May 13, 2009
ＦＬＡＳＨ ＲＥＰＯＲＴ
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended March 31, 2009
Name of the Company :
SEGA SAMMY HOLDINGS INC.
Code number :

6460
(URL http://www.segasammy.co.jp/ )
Representative:
Hajime Satomi
Chairman of the Board and Chief Executive Officer Any inquiry to :
Shunichi Shimizu
General Manager, Accounting and Financial Department Shiodome Sumitomo Building 21F, 1-9-2 Higashi Shimbashi, Minato-ku, Tokyo
Tel (03) 6215-9955

Annual Meeting of Shareholders:

June 18, 2009 (plan)
Filing of Financial Report: une 18, 2009 (plan)

J
Start of cash dividend payments:

June
3, 2009 (plan)

(Amounts below one million yen are rounded down)
1. Consolidated Operating Results for the Year Ended March 31, 2009
(1)

RESULTS OF CONSOLIDATED OPERATIONS
(Percentage for net sales, operating income and net income represent change from the prior year)

Net sales
Operating income
Net income

Millions of Yen
%
Millions of Yen
%
Millions of Yen
%
For Year ended March 31, 2009
429,194 (6.5)
8,363 －
(22,882)
－

For Year ended March 31, 2008
458,977 (13.1)
(5,829) －
(52,470)
－
Net income
per share
Net income per
share (Diluted)
Return on
equity
Operating income to
total assets
Operating income to
net sales
Yen
Yen
%
%
%
For Year ended March 31, 2009

(90.83)
－

(9.5)
1.9
1.9
For Year ended March 31, 2008

(208.26)
－

(17.6) (1.1) (1.3)
(Reference) Equity in earnings (losses) of affilia es:
t
For Year ended March 31, 2009: ¥

(191) million
For Year ended March 31, 2008: ¥ (293) million
（
2）CONSOLIDATED FINANCIAL POSITION

Total assets
Net assets
Equity ratio
Net assets per share

Millions of Yen
Millions of Yen
%
Yen
March 31,2009
423,938
242,532
52.4
882.47
March 31,2008
469,642
281,627
55.3
1,030.09
(Reference) Equity at year-end (consolidated):
March 31, 2009: ¥222,316 million
March 31, 2008: ¥259,519 million

1

(3)

CONSOLIDATED CASH FLOWS

Cash flows from
operating activities
Cash flows from
investing activities
Cash flows from
financing activities
Cash and cash
equivalents at the
year-end

Millions of Yen
Millions of Yen
Millions of Yen
Millions of Yen
For Year ended March 31, 2009

32,199
936
(7,653)
123,385
For Year ended March 31, 2008

(25,878) (10,399) (7,579)
99,975
2. Cash Dividends
Cash dividends per share
First
quarter
Second
quarter
Third
quarter
Year-
end
For the
year
Total
dividends
paid
(annual)
Payout ratio
(Consolidated)
Dividends
paid
to net assets
(Consolidated)
Yen Yen Yen Yen Yen
Millions
of Yen
% %
Year ended
March 31, 2008
－

30.00
－

15.00 45.00 11,337
－
3.8
Year ended
March 31, 2009
－

15.00
－

15.00 30.00 7,557
－

3.1
Year ending
March 31,2010
(plan)
－

15.00
－

15.00 30.00 －
50.4
－

3. Projection for Consolidated Results for the Year ending March 31, 2010
(Percentage for net sales, operating income and net income represent change from the prior year)

Net sales
Operating income
Net income
Net income
per share

Millions of Yen
%
Millions of Yen
%
Millions of
Yen
% Yen
First half ending
September 2009
163,000 (18.7)
(12,500) －
(14,500)
－

(57.56)
Entire - year
420,000
(2.1)
27,000
222.8
15,000
－

59.54
[Caution With Regard to Operating Results Outlook]
Statements in this report pertaining to market projections and the outlook for operating results reflect the assumptions and judgment of the Company’s management based on the most accurate information available at the time of release. Such statements carry inherent risks and uncertainties. Factors that may affect operating results include, but are not limited to, those discussed in the projections and outlook. Readers are cautioned that changes in a variety of factors could cause actual results to differ substantially from the aforementioned projections and outlook.
4. Other (1) Significant changes in subsidiaries (scope of consolidation) during the year ended March 31, 2009: No

(2) Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of
consolidated financial statements:
1. Changes associated with revision in accounting standards: Yes 2. Other changes: No (3) Shares outstanding (common stock) at year-end 1. Number of shares outstanding (including treasury stock)
March 31, 2009: 283,229,476

March 31, 2008: 283,229,476

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2. Number of treasury stock
March 31 2009: 31,305,733 March 31 2008: 31,292,007

1. Operating Results and Financial Position
(1) Overview
In the fiscal year ended March 31, 2009, the Japanese economy deteriorated in real terms amid turmoil in world financial markets. Specific factors included downward pressure on corporate earnings due to sharp foreign exchange fluctuations, a worsening employment situation and depressed personal consumption. Accordingly, the economic outlook became increasingly uncertain. In this environment, the momentum in the pachislot and pachinko industry to replace older pachinko machines with new models offering more diverse gameplay remained strong in the wake of the recent revisions to regulations pertaining to the Entertainment Establishments Control Law of Japan. Meanwhile, the partial amendment of the Standards for Interpretation of Technical Specifications led to progress in replacement of older pachislot machines with models featuring new forms of gameplay. Full-scale market recovery failed to materialize, and the stepped-up development and delivery of innovative machines will be expected to stimulate the market in the future. In the amusement machine and amusement center industry, conditions remained difficult due to sluggish personal consumption. The industry awaits the development and launch of new game machines that will support amusement center operators and lead the market by addressing the diversified needs of customers, including families and casual players. In the home video game software industry, growth in demand for software has leveled off in Japan, due to widespread proliferation of the current generation of game platforms. Nevertheless, demand remains firm in Europe and North America. In this business environment, the SEGA SAMMY Group implemented business structure reforms aimed at reinforcing the earnings foundations of its various fields of activity. Main Measures in the Fiscal Year Ended March 31, 2009 ①
In the pachislot and pachinko market, the Group sought to maximize earnings by allocating increased
managerial resources to the highly profitable Sammy brand. At the same time, the Group worked to build a stable title development system and boost brand appeal. To facilitate these endeavors, the Group terminated our capital alliance with GINZA CORPORATION.
②
In another move to maximize earnings in the pachislot and pachinko market, the Group also concentrated
managerial resources on our pachislot and pachinko machine businesses. To this end, the Group decided to sell our shares in Sammy Systems Corporation, which operates a pachislot and pachinko machine peripherals business, to Japan Cash Machine Co., Ltd.
③
In our domestic amusement center business, the Group decided to close 110 amusement centers deemed to
have low profitability or future potential.
④
SEGA CORPORATION implemented an early retirement program with the aim of optimizing personnel
numbers to suit its current level of earnings.
As a result, consolidated net sales for the year amounted to ¥429,194 million, down 6.5% from the previous fiscal year. Operating income totaled ¥8,363 million, compared with an operating loss of ¥5,829 million in the previous year. Due to the factors including impairment loss, premium allowance of retirement, and a loss on valuation of investment securities, the Group recorded a net loss of ¥22,882 million, compared with a net loss of ¥52,470 million in the previous year. Results by business segments were as follows.
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《Pachislot and Pachinko Machines》
In the pachinko machine business, the Group launched “Pachinko CR Hokuto No Ken,” under the Sammy brand. This was our major title for the year and the first since the Group adopted our new product development system. Thanks to a warm market response, the Group sold 213 thousand units of these machines during the period. Other titles created under the same system also performed well. Specifically, the Group sold 49 thousand units of “Degihane CR Hokuto No Ken Yuria,” under the Sammy brand, 31 thousand units across all series of “CR Momotaro Dentetsu,” under the GINZA brand, and 29 thousand units of “Pachinko CR Nogaremono Orin,“ under the Sammy brand. Accordingly, the Group sold a total of 391 thousand pachinko machine units during the year. In the pachislot machine business, the Group launched a number of well-received models with improved gameplay, benefiting from a partial amendment of Standards for Interpretation of Technical Specifications. These included “Pachislot Hard Boiled” and “Kaitou Tenshi Twin Angel 2,” under the Sammy brand and “KAIDOU- MOKUSHIROKU KAIJI 2,” under the RODEO brand. As a result of postponing the launch of the year’s flagship titles until the next fiscal year in a bid to enhance gameplay, overall pachislot machine sales remained at 123 thousand units for the period. As a result, the segment recorded sales of ¥162,490 million (an increase of 10.9% year on year) and operating income of ¥14,528 million (an increase of 72.1% year on year) for the year under review. Main Pachinko Machines and Units Sold
Model name
Brand
Units sold (Thousands)
Pachinko CR Hokuto No Ken
(Sammy)
213
Degihane CR Hokuto No Ken Yuria
(Sammy)
49
CR Momotaro Dentetsu
(Ginza)
31
Pachinko CR Nogaremono Orin
(Sammy)
29
CR SAMURAI CHAMPLOO
(Taiyo Elec)
18
Others
48
Total

391

Main Pachislot Machines and Units Sold
Model name
Brand
Units sold (Thousands)
Pachislot Hard Boiled (Sammy)
23
KAIDOU-MOKUSHIROKU KAIJI 2 (Rodeo)
18
Pachislot Momotaro Dentetsu (Sammy)
11
Pachislot THE BLUE HEARTS
(Ginza)
11
Kaitou Tenshi Twin Angel 2
(Sammy)
5
Others
52
Total

123

《Amusement Machine Sales》

In the amusement machine sales business, the Group reported healthy sales of major titles, including “WORLD CLUB Champion Football Intercontinental Clubs 2006-2007,” a trading card game, and “GALILEO FACTORY,” a large medal game. In light of harsh conditions in the amusement center industry, however, the Group suspended the development of a major title originally scheduled for release in the second half of the period.
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As a result, sales in this segment declined 13.2%, to ¥65,430 million, and operating income fell 3.7%, to ¥6,890 million.
《Amusement Center Operations》

In the amusement center operations business, sales at existing SEGA amusement centers in Japan, particularly in suburban areas, were weakened by sluggish personal consumption, at 92.4% of the previous year’s level. Facing difficult business conditions, SEGA CORPORATION decided to close 110 domestic amusement centers with low profitability or future potential between January and September 2009. In the year under review, the Group closed 47 amusement centers and opened 6 new amusement centers. At fiscal year-end, therefore, the Group operated a total of 322 amusement centers. As a result, the segment reported a 21.8% decline in sales, to ¥71,330 million, and an operating loss of ¥7,520 million, compared with an operating loss of ¥9,807 million in the previous fiscal year.
《Consumer Business》

In the consumer business, overseas home video game software sales were firm thanks to favorable year-end sales of titles such as “Sonic Unleashed” and “Football Manager 2009.” Also popular were titles released in the previous year, such as “Mario & Sonic at the Olympic Games.” In Japan, the Group reported strong sales of two titles “PHANTASY STAR PORTABLE” and “Ryu Ga Gotoku 3,” the latest version of the popular series, but other titles performed weakly. For the year, the Group sold 12,490 thousand video game copies in the United States, 12,730 thousand copies in Europe and 4,230 thousand copies in Japan and other regions, for a total of 29,470 thousand copies. In the toy sales division, sales were weak in Japan, but overseas sales were buoyant for “BAKUGAN,” which was awarded Toy of the Year 2009 in the United States. In addition, the Group performed well in contents for mobile phones, mainly offering the game software, such as “Pachinko CR Hokuto No Ken”. Also, the network delivery was increased, but the sales from animated TV programs and videogram were weak in Japan. As a result, this segment posted 7.5% decline in sales, to ¥131,664 million, and an operating loss of ¥941 million, compared with an operating loss of ¥5,989 million in the previous fiscal year. Outlook for the Financial Year ending March 2010 The economic conditions are expected to become more difficult due to several factors. These include falling private-sector capital spending amid turmoil in world financial markets, as well as a worsening employment situation and sluggish personal consumption. Despite the anticipated benefits of economic measures implemented by various nations, the outlook is expected to remain uncertain for the time being. Facing these conditions, in its pachislot and pachinko machines business the SEGA SAMMY Group will narrow down the number of titles on offer in both the pachislot and pachinko machine categories in order to reinforce its overall lineup. For the year ending March 31, 2010, the Group forecasts sales of 450 thousand pachinko machines, up 58 thousand from the year under review, and 180 thousand pachislot machines, up 56 thousand. In addition, the Group will work to enhance profitability by reassessing our sales pricing strategy, reducing procurement costs for parts, and improving the ratio of board sales of the pachinko machines. In the amusement machine sales business, the Group will address changing conditions in the industry by offering products and business models that enhance investment efficiency for operators and secure sources of long-term and stable earnings for the Group as an amusement machine manufacturer. In the amusement center operations business, the Group is working to close amusement centers with low profitability or future potential. The Group will also strive to improve earnings by boosting our center management capabilities.
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