change.
In line with this strategy, the Group will work to strengthen
the network in the mobile communications business, provide high
speed telecommunications services, and enhance its lineup of
smartphones and tablet PCs. It will also provide a full array of
mobile content including video, electronic books, and games.
Note:
1. Mobile Computing Promotion Consortium forecast (November 26,
2010). Comparison of the forecast for one year from April 2010 to
March 2011 and from April 2015 to March 2016.
(3) Important Management Issues for the Company
1. Reduction of Net Interest-bearing Debt
The Group recognizes the importance of reducing its net
interest-bearing debt,(2) and has set a target of reducing its JPY
1,939,520 million of net interest-bearing debt as of the end of
March 2009 by half over three years (as of the end of March 2012),
and to zero over six years (as of the end of March 2015). Net
interest-bearing debt at the end of this fiscal year was JPY
1,209,635 million, down 37.6% from the end of March 2009.
To achieve this target, the Group plans to generate an aggregate
total of at least JPY 1 trillion in free cash flow(3) over the
three years from the fiscal year ended March 2010 through the
fiscal year ending March 2012, in order to obtain funds to repay
the interest-bearing debt. To generate the free cash flow, the
Group will focus on improving operating cash flow, mainly in its
core telecommunications-related businesses.
Notes:
2. Net interest-bearing debt: interest-bearing debt minus cash
position.
Interest-bearing debt: short-term borrowings + commercial paper
+ current portion of corporate bonds + corporate bonds + long-term
debt. Lease obligations are excluded.
This excludes the corporate bonds (WBS Class B2 Funding Notes,
issued by J-WBS Funding K.K.) with a face value of JPY 27,000
million acquired by the Company during the previous fiscal year
that were issued under the whole business securitization financing
scheme associated with the acquisition of Vodafone K.K.
Cash position: cash and cash deposits + marketable securities
recorded as current assets (excludes Yahoo! Inc. shares held by
a subsidiary of the Company in the United States of
America).
3. Free cash flow: cash flows from operating activities + cash
flows from investing activities.
2. Mobile Communications Enhancement
In relation to the mobile phone services provided by SOFTBANK
MOBILE, the Group recognizes the need to enhance its network. In
March 2010, SOFTBANK MOBILE announced the SoftBank Network
Enhancement Initiative, and in one year doubled the number of
mobile phone base stations from around 60,000 at the end of April
2010, to 122,508 as of the end of March 2011.
To further increase service area and improve communications
quality, the Group plans to increase the number of base stations to
140,000 by the end of September 2011. At the same time, the Group
will continue efforts to improve the users' convenience by
providing small base stations (femtocells) and Wi-Fi routers free
of charge in users' homes and in stores.
3. Response to the Great East Japan Earthquake and Revision of
BCP in Preparation for Disasters
The Great East Japan Earthquake of March 11, 2011 left some
regions unable to use the Group's telecommunication services. The
Group is making every effort to restore its services and network as
quickly as possible, as it recognizes these services are important
lifelines.
Regarding the mobile communications service, on the morning of
March 12(th) , 2011, the day after the earthquake occurred, 3,786
base stations were rendered inoperative. The Group deployed
vehicle-mounted base stations, auxiliary telecommunications
facilities, and other response measures and had restored the
service area to nearly the pre-disaster equivalent(4) by April 14,
2011. At present the Group is working to restore the rest of the
inoperative base stations and continuing efforts to provide
pre-disaster levels of communications quality across the entire
service area by the end of May 2011.
Meanwhile, for fixed-line telecommunications service and
broadband service, the Group had restored around 97% of the total
of around 178,000(5) affected subscriber lines as of May 6,
2011.
Moving ahead, the Group will look at countermeasures to allow it
to continue providing telecommunications services even in the event
of a major disaster, and for speeding recovery from service
disruptions caused by damage. It will also review its business
continuity plan to prepare for disasters of a larger scale than
previously imagined.
Notes:
4. Excludes the exclusion zone around the Fukushima Nuclear
power plant and areas with restricted access due to immense
earthquake and tsunami damages.
5. Total number of lines for SOFTBANK TELECOM fixed-line
communication services and SOFTBANK BB broadband service (Yahoo! BB
service and SOFTBANK broadband service) including the number of
lines in the exclusion zone around the Fukushima Nuclear power
plant.
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of yen)
As of As of
March 31, 2010 March 31, 2011
------------------- -------------------
Amount Amount
------------------------------------ ------------------- -------------------
ASSETS
Current assets:
Cash and deposits 690,053 861,657
Notes and accounts
receivable - trade 816,550 657,774
Marketable securities 4,342 78,099
Merchandise and finished
products 37,030 49,887
Deferred tax assets 74,290 90,907
Other current assets 106,733 162,068
Less: Allowance for
doubtful accounts (34,559) (37,778)
------------------------------------ ------------------- -------------------
Total current assets 1,694,440 1,862,617
------------------------------------ ------------------- -------------------
Fixed assets:
Property and equipment, net:
Buildings and structures 68,182 74,867
Telecommunications equipment 706,283 840,839
Telecommunications service
lines 72,983 68,856
Land 22,401 22,882
Construction in progress 34,634 55,663
Other property and equipment 46,218 50,339
------------------------------------ ------------------- -------------------
Total property and
equipment 950,703 1,113,447
------------------------------------ ------------------- -------------------
Intangible assets, net:
Goodwill 900,768 839,238
Software 208,915 248,872
Other intangibles 42,702 32,233
------------------------------------ ------------------- -------------------
Total intangible assets 1,152,386 1,120,345
------------------------------------ ------------------- -------------------
Investments and other assets:
Investment securities and
investments in
unconsolidated
subsidiaries and
affiliated companies 370,027 340,436
Deferred tax assets 152,654 109,145
Other assets 164,950 123,360
Less: Allowance for doubtful
accounts (24,238) (15,008)
------------------------------------ ------------------- -------------------
Total investments and other
assets 663,394 557,933
------------------------------------ ------------------- -------------------
Total fixed assets 2,766,483 2,791,726
------------------------------------ ------------------- -------------------
Deferred charges 1,951 1,381
Total assets 4,462,875 4,655,725
------------------------------------ ------------------- -------------------
Consolidated Balance Sheets
(Millions of yen)
As of As of
March 31, 2010 March 31, 2011
------------------- -------------------
Amount Amount
------------------------------------ ------------------- -------------------
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - trade 158,942 193,644
Short-term borrowings 437,960 410,950
Commercial paper - 25,000
Current portion of corporate
bonds 54,400 128,500
Accounts payable - other
and accrued expenses 451,408 561,421
Income taxes payable 100,483 115,355
Deferred tax liabilities - 7,104
Current portion of lease
obligations 109,768 131,305
Other current liabilities 65,914 71,125
------------------------------------ ------------------- -------------------
Total current liabilities 1,378,878 1,644,407
------------------------------------ ------------------- -------------------
Long-term liabilities:
Corporate bonds 448,523 507,390
Long-term debt 1,281,586 1,030,959
Long-term accounts payable -
other 47,541 265,141
Deferred tax liabilities 30,482 26,582
Liability for retirement
benefits 15,557 14,414
Allowance for point mileage 47,215 41,947
Lease obligations 224,484 199,769
Other liabilities 24,634 45,494
------------------------------------ ------------------- -------------------
Total long-term liabilities 2,120,024 2,131,699
------------------------------------ ------------------- -------------------
Total liabilities 3,498,903 3,776,107
------------------------------------ ------------------- -------------------
Equity:
Common stock 188,750 188,775
Additional paid-in capital 213,068 212,510
Retained earnings 43,071 222,277
Less: Treasury stock (225) (240)
------------------------------------ ------------------- -------------------
Total shareholders' equity 444,665 623,321
------------------------------------ ------------------- -------------------
Unrealized gain on
available-for-sale
securities 43,864 34,920
Deferred gain on
derivatives under hedge
accounting 14,528 11,224
Foreign currency translation
adjustments (32,525) (50,213)
Total valuation and
translation adjustments 25,866 (4,068)
------------------------------------ ------------------- -------------------
Stock acquisition rights 476 703
------------------------------------ ------------------- -------------------
Minority interests 492,963 259,661
------------------------------------ ------------------- -------------------
Total equity 963,971 879,618
------------------------------------ ------------------- -------------------
Total liabilities and equity 4,462,875 4,655,725
------------------------------------ ------------------- -------------------
(2) Consolidated Statements of Income and Consolidated
Statements of Comprehensive Income
Consolidated Statements of Income (Millions of yen)
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
------------------ --------------------
April 1, 2009 to April 1, 2010 to
March 31, 2010 March 31, 2011
------------------ --------------------
Amount Amount
------------------------------------ ------------------ --------------------
Net sales 2,763,406 3,004,640
Cost of sales 1,326,571 1,373,617
Gross Profit 1,436,834 1,631,022
Selling, general and
administrative expenses 970,963 1,001,859
------------------------------------ ------------------ --------------------
Operating income 465,871 629,163
------------------------------------ ------------------ --------------------
Interest income 1,024 2,228
Foreign exchange gain, net 1,707 1,808
Equity in earnings of affiliated
companies - 2,874
Gain on investments in
partnership - 2,088
Other non-operating income 6,586 8,320
------------------------------------ ------------------ --------------------
Non-operating income 9,318 17,320
------------------------------------ ------------------ --------------------
Interest expense 111,152 104,019
Equity in losses of affiliated
companies 3,616 -
Loss on investments in
partnership 1,529 -
Other non-operating expenses 17,893 22,049
------------------------------------ ------------------ --------------------
Non-operating expenses 134,192 126,069
------------------------------------ ------------------ --------------------
Ordinary income 340,997 520,414
------------------------------------ ------------------ --------------------
Gain on sale of investment
securities 4,758 6,623
Dilution gain from changes in
equity interest 1,407 2,879
Gain on repurchase of
minority interests and
long-term debt - 4,187
Unrealized appreciation on
valuation of investments and
loss on sale of investments
at subsidiaries in the
U.S.,net - 263
Other special income 489 298
------------------------------------ ------------------ --------------------
Special income 6,655 14,252
------------------------------------ ------------------ --------------------
Valuation loss on investment
securities 5,167 8,739
Unrealized appreciation on
valuation of investments and
loss on sale of investments
at subsidiaries in the
U.S.,net 303 -
Loss on retirement of non
current assets 48,786 6,542
Loss on disaster - 14,416
Valuation loss on option - 9,521
Loss on adjustment for
changes of accounting
standard for asset
retirement obligations - 7,099
Other special losses 4,145 7,734
Special loss 58,403 54,053
------------------------------------ ------------------ --------------------
Income before income taxes
and minority interests 289,249 480,612
------------------------------------ ------------------ --------------------
Income taxes:
Current 117,876 173,509
Correction - 27,391
Deferred 26,683 32,047
------------------------------------ ------------------ --------------------
Total income taxes 144,559 232,949
------------------------------------ ------------------ --------------------
Income before minority interests - 247,663
------------------------------------ ------------------ --------------------
Minority interests in net income 47,973 57,950
Net income 96,716 189,712
------------------------------------ ------------------ --------------------
Consolidated Statements of Comprehensive Income
(Millions of yen)
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
------------------- --------------------
April 1, 2009 to April 1, 2010 to
March 31, 2010 March 31, 2011
------------------- --------------------
Amount Amount
----------------------------------- ------------------- --------------------
Income before minority interests - 247,663
Other comprehensive income
Unrealized gain on
available-for-sale securities - (6,822)
Deferred gain on derivatives
under hedge accounting - (3,176)
Foreign currency translation
adjustment - (10,195)
Share of other comprehensive
income of associates
accounted for using equity
method - (7,526)
----------------------------------- ------------------- --------------------
Total other comprehensive income - (27,720)
----------------------------------- ------------------- --------------------
Comprehensive income - 219,942
----------------------------------- ------------------- --------------------
Comprehensive income attributable
to
Comprehensive income
attributable to owners of
the parent - 159,777
Comprehensive income
attributable to minority
interests - 60,165
----------------------------------- ------------------- --------------------
(3)Consolidated Statements of Changes in Equity
Fiscal year from April
1, 2009 to March 31,
2010: (Millions of yen)
Stock
acquisition Minority Total
Shareholders' equity Valuation and translation adjustments rights interests equity
---------------------------------------------------- ------------------------------------------------ ----------- --------- -------
Unrealized Deferred
Retained gain on gain on Foreign
Additional earnings available-for- derivatives currency
Common paid-in (accumulated Treasury sale under hedge translation
stock capital deficit) stock Total securities accounting adjustments Total
------------------------ ------- ---------- ------------ -------- ------- -------------- ----------- ----------- ------ ----------- --------- -------
Balance at April 1,
2009 187,681 211,999 (51,269) (214) 348,197 31,334 25,117 (30,554) 25,897 289 450,414 824,798
------------------------ ------- ---------- ------------ -------- ------- -------------- ----------- ----------- ------ ----------- --------- -------
Changes of items during
the year
Exercise of warrants 1,069 1,069 - - 2,138 - - - - - - 2,138
Cash dividends - - (2,702) - (2,702) - - - - - - (2,702)
Net income - - 96,716 - 96,716 - - - - - - 96,716
Purchase of treasury
stock - - - (11) (11) - - - - - - (11)
Adjustments of
retained earnings
(accumulated deficit)
due to change in
scope of the
consolidation - - 327 - 327 - - - - - - 327
Items other than
changes in
shareholders'
equity, net - - - - - 12,530 (10,589) (1,971) (30) 187 42,548 42,705
------------------------ ------- ---------- ------------ -------- ------- -------------- ----------- ----------- ------ ----------- --------- -------
Total changes in the
year 1,069 1,069 94,341 (11) 96,468 12,530 (10,589) (1,971) (30) 187 42,548 139,173
------------------------ ------- ---------- ------------ -------- ------- -------------- ----------- ----------- ------ ----------- --------- -------
Balance at March 31,
2010 188,750 213,068 43,071 (225) 444,665 43,864 14,528 (32,525) 25,866 476 492,963 963,971
------------------------ ------- ---------- ------------ -------- ------- -------------- ----------- ----------- ------ ----------- --------- -------
Fiscal year from
April 1, 2010 to
March 31, 2011: (Millions of yen)
Stock
acquisition Minority Total
Shareholders' equity Valuation and translation adjustments rights interests equity
------------------------------------------------ -------------------------------------------------- ----------- --------- ---------
Unrealized Deferred
gain on gain on Foreign
Additional available-for- derivatives currency
Common paid-in Retained Treasury sale under hedge translation
stock capital earnings stock Total securities accounting adjustments Total
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
Balance at April 1,
2010 188,750 213,068 43,071 (225) 444,665 43,864 14,528 (32,525) 25,866 476 492,963 963,971
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
Decrease in
retained earnings
due to adoption
of practical
solution on
unification of
accounting
policies applied
to associates
accounted for
using the equity
method - - (4,510) - (4,510) - - - - - - (4,510)
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
Changes of items
during the year
Exercise of
warrants 24 24 - - 49 - - - - - - 49
Cash dividends - - (5,411) - (5,411) - - - - - - (5,411)
Net income - - 189,712 - 189,712 - - - - - - 189,712
Purchase of
treasury stock - - - (15) (15) - - - - - - (15)
Adjustments of
retained earnings
due to change in
scope of the
consolidation - - (585) - (585) - - - - - - (585)
Changes in
foreign
affiliate's
interests in its
subsidiary - (582) - - (582) - - - - - - (582)
Items other
than changes
in
shareholders'
equity, net - - - - - (8,943) (3,303) (17,687) (29,935) 226 (233,301) (263,010)
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
Total changes in the
year 24 (558) 183,715 (15) 183,166 (8,943) (3,303) (17,687) (29,935) 226 (233,301) (79,843)
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
Balance at March 31,
2011 188,775 212,510 222,277 (240) 623,321 34,920 11,224 (50,213) (4,068) 703 259,661 879,618
-------------------- ------- ---------- -------- -------- ------- -------------- ----------- ----------- -------- ----------- --------- ---------
(4) Consolidated Statements of Cash Flows
(Millions of yen)
--------------------------------------------------------------------------------------------------------------------------
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
-------------------------------- ----------------------------------
April 1, 2009 to April 1, 2010 to
March 31, 2010 March 31, 2011
---------------------------------------------------- -------------------------------- ----------------------------------
Cash flows from operating activities:
Income before income taxes and minority
interests 289,249 480,612
Adjustments for:
Depreciation and amortization 243,944 224,937
Amortization of goodwill 61,070 62,688
Loss on retirement of non current
assets 48,786 6,542
Equity in losses (earnings) of affiliated
companies 3,616 (2,874)
Dilution gain from changes in equity
interest, net (327) (2,045)
Valuation loss on investment securities 5,167 8,739
Unrealized appreciation on valuation
of investments and loss on sale of
investments at subsidiaries in the
U.S., net 303 (263)
Gain on sale of marketable and investment
securities,net (4,621) (5,972)
Foreign exchange gain, net (1,818) (1,587)
Interest and dividend income (1,370) (3,856)
Interest expense 111,152 104,019
Changes in operating assets, and
liabilities
Decrease in receivables - trade 59,637 167,452
(Decrease) increase in payables -
trade (1,038) 33,679
Other, net (10,447) 30,735
---------------------------------------------------- -------------------------------- ----------------------------------
Sub-total 803,304 1,102,806
Interest and dividends received 1,234 3,900
Interest paid (97,297) (94,708)
Income taxes paid (39,191) (186,162)
Net cash provided by operating activities 668,050 825,837
---------------------------------------------------- -------------------------------- ----------------------------------
- Continued -
Consolidated Statements of Cash Flows (Continued)
(Millions of yen)
------------------------------------------------------------------------------
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
------------------ ------------------
April 1, 2009 to April 1, 2010 to
March 31, 2010 March 31, 2011
-------------------------------------- ------------------ ------------------
Cash flows from investing activities:
Purchase of property and
equipment, and intangibles (223,818) (208,553)
Purchase of marketable and
investment securities (56,686) (79,441)
Proceeds from sale of
marketable and investment
securities 19,040 31,492
Acquisition of interests in
subsidiaries newly
consolidated, net of cash
acquired (20,880) (701)
Other, net 5,183 (7,243)
-------------------------------------- ------------------ ------------------
Net cash used in investing activities (277,162) (264,447)
-------------------------------------- ------------------ ------------------
Cash flows from financing activities:
(Decrease) increase in
short-term borrowings, net (112,910) 20,129
Increase in commercial paper,
net - 25,000
Proceeds from long-term debt 337,929 252,900
Repayment of long-term debt (516,051) (459,165)
Proceeds from issuance of bonds 183,433 233,936
Redemption of bonds (70,675) (105,508)
Exercise of warrants 2,138 41
Proceeds from issuance of
shares to minority
shareholders 1,493 1,684
Cash dividends paid (2,678) (5,387)
Cash dividends paid to minority
shareholders (4,618) (16,009)
Proceeds from sale and
lease back of equipment
newly acquired 135,941 117,596
Repayment of lease obligations (103,052) (155,063)
Payments for additional
entrustment for debt
assumption - (75,000)
Payments for repurchase of
minority interests and
long-tem debt - (213,564)
Other, net (10,512) (19,316)
-------------------------------------- ------------------ ------------------
Net cash used in financing activities (159,563) (397,728)
-------------------------------------- ------------------ ------------------
Effect of exchange rate changes
on cash and cash equivalents (606) (4,203)
-------------------------------------- ------------------ ------------------
Net increase in cash and
cash equivalents 230,718 159,457
-------------------------------------- ------------------ ------------------
Increase in cash and cash
equivalents due to newly
consolidated subsidiaries 126 1,919
Decrease in cash and cash
equivalents due to exclusion
of previously consolidated
subsidiaries (807) (64)
Decrease in cash and
cash equivalents
resulting from
corporate separation - (1,837)
Cash and cash equivalents,
beginning of the year 457,644 687,681
------------------ ------------------
Cash and cash equivalents, end of
the year 687,681 847,155
-------------------------------------- ------------------ ------------------
(5) Significant Doubt about Going Concern Assumption
There are no applicable items.
(6) Basis of Presentation of Consolidated Financial
Statements
1. Changes in scope of consolidation
As of March 31, 2011, SOFTBANK CORP. (the "Company")
consolidated 117 subsidiaries (together, the "Group"). 61
subsidiaries were not consolidated as the individual and aggregate
amounts were not considered material in relation to the
consolidated total assets, net sales, net income and retained
earnings of the SOFTBANK Consolidated Financial Statements.
Changes in scope of consolidation are as follows:
<Increase>
12 companies
Significant changes:
SB Asia Infrastructure Fund L.P. and its 6 consolidated subsidiaries
<Decrease>
4 companies
The Company owns 100% shares issued by WILLCOM, Inc. However,
WILLCOM, Inc. is in the process of reorganization under the
Corporate Reorganization Act and the Company does not have
effective control over WILLCOM, Inc. Therefore, WILLCOM, Inc. is
not treated as a subsidiary.
2. Changes in scope of equity method
As of March 31, 2011, the Company held 4 non-consolidated
subsidiaries and 69 affiliates, all of which were accounted for
under the equity method. 57 non-consolidated subsidiaries and 23
affiliates were not accounted for under the equity method, as the
individual and aggregate amounts were not considered material in
relation to the net income and retained earnings of the SOFTBANK
Consolidated Financial Statements.
Changes in scope of equity method are as follows:
<Increase>
24 companies
Significant changes:
Synacast Corporation (Synacast Corporation has changed its name
to PPLive Corporation at April 5, 2011.)
SB Asia Infrastructure Fund L.P.'s 12 affiliates under equity
method
Wireless City Planning Inc.
USTREAM, Inc.
<Decrease>
15 companies
Significant changes:
SB Asia Infrastructure
Fund L.P.
3. Fiscal year end
Fiscal year ends of consolidated subsidiaries for both domestic
and overseas entities are as follows:
<Fiscal year end> <Domestic> <Overseas>
March end 48 35
(same as the consolidated balance sheet date)
July end - 8
December end 2 21
January end - 1
February end 2 -
4. Summary of significant accounting policies
(1) Evaluation standards and methods for major assets
[1] Marketable securities and investment securities
Held-to-maturity debt securities: Stated at amortized cost
Available-for-sale securities:
With market quotations: Stated at fair value, which represents
the market prices at the balance sheet date (unrealized gain/loss
is included as a separate component in equity, net of tax, while
cost is primarily determined using the moving-average method)
Without market quotations: Carried at cost, primarily based on
the moving-average method
Certain subsidiaries of the Company in the United States of
America qualify as investment companies under the provisions set
forth in Financial Services - Investment Companies of the FASB
Accounting Standards Codification Topic 946 (ASC 946) and account
for the investment securities in accordance with the ASC 946. The
investment securities are carried at fair value, and net changes in
fair value are recorded in the consolidated statements of income
under the application of the ASC 946.
[2] Derivative instruments: Stated at fair value
[3] Inventories (merchandise): Carried at cost, primarily net
selling value determined by the moving-average method
(2) Depreciation and amortization
[1] Property and equipment:
Buildings and structures: Computed primarily using the straight-line
method
Telecommunications Computed using the straight-line method
equipment:
Telecommunications Computed using the straight-line method
service lines:
Others: Computed primarily using the straight-line
method
[2] Intangible assets: Computed using the straight-line
method
Finance leases in which the ownership of leased assets is not
transferred to lessees at the end of lease periods are computed
using the straight-line method over the period of the finance
leases. Finance lease transactions in which the ownership of leased
assets was not transferred to lessees and contracted before April
1, 2008 are accounted for as operating lease transactions and "as
if capitalized" information is disclosed in the notes to the
Company's consolidated financial statements.
(3) Accounting principles for major allowances and accruals
<Allowance for doubtful accounts>
To prepare for uncollectible credits, allowance for doubtful
accounts is calculated based on the actual bad debt ratio, and
specific allowance for doubtful accounts deemed to be uncollectible
is calculated considering its collectability.
<Accrued retirement benefits>
SOFTBANK MOBILE, SOFTBANK TELECOM, and certain other
subsidiaries have defined benefit pension plans for their
employees. These companies account for the obligation for
retirement benefits based on the projected benefit obligations at
the end of the fiscal year.
SOFTBANK MOBILE and SOFTBANK TELECOM amended the pension plans
by suspending the defined benefit pension plans at the end of March
2007 and March 2006, respectively, and implementing defined
contribution pension plans. The retirement benefits existed and
calculated under the benefit pension plan were fixed and will be
paid at the retirement of applicable employees, and the projected
benefit obligations are calculated based on these fixed retirement
benefits. As a result, service cost under the defined benefit
pension plans at SOFTBANK MOBILE and SOFTBANK TELECOM did not occur
for the fiscal year ended March 31, 2011.
<Allowance for point mileage >
SOFTBANK MOBILE has an allowance for point mileage which is
accrued based on the estimated future obligation arising from point
service, based on past experience.
(4) Translation of foreign currency transactions and
accounts
All assets and liabilities in foreign currencies are translated
at the foreign currency exchange rates prevailing at the respective
balance sheet dates. Foreign currency exchange gains or losses are
charged to net income when incurred.
The translation of foreign currency denominated revenues and
expenses in the financial statements of foreign consolidated
subsidiaries into Japanese yen is performed by using the average
exchange rate for the period. Assets and liabilities are translated
using the foreign currency exchange rates prevailing at the balance
sheet dates, and capital stock is translated using the historical
foreign currency exchange rates. Foreign currency financial
statement translation differences are presented as a separate
component of "Equity," and the portion pertaining to minority
shareholders, which is included in "Minority interests."
(5) Accounting for significant hedge transactions
[1] Forward-exchange contract
<Hedge accounting>
Receivables and obligations denominated in foreign currencies
for which foreign exchange forward contracts are used to hedge the
foreign currency fluctuation are translated at the contracted rate,
if the forward contracts qualify for hedge accounting. For
forecasted transactions denominated in foreign currencies,
recognitions of gains or losses resulting from changes in fair
value of derivative instruments for hedging are deferred until the
related gains and losses on hedged items are recognized.
<Derivative instruments for hedging and hedged items>
Derivative instruments for hedging: Forward-exchange
contract
Hedged items: Foreign currency-denominated receivables,
obligations and
forecasted transactions
<Hedging policy>
In accordance with the Group's policy, derivative financial
instruments are used to hedge foreign exchange risk associated with
hedged items denominated in foreign currencies.
< Effectiveness of hedge transactions >
For receivables and obligations denominated in foreign
currencies, effectiveness of the hedge transaction is omitted due
to qualifying for hedge accounting. For forecasted transaction
denominated in foreign currencies, the effectiveness of hedge
transaction is assessed by measuring high correlation between the
variability of cash flows associated with the foreign currency
fluctuation of hedged items and variability of cash flows of hedge
instruments.
[2] Interest rate swap
<Hedge accounting>
Recognitions of gains or losses resulting from changes in fair
value of derivative instruments for hedging are deferred until the
related gains and losses on hedged items are recognized.
<Derivative instruments for hedging and hedged items>
Derivative instruments for hedging: Interest rate swap
contracts
Hedged items: Interest expense on borrowings
<Hedging policy>
In accordance with the Group's policy, derivative financial
instruments are used to hedge the risk of exposures to fluctuations
in interest rates in accordance with its internal policies,
regarding the authorization and credit limit amount.
< Effectiveness of hedge transactions >
The effectiveness of hedge transaction is assessed by measuring
high correlation between the variability of cash flows associated
with the interest rate of hedged items and variability of cash
flows of hedge instruments.
[3] Collar transaction
<Hedge accounting>
Unrealized gains and losses, net of tax, on a collar transaction
that qualifies as an effective cash flow hedge at consolidated
subsidiaries in the United States of America are reported as a
separate component of "Equity" in the Company's consolidated
balance sheets. As such, unrealized gains and losses associated
with the collar transaction will be recognized into earnings in the
same period during which the hedged assets and liabilities are
recognized in earnings.
<Derivative instruments for hedging and hedged items>
Derivative instruments for hedging: Prepaid variable share
forward contract (the collar transaction)
Hedged items: Equity security
<Hedging policy>
The purpose of the collar transaction is to hedge the
variability of cash flows associated with the future market price
of the underlying equity security, which is used for the settlement
of loans at maturity.
<Effectiveness of hedge transactions>
The effectiveness of hedge transaction is assessed by measuring
high correlation between the variability of cash flows associated
with the market price of hedged items and variability of cash flows
of hedge instruments.
(6) Amortization of goodwill
"Goodwill" is amortized on a straight-line basis over reasonably
estimated periods in which economic benefits are expected to be
realized. Immaterial goodwill is expensed as incurred. The goodwill
resulted from acquisition of Vodafone K.K. (currently SOFTBANK
MOBILE) is amortized over a 20-year-period.
(7) Scope of cash and cash equivalents in the consolidated
statements of cash flows
"Cash and cash equivalents" are comprised of cash on hand, bank
deposits withdrawable on demand and highly liquid investments with
initial maturities of three months or less and a low risk of
fluctuation in value.
(8) Other
[1] Accounting method for consumption taxes
Consumption taxes are accounted for using the net method of
reporting.
[2] Application of consolidated taxation system
BB Mobile Corp., as a parent company of the consolidated tax
return, SOFTBANK MOBILE, and Telecom Express Co.,Ltd. adopted the
consolidated taxation system.
(7) Changes in Basis of Presentation of Consolidated Financial
Statements
1. Application of accounting standards codification (ASC) 810,
consolidations, formerly SFAS No. 167, amendments to FASB
interpretation No. 46 (R) (SFAS 167)
Effective April 1, 2010, certain subsidiaries of the Company
that apply generally accepted accounting principles in the United
States of America adopted ASC 810.
As a result of the application of the accounting standard, the
scope of SB Asia Infrastructure Fund L.P. changed from an affiliate
under equity method to a consolidated subsidiary. The effect of
this change is not material for the fiscal year ended March 31,
2011.
2. Application of accounting standard for equity method of
accounting for investments
"Accounting Standard for Equity Method of Accounting for
Investments" (Accounting Standards Board of Japan (ASBJ) Statement
No. 16, March 10, 2008) and "Practical Solution on Unification of
Accounting Policies Applied to Associates Accounted for Using the
Equity Method" (Practical Issues Task Force (PITF) No. 24, March
10, 2008) were applied and necessary adjustments for the
consolidated accounting were made for the fiscal year ended March
31, 2011. The effect of this change is not material for the fiscal
year ended March 31, 2011.
3. Application of accounting standard for asset retirement
obligations
"Accounting Standard for Asset Retirement Obligations" (ASBJ
Statement No. 18, March 31, 2008) and "Guidance on Accounting
Standard for Asset Retirement Obligations" (ASBJ Guidance No. 21,
March 31, 2008) were applied as of April 1, 2010. The effect of
this change in operating income and ordinary income is not material
and income before income taxes and minority interests decreased by
JPY 8,596 million for the fiscal year ended March 31, 2011.
(1) Asset retirement obligations which are recorded in the
consolidated balance sheets
The Group reasonably estimated removal costs and recorded the
asset retirement obligations mainly for the corporate head quarter
building, certain data and network centers located in the rental
properties under the rental contracts. Useful periods of 2 years to
33 years and discount rates from 0.1% to 2.3% are applied for the
estimation of asset retirement obligations.
(2) Asset retirement obligations which are not recorded in the
consolidated balance sheets
The Group has obligations to restore mobile phone base stations
and telephone line facilities for transmission to their original
conditions under the rental contracts. However, considering
business continuity, the removal of these facilities is difficult
and the possibility of executing the obligation to restore these
facilities to their original conditions is extremely low, and
therefore, the asset retirement obligations are not recorded at the
fiscal year ended March 31, 2011.
(8) Additional information
"Accounting Standard for Presentation of Comprehensive Income"
(ASBJ Statement No. 25, June 30, 2010) was applied for the fiscal
year ended March 31, 2011.
(9) Notes
(Consolidated Balance Sheets)
1. Accumulated depreciation of property and equipment
As of March 31, As of March 31,
2010 2011
million million
1,048,584 yen 1,113,677 yen
2. Investments in non-consolidated subsidiaries and
affiliates
As of March 31, As of March 31,
2010 2011
Investment securities and million million
investments in partnerships 149,025 yen 192,046 yen
3. Additional entrustment for debt assumption of bonds (As of
March 31, 2010)
SOFTBANK MOBILE has entrusted cash for the repayment of the
straight bonds listed in the following table based on debt
assumption agreements with a financial institution. The bonds are
derecognized in the Company's consolidated balance sheets.
The trust had collateralized debt obligations ("CDO") issued by
a Cayman Islands based Special-Purpose Company ("SPC"). The SPC
contracted a credit default swap agreement secured by debt
securities (corporate bonds), which referred to a certain portion
of the portfolio consisting of 160 referenced entities. Since
defaults (credit events under the agreement) of more than a certain
number of referenced entities occurred, JPY 75,000 million in total
was reduced from the redemption amount of the CDO in April 2009 and
an additional entrustment was required for the reduced amount.
As a result, for the amount required as the additional
entrustment of JPY 75,000 million, a long term accounts payable was
recognized as a recognized subsequent event (Type I subsequent
event) and included in "Other liabilities" of long-term liabilities
in the consolidated balance sheets, and it was recorded as special
loss in the consolidated statement of income for the fiscal year
ended March 31, 2009.
As of March 31, 2010, since the maturity for the additional
entrustment was within one year, the accounts payable was included
in "Accounts payable-other and accrued expenses" of current
liabilities in the consolidated balance sheets.
Mizuho Corporate Bank, Ltd and the Company set up a credit line
facility contract in order to support the repayments of the bonds
issued by SOFTBANK MOBILE.
As of March 31, 2010
Subject Maturity Amount of transferred
Bonds Issue date date bond
---------------------- ---------------- ------------ ----------------------
Third Series August 19, August 19,
Unsecured Bond 1998 2010 25,000
Fifth Series August 25, August 25,
Unsecured Bond 2000 2010 25,000
Seventh Series September September
Unsecured Bond 22, 2000 22, 2010 25,000
---------------------- ---------------- ------------ ----------------------
Total 75,000 million
yen
4. Secured loans
(1) Assets pledged as collateral for secured liabilities
[1] For short-term borrowings and long-term debt
Assets pledged as collateral and secured liabilities by
consolidated subsidiaries are as follows:
As of March 31, As of March 31,
2010 2011
Assets pledged as collateral:
Cash and deposits 213,098 222,613
Notes and accounts receivable
- trade 273,231 306,527
Marketable securities(1) - 73,592
Buildings and structures 12,133 11,694
Telecommunications equipment 182,945 281,936
Telecommunications service
lines 86 71
Land 10,633 10,747
Investment securities and
investments in unconsolidated
subsidiaries and affiliated
companies 81,701 -
Investments and other assets
- other assets 17,225 9,554
million million
Total 791,054 yen 916,738 yen
As of March 31, As of March 31,
2010 2011
Secured liabilities:
Accounts payable - trade 1,674 964
Short-term borrowings 1,928 93,686
Long - term debt(2) 1,086,707 772,577
million million
Total 1,090,310 yen 867,227 yen
Notes:
1. Shares of Yahoo! Inc. placed as collateral for a loan
procured by a subsidiary of the Company in the United States of
America were transferred to "Marketable securities" since the
maturity for the loan was within one year. These shares were
recorded as "Investment securities and investments in
unconsolidated subsidiaries and affiliated companies" as of March
30, 2010.
2. Consolidated subsidiaries shares owned by SOFTBANK MOBILE,
SOFTBANK MOBILE shares owned by BB Mobile Corp. and BB Mobile Corp.
shares owned by Mobiletech Corporation are pledged as collateral
for long-term debt (totaled to JPY 986,702 million and JPY 772,577
million, as of March 31, 2010 and March 31, 2011, respectively)
resulting from the acquisition of SOFTBANK MOBILE, in addition to
the assets pledged as collateral above.
[2] For borrowings of investee
Assets pledged as collateral for third party's liability are as
follows:
As of March 31,
As of March 31, 2010 2011
Assets pledged as collateral:
Investment securities and
investments in unconsolidated
subsidiaries and affiliated million million
companies 2,000 yen - yen
(2) Borrowings by securitization of receivables
[1] The securitization of installment sales receivable of
SOFTBANK MOBILE
Cash proceeds through the securitization of installment sales
receivables of SOFTBANK MOBILE, excluding that qualify for
derecognition criteria of a financial asset, were included in
"Short-term borrowings" (JPY 175,359 million and JPY 49,903
million, as of March 31, 2010 and March 31, 2011, respectively) and
"Long-term debt" (JPY 44,454 million, as of March 31, 2010). The
amounts of the senior portion of the securitized installment sales
receivables (JPY 219,813 million and JPY 49,903 million, as of
March 31, 2010 and March 31, 2011, respectively) were included in
"Notes and account receivable-trade", along with the subordinated
portion held by the SOFTBANK MOBILE. The trustee raised the funds
through asset backed loans based on the receivables.
[2] The securitization of receivables for ADSL services of
SOFTBANK BB
SOFTBANK BB transferred its senior portion of the securitized
present and future receivables for ADSL services* to a SPC (a
consolidated subsidiary), and the SPC raised the funds through
asset backed loans based on the receivables (JPY 10,504 million and
JPY 2,920 million, as of March 31, 2010 and March 31, 2011,
respectively) from a financial institution. Cash proceeds through
the asset backed loans are included in the "Short-term borrowings"
(JPY 6,660 million and JPY 2,920 million, as of March 31, 2010 and
March 31, 2011, respectively) and "Long-term debt" (JPY 3,844
million, as of March 31, 2010).
Note:* A certain portion of present and future (through March
2012) receivables realized through the ADSL services provided by
SOFTBANK BB.
(3) Borrowings by security lending agreements
Cash receipts as collateral from financial institutions, to whom
the Company lent a portion of shares in its subsidiary under
security lending agreements are presented as follows:
As of March 31, 2010 As of March 31, 2011
million million
Short-term borrowings 114,000 yen 114,000 yen
(4) Others
A consolidated subsidiary purchased assets by installments, and
the assets of which ownership was not transferred to the
consolidated subsidiary and its installment payables are as
follows:
As of March As of March 31,
31, 2010 2011
Assets of which ownership
is not transferred:
Buildings and structures 35 60
Telecommunications equipment 16,710 55,075
Construction in progress 1,538 186
Other property and equipment - 1
Software 4,755 14,055
Other intangibles 12 179
Investments and other assets
- other assets 240 328
million million
Total 23,292 yen 69,886 yen
As of March 31, As of March 31,
2010 2011
Installment payables:
Accounts payable - other
and accrued expenses 4,148 9,906
Long- term accounts payable
- other 20,741 63,086
million million
Total 24,889 yen 72,993 yen
5. Guarantee obligation (As of March 31, 2011)
The Company has entered into a sponsor agreement with WILLCOM,
Inc. Under the sponsor agreement, the Company provides necessary
financial support to WILLCOM, Inc. for business operation and
execution of the rehabilitation plan. The agreement is effective
until WILLCOM, Inc. completes the payment of its reorganization
clams and reorganization security interests amounting to JPY 41,000
million.
6. Line of credit as a creditor (not used)
As of March 31,
As of March 31, 2010 2011
million million
16,846 yen 15,894 yen
7. Financial covenants (As of March 31, 2011)
The Group's interest-bearing debt includes financial covenants,
with which the Group is in compliance. The major financial
covenants are as follows. If the Group fails to comply with the
following covenants, creditors may require repayment of all debt.
(Where the covenants set several conditions, the strictest
condition is presented below.)
As of March 31, 2011, there is no infringement of the debt
covenants.
(1) The amount of the Company's net assets at the end of the
year and the first half of the year must not fall below 75% of the
Company's net assets at the end of the previous year.
(2) At the end of the year and the first half of the year,
balance sheets of SOFTBANK BB and SOFTBANK TELECOM must not show a
net capital deficiency. The consolidated balance sheets of BB
Mobile Corp. at the end of the year and the first half of the year
must not show a net capital deficiency.
(3) SOFTBANK MOBILE received a loan (the "SBM loan") from Mizuho
Trust & Banking Co., Ltd. (the "lender"), which, as the Tokutei
Kingai Trust Trustee, was entrusted with the proceeds by WBS
Funding(1) . Under the terms of the SBM loan agreement, SOFTBANK
MOBILE is allowed a certain degree of flexibility in its business
operations, as a general rule. However, in the event that the loan
agreement's financial performance targets (reduction in cumulative
debt, adjusted EBITDA(2) , leverage ratio(3) ) or operational
performance targets (number of subscribers) are not met, depending
on the importance and the timing of the issue, the influence of the
lender on the operations of SOFTBANK MOBILE might be increased. It
is possible that limits will be placed on capital investment, that
prior approval will be required for development of new services,
that a majority of the board directors will be appointed, and that
rights to assets pledged as collateral, including shares of
SOFTBANK MOBILE, will be exercised.
Notes:
1. WBS Funding (Whole Business Securitization Funding)
A special-purpose company for the purpose of allocating the
total amount raised from domestic and foreign financial
institutions--JPY 1,441.9 billion--under the WBS scheme through the
Tokutei Kingai Trust Trustee for the SBM loan to SOFTBANK MOBILE.
SOFTBANK MOBILE borrowed from Tokutei Kingai Trust Trustee an
amount of JPY 1,366 billion, representing the total amount of JPY
1,441.9 billion raised by WBS Funding less such items as interest
hedge costs and interest reserve.
2. Adjusted EBITDA
Lease payments which are included in operating expenses are
added back to EBITDA.
3. Leverage ratio
Leverage ratio = Debt / Adjusted EBITDA. The balance of debt
does not include capital financing, subordinated loans from the
SOFTBANK Group.
(Consolidated Statements of Income)
1. Selling, general and administrative expenses
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
Sales commission and
sales promotion million million
expense 471,920 yen 513,482 yen
Payroll and bonuses 125,798 126,883
Provision for
allowance for
doubtful
accounts 8,499 14,646
2. Unrealized appreciation on valuation of investments and loss
on sale of investments at subsidiaries in the United States of
America, net
Certain subsidiaries of the Company in the United States of
America qualify as investment companies under the provisions set
forth in Financial Services - Investment Companies of the FASB
Accounting Standards Codification Topic 946(ASC 946) and account
for investment securities in accordance with ASC 946.
The net changes in the fair value of the investments are
recorded as unrealized appreciation on valuation of investments and
loss on sale of investments at subsidiaries in the U.S., net and
loss on sale of investments, computed based on the acquisition
cost, is also included in this account. The unrealized appreciation
on valuation of investments and loss on sale of investments
included in unrealized appreciation on valuation of investments and
loss on sale of investments at subsidiaries in the U.S., net in the
consolidated statements of income are as follows:
Fiscal year Fiscal year
ended March ended March
31, 2010 31, 2011
Unrealized appreciation on
valuation of investment at
subsidiaries in the U.S.,net 1,927 1,041
Loss on sale of investments at
subsidiaries in the U.S.,net (2,230) (777)
------- ------- -------------
million million
Total (303) yen 263 yen
3. Loss on retirement of non current assets (For the fiscal year
ended March 31, 2010)
(1) Loss on retirement of non current assets related to the
termination of second-generation mobile phone services
Certain pieces of telecommunications equipment being used
exclusively for second-generation (2G) mobile phone services in the
Mobile communications business are to be removed upon termination
of 2G mobile phone services in March, 2010. These pieces of
telecommunications equipment were depreciated under the
straight-line method over the period commencing from the
acquisition of Vodafone K.K. (currently SOFTBANK MOBILE) in April
2006 to the termination of 2G services in March, 2010.
In June 2009, a new frequency for the next generation mobile
phone services was assigned to SOFTBANK MOBILE. The
telecommunications equipment being used for 2G mobile phone
services except for the aforementioned equipment was reviewed to
determine which pieces would be used for the next generation mobile
phone services and which pieces will be removed. For the year ended
March 31, 2010, loss on retirement of non current assets was
recorded for the assets to be additionally removed. As the assets
to be removed upon termination of 2G services were specified, it
became possible to reasonably estimate the removal costs. These
removal costs were included in loss on retirement of non current
assets in the consolidated statements of income for the fiscal year
ended March 31, 2010.
The loss on retirement of non current assts of JPY 23,011
million consists of JPY 16,544 million for equipment removal cost
and JPY 6,467 million for loss on retirement of telecommunications
equipment.
(2) Loss on retirement of non current assets related to the
telecommunications equipment for third-generation mobile phone
SOFTBANK MOBILE replaced certain pieces of existing wireless
network equipment in order to increase efficiency of the future
capital expenditures and reduce maintenance costs. As a result, the
previously used wireless network equipment for third-generation
mobile phone services was retired, and the total carrying amounts
of the retired assets and the related removal costs were recorded
as loss on retirement of non current assets in the consolidated
statements of income for the fiscal year ended March 31, 2010. The
loss on retirement of non current assets of JPY 22,493 million
consists of JPY 13,726 million for telecommunications equipment,
JPY 8,689 million for software, and JPY 77 million for removal
costs.
4. Loss on disaster (For the fiscal year ended March 31,
2011)
Loss on disaster was recorded due to the Great East Japan
Earthquake occurred in March 2011.
The details are as follows:
Loss on damage and restoration expenses for million
telecommunications network 6,243 yen
- Loss on retirement and demolition of telecommunications
network such as base stations due to the earthquake
- Removal, restoration, and check up expenses
for the assets described above
Loss on exemption of receivables from customers
and additional allowance for doubtful accounts 3,636
- Exemption of receivables from customers afflicted
by the disaster
- Additional allowance for doubtful accounts
deemed to be uncollectable
Loss on non cancelable advertisement contracts
which were already ordered 2,005
Others 2,530
- Lending of mobile phone handsets free of charge
and replacement expenses of customer premises
equipment
- Business consignment expenses for call centers
to support customers corresponding
to the earthquake disaster
- Supporting expenses for damaged agencies,
and others
Total 14,416 million
yen
5. Valuation loss on option (For the fiscal year ended March 31,
2011)
The Company has entered into agreements containing a put option
and a call option for shares of Wireless City Planning Inc., which
is the Company's affiliate under equity method, with its
shareholders other than the Company. The put option is the other
shareholders' right to sell the shares to the Company and the call
option is the Company's right to buy the shares from the other
shareholders. These options are measured at fair value and the
valuation loss is recorded.
6. Income taxes - corrections (For the fiscal year ended March
31, 2011)
Yahoo Japan received a correction notice from Tokyo Regional
Taxation Bureau on June 30, 2010. Yahoo Japan acquired all the
shares of SOFTBANK IDC Solutions Corp. from the Company in February
2009 and merged it in March 2009. At the merger, loss carryforwards
held by SOFTBANK IDC Solutions Corp. were carried and utilized by
Yahoo Japan. The notice corrects this tax treatment insisting that
the treatment was to reduce Yahoo Japan's income taxes
inappropriately. Additional income taxes of JPY 26,450 million were
included in income taxes - correction and paid for the fiscal year
ended March 31, 2011. Yahoo Japan submitted a request for
reconsideration to the national tax tribunal and brought legal suit
in April 2011.
(Consolidated Statements of Comprehensive Income)
(Additional information)
"Accounting Standard for Presentation of Comprehensive Income"
(ASBJ Statement No. 25, June 30, 2010) was applied for the fiscal
year ended March 31, 2011.
Fiscal year from April 1, 2010 to March 31, 2011
1. Comprehensive Income attributable for the last fiscal year
ended March 31, 2010
Comprehensive income attributable million
to owners of the parent 96,685 yen
Comprehensive income attributable
to minority interests 48,579
Total 145,265 million
yen
2. Other Comprehensive income for the last fiscal year end March
31, 2010
Unrealized gain on available-for-sale million
securities 12,806 yen
Deferred gain on derivatives under
hedge accounting (10,788)
Foreign currency translation adjustment (3,618)
Share of other comprehensive income
of associates accounted for using
equity method 2,176
Total 575 million
yen
(Consolidated Statements of Changes in Equity)
Fiscal year from April 1, 2009 to March 31, 2010
1. Class and number of outstanding shares
(shares in thousands)
March 31, March 31,
2009 Increase Decrease 2010
------------------ ---------- --------- --------- ----------
Number of common
stocks 1,081,023 1,479 - 1,082,503
------------------ ---------- --------- --------- ----------
Note: Increase resulted from the exercise of stock acquisition
rights.
2. Class and number of treasury stocks
(shares in thousands)
March 31, March 31,
2009 Increase Decrease 2010
------------------ ---------- --------- --------- ----------
Number of common
stocks 169 5 - 174
------------------ ---------- --------- --------- ----------
Note: Increase resulted from the acquisition of the fractional
shares.
3. Stock acquisition rights
(1) Stock acquisition rights as stock options
Detail of
stock Class
acquisition of Number of shares for stock Millions
Type rights shares acquisition rights (in thousands) of yen
-------------- -------------- -------- --------------------------------------------- ---------
March March
31, March 31,
2009 Increase Decrease 31, 2010 2010
-------------- -------------- -------- ------- ---------- ---------- ------------ ---------
Consolidated
Subsidiaries - - 450
-------------- -------------- ------------------------------------------------------- ---------
Total - 450
------------------------------ ------------------------------------------------------- ---------
(2) Stock acquisition rights other than above
Detail of
stock Class
acquisition of Number of shares for stock Millions
Type rights shares acquisition rights (in thousands) of yen
-------------- -------------- -------- --------------------------------------------- ---------
March March
31, March 31,
2009 Increase Decrease 31, 2010 2010
-------------- -------------- -------- ------- ---------- ---------- ------------ ---------
Consolidated
Subsidiaries - - 25
-------------- -------------- ------------------------------------------------------- ---------
Total - 25
------------------------------ ------------------------------------------------------- ---------
4. Dividends
(1) Dividend paid
Resolution Class of Amount of Dividend Record Effective
shares dividend per share date date
(Millions
of yen)
----------------- --------- ----------- ----------- ---------- ----------
Ordinary general Common 2,702 JPY 2.50 March 31, June 25,
meeting of stocks 2009 2009
shareholders,
June 24, 2009
----------------- --------- ----------- ----------- ---------- ----------
(2) Dividends which recorded date is in the fiscal year ended
March 31, 2010 and effective date for payment is in the fiscal year
ended March 31, 2011
Resolution Class Amount of Source Dividend Record Effective
of dividend of per date date
shares (Millions dividend share
of yen)
-------------- ------- ---------- --------- --------- ------- ----------
Ordinary Common 5,411 Retained JPY 5.00 March June 28,
general stocks earnings 31, 2010
meeting of 2010
shareholders,
June 25,
2010
-------------- ------- ---------- --------- --------- ------- ----------
Fiscal year from April 1, 2010 to March 31, 2011
1. Class and number of outstanding shares
(shares in thousands)
March 31, March 31,
2010 Increase Decrease 2011
------------------ ---------- --------- --------- ----------
Number of common
stocks 1,082,503 26 - 1,082,530
------------------ ---------- --------- --------- ----------
Note: Increase resulted from the exercise of stock acquisition
rights.
2. Class and number of treasury stocks
(shares in thousands)
March 31, March 31,
2010 Increase Decrease 2011
------------------ ---------- --------- --------- ----------
Number of common
stocks 174 5 - 180
------------------ ---------- --------- --------- ----------
Note: Increase resulted from the acquisition of the fractional
shares.
3. Stock acquisition rights
(1) Stock acquisition rights as stock options
Detail of
stock Class
acquisition of Number of shares for stock Millions
Type rights shares acquisition rights (in thousands) of yen
-------------- -------------- -------- --------------------------------------------- ---------
March March
31, March 31,
2010 Increase Decrease 31, 2011 2011
-------------- -------------- -------- ------- ---------- ---------- ------------ ---------
The Company - - 100
-------------- -------------- ------------------------------------------------------- ---------
Consolidated
Subsidiaries - - 585
-------------- -------------- ------------------------------------------------------- ---------
Total - 685
------------------------------ ------------------------------------------------------- ---------
(2) Stock acquisition rights other than above
Detail of
stock Class
acquisition of Number of shares for stock Millions
Type rights shares acquisition rights (in thousands) of yen
-------------- -------------- -------- --------------------------------------------- ---------
March March
31, March 31,
2010 Increase Decrease 31, 2011 2011
-------------- -------------- -------- ------- ---------- ---------- ------------ ---------
Consolidated
Subsidiaries - - 18
-------------- -------------- ------------------------------------------------------- ---------
Total - 18
------------------------------ ------------------------------------------------------- ---------
4. Dividends
(1) Dividend paid
Resolution Class of Amount of Dividend Record Effective
shares dividend per share date date
(Millions
of yen)
----------------- --------- ----------- ----------- ---------- ----------
Ordinary general Common 5,411 JPY 5.00 March 31, June 28,
meeting of stocks 2010 2010
shareholders,
June 25, 2010
----------------- --------- ----------- ----------- ---------- ----------
(2) Dividends which recorded date is in the fiscal year ended
March 31, 2011 and effective date for payment is in the fiscal year
ending March 31, 2012
Resolution Class Amount of Source Dividend Record Effective
of dividend of per date date
shares (Millions dividend share
of yen)
-------------- ------- ---------- --------- --------- ------- ----------
Ordinary Common 5,411 Retained JPY 5.00 March June 27,
general stocks earnings 31, 2011
meeting of 2011
shareholders,
June 24,
2011
-------------- ------- ---------- --------- --------- ------- ----------
(Consolidated Statements of Cash Flows)
1. Reconciliation of cash and cash equivalents to the amounts
presented in the accompanying consolidated balance sheets
As of March 31, As of March 31,
2010 2011
million million
Cash and deposits 690,053 yen 861,657 yen
Marketable securities 4,342 78,099
Time deposits with original
maturity over three months (2,733) (14,832)
Stocks and bonds with original
maturity over three months (3,980) (77,769)
-------- --------
million million
Cash and cash equivalents 687,681 yen 847,155 yen
2. Assets and liabilities of newly consolidated subsidiaries by
acquisition (For the fiscal year ended March 31, 2010)
The estimated fair values of the assets acquired and liabilities
assumed of a new consolidated subsidiary at the acquisition date
are as follows:
BB Modem Rental Yugen Kaisha
As of March 31,
2010
million
Current assets 13,685 yen
Non-current assets 9,618
Goodwill 4,679
Current liabilities (7,142)
-------- ----------
Acquisition cost (2) 20,840
Cash and cash equivalents -
of newly
consolidated subsidiary
Payment for the acquisition (20,840) million
yen
Notes:
1. SOFTBANK BB spun off its modem rental business in order to
concentrate on its core broadband business and established BB Modem
Rental Yugen Kaisha ("BB Modem rental") in 2005. SOFTBANK BB sold
its modem rental business (the sale of all BB Modem Rentals' whole
ownership interest) to Yugen Kaisha Gemini BB in 2005.
On February 16, 2010, SOFTBANK BB acquired all shares of BB
Modem Rental from Gemini BB Holdings, as a result of
reconsideration of significance of its modem rental business after
the Group's entry into Mobile Communications business in 2006.
SOFTBANK BB merged BB Modem Rental on March 31, 2010,
effectively.
2. Loan payable to SOFTBANK BB of JPY 20,827 million was
included.
3. Income taxes paid
Payment for income taxes-corrections of JPY 26,450 million based
on the receipt of the correction notice described in "(9) Notes
(Consolidated Statements of Income) 6. Income taxes-corrections"
are included in "Income taxes paid" in the consolidated statements
of cash flows for the fiscal year ended March 31, 2011.
4. Scope of Purchase of property and equipment, and intangibles
in the consolidated statements of cash flows
"Purchase of property and equipment, and intangibles" are
comprised of cash outflows from purchasing property and equipment,
and intangible assets (excluding goodwill) and long-term prepaid
expenses.
5. Proceeds from sale and lease back of equipment newly
acquired
Once SOFTBANK MOBILE and others purchase telecommunications
equipment for the purpose of assembly, installation and inspection,
SOFTBANK MOBILE and others sell the equipment to lease companies
for sale and lease back purposes. The leased asset and lease
obligation are recorded in the consolidated balance sheets.
The cash outflows from the purchase of the equipment from
vendors are included in "Purchase of property and equipment, and
intangibles" and the cash inflows from the sale of the equipment to
lease companies are included in "Proceeds from sale and lease back
of equipment newly acquired."
6. Payments for additional entrustment for debt assumption
Additional entrustment of JPY 75,000 million recorded as special
loss in the consolidated statements of income for the fiscal year
ended March 31, 2009 reached its maturity date for the fiscal year
ended March 31, 2011. The amount of payment was recorded as
"Payments for additional entrustment for debt assumption" in the
consolidated statements of cash flows.
7. Payments for repurchase of minority interests and long-tem
debt
The Company acquired all class 1 preferred stock-series 1, stock
acquisition rights issued by BB Mobile Corp. to Vodafone
International Holdings B.V. and all principal and accrued interest
of a long-term loan receivable, which was recorded as "Long-term
debt" in the Company's consolidated balance sheets, from SOFTBANK
MOBILE Corp. to Vodafone Overseas Finance Limited for the total
amount of JPY 412,500 million during the fiscal year ended March
31, 2011. Of the total amount of the acquisition, the amount paid
during the fiscal year ended March 31, 2011 amounting to JPY
212,500 million, together with related expenses associated with the
acquisition were recorded as "Payments for repurchase of minority
interest and long-tem debt." The remaining amount of JPY 200,000
million is scheduled to be paid in April 2012.
8. Non-cash investing and financing transaction
Acquisitions of fixed assets by installments were JPY 23,695
million and JPY 51,347 million, respectively for the fiscal year
ended March 31, 2010 and March 31, 2011.
(Leases)
1. Finance lease transactions
(As a lessee)
(1) Finance leases in which the ownership of leased assets is
transferred to lessees at the end of lease periods
[1] Details of lease assets are as follows:
Tangible assets, mainly telecommunications equipment in the
Mobile Communications segment.
[2] Depreciation method for lease assets
The depreciation method is the same as the method used for fixed
assets possessed by each subsidiary and the Company.
(2) Finance leases in which the ownership of leased assets is
not transferred to lessees at the end of lease periods
[1] Details of lease assets are as follows:
Tangible assets, mainly telecommunications equipment in the
Fixed-line Telecommunications segment.
[2] Depreciation method for lease assets
The straight-line method is adopted over the period of the
finance leases, assuming no residual value.
Lease transactions contracted before April 1, 2008 are
continuously permitted to be accounted for as operating lease
transactions, and as if capitalized information is as follows:
(1) Amounts equivalent to acquisition costs, accumulated
depreciation, and accumulated impairment loss of leased property
for each year:
As of March 31, As of March 31,
2010 2011
Telecommunications equipment
and
telecommunications service
lines
Acquisition cost 141,093 124,132
Accumulated depreciation (67,776) (73,353)
Accumulated impairment
loss (33,232) (24,743)
million million
Net leased property 40,084 yen 26,035 yen
Buildings and structures
Acquisition cost 46,730 46,715
Accumulated depreciation (11,909) (14,238)
Accumulated impairment
loss - -
million million
Net leased property 34,820 yen 32,477 yen
Property and equipment -
others
Acquisition cost 16,113 13,072
Accumulated depreciation (10,223) (9,859)
Accumulated impairment
loss (1,242) (1,078)
million million
Net leased property 4,647 yen 2,134 yen
Intangible assets
Acquisition cost 9,070 8,597
Accumulated depreciation (6,669) (8,004)
Accumulated impairment
loss (290) (171)
million million
Net leased property 2,110 yen 421 yen
Total
Acquisition cost 213,007 192,518
Accumulated depreciation (96,579) (105,455)
Accumulated impairment
loss (34,765) (25,992)
million million
Net leased property 81,662 yen 61,069 yen
Current portion of long-term prepaid expenses related to a lease
contract, in which the contract term and payment term are
different, in the amount of JPY 670 million and JPY 583 million as
of March 31, 2010 and March 31, 2011 are included in "Other current
assets" in the consolidated balance sheets. Long-term prepaid
expenses relating to the lease contract as of March 31, 2010 and
March 31, 2011 were JPY 25,157 million and JPY 26,073 million,
respectively and are included in "Other assets" of investments and
other assets in the consolidated balance sheets.
(2) Obligations under finance lease at the end of each year:
As of March 31, As of March 31,
2010 2011
Due within one year 26,191 15,678
Due after one year 79,431 62,845
million million
Total 105,623 yen 78,523 yen
Balance of allowance for
impairment loss on leased million million
property 10,776 yen 4,530 yen
(3) Lease payments, payment of the lease obligation for impaired
leased property, amounts equivalent to depreciation, and interest
expense for each year:
Fiscal year ended Fiscal year ended
March 31, 2010 March 31, 2011
million million
Lease payments 36,752 yen 30,830 yen
Payment of the
lease
obligation for
impaired leased
property 8,416 6,246
Depreciation
expense 23,960 20,989
Interest expense 8,654 6,735
Impairment loss 383 -
(4) Calculation method used to determine the amount equivalent
to depreciation and interest expense:
The amount equivalent to depreciation is computed using the
straight-line method over the period of the finance leases,
assuming no residual value.
The amount equivalent to interest expense is calculated by
subtracting acquisition costs from the total lease payments and
allocated over the lease periods based on the interest method.
(Financial Instruments)
Fiscal year ended March 31, 2010
(Additional information)
"Accounting Standard for Financial Instruments" (ASBJ Statement
No. 10, March 10, 2008) and its "Implementation Guidance on
Disclosures about Fair Value of Financial Instruments" (ASBJ
Guidance No. 19 Guidance, March 10, 2008) were applied for the
fiscal year ended March 31, 2010.
1. Conditions of Financial instruments
(1) Management policy
The Group utilizes diversified financing methods of raising
funds through both indirect financing, such as bank loans, and
direct financing, such as issuance of bonds and commercial paper
and borrowings through securitization, taking market conditions and
current/non-current debts ratio into consideration. The Group makes
short-term deposits for fund management purposes. The Group also
utilizes derivative financial instruments to hedge various risks as
described in detail below and does not enter into derivatives for
trading or speculative purposes.
(2) Financial instruments, risks, and risk management
The notes and accounts receivable-trade are exposed to credit
risk of customers. To minimize the credit risk, the Group performs
due date controls and balance controls for each customer in
accordance with internal customer credit management rules, and
regularly screens major customers' credit status. For credit risk
associated with installment sales receivables of mobile handsets,
SOFTBANK MOBILE screens customers' credit in accordance with
internal screening standards for new subscriber contracts as well
as refers to an external institution for customers' credit
status.
Marketable and investment securities are exposed to stock market
fluctuation risk and foreign currency exchange risk. For those
risks, the Group is continuously monitoring investees' financial
condition, stock market fluctuation, and foreign currency exchange
risk. The Group enters into a variable share prepaid forward
contract (collar transaction) utilizing its shares of Yahoo! Inc.
The purpose of this collar transaction is to hedge the variability
of cash flows associated with the future market price of the
underlying security, which will be used for the settlement of loans
at their maturity.
Maturities of accounts payable-trade and accounts payable-other
are mostly within one year. Loan payables with variable interest
rate are exposed to interest rate risk, and interest rate swaps are
used for certain loan payables in order to hedge this risk.
Corporate bonds are mainly issued by the Company and corporate
bonds denominated in foreign currency are exposed to foreign
currency exchange risk. Foreign exchange forward contracts are used
to hedge this risk.
In order to hedge the cash flow fluctuation risk associated with
the future market price of underlying securities for sale, interest
rate risk associated with financial assets and liabilities, and
foreign currency exchange risk associated with assets and
liabilities denominated in foreign currencies, derivative
transactions such as a collar transaction, interest rate swap
transactions, and foreign exchange forward contracts are used.
Hedge accounting is applied for certain derivative transactions.
Hedging instruments and hedged items, hedging policy, and
effectiveness of hedge transactions are described in "(6) Basis of
Presentation of Consolidated Financial Statements 4. Summary of
significant accounting policies (5) Accounting for significant
hedge transactions." Derivative transactions entered into by the
Company are implemented and controlled based on the Company's
internal polices and are limited to the extent of actual demand.
Balance and fair value of derivative transactions are reported
regularly to the board of directors. Consolidated subsidiaries also
manage the derivative transactions based on the Company's
policies.
(3) Supplemental explanation regarding fair value of financial
instruments
Fair value of financial instruments are measured based on the
quoted market price, if available, or reasonably assessed value if
a quoted market price is not available. Fair value of financial
instruments which quoted market price is not available is
calculated based on certain assumptions, and the fair value might
differ if different assumptions are used. In addition, the contract
amount of the derivative transactions described below in "(9) Notes
(Derivative Transactions)" does not represent the market risk of
the derivative transactions.
2. Fair value of financial instruments
The carrying amounts on the consolidated balance sheets, fair
value, and differences as of March 31, 2010 are as follows.
In addition, financial instruments, of which it is extremely
difficult to measure the fair value, are not included. (Please see
"Notes 2. Financial instruments of which the fair value is
extremely difficult to measure")
(Millions of yen)
As of March 31, 2010
Carrying Amount Fair value Differences
Assets
(1) Cash and deposit 690,053 690,053 -
(2) Notes and accounts receivable-trade 816,550
Allowance for doubtful accounts(1) (32,801)
Notes and accounts receivable-trade,
net 783,748 783,748 -
(3) Marketable securities and
investment securities
[1] Held-to-maturity debt securities 1,499 1,344 (155)
Investments in unconsolidated
subsidiaries
[2] and affiliated companies 8,639 19,274 10,635
[3] Other securities 148,777 148,777 -
Total 1,632,718 1,643,198 10,480
Liabilities
(1) Accounts payable-trade 158,942 158,942 -
(2) Short-term borrowings 437,960 437,960 -
(3) Current portion of corporate
bonds 54,400 54,400 -
(4) Accounts payable-other and
accrued expenses 451,408 451,408 -
(5) Income taxes payable 100,483 100,483 -
(6) Current portion of lease
obligations 109,768 109,768 -
(7) Corporate bonds 448,523 488,877 40,353
(8) Long-term debt 1,281,586 1,364,076 82,490
(9) Lease obligations 224,484 224,922 438
Total 3,267,557 3,390,840 123,282
Derivative transactions (2)
Hedge accounting is not
[1] applied 1,324 1,324 -
[2] Hedge accounting is applied 25,701 25,701 -
Total 27,025 27,025 -
Notes:
1. Allowance for doubtful accounts associated with notes and
accounts receivable-trade are deducted.
2. Derivative assets and liabilities are on net basis.
Notes 1. Fair value measurement of financial instruments
Assets
(1) Cash and deposits
The carrying amount approximates fair value because of the short
maturity of these instruments.
(2) Notes and accounts receivable-trade
The carrying amount of installment sales receivables
approximates fair value, which is based on the present value of
future cash flows through maturity discounted using an estimated
credit-risk-adjusted interest rate. The carrying amount of notes
and accounts receivable-trade other than installment sales
receivables approximates fair value because of the short maturity
of these instruments.
(3) Marketable and investment securities
The fair value of equity securities equals quoted market price,
if available. The fair value of debt securities equals quoted
market price or provided price by financial institutions. The
investment securities held by certain subsidiaries in the United
States of America which apply ASC 946 are carried at fair value
(Please see "(9) Notes (Investment in Debt and Equity Securities)
5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services - Investment Companies
of the FASB Accounting Standards Codification"). Marketable and
investment securities based on holding purpose are described in
"(9) Notes (Investment in Debt and Equity Securities)."
Liabilities
(1) Accounts payable-trade, (4) Accounts payable-other, and (5)
Income taxes payable
The carrying amount approximates fair value because of the short
maturity of these instruments.
(2) Short-term borrowings
The carrying amount of the current portion of long-term debt
approximates fair value since the carrying amount was equivalent to
the present value of future cash flows discounted using the current
borrowing rate for similar debt of a comparable maturity.
Borrowings other than the current portion of long-term debt, the
carrying amount approximates fair value because of the short
maturity of these instruments.
(3) Current portion of corporate bonds
The carrying amount approximates fair value because the carrying
amount was equivalent to the quoted market price.
(6) Current portion of lease obligations
The carrying amount approximates fair value since the carrying
amount was equivalent to the present value of future cash flows
discounted using the current interest rate for similar lease
contracts of comparable maturities and contract conditions.
(7) Corporate bonds
Fair value equals the quoted market price or the price provided
by a financial institution. For certain corporate bonds denominated
in foreign currencies, for which foreign exchange forward contracts
are used to hedge the foreign currency fluctuations, fair value
includes fair value of the derivative financial instrument.
(8) Long-term debt
Fair value of long-term debts is based on the price provided by
a financial institution or the present value of future cash flows
discounted using the current borrowing rate for similar debt of a
comparable maturity.
(9) Lease obligations
Fair value equals to the present value of future cash flows
discounted using the current interest rate for similar lease
contracts of comparable maturities and contract conditions.
Derivative Transactions
Contract amount, fair value, unrealized gain or loss, and others
are described in "(9) Notes (Derivative Transactions)."
Notes 2. Financial instruments of which the fair value is
extremely difficult to measure.
(Millions of yen)
Classification Carrying Amounts
Unlisted investment securities of unconsolidated
subsidiaries
and affiliated companies 140,386
Unlisted equity securities 68,241
Investments in partnerships 6,827
Total 215,454
Above are not included in "Assets (3) Marketable and investment
securities" because there is no market value and it is extremely
difficult to measure the fair value.
Notes 3. The redemption schedule for money claim and
held-to-maturity debt securities with maturity date subsequent to
the consolidated balance sheets date.
(Millions of yen)
April
1,
2015
April 1, April 1, to
2010 to 2011 to March April 1,
March 31, March 31, 31, 2020 and
Classification 2011 2015 2020 thereafter
Cash and deposits 690,053 - - -
Notes and accounts
receivable-trade 693,406 123,144 - -
Marketable and investment
securities
Held-to-maturity debt
securities
(corporate bonds) 800 100 - 600
Other securities with
maturity date
(corporate bonds) 0 503 27,000 -
Other securities with
maturity date (other) 300 - - -
Sub-total 1,100 603 27,000 600
Total 1,384,559 123,747 27,000 600
Notes 4. The redemption schedule for corporate bonds, long-term
debt, and lease obligations subsequent to the consolidated balance
sheets date.
(Millions of yen)
April 1, April 1, April 1, April 1,
2010 to 2011 to 2012 to 2013 to
March 31, March 31, March 31, March 31,
Classification 2011 2012 2013 2014
Corporate bonds 54,400 128,500 144,998 97,625
Long-term debt 229,653 184,804 136,691 250,200
Lease obligations 109,768 79,639 77,552 39,726
Total 393,821 392,943 359,241 387,552
April 1, April 1,
2014 to 2015 to April 1,
March 31, March 31, 2020
Classification 2015 2020 and thereafter
Corporate bonds 44,900 32,500 -
Long-term debt 232,581 477,308 -
Lease obligations 24,715 2,850 -
Total 302,197 512,658 -
Fiscal year ended March 31, 2011
1. Conditions of Financial instruments
(1) Management policy
The Group utilizes diversified financing methods of raising
funds through both indirect financing, such as bank loans, and
direct financing, such as issuance of bonds and commercial paper
and borrowings through securitization, taking market conditions and
current/non-current debts ratio into consideration. The Group makes
short-term deposits for fund management purposes. The Group also
utilizes derivative financial instruments to hedge various risks as
described in detail below and does not enter into derivatives for
trading or speculative purposes.
(2) Financial instruments, risks, and risk management
The notes and accounts receivable-trade are exposed to credit
risk of customers. To minimize the credit risk, the Group performs
due date controls and balance controls for each customer in
accordance with internal customer credit management rules, and
regularly screens major customers' credit status. For credit risk
associated with installment sales receivables of mobile handsets,
SOFTBANK MOBILE screens customers' credit in accordance with
internal screening standards for new subscriber contracts as well
as refers to an external institution for customers' credit
status.
Marketable and investment securities are exposed to stock market
fluctuation risk and foreign currency exchange risk. For those
risks, the Group is continuously monitoring investees' financial
condition, stock market fluctuation, and foreign currency exchange
risk. The Group enters into a variable share prepaid forward
contract (collar transaction) utilizing its shares of Yahoo! Inc.
The purpose of this collar transaction is to hedge the variability
of cash flows associated with the future market price of the
underlying security, which will be used for the settlement of loans
at their maturity.
Maturities of accounts payable-trade and accounts payable-other
are mostly within one year. Loan payables with variable interest
rate are exposed to interest rate risk, and interest rate swaps are
used for certain loan payables in order to hedge this risk.
Corporate bonds are mainly issued by the Company and corporate
bonds denominated in foreign currency are exposed to foreign
currency exchange risk. Foreign exchange forward contracts are used
to hedge this risk.
In order to hedge the cash flow fluctuation risk associated with
the future market price of underlying securities for sale, interest
rate risk associated with financial assets and liabilities, and
foreign currency exchange risk associated with assets and
liabilities denominated in foreign currencies, derivative
transactions such as a collar transaction, interest rate swap
transactions, and foreign exchange forward contracts are used.
Hedge accounting is applied for certain derivative transactions.
Hedging instruments and hedged items, hedging policy, and
effectiveness of hedge transactions are described in "(6) Basis of
Presentation of Consolidated Financial Statements 4. Summary of
significant accounting policies (5) Accounting for significant
hedge transactions." Derivative transactions entered into by the
Company are implemented and controlled based on the Company's
internal polices and are limited to the extent of actual demand.
Balance and fair value of derivative transactions are reported
regularly to the board of directors. Consolidated subsidiaries also
manage the derivative transactions based on the Company's
policies.
(3) Supplemental explanation regarding fair value of financial
instruments
Fair value of financial instruments are measured based on the
quoted market price, if available, or reasonably assessed value if
a quoted market price is not available. Fair value of financial
instruments which quoted market price is not available is
calculated based on certain assumptions, and the fair value might
differ if different assumptions are used. In addition, the contract
amount of the derivative transactions described below in "(9) Notes
(Derivative Transactions)" does not represent the market risk of
the derivative transactions.
2. Fair value of financial instruments
The carrying amounts on the consolidated balance sheets, fair
value, and differences as of March 31, 2011 are as follows.
In addition, financial instruments, of which it is extremely
difficult to measure the fair value, are not included. (Please see
"Notes 2. Financial instruments of which the fair value is
extremely difficult to measure")
(Millions of yen)
As of March 31, 2011
Carrying
Amount Fair value Differences
Assets
(1) Cash and deposit 861,657 861,657 -
(2) Notes and accounts receivable-trade 657,774
Allowance for doubtful accounts(1) (36,063)
Notes and accounts receivable-trade,
net 621,710 621,710 -
(3) Marketable securities and
investment securities
[1] Held-to-maturity debt securities 1,587 1,487 (100)
Investments in unconsolidated
subsidiaries
[2] and affiliated companies 15,937 30,947 15,009
[3] Other securities 160,025 160,025 -
Total 1,660,919 1,675,827 14,908
Liabilities
(1) Accounts payable-trade 193,644 193,644 -
(2) Short-term borrowings 410,950 410,950 -
(3) Commercial paper 25,000 25,000 -
(4) Current portion of corporate
bonds 128,500 128,500 -
(5) Accounts payable-other and
accrued expenses 561,421 561,421 -
(6) Income taxes payable 115,355 115,355 -
(7) Current portion of lease
obligations 131,305 131,305 -
(8) Corporate bonds 507,390 584,477 77,087
(9) Long-term debt 1,030,959 1,102,328 71,368
(10) Long-term accounts payable-other 265,141 265,085 (56)
(11) Lease obligations 199,769 203,113 3,343
Total 3,569,439 3,721,182 151,742
Derivative transactions (2)
Hedge accounting is not
[1] applied (216) (216) -
[2] Hedge accounting is applied 20,856 20,856 -
Total 20,640 20,640 -
Notes:
1. Allowance for doubtful accounts associated with notes and
accounts receivable-trade are deducted.
2. Derivative assets and liabilities are on net basis. Net
liabilities are disclosed in brackets.
Notes 1. Fair value measurement of financial instruments
Assets
(1) Cash and deposits
The carrying amount approximates fair value because of the short
maturity of these instruments.
(2) Notes and accounts receivable-trade
The carrying amount of installment sales receivables
approximates fair value, which is based on the present value of
future cash flows through maturity discounted using an estimated
credit-risk-adjusted interest rate. The carrying amount of notes
and accounts receivable-trade other than installment sales
receivables approximates fair value because of the short maturity
of these instruments.
(3) Marketable and investment securities
The fair value of equity securities equals quoted market price,
if available. The fair value of debt securities equals quoted
market price or provided price by financial institutions. The
investment securities held by certain subsidiaries in the United
States of America which apply ASC 946 are carried at fair value
(Please see "(9) Notes (Investment in Debt and Equity Securities)
5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services - Investment Companies
of the FASB Accounting Standards Codification"). Marketable and
investment securities based on holding purpose are described in
"(9) Notes (Investment in Debt and Equity Securities)."
Liabilities
(1) Accounts payable-trade, (3) Commercial paper, (5) Accounts
payable-other, and (6) Income taxes payable
The carrying amount approximates fair value because of the short
maturity of these instruments.
(2) Short-term borrowings
The carrying amount of the current portion of long-term debt
approximates fair value since the carrying amount was equivalent to
the present value of future cash flows discounted using the current
borrowing rate for similar debt of a comparable maturity.
Borrowings other than the current portion of long-term debt, the
carrying amount approximates fair value because of the short
maturity of these instruments.
(4) Current portion of corporate bonds
The carrying amount approximates fair value because the carrying
amount was equivalent to the quoted market price.
(7) Current portion of lease obligations
The carrying amount approximates fair value since the carrying
amount was equivalent to the present value of future cash flows
discounted using the current interest rate for similar lease
contracts of comparable maturities and contract conditions.
(8) Corporate bonds
Fair value equals the quoted market price or the price provided
by a financial institution.
(9) Long-term debt
Fair value of long-term debts is based on the price provided by
a financial institution or the present value of future cash flows
discounted using the current borrowing rate for similar debt of a
comparable maturity.
(10) Long-term accounts payable - other
Fair value of long-tem accounts payable - other is based on the
present value of future cash flows discounted using the rate with
consideration for period up to payment date and credit risk.
(11) Lease obligations
Fair value equals to the present value of future cash flows
discounted using the current interest rate for similar lease
contracts of comparable maturities and contract conditions.
Derivative Transactions
Contract amount, fair value, unrealized gain or loss, and others
are described in "(9) Notes (Derivative Transactions)."
Notes 2. Financial instruments of which the fair value is
extremely difficult to measure.
(Millions of yen)
Classification Carrying Amounts
Unlisted investment securities of unconsolidated
subsidiaries
and affiliated companies 176,108
Unlisted equity securities 55,297
Investments in partnerships 9,579
Total 240,985
Above are not included in "Assets (3) Marketable and investment
securities" because there is no market value and it is extremely
difficult to measure the fair value.
Notes 3. The redemption schedule for money claim and
held-to-maturity debt securities with maturity date subsequent to
the consolidated balance sheets date.
(Millions of yen)
April
1,
2016
April 1, April 1, to
2011 to 2012 to March April 1,
March 31, March 31, 31, 2021
Classification 2012 2016 2021 and thereafter
Cash and deposits 861,657 - - -
Notes and accounts
receivable-trade 566,564 91,210 - -
Marketable and investment
securities
Held-to-maturity debt
securities
(corporate bonds) 1,100 - - 600
Other securities with
maturity date
(corporate bonds) 117 400 27,200 -
Other securities with
maturity date (other) - 109 - -
Sub-total 1,217 509 27,200 600
Total 1,429,438 91,719 27,200 600
Notes 4. The redemption schedule for corporate bonds, long-term
debt, lease obligations, and other interest bearing debt subsequent
to the consolidated balance sheets date.
(Millions of yen)
April 1, April 1, April 1, April 1,
2011 to 2012 to 2013 to 2014 to
March 31, March 31, March 31, March 31,
Classification 2012 2013 2014 2015
Corporate bonds 128,500 144,998 204,992 44,900
Long-term debt 182,694 124,100 268,825 232,581
Lease obligations 131,305 85,325 55,599 40,919
Accounts payable - other
by installment purchase 9,906 13,921 13,921 13,921
Total 452,407 368,345 543,338 332,322
April 1, April 1,
2015 to 2016 to April 1,
March 31, March 31, 2021
Classification 2016 2021 and thereafter
Corporate bonds 70,000 42,500 -
Long-term debt 230,000 175,452 -
Lease obligations 17,861 63 -
Accounts payable - other
by installment purchase 13,921 7,401 -
Total 331,782 225,417 -
(Investment in Debt and Equity Securities)
For the fiscal year ended March 31, 2010
1. Held-to-maturity debt securities
(Millions of yen)
Classification As of March 31, 2010
Carrying
Amount Fair value Differences
Fair value > Carrying Amount
Corporate bonds 199 199 0
Fair value Carrying Amount
Corporate bonds 1,300 1,144 (155)
Total 1,499 1,344 (155)
2. Marketable and investment securities at fair value
(Millions of yen)
Classification As of March 31, 2010
Carrying Investment
Amount Cost Differences
Carrying Amount > Investment
Cost
(1) Equity securities 93,084 19,014 74,070
(2) Debt securities 28,680 26,397 2,283
(3) Others 2,718 2,359 358
Sub-total 124,483 47,771 76,712
Carrying Amount Investment Cost
(1) Equity securities 8,010 11,337 (3,326)
(2) Debt securities 276 276 -
(3) Others 690 704 (14)
Sub-total 8,976 12,317 (3,340)
Total 133,460 60,089 73,371
Note: Investment securities held by certain subsidiaries in the
United States of America which apply ASC 946 are described in below
"5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services- Investment Companies of
the FASB Accounting Standards Codification."
3. Marketable and investment securities sold during the fiscal
year ended March 31, 2010
(Millions of yen)
Loss on
Securities Sales Price Gain on sales sales
(1) Equity securities 1,437 803 226
(2) Others 3,049 56 -
Total 4,487 860 226
Note: Sales price of JPY 760 million, gain on sales of JPY 580
million, and loss on sales of JPY 57 million for financial
instruments of which the fair value is extremely difficult to
measure are included in the amounts above.
4. Marketable and investment securities impaired
Certain marketable and investment securities are impaired, and
valuation loss on investment securities of JPY 5,167 million
(valuation loss on investment securities, of which the fair value
is extremely difficult to measure, of JPY 3,183 million is
included) is recorded for the fiscal year ended March 31, 2010.
5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services - Investment Companies
of the FASB Accounting Standards Codification
Certain subsidiaries of the Company in the United States of
America qualify as investment companies under the provisions set
forth in Financial Services - Investment Companies of the FASB
Accounting Standards Codification Topic 946(ASC 946) and account
for investment securities in accordance with ASC946.
Proceeds from sales and the carrying amounts of the investment
securities at fair value recorded in the consolidated balance
sheets as of March 31, 2010 were as follows:
As of March 31, 2010
Proceeds from sales: 1,864 million yen
Carrying amounts of investment securities at fair value : 15,316
million yen
Regarding net changes in fair value of the investment securities
and gain on sale of the investment securities, please see "(9)
Notes (Consolidated Statements of Income) 2. Unrealized
appreciation on valuation of investments and loss on sale of
investments at subsidiaries in the United States of America,
net."
For the fiscal year ended March 31, 2011
1. Held-to-maturity debt securities
(Millions of yen)
Classification As of March 31, 2011
Carrying
Amount Fair value Differences
Fair value > Carrying Amount
Corporate bonds 197 199 1
Fair value Carrying Amount
Corporate bonds 1,390 1,288 (102)
Total 1,587 1,487 (100)
2. Marketable and investment securities at fair value
(Millions of yen)
Classification As of March 31, 2011
Carrying Investment
Amount Cost Differences
Carrying Amount > Investment
Cost
(1) Equity securities 92,582 19,151 73,430
(2) Debt securities 31,060 26,587 4,473
(3) Others 2,390 2,298 91
Sub-total 126,033 48,038 77,995
Carrying Amount Investment Cost
(1) Equity securities 20,185 27,667 (7,481)
(2) Debt securities 693 702 (9)
(3) Others 632 636 (4)
Sub-total 21,510 29,005 (7,494)
Total 147,544 77,043 70,500
Note: Investment securities held by certain subsidiaries in the
United States of America which apply ASC 946 are described in below
"5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services- Investment Companies of
the FASB Accounting Standards Codification."
3. Marketable and investment securities sold during the fiscal
year ended March 31, 2011
(Millions of yen)
Loss on
Securities Sales Price Gain on sales sales
(1) Equity securities 13,650 1,971 598
(2) Others 3,767 105 1
Total 17,418 2,076 600
Note: Sales price of JPY 371 million, gain on sales of JPY 173
million, and loss on sales of JPY 123 million for financial
instruments of which the fair value is extremely difficult to
measure are included in the amounts above.
4. Marketable and investment securities impaired
Certain marketable and investment securities are impaired, and
valuation loss on investment securities of JPY 8,739 million
(valuation loss on investment securities, of which the fair value
is extremely difficult to measure, of JPY 6,168 million is
included) is recorded for the fiscal year ended March 31, 2011.
5. Investment securities evaluated at fair value under the
provisions set forth in Financial Services - Investment Companies
of the FASB Accounting Standards Codification
Certain subsidiaries of the Company in the United States of
America qualify as investment companies under the provisions set
forth in Financial Services - Investment Companies of the FASB
Accounting Standards Codification Topic 946(ASC 946) and account
for investment securities in accordance with ASC946.
Proceeds from sales and the carrying amounts of the investment
securities at fair value recorded in the consolidated balance
sheets as of March 31, 2011 were as follows:
As of March 31, 2011
Proceeds from sales: 1,550 million yen
Carrying amounts of investment securities at fair value : 12,480
million yen
Regarding net changes in fair value of the investment securities
and gain on sale of the investment securities, please see "(9)
Notes (Consolidated Statements of Income) 2. Unrealized
appreciation on valuation of investments and loss on sale of
investments at subsidiaries in the United States of America,
net."
(Derivative Transactions)
As of March 31, 2010
(1) Derivative transactions to which the Company did not apply
hedge accounting
1. Currency Related
(Millions of yen)
March 31, 2010
Nature of Fair Unrealized
transaction Contract amounts value gain(loss)
Over 1
year
Off-market Forward exchange contracts
transactions to-
Purchase U.S. dollars
- and sell Japanese yen 81,567 - 1,357 1,357
Purchase Euro and sell
- Japanese yen 657 - (33) (33)
Total 82,225 - 1,324 1,324
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
2. Interest Related
There are no applicable items.
3. Securities Related
There are no applicable items.
(2) Derivative transactions to which the Company applied hedge
accounting
1. Currency Related
(Millions of yen)
Hedge accounting Nature of Fair
method transaction Hedged items Contract amount value
Over 1
year
Forward-exchange
contracts:
Deferral Purchased option
hedge accounting to buy
Forecasted
transactions
for expenses
denominated
in foreign
U.S. dollars currencies 843 - 43
Forecasted
transactions
for expenses
denominated
in foreign
Euro currencies 13 - (0)
Forward-exchange
Alternative contracts:
method Purchased option
(Note 2) to buy
Accounts payable-
U.S. dollars trade and other 545 - (Note 3)
Accounts payable-
trade, and
Euro corporate bonds 49,120 47,807 (Note 3)
Total 50,522 47,807 43
Notes:
1. Fair value is based on information provided by financial
institutions at the end of the fiscal year.
2. Foreign monetary obligations denominated in foreign
currencies for which foreign exchange forward contracts are used to
hedge the foreign currency fluctuation are translated at the
contracted rate, if the forward contracts qualify for hedge
accounting.
3. For certain accounts payable-trade, accounts payable-other
and corporate bonds denominated in foreign currencies for which
foreign exchange forward contracts are used to hedge the foreign
currency fluctuations, fair value of derivative financial
instrument is included in fair value of the accounts payable-trade,
accounts payable-other and corporate bonds as hedged items.
2. Interest Related
(Millions of yen)
Hedge
accounting Nature of
method transaction Hedged items Contract amount Fair value
Over 1
year
Deferral hedge
accounting Interest swap:
Receiving
floating rate
and paying
fix rate Interest for loan 15,000 10,000 (260)
Total 15,000 10,000 (260)
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
3. Securities Related
(Millions of yen)
Hedge
accounting Nature of
method transaction Hedged items Contract amount Fair value
Over 1
year
Collar
transaction:
A variable
share
prepaid
forward
contract
consisting
of a
purchased
Deferral put option
hedge and a sold Equity
accounting call option securities 105,697 105,697 25,918
Total 105,697 105,697 25,918
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
As of March 31, 2011
(1) Derivative transactions to which the Company did not apply
hedge accounting
1. Currency Related
(Millions of yen)
March 31, 2011
Nature of Fair Unrealized
transaction Contract amounts value gain(loss)
Over 1
year
Off-market Forward exchange contracts
transactions to-
Purchase U.S. dollars
- and sell Japanese yen 52,791 - (217) (217)
Purchase U.S. dollars
- and sell Korean won 353 - 1 1
Total 53,144 - (216) (216)
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
2. Interest Related
There are no applicable items.
3. Securities Related
There are no applicable items.
(2) Derivative transactions to which the Company applied hedge
accounting
1. Currency Related
(Millions of yen)
Hedge
accounting Nature of
method transaction Hedged items Contract amount Fair value
Over 1
year
Forward-exchange
Deferral contracts:
hedge Purchased option
accounting to buy
Forecasted
transactions
for expenses
denominated
in foreign
U.S. dollars currencies 205 - (3)
Forecasted
transactions
for expenses
denominated
in foreign
Euro currencies 1,181 - (1)
Total 1,387 - (5)
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
2. Interest Related
(Millions of yen)
Hedge
accounting Nature of Hedged
method transaction items Contract amount Fair value
Over 1
year
Deferral
hedge Interest
accounting swap:
Receiving
floating
rate and
paying fix
rate Interest for loan 104,000 99,000 (1,418)
Total 104,000 99,000 (1,418)
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
3. Securities Related
(Millions of yen)
Hedge
accounting Nature of Hedged Fair
method transaction items Contract amount value
Over 1
year
Collar
transaction:
A variable
share
prepaid
forward
contract
consisting
of a
purchased
Deferral put option
hedge and a sold Equity
accounting call option securities 94,461 - 22,280
Total 94,461 - 22,280
Note: Fair value is based on information provided by financial
institutions at the end of the fiscal year.
(Income Taxes)
For the fiscal year ended March 31,
2010 For the fiscal year ended March 31, 2011
Significant components of deferred Significant components of deferred
1. tax assets and liabilities 1. tax assets and liabilities
(Million yen) (Million yen)
Deferred tax assets Deferred tax assets
Depreciation /
Amortization 99,676 Loss carryforwards 79,172
Loss carryforwards 88,229 Depreciation / Amortization 64,682
Revaluation of acquired
consolidated subsidiary
at the respective fair
market value 54,774 Investment securities 48,450
Revaluation of acquired
consolidated subsidiary at
Allowances for doubtful the respective fair market
accounts 39,377 value 43,560
Accounts payable-other and
Investment securities 32,106 accrued expenses 31,520
Accounts payable-other Allowances for doubtful
and accrued expenses 29,302 accounts 19,903
Allowances for point
mileage 19,211 Allowances for point mileage 17,068
Others 52,860 Others 64,275
Gross deferred tax assets 415,538 Gross deferred tax assets 368,633
Less: valuation allowance (174,215) Less: valuation allowance (141,498)
Total deferred tax assets 241,323 Total deferred tax assets 227,135
Deferred tax liabilities Deferred tax liabilities
Unrealized gains on other Unrealized gains on other
securities (30,504) securities (27,844)
Deferred taxable gain on a
sale of shares of a
Deferred gain on subsidiary to a 100% owned
derivatives under hedge subsidiary under Japanese
accounting (10,251) group taxation regime (13,294)
Deferred gain on derivatives
Others (4,106) under hedge accounting (7,642)
Total deferred tax
liabilities (44,862) Others (11,987)
Total deferred tax
Net deferred tax assets 196,461 liabilities (60,768)
Net deferred tax assets 166,366
Reconciliation between the statutory Reconciliation between the statutory
income tax rate income tax rate
2. and effective income tax rate: 2. and effective income tax rate:
Statutory tax rate 40.69% Statutory tax rate 40.69%
(Reconciliation) (Reconciliation)
Change in valuation Income taxes, current,
allowance (8.64)% correction, and deferred 5.70%
Amortization of goodwill 8.40 Amortization of goodwill 5.09
Consolidation
adjustments resulting
from gain on sale of
investments in
consolidated Change in valuation
subsidiaries 7.26 allowance (5.05)
Consolidation adjustments
resulting from gain on sale of
Equity in losses of investments in consolidated
affiliated companies 1.00 subsidiaries 4.18
Others 1.26 Others (2.14)
Income tax rate per Income tax rate per statements
statements of income 49.97% of income 48.47%
(Segment Information)
1. Segment information
(Additional Information)
"Accounting Standard for Disclosures about Segments of an
Enterprise and Related information" (ASBJStatement No. 17, March
27, 2009) and "Guidance on Accounting Standard for Disclosures
about Segments of an Enterprise and Related information" (ASBJ
Guidance No. 20, March 21, 2008) (hereafter "the new standards")
were applied for the fiscal year ended March 31, 2011.
(1) Over view of reportable segments
Reportable segments of the Company are components of an entity
about which separate financial information is available and such
information is evaluated regularly by the board of directors in
deciding how to allocate resources and in assessing
performance.
The Company as a pure holding company assigns core operating
companies to primary businesses. The core operating companies
develop comprehensive business strategies for the products and
services and perform business activities.
Accordingly, the Company's segments are separated based on the
products and services provided by the core operating companies, and
4 segments, "Mobile Communications," "Broadband Infrastructure,"
"Fixed-line Telecommunications," and "Internet Culture" are treated
as reportable segments.
"Mobile Communications" business provides mobile communication
services and sale of mobile phones accompanying the services.
"Broadband Infrastructure" business provides high-speed Internet
connection service, IP telephony service, and contents. "Fixed-line
Telecommunications" business provides fixed-line telecommunication
services. "Internet Culture" business provides Internet-based
advertising operations, e-commerce site operations such as Yahoo!
Auctions and Yahoo! Shopping.
(2) Calculation for net sales, segment income or loss, and
others of reportable segments
Accounting treatment for reportable segments is the same as the
treatment described in "Basis of Presentation of Consolidated
Financial Statements". Income of reportable segments is based on
operating income. Internal net sales between segments are under
general business condition which is applied for external customers.
Assets are not allotted in the reportable segments.
(3) Net sales, segment income or loss, and others of reportable
segments
For the fiscal year ended March 31, 2010 (Millions of yen)
Reconciliations Amounts in
to consolidated consolidated
Other statement of statement of
Reportable segments (2) Total income (3) income (4)
Mobile Broadband Fixed-line Internet
Communications Infrastructure Telecommunications Culture Subtotal
Net sales
Customers 1,692,326 198,262 304,182 265,938 2,460,709 302,696 2,763,406 - 2,763,406
Inter-segment 9,088 3,865 44,509 4,816 62,280 29,152 91,433 (91,433) -
Total 1,701,414 202,127 348,692 270,755 2,522,989 331,849 2,854,839 (91,433) 2,763,406
Segment
income 260,895 48,399 23,065 136,585 468,945 5,878 474,824 (8,953) 465,871
Others:
Depreciation
and
amortization 176,337 17,023 35,292 9,864 238,517 4,667 243,184 759 243,944
Notes:
1. Segment information is disclosed based on the new
standards.
2. The PC software and peripherals distribution business and
Fukuoka SOFTBANK HAWKS related business are included in
"Other."
3. Amounts in the column "Reconciliations to consolidated
statement of income" of JPY (8,953) million represents elimination
of intersegment transactions and expenses of the corporate division
of the Company, which totaled JPY 1,624 million and JPY (10,577)
million, respectively.
4. Segment income is adjusted with operating income in the
consolidated statements of income.
For the fiscal year ended March 31, 2011 (Millions of yen)
Reconciliations Amounts in
to consolidated consolidated
Other statement of statement of
Reportable segments (1) Total income (2) ( ) income (3)
Mobile Broadband Fixed-line Internet
Communications Infrastructure Telecommunications Culture Subtotal
Net sales
Customers 1,936,093 183,070 297,090 279,232 2,695,486 309,153 3,004,640 - 3,004,640
Inter-segment 8,458 6,984 59,471 4,382 79,297 34,481 113,778 (113,778) -
Total 1,944,551 190,055 356,561 283,615 2,774,783 343,635 3,118,419 (113,778) 3,004,640
Segment
income 402,411 43,154 38,006 150,305 633,877 7,092 640,970 (11,806) 629,163
Others:
Depreciation
and
amortization 156,993 15,840 36,634 9,422 218,891 4,833 223,725 1,211 224,937
Notes:
1. The PC software and peripherals distribution business and
Fukuoka SOFTBANK HAWKS related business are included in
"Other."
2. Amounts in the column "Reconciliations to consolidated
statement of income" of JPY (11,806) million represents elimination
of intersegment transactions and expenses of the corporate division
of the Company, which totaled JPY 57 million and JPY (11,864)
million, respectively.
3. Segment income is adjusted with operating income in the
consolidated statements of income.
2. Information on impairment loss on fixed assets of reportable
segments
Fiscal year ended March 31, 2011
There are no applicable items.
3. Information on amortization of goodwill and balance of
goodwill of reportable segments
Fiscal year ended March 31, 2011
(Millions of yen)
Elimination
Other or
Reportable segments (1) corporate Total
Mobile Broadband Fixed-line Internet
Communications Infrastructure Telecommunications Culture Subtotal
Amortization
of goodwill 51,427 1,560 7,283 1,817 62,088 599 - 62,688
Balance of
goodwill 775,700 3,119 35,203 21,515 835,539 3,699 - 839,238
Notes:
1. Fukuoka SOFTBANK HAWKS related business is included in
"Other."
2. Negative goodwill which occurred from a business combination
before April 1, 2010 is offset by goodwill.
4. Information on gain on negative goodwill of reportable
segments
Fiscal year ended March 31, 2011
There are no applicable items.
(Per Share Data)
Fiscal year
ended March Fiscal year ended
31, 2010 March 31, 2011
Shareholders' equity per share (yen) JPY 434.74 JPY 572.14
Net income per share - primary (yen) 89.39 175.28
Net income per share - diluted (yen) 86.39 168.57
Fiscal year
Basic data for computation of the per ended March Fiscal year ended
share data 31, 2010 March 31, 2011
1. Net income (in millions of
yen) 96,716 189,712
2. Net income allocated to common
stock outstanding (in millions
of yen) 96,716 189,712
3. Amounts not allocated to
shareholders (in millions of yen) - -
4. Weighted average number of
common stock outstanding during
each year (unit: shares) 1,081,990,217 1,082,345,444
5. Adjustment for net income
used to calculate net income per
share - diluted (in millions of
yen)
- Interest expense (net of tax) 963 963
- Adjustments for net income
used to calculate diluted
net income per share in
consolidated subsidiaries
and affiliated companies (30) (87)
- Total 933 875
6. Increase of common stock used
to calculate net income per
share - diluted (unit: shares)
- Corporate bonds with stock
acquisition rights 48,297,825 48,296,643
- Stock acquisition rights 74,184 712
- Total 48,372,009 48,297,355
7. Residual securities which do not Stock acquisition Stock acquisition
dilute net income per share rights agreement rights agreement
on June 22, 2005 on June 22, 2005
in accordance in accordance
with special with special
resolution at resolution at
general general
shareholders' shareholders'
meeting meeting and July
29, 2010 in
accordance with
resolution at
board meeting
(Significant Subsequent Events)
Fiscal year ended March 31, 2010
There are no applicable items.
Fiscal year ended March 31, 2011
There are no applicable items.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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