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TIDM56ID
RNS Number : 1819G
Softbank Corp
09 May 2011
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 40.0 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
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