Consolidated Financial Report for the Interim Period of
the Fiscal Year Ending March 31, 2008

November 8, 2007

DISCLAIMER- NAMCO BANDAI Holdings Inc. provides this translation for your reference and convenience only and without
any warranty as to its accuracy or otherwise. In the event of any discrepancy, the original “Kessan Tanshin” inJapanese shall prevail.
- This document has been prepared as a guide to non-Japanese investors and contains forward-looking statements thatare based on management’s estimates, assumptions and projections at the time of publication. A number of factors
could cause actual results to differ materially from expectations.
- This document does not include the non-consolidated financial statements of NAMCO BANDAI Holdings Inc.

1

Stock Listing: Tokyo Stock Exchange
Code Number: 7832
(URL: http://www.bandainamco.co.jp/)
November 8, 2007

Consolidated Financial Report for the Interim Period of
the Fiscal Year Ending March 31, 2008
Representative:
Contact:
Scheduled filing date of the semi-annual security report:
Scheduled starting date for dividend payments:

Takeo Takasu, President and Representative Director
Yuji Asako, General Manager, Corporate Administration DivisionDecember 19, 2007
December 10, 2007

1. Consolidated Results for the Interim Period of the Fiscal Year Ending March 31, 2008
(April 1, 2007 ~ September 30, 2007)(1) Consolidated Operating Results
Net salesInterim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007
Fiscal Year Ended March 31,
2007

Recurring income¥ million
213,522%
3.3¥ million
15,085%(12.6)¥ million
17,379%(6.4)

206,636(5.6)

17,263(1.6)

18,561

1.7

459,132−

42,224−45,615−

Net income

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007

Operating income

Net income per share

Net income per share(diluted)¥ million
7,977%(27.6)

¥
31.33

¥
31.28

11,011

40.6

43.53

43.51

Fiscal Year Ended March 31,
24,252−
95.73
2007(Reference)
Gain or loss from the equity method: 211 million yen (FY 2008.3 interim), 1 million yen (FY 2007.3 interim),
191 million yen (FY 2007.3)

95.67(2) Consolidated Financial Position
Total assets

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007

Net assets

Equity ratio

Net asset per
share¥ million
386,020¥ million
280,030%
69.7¥
1,064.01

381,452

260,33765.8

992.26

Fiscal Year Ended March 31,
408,490284,254
67.1
2007(Reference)
Shareholder's equity: 269,051 million yen (FY 2008.3 interim), 250,993 million yen (FY 2007.3 interim),
274,169 million yen (FY 2007.3)

2

1,063.29

(3) Consolidated Statement of Cash Flows
Operatingactivities

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007
Fiscal Year Ended March 31,
2007

Investingactivities

Financing
activities¥ million
10,242¥ million(15,461)¥ million(16,158)

Cash and cash
equivalents atperiod-end¥ million
105,387

20,417(4,385)(18,121)111,566

42,493(15,253)(18,856)

124,155

2. Dividend

Dividend record dates
Fiscal Year Ended March 31, 2007
Fiscal Year Ending March 31, 2008
Fiscal Year Ending March 31, 2008 (Projection)

End of Interim¥12.00¥12.00−

Dividend per share
Fiscal Year-end¥16.00−¥12.00Total¥28.00¥24.00*1 NAMCO BANDAI Holdings Inc. does not provide dividend payment for the First Quarter and the Third Quarter.
*2 The fundamental policy on regarding appropriation of profits of the Company is to maintain the consolidated dividend payout ratio at alevel of 30%, based on stable annual dividend payments of ¥24 per share. The stable portion of the period-end dividend is given in the
projection based on the policy. Thus, the actual period-end dividend will be decided according to the consolidated financial results.

3. Consolidated Projections for the Fiscal Year Ending March 2008
(April 1, 2007 ~ March 31, 2008)
Net sales
Operatingincome¥ million% ¥ million%
Full Year
480,000
4.5
45,000
6.6

Recurringincome¥ million%
47,000
3.0

Net income¥ million
26,5004. Other Information(1) Significant changes in scope of consolidation: No(2) Changes in accounting policiesa) Changes due to changes in accounting standard: Yesb) Other changes: Yes
Note: Please refer to P46, P49, P52, and P57 for details.
(3) Number of shares issued (common share)a) Number of shares issued at the fiscal year end (including treasury stocks)
Interim Period for the Fiscal Year ending March 31, 2008
Interim Period for the Fiscal Year ended March 31, 2007
Fiscal Year ended March 31, 2007b) Number of treasury stocks at the fiscal year end
Interim Period for the Fiscal Year ending March 31, 2008
Interim Period for the Fiscal Year ended March 31, 2007
Fiscal Year ended March 31, 2007

256,080,191
260,580,191
260,580,191

3,214,497
7,627,726
2,731,047

Note: Please refer to P82 (“Per share data”) for the number of shares used to calculate “Net income per share”.

3

Net income
per share%
9.3¥
104.42

【Reference】 Non-consolidated Financial Statements

1. Non-consolidated Results for the Interim Period for the Fiscal Year Ending March 31, 2008
(April 1, 2007 ~ September 30, 2007)(1) Non-consolidated Operating Results
Ordinary Revenue

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007

Recurring income¥ million
10,578%238.3¥ million
8,654

%
426.2

¥ million
8,742

%
401.9

3,126

−

1,644

−

1,741

−

6,239

−

3,764

−

3,877

−

Fiscal Year Ended March 31,
2007

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007

Operating income

Net income¥ million
%
8,323
188.5

Fiscal Year Ended March 31,
2007

Net income per share
¥
32.68

2,885

−

11.07

5,085

−

19.57

(2) Non-consolidated Financial Position
Total assets

Interim Period of the Fiscal
Year Ending March 31, 2008
Interim Period of the Fiscal Year
Ended March 31, 2007

Net assets

Equity ratio

Net asset per
share¥ million
280,350¥ million
258,849%91.8¥
1,017.72

288,460

271,22293.9

1,039.04

Fiscal Year Ended March 31,
291,923265,286
90.7
1,026.20
2007(Reference)
Shareholder's equity: 257,450 million yen (FY 2008.3 interim), 270,744 million yen (FY 2007.3 interim),
264,709 million yen (FY 2007.3)

Explanation regarding the appropriate use of forecasts of business results and other notes* Qualitative information regarding forward-looking statements:
Forward-looking statements that have been released prior to this document are based on management’s estimates, assumptions,projections and information available at the time of its publications. A number of factors could cause actual results to differ materiallyfrom expectations.
* Figures are in millions of yen, rounded down, except where noted.

4

1. Results of Operations(1) Analysis on Results of Operations
a. Summary for the Interim Period (April 1, 2007 to September 30, 2007)
In the period under consideration (April 1, 2007 to September 30, 2007), Japan’s economy
was characterized by solid growth in corporate earnings and capital expenditure andimprovement in the employment environment. However, with a heavier individual resident tax
burden and rising gasoline prices, consumer mindset was on a negative trend. On top of this,fears of global economic turmoil brought about by the U.S. subprime mortgage crisis havedarkened prospects for the future of the economic upswing.
In the entertainment industry, the home video game market continued to enjoy strong sales ofsoftware titles for handheld consoles thanks to efforts to expand the purchasing base with new
genres such as education and training. The toys and hobby market, on the other hand, still lacks
a hit product that can drive the industry as a whole in the face of diversifying consumer needs.
In this environment, the BANDAI NAMCO Group (the Group) continues to pursue a policyof strengthening, enriching, and expanding its portfolio management based on its three-year
medium-term management plan launched in the previous fiscal year.
During this period, long-established character toys in the Toys and Hobby Business andfranchise titles in the home video game software gained popularity, while domestic large-scale
facilities performed strongly in the Amusement Facility Business. However, the Group’s profits
fell short of the prior interim period, in part because base integration in the Game Contents
Strategic Business Unit and changes to the depreciation accounting rules caused operating costs
to increase, and in part because the Group earned a large amount during the prior interim period
from sale of affiliate stock.
As a result, the Group’s consolidated operational results for this interim period ended with
net sales of ¥213,522 million, an increase of 3.3% compared to the prior interim period;
operating income of ¥15,085 million, a decrease of 12.6% compared to the prior interim period;
recurring income of ¥17,379 million, a decrease of 6.4% compared to the prior interim period;and net income of ¥7,977 million, a decrease of 27.6% compared to the prior interim period.

5An overview of each business is presented as follows.
Results by Business Segment(¥ million)
Net Sales
FY08.3
InterimOperating Income

FY07.3
InterimchangeFY08.3
Interim

FY07.3
InterimchangeToys & Hobby

83,57885,784(2,206)

5,768

8,186 (2,417)

Amusement
Facility

46,124

43,216

2,907

2,078

1,883

194

Game Contents

61,83557,007

4,827

4,856

1,853

3,003

Network

5,936

6,266

(330)

431

540

(109)

Visual & Music
Content

17,88819,282(1,394)

3,035

Other

10,065

10,943(877)

476

4,516 (1,481)
899

(423)

Toys and Hobby BusinessIn the Toys and Hobby Business, boys’ toys based on Masked Rider Den-O characters andgirls’ toys based on YES! Pretty Cure 5 characters posted strong performances in Japan, while
DATA CARDDASS expanded its target audience with new additions Daikaiju Battle ULTRAMONSTERS and Hyakuju Taisen Animal Kaiser. However, the results did not reach the heightsof the previous interim period, which was fueled by Tamagotchi Plus and DATA CARDDASS.
Overseas, the Power Rangers and Tamagotchi series continued to gain popularity, whileboys’ toys featuring characters from BEN 10, which was developed in the United States, also
contributed to the performance of this business category with their expansion to new regional
markets.
As a result, the Toys and Hobby Business booked net sales of ¥83,578 million, a decrease of
2.6% compared to the prior interim period; and operating income of ¥5,768 million, a decreaseof 29.5% compared to the prior interim period.

6

Amusement Facility BusinessIn the Amusement Facility Business, although sales at existing facilities amounted to 95.8%
compared to the prior interim period, new large-scale facilities in Japan, such as NAMCO
WONDERPARK HEROES BASE in Kawasaki and Kanagawa and NAMCO Land
Kagamigahara in Gifu, which opened last period and this period, earned solid revenues.
Overseas, in Europe, sales were strong particularly among hybrid facilities acquired in theprevious fiscal year, while in the Americas the Group worked to streamline its
directly-managed facilities and expand its revenue-sharing facilities in a sluggish market
environment.
As a result, the Amusement Facility Business reported net sales of ¥46,124 million, an
increase of 6.7% compared to the prior interim period; and operating income of ¥2,078 million,
an increase of 10.4% compared to the prior interim period.
Facilities as of September 30, 2007
Directly-managed
facilities

Revenue-sharing
facilities

Theme parks

Spa Resort

Total

435

1,349

5

4

1,793

Game Contents BusinessIn the Game Contents Business, home video game titles Super Robot Wars: Original
Generations for PlayStation 2 and Dragon Ball Z Sparking! METEOR for PlayStation 2 andWii became hits in the domestic market. The Group also worked to boost sales of software for
handheld consoles. Overseas, titles in the NARUTO series met with success in the Americas,
including repeat orders for titles released during the previous period, and the Group narrowed
down its title lineup to improve its profit base. In Europe, titles in the Dragon Ball Z series aswell as Ridge Racer 7 for PLAYSTATION 3 delivered strong performances.
In coin-operated game machines, Wangan Midnight Maximum Tune 3 scored a hit andcontributed to profits. In game contents for mobile devices, the Group achieved success bydeveloping variety-themed contents that catered to users’ diversifying preferences.
As a result, the Game Contents Business recorded net sales of ¥61,835 million, an increase of
8.5% compared to the prior interim period; and operating income of ¥4,856 million, an increaseof 162.1% compared to the prior interim period.

7

Network BusinessIn the Network Business, within the mobile content sector, the Group actively developed
game contents tailored to different users’ purposes – including high value-added contents suchas One Piece Mobile Jack, casual games such as the Simple 100 series and Zoo Keeper, andcontents tied to coin-operated game machines such as Mobile Suit Gundam: Senjo no Kizuna –as well as customized contents for mobile phones. However, the business continued to struggle
due largely to the effects of a decrease in the number of subscribers for wallpapers and ringtones.
In the solutions services sector, proposals for new services and consignment work such as
developing and operating mobile content sites for other companies generated strong revenues.
As a result, the Network Business reported net sales of ¥5,936 million, a decrease of 5.3%
compared to the prior interim period; and operating income of ¥431 million, a decrease of
20.2% compared to the prior interim period.
Visual and Music Content BusinessIn the Visual and Music Content Business, DVD box sets showcasing high-quality content
from the past like the Ghost in the Shell series and Mobile Suit Gundam Wing as well as theanimated TV series CODE GEASS: Lelouch of the Rebellion and original animated titles such
as FREEDOM were well received among visual software packages. Music software packages
from the animated TV series Lucky

Star, also proved popular. However, results did notmatch up to the same period last year, when strong sales from the Mobile Suit Gundam series
fostered group synergy.
As a result, the Visual and Music Content Business posted net sales of ¥17,888 million, adecrease of 7.2% compared to the prior interim period; and operating income of ¥3,035 million,a decrease of 32.8% compared to the prior interim period.
Other Business
Other Business consists of companies that provide support to the Group’s strategic business
units through operations that include logistics, leasing, and building management. During theinterim period under review, the business remained focused in its efforts to improve theoperational efficiency of these group support services.
As a result, the Other Business category booked net sales of ¥10,065 million, a decrease of
8.0% compared to the prior interim period; and operating income of ¥476 million, a decrease of
47.1% compared to the prior interim period.

8

Operating Results By Geographic Segment(¥ million)
Net Sales
FY08.3
Interim

FY07.3
InterimOperating Income (Loss)
ChangeFY08.3
Interim

FY07.3
InterimChangeJapan

170,570

171,103(532)

12,005

16,598(4,592)

Americas21,96020,793

1,166

147

(867)

1,015

Europe21,004

13,998

7,006

3,062

1,405

1,657

Asia

17,29816,414

884

1,263

1,373

(110)

Japan
In Japan, the Toys and Hobby Business enjoyed strong performances from products such as
boys’ toys based on the Masked Rider Den-O characters, but fell short of the same period lastyear, when Tamagotchi Plus and DATA CARDDASS performed exceptionally well.
In the Amusement Facility Business, sales were sluggish at existing facilities, but large-scale
facilities which opened last period and this period performed well.
In the Game Contents Business, home video game titles Super Robot Wars: Original
Generations for PlayStation 2 and Dragon Ball Z Sparking! METEOR for PlayStation 2 andWii became hits and the Group also worked to boost sales of software for handheld consoles.
Meanwhile, in coin-operated game machines, Wangan Midnight Maximum Tune 3 scored a hit
and contributed to profits.
With regards to the Network Business, within the mobile content sector, the Group actively
developed high value-added and casual game contents as well as customized content for mobile
phones. However, the business continued to struggle due largely to the effects of a decrease in
the number of subscribers for wallpapers and ring tones.
In the Visual and Music Content Business, software packages such as DVD box setsshowcasing high-quality content from the past and TV series like CODE GEASS: Lelouch of
the Rebellion were well received. However, results did not match up to the same period lastyear, when strong sales from the Mobile Suit Gundam series fostered group synergy.
As a result, net sales in Japan totaled ¥170,570 million, a decrease of 0.3% compared to theprior interim period; and operating income totaled ¥12,005 million, a decrease of 27.7%
compared to the prior interim period.
Americas
In the Americas, the Toys and Hobby Business continued to enjoy strong performances fromPower Rangers and Tamagotchi, while boys’ toys based on BEN 10 characters also proved
popular. In the Amusement Facility Business, the Group worked to streamline its
9directly-managed facilities and expand its revenue-sharing facilities in a sluggish market
environment. In the Game Contents Business, titles in the NARUTO series met with success,including repeat orders for titles released during the previous period, and the Group narrowed
down its title lineup to improve its profit base.
As a result, net sales in the Americas reached ¥21,960 million, an increase of 5.6% comparedto the prior interim period; while operating income reached ¥147 million, a marked
improvement over the prior interim period’s operating loss of ¥867 million.
EuropeIn Europe, the Toys and Hobby Business continued to enjoy strong performances from
Tamagotchi and Power Rangers, while boys’ toys based on BEN 10 characters – which were
deployed to European markets this period – also proved popular. In the Amusement Facility
Business, hybrid facilities acquired in the previous fiscal year contributed to sales. In the Game
Contents Business, home video game titles including the Dragon Ball Z series as well as Ridge
Racer 7 for PLAYSTATION 3 delivered strong performances.
As a result, net sales in Europe amounted to ¥21,004 million, an increase of 50.1% comparedto the prior interim period; and operating income amounted to ¥3,062 million, an increase of
117.9% compared to the prior interim period.
Asia
In Asia, the Toys and Hobby Business enjoyed solid sales from boys’ toys based on Power
Rangers and Masked Rider characters and from plastic models based on the Mobile Suit
Gundam series. In the Amusement Facility Business, the Group continued to expand its
presence with prize games and Group products.
As a result, net sales in Asia totaled ¥17,298 million, an increase of 5.4% compared to theprior interim period; and operating income totaled ¥1,263 million, a decrease of 8.0%
compared to the prior interim period.

b. Outlook for the Fiscal Year ending March 2008
Looking at economic conditions going forward, while the economy is expected to remain on
a recovery track with moderate signs of improved corporate profits and increased capital
expenditures, the effects of the subprime mortgage crisis on the American economy and rises in
the price of crude oil provide cause for concern. Regarding the entertainment businessenvironment surrounding the Group, in addition to the ongoing technological revolution anddiversification of consumer needs, the borders with other industries are rapidly disappearing,
signaling the arrival of an era of great change.
In this context, the Group will push to strengthen, enrich, and expand its portfolio
management based on the three-year medium-term management plan initiated in April 2006.
10

Specifically, we will create synergy throughout the Group as a whole through marketing
campaigns for the new animated TV series Mobile Suit Gundam 00, which began in October
2007.
Among other efforts, in the Toys and Hobby Business, the Group will boost the presence ofTamagotchi in Japan with new products and a new movie while also deploying
long-established characters such as Juken Sentai Geki Rangers, Masked Rider Den-O, and YES!
Pretty Cure 5 in preparation for the year-end sales season. DATA CARDDASS will also be
pushed toward a broader range of customers with new content such as Utatte! Pretty Cure
Dream Live. Overseas, the Group will continue to expand our presence with Power Rangers,
Tamagotchi, and BEN 10 products.
In the Amusement Facility Business, the Group will work to increase the scale of its revenues
in Japan by actively launching large-scale amusement facilities and revitalizing existing
facilities with attractive large-scale coin-operated machines, while also taking steps to expand
profits by sharing our expertise in low-cost business operations. Overseas, the Group willcontinue to aim for increased profits by tailoring our expansion efforts to suit each region.
In the Game Contents Business, the Group will release multiple large-scale home video gamesoftware titles in the second half of the fiscal year including Ace Combat 6: Fires of Liberation
for Xbox 360 while also developing software for casual users for Nintendo DS and Wii. In
coin-operated game machines, the Group will release machines targeting a wide range ofcustomers, starting with Tekken 6, the newest entry in the popular series.
In the Network Business, the Group will work to strengthen its profit base by streamlining
mobile content operations while reinforcing our corporate-oriented business by developing andinnovating new technologies.
In the Visual and Music Content Business, the Group will release packaged software
targeting a wide range of customers. These include a new original video animation for the
popular Armored Trooper Votoms animated TV series; the film Kantoku Banzai! from director
Takeshi Kitano; Mobile Suit Gundam Theatrical Memorial Box Set, the first DVD release of 3
Gundam movies with the original voices; and Mobile Suit Gundam 00, a new TV series
launched in October 2007.
In light of the aforementioned, the Group maintains its unamended forecast of consolidated
business results, released on May 9, 2007, for projections for the full fiscal year ending March
31, 2008.
Forward-looking statements
This document contains forward-looking statements based on information currently available to the Company andGroup, and as such, include inherent risks and uncertainties. Actual results may differ materially from forecasts for avariety of reasons.
Significant factors that may actually affect actual results include but are not limited to, changes in the Company andGroup’s operating environment, market trends and exchange rate fluctuations.

11(2) Financial Position
a. Analysis of assets, liabilities, net assets, and cash flows
At the end of the interim period under consideration, the Group’s assets totaled ¥386,020
million, a decrease of ¥22,470 million compared to the end of the previous fiscal year. This wasdue primarily to decreases in cash and deposits from stock buybacks and payment of dividends
as well as a decrease in accounts receivable.
Liabilities amounted to ¥105,989 million, a decrease of ¥18,247 million compared to the endof the previous fiscal year. This mainly reflected decreases in accounts payable and accrued
income taxes.
Net assets totaled ¥280,030 million, a decrease of ¥4,223 million compared to the end of theprevious fiscal year. While net profits this interim period reached ¥7,977 million, this wasoffset by stock buybacks and payment of dividends. As a result, the stockholders’ equity ratiorose from 67.1% at the end of the previous fiscal year to 69.7% this period.
b. Cash Flows
Cash and cash equivalents (hereafter “cash”) at the end of the interim period underconsideration totaled ¥105,387 million, a decrease of ¥18,768 million compared to the end of
the previous fiscal year. Cash flows in the interim period were as follows:(Cash flows from operating activities)
Operating activities provided cash of ¥10,242 million, a decrease of 49.8% compared to thesame period of the prior year. There were several factors that decreased cash this period,
including income tax payments totaling ¥11,067 million (compared to ¥7,102 million during
the same period of the prior year), an increase in inventory assets of ¥6,687 million (compared
to an increase of ¥6,236 million during the same period of the prior year), and a decrease intrade payables of ¥2,398 million (compared to an increase of ¥2,613 million during the same
period of the prior year). However, cash flow from operating activities overall resulted in a net
gain in cash with interim net income before income taxes and other adjustments of ¥17,050
million (compared to ¥21,507 million for the same period of the prior year), and a decrease intrade receivables of ¥17,298 million (compared to a decrease of ¥12,700 million for the same
period of the prior year).

12(Cash flows from investment activities)
Investing activities used cash of ¥15,461 million, an increase of 252.5% compared to thesame period of the prior year. This reflects expenditures of ¥8,772 million on acquisition of
tangible and intangible fixed assets (compared to ¥6,729 million during the same period of theprior year), and ¥3,896 million on acquisition of investment securities in shares of Toei
Company, Ltd. and others (compared to ¥447 million during the same period of the prior year),as well as income of ¥23 million from sales of investment securities (compared to ¥5,301
million during the same period of the prior year).
(Cash flows from financing activities)
Financing activities used cash of ¥16,158 million, a decrease of 10.8% compared to the same
period of the prior year. This reflects ¥9,967 million in purchases of treasury stock (comparedto ¥4 million during the same period of the prior year), dividends paid of ¥4,127 million(compared to ¥3,036 million during the same period of the prior year), and a net decrease in
short-term borrowings of ¥298 million (compared to a decrease of ¥13,451 million during thesame period of the prior year).
(Reference) Cash Flow Indices
FY2006.3
Equity ratio (%)
Equity ratio (market capitalization basis) (%)
Cash flows to interest bearing debt ratio (%)
Interest coverage ratio (times)

63.0
105.5
1.0
90.4

FY2007.3
67.1
116.1
0.5
180.1

FY2008.3
Interim
69.7
109.4
0.6
127.7

Stockholders’ equity ratio: Total stockholders’ equity/Total assets
Stockholders’ equity ratio (market capitalization basis): Market capitalization/Total assets
Ratio of interest-bearing debt to cash flow: Interest-bearing debt/Cash flow
* Operating cash flow for the interim period is doubled to calculate a full-year figure.
Interest coverage ratio: Cash flow/Interest expenses(Note 1) All calculations are performed using consolidated financial figures.
(Note 2) Market capitalization is calculated on the basis of the number of issued shares excluding treasury stock.
(Note 3) Operating cash flow is used for cash flow.
(Note 4) Interest-bearing debt covers all debt reported in the consolidated balance sheet for which interest is paid.

13

c. Fundamental Policy on Profit Sharing
The Company positions the return of profits to stockholders as one of its highest management
priorities. The fundamental policy is to maintain a stable dividend and increase corporate value while
becoming an even more competitive Group, and preserving a sound financial position. In concreteterms, the Company plans to maintain the consolidated dividend payout ratio at a level of 30%, basedon stable annual dividend payments of ¥24 per share.
The Company plans to use retained earnings for more efficient asset management as well as actively
investing in areas that will boost corporate value going forward, including the development of new
business fields and M&A.

d. Business Risks
Risk factors related to the Group’s businesses that may significantly affect decisions made by theinvestment community, include, but are not limited to, those listed below. These statements on risk
are based on information available to the Group as of November 8, 2007, the filing date for the
NAMCO BANDAI Holdings Inc.’s financial report (Kessan Tanshin) for the Interim Period of the
Fiscal Year ending March 31, 2008.
Risks associated with the core business model
The BANDAI NAMCO Group’s businesses are centered on products and services based on content,
including various characters. The Group's operating results may be affected by changes in the
popularity of specific content or related trends. Therefore, the Group is working to achieve stableearnings by strengthening, enriching, and expanding its portfolio management throughthree-dimensional and multi-lateral business administration. This portfolio compromises a businessportfolio, in which the Group conducts operations in a diverse array of business domains; a contents
portfolio, consisting of many different characters and content; and a regional portfolio, wherebusinesses are conducted in various regions around the world. In each business, the Group works todevelop new content, and conducts marketing activities designed to cultivate and develop that content
over the long term.

14

Risks associated with overseas business expansion
The Group is aggressively expanding its business overseas. This initiative exposes the Group to avariety of risks, including business risks associated with regional characteristics, such as local media
and distribution systems; risks associated with intellectual property rights, such as those related tocounterfeit products; and risks associated with fluctuations in exchange rates. Operationally, theGroup conducts sufficient research to minimize these risks and formulates countermeasures before
proceeding with overseas business expansion. With respect to intellectual property rights, the Group
cooperates with local government agencies and other authorities to identify counterfeit products,
promote enhanced recognition of genuine products, etc. In addition, for foreign exchange risks, theGroup uses forward contracts to lower the risks from short-term fluctuations in the exchange rates for
major currencies.
Retaining and developing key personnel
In the fast-changing entertainment industry, it is essential for the Group to retain and developing
personnel who can respond effectively to rapid changes. In addition to developing compensation
system that will facilitate the retention of these employees, the Group actively delegates authority. To
develop the next generation of employees, the Group is devoting resources to training seminars andother development programs. Furthermore, we will actively adopt personnel exchanges with the aimof reinforcing cooperation between each Strategic Business Unit.
Risk associated with Game Contents BusinessIn the game contents business, titles are a significant cause of fluctuations in profits, and there is arisk that changes in the timing of product launches will affect earnings in a given period. The Grouptightly controls software development schedules for every game while striving to diversify risks byflexibly developing multiple products with different software characteristics and development periods.
Moreover, the launch of next-generation game platforms and diversification of customer needs leadto market conditions remain marked by uncertainty. The Group tries to respond quickly to customer
needs by putting more emphasis on balanced titles among various platforms.
Risks associated with advances in and new generations of platforms
In developing game content, visual content, and network content, the Group faces the risk related toadvances in and new generations of content-provision platforms and the risk of delays in changing its
business models in response to these developments. The Group conducts research into newtechnologies and works to develop competitive content that is in step with the latest advances. At thesame time, the Group takes steps to further develop the content it creates and to acquire rights to newcontent. In line with its medium- to long-term strategy, the Group is also distributing the appropriate
management resources to growth areas with an eye toward the global market.

15

Decline in domestic birthrate
In the future, an ongoing decline in the domestic birthrate might affect the financial results of theGroup. Accordingly, the Group has been expanding the scope and target of its business activities inJapan and is aggressively taking steps to expand its operations in overseas markets.
Concentration of production and quality control in China
In the Group’s Toys and Hobby SBU, approximately 90% of the toys are manufactured in China.
Thus the Group faces risk of higher production costs from the revaluation of the yuan, country risk
stemming from the regional concentration of production, and risk regarding quality control of the
products. In response, the Group is working to reduce production costs and to diversify its production
bases into Southeast Asia and other regions. Additionally, the Group is establishing stricter quality
standards and designing products with safety in mind based on relevant legal restrictions and industry
quality and safety standards in all of its business fields.
Risks from higher crude oil prices
The Group faces the risk that higher crude oil prices could lead to higher production costs fromincreased product raw material prices and to higher transportation costs. Accordingly, the Group is
working to standardize the metal casts and molds used for character toys marketed worldwide and to
reduce costs by enhancing the efficiency of processes, ranging from production to distribution.
Additional risks include disasters, such as natural disasters or accidents, changes in laws andregulations, defective or deficient products or services, leaks of customer information, and litigation
associated with business activities. The Group maintains risk management systems and works tostrengthen its management foundation in order to minimize the effects on its results in the unlikely
event that any of these risks should materialize.

16

2. The BANDAI NAMCO Group
The BANDAI NAMCO Group (the Group) comprises NAMCO BANDAI Holdings Inc. (The Company), 77
subsidiaries and 8 affiliates. Operations primarily encompass the manufacture and sale of toys and plastic models,the core activity of the character merchandising business; amusement facility operations; coin-operated gamemachines and other related products; the production and sale of home videogame software; mobile content; andthe production and sale of video-related products. The Group is also engaged in distribution, planning,development and the provision of other services related to the above areas of business.
The Group’s businesses and the relationships among NAMCO BANDAI Holdings Inc. and its subsidiaries andaffiliates with business segments are outlined below. Business classifications correspond directly to theclassifications for business segment information.
Business
Segment

Business Outline

RegionMajor Companies
Bandai Co., Ltd., Megahouse Corp., Seika Co., Ltd.,

Domestic
Toys and

Toys, candy toys, products for vending

Hobbymachines, cards, plastic models, apparel,

Businesssundries, stationery and other products

Seeds Co., Ltd., Plex Co., Ltd.,
Sunlink Co., Ltd., CCP Co. Ltd.,
People Co., Ltd., and 6 other companies
BANDAI AMERICA INC., BANDAI S. A.,
BANDAI U.K. LTD., BANDAI ESPANA S.A.,BANDAI (H.K.) CO., LTD., BANDAI ASIA CO. LTD.,

Overseas

BANDAI INDUSTRIAL CO., LTD.,BANDAI KOREA CO., LTD.,
CREATIVE B WORKS CO. LTD.,and 4 other companies
NAMCO LIMITED, Pleasure Cast Co., Ltd., Hanayashiki

Domestic

Co. Ltd., NAMCO SPA RESORT LTD.,
Yunokawa Kanko Hotel Co., Ltd.

Amusement

NAMCO CYBERTAINMENT INC.,

Amusement facility operations, andFacility

NAMCO OPERATIONS EUROPE LTD.,

other operations
Business

Overseas

NAMCO OPERATIONS SPAIN S.L.,
NAMCO ENTERPRISES ASIA LTD.,XS ENTERTAINMENT INC. *1,
SHANGHAI NAMCO LTD.
NAMCO BANDAI Games Inc., Banpresto Co., Ltd.,

Domestic

Bec Co., Ltd., Banpresto Sales Co., Ltd.,
Banpresoft Co., Ltd., NAMCO TALES STUDIO LTD.,and 3 other company

Software for home videogames,

NAMCO BANDAI Games America Inc.,

coin-operated game machines, prizes for

NAMCO AMERICA INC.,

Game Contents
Business

NAMCO NETWORKS AMERICA INC.,

amusement machines, and other products
Overseas

NAMCO Holdings UK LTD.,
NAMCO EUROPE LTD.,
NAMCO BANDAI Network Europe LTD.,
NAMCO BANDAI Games Europe S.A.S.,BANPRESTO (H.K.) LTD.,

17

Business
Segment

Business Outline

RegionMajor Companies

Domestic

Bandai Networks Co., Ltd., VIBE Inc.

Network
Mobile content and other services
Business
Bandai Visual Co., Ltd., Sunrise Inc.,

Visual andVisual works, visual software, on-demandMusic Content

video distribution and other products andBusiness

services

Domestic

Bandai Channel Co., Ltd., Lantis Co., Ltd.,EMOTION CO., LTD., ANIME CHANNEL CO., LTD.,and 1 other company
BANDAI ENTERTAINMENT INC.,

Overseas

BANSAI VISUAL USA INC.,
and 2 other companies
Bandai Logipal Inc. *2, Logipal Express Inc. *2,

Transportation and warehousing ofproducts, leasing, real estate management,
Other Business

NAMCO BANDAI Business Services Inc.,

Domestic

printing, development and sale of

NAMCO TRADING LTD., Happinet Corp.,
Sotsu Co.,Ltd., Italian Tomato Ltd.

environmental equipment, and other

Corporate

Artpresto Co., Ltd., NAMCO ECOLOTECH LTD.,and 5 other companies

activities

Overseas

2 companies

Management of regional business companies

Overseas

NAMCO BANDAI Holdings (USA) Inc.

*1: Not operational as of March 31, 2007.
*2: On July 2, 2007, Logipal Express Inc. was formed as a spin of Bandai Logipal Inc.
*3: On April 1, 2007, Sotsu Agency Co., Ltd. changed its name to Sotsu Co., Ltd.

18

Chart of business system is as follows:
END USERJAPANOVERSEAS

Plan andWork

Production

BANDAI AMERICA INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.

Bandai Co., Ltd.

Plex Co., Ltd.

Seika Co., Ltd. C.C.P.
Co., Ltd. People Co.,
Ltd. *

Megahouse
Corp.

Seeds Co., Ltd.

Toys and Hobby Business

Sunlink Co., Ltd.

Product Sale

CREATIVE B
WORKS CO.,LTD.

BANDAI KOREA
CO., LTD.

BANDAI ASIA
CO., LTD.

Production
Production

BANDAI (H.K.) CO., LTD.
BANDAI INDUSTRIAL
CO.,LTD.

Product Sale

SHANGHAI NAMCO LTD.*

NAMCO LIMITED

Pleasure Cast Co., Ltd.
Hanayashiki Co., Ltd.

NAMCO SPA RESORT LTD.
Yunokawa Kanko Hotel, Co., Ltd.

Amusement Facility Business

Product Parts Sale

NAMCO OPERATIONSEUROPE LTD.
NAMCO OPERATIONSSPAIN S.L.
Product Sale

NAMCO ENTERPRISESASIA LTD.

Product Sale

NAMCO CYBERTAINMENT INC.
XS ENTERTAINMENT INC.
Intellectual Properties License

Plan andWork

Licenses（Mobile） Distribution License

NAMCO NETWORKSAMERICA INC.
Production License,
Selling License

NAMCO AMERICA INC.
Licenses, Product sale

NAMCO EUROPE LTD.
Licenses

Production

NAMCO BANDAI
Games America Inc.
Product Sale

NAMCO BANDAI Games Inc.

Plan andWork

Product Sale

NAMCO TALES STUDIO LTD.
Bec Co., Ltd.
Banpresoft Co., Ltd.

Banpresto Co., Ltd.

Game Contents Business

Banpresto Sales
Co., Ltd.

ProductSale

BANPRESTO (H.K.) LTD.

NAMCO BANDAI
Games Europe S.A.S.
NAMCO BANDAI
Networks Europe LTD.

Business

NetworkBusiness

Visual and Music Content

Bandai Networks Co., Ltd.
VIBE Inc.
Sunrise Inc.

Lantis Co., Ltd.
Bandai Channel Co., Ltd.

Plan and Work

Provide Contents

Bandai Visual Co., Ltd.

BANDAI VISUAL USA INC.

Provide Contents

Emotion Co., Ltd.

Provide WorksBANDAI ENTERTAINMENT INC.

Anime Channel Co., Ltd.

Bandai Logipal Inc.
Logipal Express Inc.
NAMCO BANDAI
Business Services Inc.
Artpresto Co., Ltd.
NAMCO ECOLOTECH LTD.
NAMCO TRADING LTD.
Happinet Corp.*
Sotsu Co., Ltd.*
Italian Tomato Ltd.*

Other Business

Serviceｓ to Support Group Companies

NAMCO BANDAI Holdings (USA) Inc.

NAMCO Holdings UK LTD.**NAMCO BANDAI Holdings Inc.
*Affiliated companies accounted for by the equity method.
** NAMCO Holdings UK LTD. is a regional holding company in Europe, and is included in the Game Contents segment.

19

3. Management Policies(1) Fundamental Management Policy
Guided by our vision of becoming “The World’s Most Inspiring Entertainment Group,” theBANDAI NAMCO Group’s mission is to offer “Dreams, Fun and Inspiration” throughentertainment to people around the world.
Moreover, based on the “entertainment hub concept” referenced in the Medium-Term
Management Plan, the Group, across its wide group-internal business expanse will engage ininitiatives involving content derived from a host of products and services and content madeavailable to the Group by content and partner companies. At the same time, we will strengthen theGroup’s relations with external business partners in this ever changing and competitiveentertainment industry, expand and cultivate our operations, and continually aim to achieve higher
corporate value.

(2) Targets and Management Performance Indicators
The Group has adopted return on assets (ROA) and return on equity (ROE) as medium-term
management performance indicators. The Group’s aim is to create a robust and stable managementbase over the medium term by ensuring all assets are always utilized to maximum efficiency and byeffectively using our equity. For this purpose, the Company has decided on a basic policy for theapplication of cash. Specifically, with regard to reserve funds after deduction of working capital andoutlays for forward capital investments related to operations, the Company considers acquisition oftreasury stock for return to shareholders and other purposes, after taking into account an overall
assessment of expected earnings for the current and next term as well as capital expenditure items,
etc. Based on this basic policy, the Group acquired 4,980,000 shares of its own stock between May
10, 2007 and June 12, 2007, and retired 4,500,000 shares of its own stock on June 20, 2007.
The Group aims to attain consolidated ROA of 13.5% and consolidated ROE of 10.0% in thefiscal year ending March 2009, which is the last fiscal year of the Medium-Term Management Plan
launched in April 2006, and will work to enhance management efficiency in parallel with businessexpansion.

16.0%
12.0%

13.5%
11.5%

9.4%

9.5%

9.6%

8.0%
4.0%

11.5%

10.0%
ROA
ROE

5.8%

0.0%
FY06.3

FY07.3

FY 08.3 (Plan) FY09.3(Target)20

(3) Medium- to Long-term Management Strategy
The Group aims to achieve maximum enterprise value through “strengthening, enhancement, andexpansion” of its portfolio-management, while implementing the 3-year Medium-Term
Management Plan initiated in April 2006.
In order to promote attainment of the Medium-Term Management Plan, the Company, as the groupholding company, implements management strategies spanning across the entire Group, while thepromotion of business strategies is centered on the five Strategic Business Units (Toys and Hobby,
Amusement Facility, Game Contents, Network, and Visual and Music Content) formed by
agglomerations of the Group’s business operating companies.
a. Portfolio Management of the GroupIn order to generate stable earnings, the Group has combined three portfolios comprising a“business portfolio” engulfing multiple areas of business initiatives, a “content portfolio”
encompassing initiatives based on various content including character-based content offerings, anda “geographic portfolio” comprising business initiatives in locations worldwide, with portfolio
management implemented through a three-dimensional and multi-layered administration. Under the
Medium-Term Management Plan, together with reinforcing these portfolios and through creating
new businesses going forward; the company will generate growth from inter-portfolio synergy
effects, and work to strengthen, enrich, and expand overall portfolio management.
b. Management Strategies
1) Strengthening Corporate Governance
Aiming to become a Group that features heightened management transparency, trusted by society,and capable of sustained contributions to society, we will promote brand strategies, enhance CSR
and compliance arrangements, and advance appropriate corporate disclosure, and in this way work
to reinforce governance systems.
2) Effectively Utilizing Human Resources
In order to realize the maximum potential of human resources, the foremost among management
resources, the Group will provide employees with opportunities and venues for self realization byintroducing efficient and flexible systems such as personnel exchange within the Group,
reinforcement of personnel training programs, and adoption of new hiring rules.
3) Building Optimal Management System
The Group constantly strives toward achieving the ideal group structure for its strategy and thechanging environment and will continue to take a flexible approach. Specifically, the Group will
optimally allocate its management resources to markets that need a full-Group approach throughorganizational restructuring and other measures. The Group will also continue to implement
measured efforts toward organizational restructuring, such as consolidating its back office functions
to streamline operations.
21

c. Business Strategies
1) Entertainment Hub Concept
The entertainment hub function, which forms the Group’s business model, is equipped withcomprehensive capabilities reaching from content creation to product development and sales,
capable of providing products and services across a wide range of businesses. Together with ourpartner companies and creators in and outside Japan, we will make active mutual use of theentertainment hub function to create new businesses as well as products and services, and provide
further strengthening in the process.
2) Strengthening Overseas BusinessIn overseas business initiatives, we have established the regional holdings companies in theAmericas, Europe, and Asia, and each Strategic Business Unit works to expand operations though
optimized business portfolios and content portfolios according to regional characteristics.
As numeric targets, through the pursuit of these management and business strategies, the Groupaims to reach net sales of 550 billion yen and operating income of 58 billion yen for the fiscal year
ending March 2009.
(million yen)

Net Sales
Operating Income

Fiscal Year ended
March 2006

Fiscal Year ended
March 2007

Fiscal Year ending
March 2008
(Plan)

Fiscal Year ending
March 2009
(Target)450,829
35,669459,132
42,224

480,000
45,000550,000
58,00022

(4) Issues to be Addressed
The Group and this industry must address many important, long-term issues, including “theincreasing diversification of consumer preferences” and “changes in the market and theenvironment”. In response, the Group is working to reinforce its portfolio management further,based on the “Entertainment Hub Concept” laid out in its medium-term management plan.
Operationally, the Group placed “Strategic Business Units (SBUs)”, which grouped all the businessthe Group is engaged in, at the core, and is working to enrich its cross functional capabilities acrosseach of the SBUs.

a. Common issues faced by all SBUs
Domestic business expansion
The Group will maximize utilization of the managerial resources it owns—contents,
technologies, and locations—to create markets and attract new customer segments in order toexpand its domestic operations. The implementation of strategies spanning across the Group, theuse of alliances with outside partners and M&A will further contribute to expanding its
operations. In addition, in response to the changing environment for the entertainment industry,
the Group will also engage in building new business models free from the constraints imposedby existing business practices and models.

Overseas business expansion
The Group is strengthening cooperation among regions and examining concepts towards
building the optimal business model for expanding operations overseas. In addition, we haveestablished the regional holdings companies in the Americas, Europe, and Asia, and are working
to expand operations according to regional characteristics

23

Corporate Social Responsibility
The BANDAI NAMCO Group's corporate philosophy is to provide “Dreams, Fun andInspiration” to people around the world through entertainment based on creativity and boundlessenthusiasm. To ensure that we can continue to provide “Dreams, Fun and Inspiration,” we haveformulated Groupwide CSR initiatives that include three types of responsibilities.
In accordance with these fundamental principles, a range of measures are implemented by theGroupwide CSR Committee and its sub-committees—the Social Contribution Committee andthe Environmental Project Committee— as well as by the Crisis Management Committee andthe Compliance Committee.

1) Legal and ethical responsibilities (compliance)
We have formulated basic compliance standards for Group companies, officers, andemployees in Japan and overseas, and we conduct continual monitoring to ensure appropriate
observance of legal and ethical standards.

2) Environmental and social responsibilities (safety/quality, environmental conservation, social
support activities)- Safety / quality initiatives
We follow industry standards and inhouse standards, and we have built a system thatfacilitates the achievement of higher levels of safety and quality, so that customers can use
our products with confidence.
- Environmental conservation initiatives
We are aggressively implementing forward-looking environmental conservation measures
to ensure that we can continue to provide “Dreams, Fun and Inspiration” to people around theworld.
- Cultural / social support activities
We are also active in areas outside the provision of products and services, such as
museum operations and volunteer activities.

3) Economic initiatives
We are continually working to enhance management transparency and monitoring themanagement plans and conditions of Group companies. Moreover, we are working to provide
maximum returns to society and stakeholders by selecting the optimal operational fields forGroup development and focusing our management resources on those fields.
24

b. Issues specific to each SBU
Toys and Hobby SBU
This unit’s industry is facing a “shrinking domestic market due to the falling birthrate” and“diversifying consumer needs”. It is addressing those challenges by expanding its target population
segment and creating new businesses in Japan as well as actively expanding operations in overseas
markets. For speedy implementation of its plans, this unit will also actively build cooperative
relationships with external partners.

Amusement Facility SBU“Changes in business revenue structures”, “diversifying consumer needs”, and “revision of
consumption tax rate” are among the issues for this unit’s industry. To address them, theAmusement Facility SBU is working to enhance profitability by improving its cost structure aswell as working in conjunction with other SBUs to develop and provide highly valued-added,
distinctive facilities that target a broad range of customer segments. The Amusement Facility SBU
is also working proactively to build new major revenue sources, develop overseas operations, andpioneer new business formats.

Game Contents SBU
Due to the launch of next generation game platforms, the industry is facing issues such as“diversifying consumer needs” and “soaring content development costs”. In response, this business
unit is reviewing and revising the content development process through sharing know-how andtechnologies between the amusement machines, home video game software, and mobile content
businesses, to build a flexible development system. Those initiatives will enable the Game
Contents SBU to develop the optimal number of titles across each platform and to respond swiftly
to changing customer preferences.

Network SBU
The issues for this industry include “responding to the rapid generational transition in mobile
phone handsets” as well as “responding to a broader and more highly evolved network
environment”. In regards to these issues, the Group will actively plan and develop attractive newcontent while reinforcing our B to B business by developing and innovating new technologies. In
addition, as competition in the industry grows fiercer, we will make effective use of the Group’s
resources to streamline existing businesses and achieve the optimal allocation of management
resources to new and growing businesses.

25

Visual and Music Content SBU
This industry’s issues include the “emergence of next-generation media” as well as “adapting to
new high-performance hardware”. In order to respond to these problems, the Group strives tomaximize the value of its contents. In concrete terms, we focus our attention on the creation ofsuperior content, as well as expand into music/publishing content development, in order to increasebusiness opportunities. Furthermore, along with applying content owned by the Group to new
hardware, quickly and to the maximum extent, we will also construct business models using new
media, such as network delivery.

26

4. Interim Consolidated Financial Statements(1) Interim Consolidated Balance Sheets

Note

Prior interim period

Current interim period

As of September 30, 2006

As of September 30, 2007

Millions of yen

Share
(%)

Millions of yen

Share
(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2007

ChangeMillions of yen

Share
(%)

(Assets)
I

Current assets

1. Cash and time deposits*2108,985

97,641

113,710

2. Trade receivables*4

60,74062,32978,429

3. Short-term investments

4,434

11,37912,191

4. Inventories

34,48540,49732,291

5. Deferred tax assets

5,580

4,687

5,717

6. Other current assets

17,642

18,564

16,816

(575)

(572)

(1,947)

Allowance for doubtful receivables

231,293

Total current assets
II

60.6

234,527

60.8

3,233

257,209

63.0

Fixed assets

1. Property, plant and equipment*1(1) Buildings and structures

14,02013,157

12,007(2) Amusement facilities and machines

24,78026,776

26,123(3) Land

22,19020,21920,597(4) Other property, plant and equipment

16,02277,013

15,912

76,066(947)

16,22674,955

2. Intangible assets(1) Goodwill

10,818(2) Other intangible assets

8,495

8,497
19,314

11,066

9,739
19,563249

9,729

19,468

3. Investments and other assets(1) Investment securities

19,86928,007

28,817(2) Guarantee money deposited

25,13920,93621,022(3) Deferred tax assets

5,292

4,099

4,141

(4) Other investments and assets

4,905

4,050

4,171

Allowance for doubtful receivables(1,375)53,830(1,230)Total fixed assets

150,158

39.4

Total assets

381,452 100.027

55,863
151,492

2,032(1,296)56,857

39.2

1,334

151,28137.0

386,020 100.0

4,568

408,490 100.0

Note

Prior interim period

Current interim period

As of September 30, 2006

As of September 30, 2007

Millions of yen

Share
(%)

Share

Millions of yen

(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2007

ChangeMillions of yen

Share
(%)

(Liabilities)
I

Current Liabilities

1. Trade payables*4

44,96045,68347,097

2. Short-term borrowings

*2

2,453

1,054

2,169

3. Bonds—current portion

5,000

10,00010,0004. Accounts payable—other

16,534

15,777

22,334

5. Accrued income taxes

8,473

6,516

10,875

339

422

651

147

60

−

−

648

−

9. Other current liabilities

16,796

13,953

17,701

Total current liabilities

94,705

6. Provision for directors’ bonus
7. Provision for losses from businessrestructuring
8. Provision for sales return

II

24.9

94,116

24.4

(589)

110,829

27.1

Long-term Liabilities

1. Bonds

10,000−−2. Long-term debt

1,497

500

1,133

690

591

591

2,130

1,725

2,223

602

15

525

6. Other long-term liabilities

11,488

9,040

8,933

Total long-term liabilities

26,4096.9

11,873

3.1(14,535)

13,407

3.3

Total liabilities

121,11431.8

105,98927.5(15,125)

124,236

30.4

3. Deferred tax liabilities, land
revaluation difference
4. Accrued retirement and severance
benefits
5. Directors’ and auditors’ retirement
and severance benefits

28

Note

Prior interim period

Current interim period

As of September 30, 2006

As of September 30, 2007

Millions of yen

Share
(%)

Millions of yen

Share
(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2007

ChangeMillions of yen

Share
(%)

(Net Assets)
I

Stockholders’ Equity

1. Common stock

10,00010,00010,0002. Additional paid-in capital

95,772

88,957

97,142

3. Retained earnings

172,358

186,107

182,389

4. Treasury stock(11,173)(5,735)(3,952)

Total stockholders’ equity

266,956II

70.0

279,330

72.4

12,373

285,578

69.9

Valuation difference andtranslation adjustments
1. Other securities valuation difference

3,053

2,014

4,100

2. Deferred gains or losses on hedges

10

182

91

(21,459)(21,286)(21,286)

2,432

8,810

5,684

3. Land revaluation difference
4. Translation adjustment
Total valuation difference and(15,963)(4.2)(10,279)

(2.7)

5,684

(11,409)

(2.8)

478

0.1

1,399

0.3

921

577

0.2

8,865

2.3

9,580

2.5

714

9,507

2.3

Total net assets

260,33768.2

280,030

72.5

19,693284,254

69.6

Total liabilities and net assets

381,452 100.0

386,020 100.0

4,568

408,490 100.0translation adjustments
III

Stock subscription rights

IV

Minority Interests29

(2) Interim Consolidated Statements of Income
Ref: Prior fiscal year
Prior interim period

Current interim period

VS prior(April 1, 2006 ~(April 1, 2007 ~interimof income

September 30, 2006)

September 30, 2007)

period(April 1, 2006 ~condensed statement

March 31, 2007)
Note

Millions of yen

Share
(%)

Millions of yen

Share
(%)

ChangeMillions of yen

Share
(%)

I

Net sales

206,636

100.0

213,522

100.0

6,886

459,132

100.0

II

Cost of sales

130,896

63.3

136,351

63.9

5,455

291,052

63.4

Gross profit

75,73936.7

77,170

36.1

1,430

168,079

36.6

58,47628.3

62,084

29.0

3,608

125,855

27.4

17,263

8.4

15,085

7.1(2,177)42,224

9.2

4,032

0.9

641

0.2

45,615

9.9

5,837

1.3

III

Selling, general andadministrative expenses*1

Operating income
IVV

Non-operating income
1. Interest income

625

1,168

1,448

2. Dividend income

106

153

639

3. Rental income

127

−

250

4. Foreign exchange gain

347

−

573

5. Operation consignment
income

195

−

349

6. Other non-operating income

271

0.8

1,161

2,483

1.1

810

772

Non-operating expenses
1. Interest expense

112

82

237

2. Expenses related to rental
assets52

50

63

3. Loss on valuation ofderivatives

158

−

246

4. Sales discounts

−

26

48

5. Other non-operating expenses

51

Recurring income
VI

1,673

375

0.2

18,561

9.0

30

190

0.1

(185)

17,3798.1(1,182)44

Extraordinary income
1. Gain on sale of property, plantand equipment

*2

32

27

160

316

1

498

4,917

−

4,917

4. Reversal of allowance for
doubtful receivables

92

189

145

5. Government subsidy income

102

−

102

6. Reversal of accrued retirement
and severance benefits

−

478

−

7. Other extraordinary income−

2. Gain on sale of investment
securities
3. Gain on sale of investments inaffiliated companies

5,461

2.6

30

−

696

0.4

(4,764)13

Ref: Prior fiscal year
Prior interim period

Current interim period

VS prior(April 1, 2006 ~(April 1, 2007 ~interimof income

September 30, 2006)

September 30, 2007)

period(April 1, 2006 ~condensed statement

March 31, 2007)
Note
VII

Millions of yen

Share
(%)

Millions of yen

Share
(%)

ChangeMillions of yen

Share
(%)

Extraordinary loss
1. Loss on sale of property, plantand equipment
2. Loss on disposal of property,
plant and equipment
3. Loss on impairment of fixed
assets
4. Litigation settlement
5. Loss on valuation of
investment securities
6. Provision for losses on
business restructuring
7. Provision for allowance of
doubtful receivables

*3

2

12

20

*4

164

394

406

*5

1,616

81

5,069

−

288

3

462

188

690

−

60

−

168

−

343

100

−

100

8. Loss for deferring income tax

of depreciation of property,
plant and equipment
9. Other extraordinary loss
Net income before income taxes
and minority interests
Corporate income, inhabitant andenterprise taxes
Deferred income taxes
Minority interests
Net income

1

2,515

1.2

21,507

10.4

8,406
1,285

−

1,025

0.5

(1,489)17,0508.0(4,457)

6,861
9,692

4.7

803
11,0117,739

1.7

43,713

9.5

17,5693.8

17,822
8,519

4.0(1,172)

0.4

553

0.3

(249)

1,891

0.4

5.3

7,977

3.7

(3,034)24,252

5.3

31

1,658

1,106

(253)

(3) Interim Consolidated Statement of Changes in Net Assets
For the previous interim period ended September 30, 2006 (April 1, 2006 to September 30, 2006)
Stockholders’ equity
Common stock

Additional paid-in
capitalRetained earnings

Treasury stock

10,00095,772

164,503(11,156)

Balance at March 31, 2006(¥ million)

Total
stockholders’equity259,119

Changes during the period
Cash dividends (*)(3,036)(3,036)

(417)

(417)

11,011

11,011

Directors’ bonuses (*)
Net income
Purchase of treasury stock

(17)

(17)

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)

30

30

Changes in the scope of
application of the equity method(decrease in companies to which
the equity method applies)

295

295

Decrease in retained earnings
on merger of consolidated
subsidiaries

(28)

(28)

Net changes other than forchanges in stockholders’ equity
Total changes during the period(¥ million)
Balance, September 30, 2006(¥ million)

-

-

7,854

(17)

7,837

10,00095,772

172,358(11,173)

266,956

Valuation difference and translation adjustments

Balance at March 31, 2006(¥ million)

Other
securities
valuationdifference

Deferred
gains orlosses onhedgesLand
revaluationdifference

4,145

-

(21,459)

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments

Stocksubscription
rightsMinority
interest
s

Total
net
assets

1,801(15,512)-8,636

252,243

Changes during the period
Cash dividends (*)(3,036)

Directors’ bonuses (*)(417)

Net income

11,011

Purchase of treasury stock(17)

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)

30

Changes in the scope of
application of the equity method(decrease in companies to which
the equity method applies)

295

Decrease in retained earnings
on merger of consolidated
subsidiaries(28)

Net changes other than forchanges in stockholders’ equity(1,092)

10

-

631

(450)

478

228

256

Total changes during the period(¥ million)(1,092)

10

-

631

(450)

478

228

8,093

Balance, September 30, 2006(¥ million)

3,053

10

(21,459)

2,432(15,963)

478

8,865

260,337(*): Item for appropriation of earnings at the Ordinary General Meeting of Shareholders.

32For the current interim period ended September 30, 2007 (April 1, 2007 to September 30, 2007)
Stockholders’ equity
Common stock

Additional paid-in
capitalRetained earnings

Treasury stock

10,00097,142

182,389(3,952)

Balance at March 31, 2007(¥ million)

Total
stockholders’equity285,578

Changes during the period
Cash dividends(4,127)(4,127)

Net income

7,977

7,977

Purchase of treasury stock
Retirement of treasury stock(8,184)(9,967)(9,967)

8,184−

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)

(103)

(103)

Changes in the scope of
consolidation (decrease inconsolidated subsidiaries)

(27)

(27)

Net changes other than forchanges in stockholders’ equity
Total changes during the period(¥ million)
Balance, September 30, 2007(¥ million)−(8,184)

3,718(1,783)(6,248)10,00088,957

186,107(5,735)279,330

Valuation difference and translation adjustments

Balance at March 31, 2007(¥ million)

Other
securities
valuationdifference

Deferred
gains orlosses onhedgesLand
revaluationdifference

4,100

91

(21,286)

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments

Stocksubscription
rightsMinority
interest
s

Total
net
assets5,684(11,409)

577

9,507

284,254

Changes during the period
Cash dividends(4,127)

Net income

7,977

Purchase of treasury stock(9,967)Retirement of treasury stock−

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)(103)

Changes in the scope of
consolidation (decrease inconsolidated subsidiaries)(27)

Net changes other than forchanges in stockholders’ equity(2,085)

90

−

3,125

1,130

822

72

2,025

Total changes during the period(¥ million)(2,085)

90

−

3,125

1,130

822

72

(4,223)

Balance, September 30, 2007(¥ million)

2,014

182

(21,286)

8,810(10,279)

1,399

9,580

280,03033

Consolidated statement of changes in net assets for the prior fiscal year ended March 31, 2007
(April 1, 2006 to March 31, 2007)
Stockholders’ equity

Balance at March 31, 2006(¥ million)

Common stock

Additional paid-in
capitalRetained earnings

Treasury stock

10,00095,772

164,503(11,156)

Total
stockholders’equity259,119

Changes during the period
Cash dividends (*)(3,036)(3,036)

Cash dividends(3,036)(3,036)

(417)

(417)

24,252

24,252

Directors’ bonuses (*)
Net income
Purchase of treasury stock
Disposal of treasury stock

867

Acquisition of treasury stockfrom consolidated subsidiaries

502

(23)

(23)

7,227

8,095
502

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)

30

30

Decrease in retained earnings
on merger of consolidated
subsidiaries

(28)

(28)

Changes in the scope of
application of the equity method(decrease in companies to which
the equity method applies)

295

295

Reversal of land revaluationdifference

(173)

(173)

Net changes other than forchanges in stockholders’ equity
Total changes during the period(¥ million)
Balance, September 30, 2007(¥ million)

−

1,369

17,885

7,203

26,45810,00097,142

182,389(3,952)285,578

34

Valuation difference and translation adjustments

Balance at March 31, 2006(¥ million)

Other
securities
valuationdifference

Deferred
gains orlosses onhedgesLand
revaluationdifference

4,145

−

(21,459)

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments

Stocksubscription
rightsMinority
interest
s

Total
net
assets

1,801(15,512)−8,636

252,243

Changes during the period
Cash dividends (*)(3,036)

Cash dividends(3,036)

Directors’ bonuses (*)(417)

Net income

24,252

Purchase of treasury stock(23)

Disposal of treasury stock

8,095

Acquisition of treasury stockfrom consolidated subsidiaries

502

Changes in the scope of
consolidation (increase inconsolidated subsidiaries)

30

Decrease in retained earnings
on merger of consolidated
subsidiaries(28)

Changes in the scope of
application of the equity method(decrease in companies to which
the equity method applies)

295

Reversal of land revaluationdifference(173)

Net changes other than forchanges in stockholders’ equity

(44)

91

173

3,882

4,103

577

870

5,551

Total changes during the period(¥ million)

(44)

91

173

3,882

4,103

577

870

32,010

Balance, September 30, 2007(¥ million)

4,100

91

(21,286)

5,684(11,409)

577

9,507

284,254(*): Item for appropriation of earnings at the Ordinary General Meeting of Shareholders.

35(4) Interim Consolidated Statements of Cash Flows

September 30, 2006)

Current interim
period(April 1, 2007 ~September 30, 2007)

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2006 ~March 31, 2007)

Millions of yen

Millions of yen

ChangeMillions of yen

Prior interim period(April 1, 2006 ~Note
ICash Flows from Operating Activities

Income before income taxes and minority

21,507

17,05043,713

Depreciation and amortization

8,988

11,125

20,954

Loss on impairment of fixed assets

1,616

81

5,069

Amortization of goodwill

1,136

1,227

2,399

(782)

(1,478)473

Increase in provision for directors’ bonus

337

(228)

649

Increase (decrease) in provision for losses on

−

60

(147)

−

115

−

60

(452)

72

(309)

(517)

(387)

(731)

(1,322)(2,087)

Interest expense

112

82

237

Foreign exchange loss (gain)

(46)

4

5

Equity in loss (gain) of affiliated companies

(1)

(211)

(191)

164

394

406

(30)

(14)

(139)

435

493

1,129

(5,232)(1)(4,826)

462

188

700

Decrease in trade receivables

12,70017,298(3,111)

Decrease (increase) in inventories(6,236)(6,687)(3,636)(4,506)(4,622)(10,601)

Increase (decrease) in trade payables

2,613(2,398)3,465

Increase (decrease) in accounts payable—other(7,874)(6,893)(2,574)

Bonuses to directors

(448)

−

(448)

Other

3,000

(3,223)

3,198

26,932

20,067

Interest and dividends received

727

1,322

2,077

Interest paid

(141)

(80)

(235)

Income taxes paid

(7,102)(11,067)(13,670)

Net cash provided by operating activities

20,417

10,242interests

Increase (decrease) in allowance for doubtfulreceivables

business restructuring
Increase (decrease) in provision for sales return
Increase in accrued retirement and severance
benefits
Decrease in directors’ and auditors’ retirement
and severance benefits
Interest and dividend income

Loss on disposal of property, plant andequipment
Loss on sale of property, plant and equipment
Loss on disposal of amusement facilities andmachines
Gain on sale of investment securities
Loss on valuation of investment securities

Investment for amusement facilities andmachines

Subtotal

36(6,865)(10,174)

54,32242,493

Prior interim period(April 1, 2006 ~September 30, 2006)

Note
II

Millions of yen

Current interim
period(April 1, 2007 ~September 30,
2007)

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2006 ~March 31, 2007)

Millions of yen

ChangeMillions of yen

Cash Flows from Investing Activities

Payments for deposit in time deposits(147)(2,750)(1,413)

Proceeds from withdrawal from time deposits

171

858

1,546

Purchases of property, plant and equipment(4,534)(6,244)(9,730)

34

544

568

Proceeds from sales of property, plant andequipment
Purchases of intangible assets(2,194)(2,528)(4,789)Purchases of investment securities(447)(3,896)(7,594)

Sales of investment securities

5,301

23

6,165

(1,099)(2)(1,102)

(416)

―

(416)

―

(78)

445

Advances of loans receivable(10,977)(1,529)(11,701)

Collection of loans receivable

10,948567

14,941

Guarantee money deposited(784)(1,105)(2,577)

974

696

1,556

(1,215)―(1,248)

1

(16)

99

(4,385)(15,461)

Acquisition of shares in consolidated
subsidiaries, net of cash acquired
Acquisition of subsidiary shares related tochanges in scope of consolidation
Proceeds from sale of subsidiary shares related
to changes in scope of consolidation

Proceeds from collection of guarantee money
deposited
Net of cash used for business transfer
Other
Net cash used in investing activities

37(11,075)(15,253)

Prior interim period(April 1, 2006 ~September 30, 2006)

Note
III

Millions of yen

Current interim
period(April 1, 2007 ~September 30,
2007)

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2006 ~March 31, 2007)

Millions of yen

ChangeMillions of yen

Cash Flows from Financing Activities

Net decrease in short-term borrowings(13,451)(298)(13,112)

Repayment of long-term debt

(1,405)(1,475)(2,434)

Repayment of bond――

(5,000)Purchases of treasury stock(4)(9,967)(11)

Proceeds from disposal of treasury stock

―

―

8,095

Dividends paid

(3,036)(4,127)(6,073)

Dividends paid to minority interests

(222)

(290)

(319)

Net cash used in financing activities(18,121)(16,158)

1,962(18,856)

439

2,123

1,684

2,548

(1,651)(19,254)(17,603)

10,932

113,186

124,155

10,969113,186

10

485

475

15

21

―

(21)

21

111,566

105,387(6,179)124,155

IV

Effect of exchange rate changes oncash and cash equivalents
V

Net increase (decrease) in cash and cash
equivalents

VI

Cash and cash equivalents at beginningof periodVII

Net increase in cash and cash
equivalents due to additional
consolidation of subsidiaries

VIII

Increase in cash and cash equivalents

due to merger of subsidiaries
IX

Cash and cash equivalents at end ofinterim period (fiscal year)*38

Important Information Constituting the Basis for Preparation of Interim Consolidated
Financial Statements (April 1, 2007 ~ September 30, 2007)
Prior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)

Prior fiscal year

(1) Consolidated subsidiaries:(1) Consolidated subsidiaries:
1. Information(1) Consolidated subsidiaries:
There are 54 consolidated
There are 55 consolidated
Concerning the Scope
There are 57 consolidated
subsidiaries.
subsidiaries.
of Consolidation
subsidiaries.
The major consolidated
The major consolidated
The major consolidated
subsidiaries are listed here:
subsidiaries are listed here:
subsidiaries are listed here:
Bandai Co., Ltd.,
Bandai Co., Ltd.,
Bandai Co., Ltd.,NAMCO LIMITED,NAMCO LIMITED,NAMCO LIMITED,NAMCO BANDAI GamesNAMCO BANDAI GamesNAMCO BANDAI Games
Inc.,
Inc.,
Inc.,
Bandai Networks Co., Ltd.,
Bandai Networks Co., Ltd.,
Bandai Networks Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Logipal Inc.,
Bandai Logipal Inc.,
Bandai Logipal Inc.,
NAMCO BANDAI Holdings
NAMCO BANDAI Holdings
NAMCO BANDAI Holdings(USA) Inc.,(USA) Inc.,(USA) Inc.,BANDAI S.A.,BANDAI S.A.,BANDAI S.A.,
NAMCO EUROPE LTD.,
NAMCO EUROPE LTD.,
NAMCO Holdings UK LTD.,BANDAI (H.K.) CO., LTD.
BANDAI (H.K.) CO., LTD.
BANDAI (H.K.) CO., LTD.
Four companies were added toFour companies were added
The following companies were
the scope of consolidation fromto the scope of consolidation
added to the scope of
the interim period under review:
from the current period underconsolidation from the current
NAMCO NETWORKS AMERICA
review: NAMCO NETWORKS
period under review: Emotion
INC., a newly established
AMERICA INC., a newly
Co., Ltd, Anime Channel Co., Ltd
company, and Lantis Co., Ltdestablished company, andand Bandai Visual USA Inc due
and C.C.P. Co. Ltd. which
Lantis Co., Ltd and C.C.P. Co.
to increase in significance; andbecame a subsidiaries following
Ltd. which became a
LOGIPAL EXPRESS INC. due tothe purchase of stock andsubsidiaries following the
an independent merger.
CREATIVE B WORKS CO. LTD.,
purchase of stock andMonolith Software Inc. has been
due to increase in significance.
CREATIVE B WORKS CO.
excluded from the scope of
Moreover, effective January 4,LTD., due to increase inconsolidation due to the sale of2006, NAMCO HOMETEK INC.
significance.
its shares, and NAMCO
and BANDAI GAMES INC.
On the other hand, St. Tropez
Supporters Ltd and Popy Co., Ltd
merged, with NAMCO
Ltd. and NAMCO IRELAND
due to being merged with other
HOMETEK INC. as the surviving
LTD have been removed fromconsolidated subsidiaries
entity. NAMCO HOMETEK INC.
the consolidation, the former
Moreover, in January 2007
subsequently changed its
because it no longer counts as
NAMCO Europe Ltd changed its
corporate name to NAMCO
a subsidiary owing to the sale ofcorporate name to NAMCO
BANDAI Games America Inc.
its shares, and the latter due toHoldings UK Ltd, establishedDue to above, BANDAI
its liquidation.
NAMCO Europe Ltd and NAMCOGAMES, has been excluded
Moreover, effective January 4,
Bandai Networks Europe Ltd andfrom the scope of consolidation
2006, NAMCO HOMETEK INC.
added them to the scope offrom the interim period underand BANDAI GAMES INC.
consolidation.
merged, with NAMCO
review．
HOMETEK INC. as the
Additionally, BHK TRADING
surviving entity. NAMCO
LTD. changed its corporate nameHOMETEK INC. subsequently
to BANDAI ASIA CO. LTD.
changed its corporate name to
NAMCO BANDAI Games
America Inc.
Due to above, BANDAIGAMES, has been excluded
from the scope of consolidationfrom the current period underreview．
Additionally, BHK TRADING
LTD. changed its corporatename to BANDAI ASIA CO.
LTD.
NAMCO BANDAI Games
Europe S.A.S, which started
operating in July 2006, wasnewly included in the
consolidation, associated withthe concentration of home video
game software operations.

39

Prior interim period

Current interim period

Prior fiscal year

(April 1, 2006 ~(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)

September 30, 2006)(2) Non-consolidated subsidiaries:
Including SHANGHAI NAMCO
LTD, 25 of the Company’s
subsidiaries are excluded fromthe scope of consolidation,
because total assets, net sales,
net income (corresponding toequity therein) and retained
earnings (corresponding toequity therein) for eachcompany would not have amaterial impact on the interim
consolidated financial
statements of the Company.

(2) Non-consolidated subsidiaries:(2) Non-consolidated subsidiaries:
Including SHANGHAI
Including SHANGHAI NAMCO
NAMCO LTD, 26 of theLTD, 20 of the Company’s
Company’s subsidiaries are
subsidiaries are excluded fromexcluded from the scope ofthe scope of consolidation,
consolidation, because total
because total assets, net sales,
assets, net sales, net income
net income (corresponding to(corresponding to equity
equity therein) and retained
therein) and retained earnings
earnings (corresponding to(corresponding to equity
equity therein) for each company
therein) for each company
would not have a material impact
would not have a materialon the interim consolidated
impact on the consolidated
financial statements of thefinancial statements of theCompany.
Company.

40

2. Information Concerning
Application of the Equity
MethodPrior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)(1) Application of equity method:
1 non-consolidated subsidiary,
SHANGHAI NAMCO LTD., is
accounted for by the equity
method.
4 affiliates are accounted for by
the equity method:
Happinet Corp.,
Sotsu Agency Co., Ltd.,
People Co., Ltd. andItalian Tomato Ltd.
Tohato Inc. has been
excluded as an equity method
affiliate due to sale of its sharesand therefore the equity
method was not applied for theinterim period under review.

(1) Application of equity method:
1 non-consolidated subsidiary,
SHANGHAI NAMCO LTD., is
accounted for by the equity
method.
4 affiliates are accounted for by
the equity method:
Happinet Corp.,
Sotsu Co., Ltd.,
People Co., Ltd. andItalian Tomato Ltd.
The name for Sotsu Agency
Co., Ltd. has been changed to
Sotsu Co., Ltd. for the interim
period under review.

(1) Application of equity method:
1 non-consolidated
subsidiary,
SHANGHAI NAMCO LTD., is
accounted for by the equity
method.
4 affiliates are accounted forby the equity method:
Happinet Corp.,
Sotsu Agency Co., Ltd.,
People Co., Ltd. andItalian Tomato Ltd.
Tohato Inc. has been
excluded as an equity method
affiliate due to sale of its
shares and therefore theequity method was notapplied for the current period
under review.

(2) Non-consolidated subsidiaries
and affiliates to which theequity method is not applied
The equity method was notapplied to 24 non-consolidated
subsidiaries including SUNLINKKYUSHU CO. LTD. as well as 3
affiliates such as EUROVISUAL S.A.S., because thesecompanies would have only aminimal impact on the
Company’s interim consolidated
net income and retained
earnings, as their significance isminimal as a whole.

(2)Non-consolidated subsidiaries
and affiliates to which theequity method is not applied.
The equity method was notapplied to 19 non-consolidated
subsidiaries including
SUNLINK KYUSHU CO. LTD.
as well as 4 affiliates such as
EURO VISUAL S.A.S.,
because these companies
would have only a minimal
impact on the Company’s
interim consolidated net
income and retained earnings,
as their significance is minimal
as a whole.

(2) Non-consolidated
subsidiaries and affiliates towhich the equity method is notapplied.
The equity method was notapplied to 25
non-consolidated subsidiaries
including SUNLINK KYUSHU
CO. LTD. as well as 1 affiliate,
EURO VISUAL S.A.S.,
because these companies
would have only a minimal
impact on the Company’s
consolidated net income andretained earnings for thecurrent period under review,as their significance is minimal
as a whole.

41

Prior fiscal year

3. Information Concerning theInterim Settlement Date forConsolidated Subsidiaries

Prior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)

Consolidated subsidiaries withan interim settlement date of
September 30:
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games
Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIOLTD.
VIBE Inc.
C.C.P. Co., Ltd.

Consolidated subsidiaries with aninterim settlement date of
September 30:
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIO LTD.
VIBE Inc.

Consolidated subsidiaries
with fiscal years to March 31:
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games
Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIOLTD.
VIBE Inc.

Consolidated subsidiaries withan interim settlement date ofJuly 31:
Artpresto Co., Ltd.
St. Tropez Ltd.

Consolidated subsidiaries with aninterim settlement date of July 31st:
Artpresto Co., Ltd.

Consolidated subsidiaries
with fiscal years to January
31:
Artpresto Co., Ltd.

Consolidated subsidiaries withan interim settlement date ofJune 30:
NAMCO BANDAI Holdings(USA) Inc.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT
INC.
NAMCO BANDAI GAMESINC.
NAMCO AMERICA INC.
NAMCO NETWORKSAMERICA INC.
BANDAI ENTERTAINMENT
INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BANDAI ASIA CO., LTD.
(Formerly BHK TRADINGLTD.)
BANDAI INDUSTRIAL CO.,LTD.
BANDAI KOREA CO., LTD.
CREATIVE B WORKS CO.,LTD.

Consolidated subsidiaries with aninterim settlement date of June 30:
NAMCO BANDAI Holdings(USA) Inc.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT
INC.
NAMCO BANDAI Games
America Inc.
NAMCO AMERICA INC.
NAMCO NETWORKSAMERICA INC.
BANDAI ENTERTAINMENT
INC.
BANDAI VISUAL USA INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
NAMCO Holdings UK LTD.
NAMCO EUROPE LTD.
NAMCO BANDAI Networks
Europe LTD.
NAMCO OPERATIONSEUROPE LTD.
NAMCO OPERATIONS SPAIN
S.L.
NAMCO BANDAI Games
EuropeS.A.S.
BANDAI (H.K.) CO., LTD.
BANPRESTO（H.K.）LTD.
BANDAI ASIA CO., LTD.
BANDAI INDUSTRIAL CO.,LTD.
BANDAI KOREA CO., LTD.
CREATIVE B WORKS CO.,LTD.
NAMCO ENTERPRISES ASIALTD.
XS ENTERTAINMENT INC.

Consolidated subsidiaries
with fiscal years to
December 31:
NAMCO BANDAI
Holdings (USA) Inc.
BANDAI AMERICA INC.
NAMCO
CYBERTAINMENT INC.
NAMCO BANDAI Games
America Inc.
NAMCO AMERICA INC.
NAMCO NETWORKSAMERICA INC.
BANDAI
ENTERTAINMENT INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
NAMCO EUROPE LTD.
NAMCO OPERATIONSEUROPE LTD.
NAMCO OPERATIONSSPAIN S.L.
NAMCO BANDAI Games
Europe S.A.S.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BANDAI ASIA CO., LTD.
(Formerly BHK TRADINGLTD.)
NAMCO ENTERPRISESASIA LTD.
BANDAI INDUSTRIAL
CO., LTD.
BANDAI KOREA CO., LTD.
CREATIVE B WORKS
CO., LTD.
XS ENTERTAINMENT
INC.

42

Prior fiscal year

Prior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~Prior fiscal year
(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)

Consolidated subsidiaries notlisted above have the interim
settlement date of August 31:

Consolidated subsidiaries not listed Consolidated subsidiaries
other than those above have
above have the interim settlementfiscal years to the end ofdate of August 31:
February.

All of the above settlement
dates fall within three months ofthe consolidated interim
settlement date. Consequently,
the interim results of the above
consolidated subsidiaries arereflected in the consolidated
interim financial statements.
However, necessary
adjustments are made to theconsolidated financial statements
for material transactions
occurring between the subsidiaryinterim settlement dates and theconsolidated interim settlementdate.

All of the above settlement dates
fall within three months of theconsolidated interim settlement
date. Consequently, the interim
results of the above consolidated
subsidiaries are reflected in the
consolidated interim financial
statements.
However, necessary adjustments
are made to the consolidated
financial statements for materialtransactions occurring between thesubsidiary interim settlement dates
and the consolidated interim
settlement date.

43

All of the above settlement
dates fall within three monthsof the consolidated settlement
date for the current period
under review. Consequently,
the results of the above
consolidated subsidiaries arereflected in the consolidated
financial statements.
However, necessary
adjustments are made to theconsolidated financial
statements for materialtransactions occurring
between the subsidiary
settlement dates and theconsolidated settlement date
for the current period underreview.

4. Information Concerning
Accounting Policies

Prior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)(1) Valuation basis and methods
for significant assets:(1) Valuation basis and methods
for significant assets:(1) Valuation basis and methods
for significant assets:(i) Securities:(i) Securities:

Prior fiscal year(i) Securities:

Bonds to be held to maturity

Bonds to be held to maturity

Bonds to be held to maturity

Stated at amortized cost(straight-line method)
Other securities

Same as left column

Same as left column

Other securities

Other securities

Securities with market
values:Stated at market value using,among others, market prices atinterim period settlement dates.
(Valuation differences arereflected directly in stockholders’equity and the cost of securities
sold is calculated by themoving-average method).

Securities with market
values:Same as left column

Securities with market
values:Stated at market value using,among others, market prices atperiod end settlement dates.
(Valuation differences arereflected directly in stockholders’equity and the cost of securities
sold is calculated by themoving-average method).

Securities without market
values:Stated at cost based on themoving-average method.
However, with respect toinvestments in limited liability
partnerships for investment
businesses and similar
partnerships, the amountcorresponding to the equity
holding of the partnership’s
assets is stated as investment insecurities, and the amountcorresponding to the profit orloss derived from the operationsof the partnership is stated as
profit or loss for the interim
period.

Securities without market
values:Same as left column

Securities without market
values:Stated at cost based on themoving-average method.
However, with respect toinvestments in limited liability
partnerships for investment
businesses and similar
partnerships, the amountcorresponding to the equity
holding of the partnership’s
assets is stated as investment insecurities, and the amountcorresponding to the profit orloss derived from the operationsof the partnership is stated as
profit or loss for the fiscal year.

44

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(ii) Derivative trading:(ii) Derivative trading:Stated using the market
price method(iii) Inventories:
Domestic consolidated
subsidiaries:
Game software and otherwork in progress:
Stated at cost using
the specific cost
methodOther inventories:
Generally stated atcost using themoving- averagemethodOverseas consolidated
subsidiaries:
Game software and otherwork in progress:
Stated at cost using
the specific cost
methodOther inventories:
Generally stated at
the lower of cost or
market using thefirst-in, first-out
methodSame as left column(iii) Inventories:

Prior fiscal year(ii) Derivative trading:Same as left column(iii) Inventories:

Domestic consolidated
subsidiaries:
Game software and otherwork in progress:
Same as left column

Domestic consolidated
subsidiaries:
Game software and otherwork in progress:
Same as left column

Other inventories:
Same as left column

Other Inventories:
Same as left column

Overseas consolidated
subsidiaries:
Game software and otherwork in progress:
Same as left column

Overseas consolidated
subsidiaries:
Game software and otherwork in progress
Same as left column

Other inventories:
Same as left column

Other inventories:
Same as left column(2) Depreciation methods for(2) Depreciation methods for(2) Depreciation methods for
significant depreciable assets:
significant depreciable assets:
significant depreciable assets:(i) Property, plant and(i) Property, plant and(i) Property, plant andequipment:
equipment:
equipment:
The Company and its
The Company and its
The Company and its
domestic consolidated
domestic consolidated
domestic consolidated
subsidiaries:
subsidiaries:
subsidiaries:
Generally theGenerally theGenerally the
declining-balance method
declining-balance method
declining-balance method
is used.
is used.
is used.
However, for buildings
However, for buildings
However, for buildings(excluding equipment(excluding equipment(excluding equipment
attached thereto) acquired
attached thereto) acquired
attached thereto) acquiredon or after April 1, 1998,
on or after April 1, 1998,
on or after April 1, 1998,
and certain amusement
and certain amusement
and certain amusement
facilities and equipment,
facilities and equipment,
facilities and equipment,
the straight-line method is
the straight-line method is
the straight-line method is
used.
used.
used.
The useful life of
The useful life of
The useful life ofbuildings and structures isbuildings and structures isbuildings and structures is
2 to 50 years.
2 to 50 years.
2 to 50 years.
The useful life of
The useful life of
The useful life ofamusement facilities andamusement facilities andamusement facilities andequipment is 3 to 15
equipment is 3 to 15
equipment is 3 to 15
years.
years.
years.

45

Prior interim period

Current interim period(April 1, 2006 ~(April 1, 2007 ~Prior fiscal year
(April 1, 2006 ~September 30, 2006)

September 30, 2007)

March 31, 2007)(Changes in accounting policies)
The Company and some of its
domestic consolidated
subsidiaries have, due to therevision of the Corporation Tax
Law, changed the method ofdepreciating tangible fixed assets
acquired since April 1, 2007 foraccounting periods from thecurrent interim period (April 1,
2007 to September 30, 2007)
based on the revised Corporation
Tax Law.
As a result of this, operating
income, recurring income and net
income before taxes and minority
interests each decreased by ¥260
million.
The impact on segment
information is noted in therelevant section.
(Additional Information)
The Company and some of its
domestic consolidated
subsidiaries, due to the revision of
the Corporation Tax Law, aredepreciating the difference
between the book value and an
amount equivalent to 5% of theacquisition cost of tangible fixed
assets acquired prior to March 31,
2007 using the straight line
method over a period of 5 years,
based on the revised Corporation
Tax Law.
As a result of this, operating
income, recurring income and net
income before taxes and minority
interests each decreased by ¥65
million.
The impact on segment
information is noted in therelevant section.

Overseas consolidated
subsidiaries:
The straight-line
method is used.
The useful life ofbuildings andstructures is 5 to 50
years.
The useful life ofamusement facilities
and equipment is 2 to
7 years

Overseas consolidated
subsidiaries:
Same as left column

46

Overseas consolidated
subsidiaries:
Same as left
columnPrior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(ii) Intangible assets:
The straight-line method isused.
The useful life of goodwill
is 5 years.
Goodwill at overseas
consolidated subsidiaries
is treated in accordancewith the accounting
regulations of the countryof domicile.
The useful life of software
used internally is 2 to 5
years.
3) Basis of recognition for
significant provisions:(i) Allowance for doubtfulreceivables:(ii) Intangible assets:

Prior fiscal year(ii) Intangible assets:

The straight-line method is
The straight-line method is
used.
used.
The useful life of software
The useful life of goodwill
used internally is 1 to 5
is 5 years.
Goodwill at overseas
years.
consolidated subsidiaries
is treated in accordancewith the accounting
regulations of the countryof domicile.
The useful life of software
used internally is 1 to 5
years.
3) Basis of recognition for3) Basis of recognition for
significant provisions:significant provisions:(i) Allowance for doubtful(i) Allowance for doubtfulreceivables:
receivables:

The Company provides forpotential losses due to bad
debts using historical credit
loss ratios for ordinary
receivables. Projecteduncollectible amounts arealso recorded forreceivables clearly at risk
and receivables fromcompanies underbankruptcy orreorganization processes,
based on individual
consideration of theaccount's potential forcollection.

Same as left column

47

Same as left column

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(ii) Provision for directors’ bonus:(ii) Provision for directors’
bonus:(ii) Provision for directors’
bonus:The portion of the amount
expected to be payable fordirectors’ bonus in the current
fiscal year that is attributable
to the current interim
accounting period is bookedby the Company and its
domestic consolidated
subsidiaries against thebonus payment.

The portion of theamount expected to bepayable for directors’
bonus in the current
fiscal year that is
attributable to the current
interim accounting period
is booked by theCompany and its
domestic consolidated
subsidiaries against thebonus payment.
(Changes in Accounting
Policies)
The Accounting Standard
for Directors’ Bonus(Corporate AccountingStandard No.4,
November 29, 2005)
applies from the current
interim accounting
period.
As a result of this,operating income,recurring income, interim
net income before
income taxes andminority interests, andnet income are eachreduced by ¥337 million.
(iii) Provisions for losses frombusiness restructuring:
The Company provides
for losses from businessrestructuring byrecognizing provisions in
the expected loss
amounts to be absorbed
by some of theCompany’s domestic
consolidated
subsidiaries.

(iii) Provisions for losses frombusiness restructuring:Same as left column

48

Prior fiscal year

The portion of the amount
expected to be payablefor directors’ bonus in thecurrent fiscal year that is
attributable to the current
accounting period isbooked by the Company
and its domestic
consolidated subsidiaries
against the bonus
payment.
Changes in Accounting
Policies:
The Accounting Standard
for Directors’ Bonus(Corporate AccountingStandard No.4, November
29, 2005) applies from thecurrent interim accounting
period.
As a result of this,operating income,recurring income, and net
income before income
taxes and minority
interests are each reducedby ¥657 million.

(iii) ──────Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(iv) ──────(iv) Provision for sales return:Some consolidated
subsidiaries book estimatedamounts in the current interim
accounting period based onsales return in the past, inorder to provide for losses on
returned goods after the endof the current.
(Changes in display ofaccounting categories)
Estimated losses on returned
goods at foreign subsidiaries
that were disclosed within“Other current liabilities” inthe previous interim
accounting period aredisclosed within “Provision forsales return” in the current
interim accounting period
because some domestic
consolidated subsidiaries
now book said provisions.
Estimated losses on returned
goods included in “Other
current liabilities” in theprevious interim accounting
period amounted to ¥440
million49

Prior fiscal year(iv) ──────Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(v) Allowance for retirement andseverance benefits:(v) Allowance for retirement andseverance benefits:(v) Allowance for retirement andseverance benefits:

The Company provides
for retirement andseverance benefits for
employees based on
estimated retirement
benefit obligations andpension assets as of theconsolidated fiscal
year-end. The amountrecognized to as having
been accrued at the end of
the interim period-end has
been recorded.
Actuarial gain/loss isamortized in equalamounts in each fiscal year
over a fixed period (10 to
17 years) from thefollowing consolidated
fiscal year within the
average remaining periodof service for affected
employees.
At certain domestic
consolidated subsidiaries,
past service obligations areamortized over a fixed
period (10 years) within the
average remaining periodof service for affected
employees when incurred.

50

The Company provides for
retirement and severance
benefits for employees
based on estimatedretirement benefit
obligations and pension
assets as of theconsolidated fiscal
year-end. The amountrecognized to as having
been accrued at the end of
the interim period-end has
been recorded.
Actuarial gain/loss isamortized in equal amounts
in each fiscal year over a
fixed period (9 to 17 years)
from the following
consolidated fiscal year
within the averageremaining period of service
for affected employees.
At certain domestic
consolidated subsidiaries,
past service obligations areamortized over a fixed
period (10 to 11 years)
within the averageremaining period of service
for affected employees
when incurred.

Prior fiscal year

The Company provides
for retirement andseverance benefits for
employees based on
estimated retirement
benefit obligations andpension assets as of theconsolidated fiscal
year-end.
Actuarial gain/loss isamortized in equalamounts in each fiscal
year over a fixed period (9to 17 years) from thefollowing consolidated
fiscal year within the
average remaining periodof service for affected
employees.
At certain domestic
consolidated subsidiaries,
past service obligations
are amortized over a fixed
period (10 to 11 years)
within the averageremaining period ofservice for affected
employees when incurred.

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(vi) Directors’ and auditors’
retirement and severance
benefits:(vi) Directors’ and auditors’
retirement and severance
benefits:(vi) Directors’ and auditors’
retirement and severance
benefits:

Certain domestic
consolidated subsidiaries
record provisions for
retirement and severance
benefits payable at the endof the interim period in
accordance with internal
rules.
(4) Accounting policies fortranslation of significant assets
and liabilities into Japanesecurrency:

Same as left column

Certain domestic
consolidated subsidiaries
record provisions for
retirement and severance
benefits payable at theend of the fiscal year inaccordance with internal
rules.
(4) Accounting policies fortranslation of significant assets
and liabilities into Japanesecurrency:(4) Accounting policies fortranslation of significant assets
and liabilities into Japanesecurrency:

Receivables and payables
denominated in foreign
currencies are translated atspot exchange rates
prevailing at the end ofeach interim period, andresulting gains or losses
are included in income.
Assets and liabilities ofoverseas subsidiaries aretranslated at spot
exchange rates prevailingat the end of each interim
period, while revenues andexpenses of the same aretranslated at the average
rates for the period. The
differences resulting fromsuch translations arerecorded in minority
interests and in foreign
currency translation
adjustment under net
assets.

Same as left column

Prior fiscal year

Receivables andpayables denominated inforeign currencies aretranslated at spot
exchange rates prevailingat the end of each fiscal
year, and resulting gains
or losses are included inincome.
Assets and liabilities ofoverseas subsidiaries aretranslated at spot
exchange rates prevailingat the end of each fiscal
year, while revenues andexpenses of the same aretranslated at the average
rates for the period. The
differences resulting fromsuch translations arerecorded in minority
interests and in foreign
currency translation
adjustment under net
assets.

51

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~Prior fiscal year
(April 1, 2006 ~September 30, 2007)

March 31, 2007)(5) Accounting standards for(5) Accounting standards for(5) Accounting standards forrecording income andrecording income andrecording income andexpenses:
expenses:
expenses:
Videogame software
Videogame software
Videogame software
production costs:
production costs:
production costs:
The production of
The production of
The production ofvideogame software
videogame software
videogame software
involves the complex
involves the complex
involves the complex
combination of both
combination of both
combination of both
software and content.
software and content.
software and content.
Consequently, it isConsequently, it is difficult
Consequently, it is difficult
difficult to treat theseto treat these constituent
to treat these constituent
constituent items as
items as separate
items as separate
separate components forcomponents for accounting
components for accounting
accounting purposes.
purposes.
purposes.
The Company judges themain component ofvideogame software to becontent, which includes
visual image and music
data, including the gameitself.

The Company judges themain component ofvideogame software to becontent, which includes
visual image and music
data, including the gameitself.

The Company judges themain component ofvideogame software to becontent, which includes
visual image and music
data, including the gameitself.

Based on the above,
videogame software
production costs arerecorded as either
inventories or advancepayments effective fromthe point an internal
decision is made tocommercialize a product.
For software production
costs recorded underassets, cost of sales isrecorded based on
estimated sales volume.

Based on the above,
videogame software
production costs arerecorded as inventories
effective from the point aninternal decision is made tocommercialize a product.
For software production
costs recorded underassets, cost of sales isrecorded based on
estimated sales volume.

Based on the above,
videogame software
production costs arerecorded as either
inventories or advancepayments effective fromthe point an internal
decision is made tocommercialize a product.
For software production
costs recorded underassets, cost of sales isrecorded based on
estimated sales volume.

(Change in display ofaccounting categories)
In order to disclose
videogame software
production cost recorded
under assets in a more
appropriate manner, thedisclosure account has
been changed from “Other
current assets (payments
in advance)” to“Inventories” in someconsolidated subsidiaries.
The impact of this change
at the end of the current
interim accounting period
was ¥2,267 million.

52

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(6) Accounting policies for
significant lease transactions:(6) Accounting policies for
significant lease transactions:

Same as left column

Same as left column(6) Accounting policies for
significant lease transactions:

The Company and its
consolidated subsidiaries
account for financing leasetransactions, other thanthose in which titles toleased property aretransferred to lessees, byapplying accounting
treatment applicable toordinary leasetransactions.
However, overseas
consolidated subsidiaries
follow the accounting
standards in the country of
domicile and therefore
treat financing leasetransactions in accordancewith accounting treatment
applicable to ordinary saleand purchase transactions.

53

Prior fiscal year

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~Prior fiscal year
(April 1, 2006 ~September 30, 2007)

March 31, 2007)(7) Significant accounting policies (7) Significant accounting policies (7) Significant accounting policies
for hedging:for hedging:for hedging:(i) Accounting for hedging:(i) Accounting for hedging:(i) Accounting for hedging:
The Company uses
deferred hedge
accounting.

Same as left column

Same as left column(ii) Hedging instruments andhedged items:-Hedging instruments:(ii) Hedging instruments andhedged items:-Hedging instruments:

Forward exchange
contracts, interest rate
swaps, etc.
-Hedged items:

Same as left column

Same as left column-Hedged items:-Hedged items:

Foreigncurrency-denominatedliabilities and scheduledtransactions, and interest
on debt.
(iii) Hedging policies:

Same as left column

Same as left column

The allocation method isused for forward exchange
contracts whenappropriate. The special
method is used for interest
rate swaps whenappropriate.
(ii) Hedging instruments andhedged items:-Hedging instruments:(iii) Hedging policies:

Hedging is implemented
for the purpose of reducing
risks arising fromfluctuations in exchange
rates and interest rates
involved in operational andfinancing activities.
(iv) Method of assessing theeffectiveness of hedging:
The effectiveness of ahedging transaction is inprinciple determined bycomparing the cumulativechange in the cash flows ormarket movement of thehedged item and that of thehedging instrument fromthe start of hedging to thetime of assessing theeffectiveness thereof.
However, if importantconditions are common forthe hedging instrument andthe hedged asset, liability,or scheduled transaction,no such determination ismade because it isapparent that 100%
effectiveness in hedging
was achieved.

54(iii) Hedging policies:

Same as left column

Same as left column(iv) Method of assessing theeffectiveness of hedging:(iv) Method of assessing theeffectiveness of hedging:

Same as left column

Same as left column

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~(April 1, 2006 ~September 30, 2007)

March 31, 2007)(8) Other important information(8) Other important information
constituting the basis ofconstituting the basis ofpreparation of interim financial
preparation of interim financial
statements:
statements:(i) Accounting treatment of(i) Accounting treatment ofconsumption tax:
consumption tax:
Consumption tax isSame as left column
accounted for separately
and is not included in eachaccount.
(ii) ──────(ii) Reserve for deferringincome tax of depreciation ofplant, property andequipment:
The amounts of current
and deferred income taxes
for the interim period underreview are calculated
assuming the reversal ofreserve for deferringincome tax of depreciationof plant, property andequipment set forth for thecurrent fiscal year.
5. Amortization of positive andnegative goodwill──────

──────

6. Scope of Cash and Cash
Equivalents in Interim
Consolidated Statements ofCash Flows

Cash and cash
equivalents include cashon hand, deposits on
demand, and short-term,
highly liquid investmentswith maturities of threemonths or less from thedate of acquisition that arereadily convertible to cash
and are subject to only
insignificant risk ofchanges in value.

Same as left column

55

Prior fiscal year(8) Other important information
constituting the basis ofpreparation of consolidated
fiscal year-end statements:(i) Accounting treatment ofconsumption tax:
Same as left column(ii) ──────

Goodwill is amortizedover a five-year period
according to thestraight-line method.
Goodwill at overseas
consolidated subsidiaries
is treated in accordancewith the accounting
regulations of the countryof domicile.
Same as left column

Changes in Important Information Constituting the Basis for Preparation of theInterim Consolidated Financial Statements (April 1, 2007 ~ September 30, 2007)
Prior interim period

Current interim period

Prior fiscal Year

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)

Accounting Standard For Presentation of

Accounting Standard For Presentation of

Net Assets

Net Assets

From the current interim consolidated

From the current consolidated

accounting period, “Accounting Standard

accounting period, “Accounting Standard

for Presentation of Net Assets” (Corporate

for Presentation of Net Assets” (Corporate

Accounting Standard No.5, December 9,

Accounting Standard No.5, December 9,2005) and “Guidance on the Accounting2005) and “Guidance on the AccountingStandard for Presentation of Net Assets”

Standard for Presentation of Net Assets”(Guidance on Corporate Accounting(Guidance on Corporate AccountingStandard No.8, December 9, 2005) areStandard No.8, December 9, 2005) are

adopted.

adopted.

The amount corresponding to total

The amount corresponding to total

stockholders’ equity until now has beenstockholders’ equity until now has been

¥250,983 million.

¥274,077 million.

In line with this revision in the standards

In line with this revision in the standards forfor interim consolidated financial

consolidated financial statements, thisstatements, this method was applied in themethod was applied in the net assets

net assets section of the interim

section of the consolidated balance sheets

consolidated balance sheets for the current

for the current consolidated accounting

interim consolidated accounting period.

period.

Accounting Standard for Share-based

Accounting Standard for Share-based

Payment

Payment

From the current interim consolidated

From the current consolidated

accounting period, “Accounting Standard

accounting period, “Accounting Standard

for Share-based Payment”(Corporate

for Share-based Payment” (Corporate

Accounting Standard No.8, December 27,

Accounting Standard No.8, December 27,2005) and the “Guidance on the Accounting2005) and the “Guidance on the AccountingStandard for Share-based Payment”

Standard for Share-based Payment”(Guidance on Corporate Accounting(Guidance on Corporate AccountingStandard No.11, May 31, 2006) areStandard No.11, May 31, 2006) are

adopted.

adopted.

As a result of this, operating income,As a result of this, operating income,recurring income, interim net income before

recurring income, and net income before

income tax and minority interests andincome tax and minority interests are eachinterim net income are each reduced by

reduced by ¥577 million.

¥478 million.

The effect of this on segment information

The effect of this on segment informationis set out in that section.

is set out in that section.
Accounting Standard for BusinessAccounting Standard for Business

Combinations
From the current interim consolidated

Combinations
From the current consolidated

account period, “Accounting Standards

accounting period, “Accountingfor Business Combinations” (BusinessStandards for Business Combinations”

Accounting Council, October 31, 2003),(Business Accounting Council, OctoberAccounting Standards for Business

31, 2003), Accounting Standards for

Divestitures (Corporate Accounting

Business Divestitures (Corporate

Standard No. 7, December 27, 2005),

Accounting Standard No. 7, December

and Guidance on Accounting Standards

27, 2005), and Guidance on Accountingfor Business Combinations andStandards for Business Combinations

Accounting Standards for Businessand Accounting Standards for Business

Divestitures (Guidance on Corporate

Divestitures (Guidance on Corporate

Accounting Standard No. 10, December

Accounting Standard No. 10, December

27, 2005) apply.

27, 2005) apply.

56

Changes in Display of Accounting Categories
Prior interim period(April 1, 2006 ~ September 30, 2006)

Current interim period

Interim Consolidated Balance Sheet(April 1, 2007 ~ September 30, 2007)
Interim Consolidated Balance Sheet

Amounts recorded in “Other (business rights)” (¥2,352 million at_______________________

the end of the previous interim accounting period) under
Intangible assets in the previous interim consolidated balance
sheet are presented as “Goodwill" from the current interim
consolidated accounting period.
Also, amounts recorded in the “Consolidation adjustment
accounts” are presented as "Goodwill” or “Other (Negative
goodwill)” under long-term liabilities.
Interim Consolidated Statement of Income

Interim Consolidated Statement of Income

1. ”Expenses related to rental assets”, which have been included

1．“Rental income” (¥134 million in the current interim accounting

in “Other non-operating expenses” on the interim consolidated

period), “Foreign exchange gain” (¥66 million in the current interim

statement of income up until the previous interim consolidated

accounting period), and "Operation consignment income” (¥163

accounting period, have been changed to be recorded under the

million in the current interim accounting period), which had been

category “Expenses related to rental assets” in the current interim

recorded separately until the previous interim accounting period,

consolidated accounting period as it exceeds 10/100 of non-are disclosed within “Other non-operating income" because they

operating expenses.

are less than 10/100 of total non-operating income.

Expenses related to rental assets included in other non-operating

2. Sales discounts, which have been included in “Other non-

expenses in the previous interim consolidated accounting period

operating expenses” on the interim consolidated statement of

were ¥53 million.

income up until the previous interim accounting period, have been

2. Amounts recorded in the previous interim consolidatedchanged to be recorded under the category “Sales discounts” inaccounting period as “Amortization of goodwill” are presented

the current interim accounting period because they exceed 10/100

from the current interim consolidated accounting period asof non-operating expenses.Sales discounts included in other non-“Selling, general and administrative expenses (Amortization of
goodwill)”.

operating expenses in the previous interim accounting period
were ¥21 million.

Interim Consolidated Statement of Cash Flow

Interim Consolidated Statement of Cash Flow

Amounts for the “Amortization of business rights” (¥289 million in

1．Increases/decreases in provision for losses on returned goods

the previous interim accounting period) included in “Depreciation
and amortization” and amounts recorded as “Amortization of

at foreign subsidiaries, which had been disclosed within “Other”
under Cash Flows from Operating Activities up until the previous
interim accounting period, are disclosed under “Increase

consolidated adjustment accounts" in the previous interim(decrease) in provision for losses on returned goods” in the

consolidated accounting period are presented as “Amortization ofcurrent interim accounting period, because some domestic

goodwill” from the current interim consolidated accounting period.

consolidated subsidiaries now book provisions for losses on
returned goods. The decrease in provision for losses fromreturned goods included within “Other” under Cash Flows fromOperating Activities in the previous interim accounting period was¥63 million.
2. In order to disclose videogame software production cost asset
balances in a more appropriate manner, the disclosure accounthas been changed from “Other current assets (payments inadvance)” to “Inventories” in some consolidated subsidiaries. As aresult of this increases/decreases in videogame software costs
booked as assets, which had been disclosed within “Other(increase (decrease) in payments in advance)” under Cash Flows
from Operating Activities up until the previous interim accounting
period, are disclosed under “Increase (decrease) in inventories” inthe current interim accounting period.The decrease in videogame
software costs booked as assets included in “Other (increase(decrease) in payments in advance)” under Cash Flows fromOperating Activities in the previous interim accounting period was¥889 million.

57

Supplemental information
Prior interim period

Current interim period

Prior fiscal year

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)
Change of useful life of fixed assets
Previously, Data Carddass hardware andsoftware was depreciated based on a
useful life of five (5) years but, because
product cycles were shortened due toescalating competition, the useful life for
hardware was changed to three (3) years
and one (1) year for software from thisconsolidated fiscal period.
Due to this change, depreciation of ¥560
million was added to selling, general andadministrative expenses and an“Extraordinary Depreciation of Fixed
Assets” of ¥246 million was added to
extraordinary loss for past fiscal years.
Accordingly, by comparison, operating
income and recurring income decreased
respectively by ¥560 million and net income
before-tax for this fiscal term decreased by¥806 million.
The effect of this on segment informationis set out in the relevant section.

(Legal action)(Legal action)

The Company and its US consolidated

The Company and its US consolidated

subsidiaries had a suit brought against

subsidiaries had a suit brought againstthem on October 5, 2006 in California bythem on October 5, 2006 in California by

Game Ballers Inc, claiming compensatory

Game Ballers Inc, claiming compensatory

damages in relation to certain businessdamages in relation to certain business

transactions, but a settlement was reachedtransactions. The case is under disputeand a settlement agreement concluded inand arbitration proceedings are underway.

September 2007. An extraordinary loss of¥288 million (US$2.4 million) is booked
under “Litigation Settlement” in respect of
this settlement.

58

Notes
Notes to Interim Consolidated Balance Sheet
Prior interim period

Current interim period

As of September 30, 2006

As of September 30, 2007

*1. Accumulated depreciation of tangible
assets:¥122,591 million*1. Accumulated depreciation of tangible
assets:¥130,805 million

Prior fiscal year
As of March 31, 2007
*1. *1. Accumulated depreciation of tangible
assets:¥126,283 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits:¥54 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits:¥54 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits: 54 million yen

The above collateral is applicable tooverdraft contracts by subsidiaries.
However, at the end of the interim period,
there was no applicable loan balance.

The above collateral is applicable tooverdraft contracts by subsidiaries. At theend of the current interim accounting
period the applicable short term loanbalance was ¥25 million.

The above collateral is applicable tooverdraft contracts by subsidiaries. At theend of the current consolidated
accounting period the applicable shortterm loan balance was ¥23 million.

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries:¥84 million*4. Notes due at the end of the interim
consolidated accounting period
Notes due at the end of the interim
consolidated accounting period aresettled on the appropriate note transfer
date. However, the final day of the current
interim consolidated accounting period
coincided with a holiday for financial
institutions. Therefore, the following notes
due at the end of the interim consolidated
accounting period are included in thebalance sheet of the interim consolidated
accounting period
Notes receivable

Notes payable

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries:¥89 million

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries: 86 million yen*4. Notes due at the end of the interim
consolidated accounting period
Notes due at the end of the interim
consolidated accounting period aresettled on the appropriate note transfer
date. However, the final day of the current
interim consolidated accounting period
coincided with a holiday for financial
institutions. Therefore, the following notes
due at the end of the interim consolidated
accounting period are included in thebalance sheet of the interim consolidated
accounting period.

*4. Notes due at the end of theconsolidated accounting period
Notes due at the end of the consolidated
accounting period are settled on theappropriate note transfer date. However,the final day of the current consolidated
accounting period coincided with a holiday
for financial institutions. Therefore, thefollowing notes due at the end of theconsolidated accounting period areincluded in the balance sheet of theconsolidated accounting period.

¥295 million
Notes receivable¥554 million

Notes receivable¥683 million

Notes payable¥1,419 million

Notes payable¥1,891 million¥1,115 million

59

Notes to Interim Consolidated Statements of Income
Prior interim period

Current interim period

Fiscal year ended March 31, 2007

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)*1. Major components of selling, generaland administrative expenses
Advertising expenses: ¥14,038 million
Officers’ remuneration and employee
salaries and benefits: ¥14,398 million
Research and development expenses:¥7,816 million
Allowance for doubtful receivables:¥201 million
Provision for employee retirement andseverance benefits: ¥582 million
Provision for officers’ retirement andseverance benefits: ¥74 million
Provision for directors’ bonus:¥337 million*1. Major components of selling, generaland administrative expenses
Advertising expenses:¥12,869 million
Officers’ remuneration and employee
salaries and benefits: ¥16,071 million
Research and development
expenses: ¥8,037 million
Allowance for doubtful receivables:¥15 million
Provision for employee retirement
and severance benefits: ¥560 million
Provision for officers’ retirement andseverance benefits: ¥55 million
Provision for directors’ bonus:¥431 million*1. Major components of selling, general andadministrative expenses
Advertising expenses: ¥31,031 million
Officers’ remuneration and employee
salaries and benefits: ¥29,425 million
Research and development expenses:¥18,004 million
Allowance for doubtful receivables:¥397 million
Provision for employee retirement andseverance benefits: ¥1,163 million
Provision for officers’ retirement andseverance benefits: ¥138 million
Provision for directors’ bonus:¥657 million*2. Breakdown of gains on sales of property, *2. Breakdown of gains on sales of *2. Breakdown of gains on sales of property,
plant and equipment
property, plant and equipment
plant and equipment
Machinery, equipment and vehicles:
Tools, furniture and fixtures:
Buildings and structures: ¥27 million¥12 million¥11 million
Land: ¥107 million
Other: ¥20 million
Other: ¥15 million
Other: ¥25 million*3. Breakdown of losses on sales of *3. Breakdown of losses on sales of *3. Breakdown of losses on sales of property,
property, plant and equipment
property, plant and equipment
plant and equipment
Tools, furniture and fixtures:
Machinery, equipment and vehicles:
Land, etc.: ¥20 million¥2 million¥6 million
Other: ¥5 million*4. Breakdown of losses on disposal of *4. Breakdown of losses on disposal of *4. Breakdown of losses on disposal ofproperty, plant and equipment
property, plant and equipment
property, plant and equipment
Buildings and structures: ¥13 million
Buildings and structures: ¥214 million
Buildings and structures:¥120 million
Tools, furniture and fixtures: ¥132million
Tools, furniture and fixtures:
Tools, furniture and fixtures: ¥247million
Software: ¥11 million¥146 million
Software: ¥17 million
Other: ¥ 6 million
Other: ¥33 million
Other: ¥ 21 million

60

Prior interim period

Current interim period

Fiscal year ended March 31, 2007

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)*5. Loss on impairment of property, plant andequipment
In order to identify assets for impairment,
the Company and its consolidated
subsidiaries group their fixed assets
according to management accountingclassifications based on each business
unit, except for important idle assets,
assets to be disposed of and lease assets.

*5. Loss on impairment of property, plantand equipment
In order to identify assets for impairment,
the Company and its consolidated
subsidiaries group their fixed assets
according to management accountingclassifications based on each strategic
business unit, except for important idle
assets, assets to be disposed of andlease assets. Of these, in the amusement
facilities business, most are grouped
according to fixed regions because theassets it owns are spread widely in Japanand overseas.

*5. Loss on impairment of fixed assets
In order to identify assets for impairment, theCompany and its consolidated subsidiaries
group their fixed assets according tomanagement accounting classifications
based on each business unit, except forimportant idle assets, assets to be disposedof and lease assets. Within that, because
assets are spread across Japan and abroad,assets in the amusement facility business aregrouped mainly by geographical region.

Also, the book value of the following
assets, except for those assets which may
be reused, is reduced to the recoverable
amount and the decrease in value
accounted for as an impairment loss in
extraordinary losses. Recoverable amounts
are calculated taking the value in use of theasset to be zero.
Location

Items

Classification

Toshimaku,
Tokyo

Amusement
facility(Themepark)

Amusement
facility,machines,etc.

Minatoku,
Tokyo
Saitamashi,
Saitama
Total

Amusement
facility

Amusement
facility

Amusement
facility,machines,
etc.
Amusement
facility,machines,
etc.

Impairment
loss(¥ mil)Also, the book value of the following
assets, except for those assets which may
be reused, is reduced to the recoverable
amount and the decrease in value
accounted for as an impairment loss in
extraordinary losses.
Location

Classification

Items

1,543

46

26

1,616

Since the management of amusement
facilities is spread widely around Japanand overseas, asset grouping is carried out
mainly according to fixed regions based on
the management accounts classifications.
The above facilities have been separated
from the existing groupings and have had
impairment losses booked against them forthe following reasons:Toshima-ku Theme Park
For this facility, it was decided to change
the main operational objective from sales
aimed at attaining profits to concentratingon the facility’s advertising value, and it isconsidered as a different category ofinvestment decision from the group, which
consists of facilities, etc. the purpose ofwhich is to attain profits.

Aki-gun,Hiroshima(Note 1)
Kitasaku-gun,
Nagano(Note 1)
Shimotsugagun,Tochigi(Note 2)

Amusement
facility,machines,
etc.

Amusement
facility

Businessfacilities

Buildings &structures

Assetsscheduledfordisposal

Total

Tools
&
equipment

Impairment
loss(¥ mil)172Note 1. These facilities have been
separated from the existing groupings andhad impairment losses booked againstthem because the Company considers
that the recoverable amount of the fixed
assets has fallen considerably as a resultof the decision to close them.
Recoverable amounts are calculated
taking the value in use to be zero.
Note 2.Impairment losses have been
booked against assets not expected to be
in use in the future due to integration ofsubsidiary branches. Recoverable
amounts are calculated taking the value in
use to be zero.

61

Location

Items

Classification

Impairment
loss(¥ mil)Toshimaku, Tokyo(Note 1)

Amusement
facility(themepark)

Amusement
facility andmachines,
etc.

1,543

SapporoCity,
Hokkaido(Note 2)

Amusement
facility

Amusement
facility andmachines,
etc.

160

Hakodate
City,
Hokkaido(Note 3)

Amusement
facility(touristhotel)

Buildings &structures,and land

1,338

Yokohama
City,
Kanagawa(Note 4)LAN
entertainment
business

Other
intangible
fixed assets;
otherinvestments,
etc.

219

Buildings &structures,and land

1,160

Buildings &structures,
and
land,
etc.

486

Buildings &structures,
and
land,
etc.

160

61

81

Minato-ku and Saitama facilities
The recoverable amount of the fixed assets
has fallen significantly as a result of thedecision to close these facilities.

With the following assets, excluding
reusable assets, book values were reduced
to the collectable amount and the amount of
reduction was appropriated as an
impairment loss under extraordinary losses.

Ota-ku,Tokyo, etc.
(Note 5)
Shimotsukagun,Tochigi,
etc. (Note6)
Ibaragi
City, Osaka(Note 7)
Total

Management,
Sales,
Production
control,
R&D
Idle assets
and assets
scheduledfordisposalAssets forlease, etc.

5,069

Prior interim period

Current interim period

Fiscal year ended March 31, 2007

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)
Notes
1. This asset was separated from its current grouping
and registered as a loss because it was decided tochange the primary management objective fromgenerating income via sales to concentrating on its
advertising value, and it was considered a different
category of investment decision from the group,
which consisted of facilities that aimed at generating
income. The collectible amount was calculatedusing a value of use of "zero".
2. Because it was judged that the collectable amountfrom this fixed asset would decrease greatly due tothe decision to close the facility, this asset was
separated from its group and registered as a loss.
The collectible amount was calculated using a valueof use of "zero".
3. A loss was registered because it was predictedthat the book value of this fixed asset could not becollected due to the decrease in businessprofitability. The collectible amount was measured
by the net sale value and assessed based on theappraised real estate value.
4. Assets used for unprofitable businesses slated forclosing were registered as losses. The collectible
amounts were calculated using a value of use of"zero".
5. Assets that had no foreseeable use due tointegration or relocation of subsidiary bases wereregistered as losses. The collectible amounts forreal estate were measured by the net sale value andassessed based on the appraised real estate value.
Collectible amounts of other assets were calculatedusing a value of use of "zero".
6. Assets that had no foreseeable use because of
integration of subsidiary bases were registered as
losses. The collectible amounts for real estate were
measured by the net sale value and assessed
based on the appraised real estate value, plannedsales price, etc. Collectible amounts of other assets
were calculated using a value of use of "zero".
7. Assets scheduled for sale and leased assets of noforeseeable use were registered as losses.
Collectible amounts for assets scheduled for sale
were assessed based on the planned sales price.
Collectible amounts for leased assets added income
from the remainder of the lease to the land value as
frontage property.

62

Notes to Interim Consolidated Statement of Changes in Net Assets
For the previous interim period ended September 30, 2006
(April 1, 2006 to September 30, 2006)
1. Matters concerning the total number and category of shares in issue and the total number and category of treasury stock.
Decrease in number of Number of shares atthe end of the current
shares in the current
interim periodinterim period

Increase in number of
Number of shares atthe end of the previous shares in the current
interim period
fiscal period
Issued shares
Common stock

260,580,191--

260,580,191

Total

260,580,191--

260,580,191

Treasury Stock
Common stock *1, *2
Total

7,616,892

10,90470

7,627,726

7,616,892

10,90470

7,627,726*1. The increase in treasury stock (shares of common stock) of 10,904 shares consists of an increase of 2,818 shares from the repurchaseof fractional shares, an increase of 17 shares as a result of an increase in the shareholding ratio in respect of affiliates to which the equity
method applies, and 8,069 shares being the company’s portion of treasury stock acquired by affiliated companies to which the equity
method applies.
*2. The decrease in treasury stock (shares of common stock) of 70 shares resulted from the sale of fractional shares.

2. Notes to stock subscription rights and treasury stock subscription rights

Category

Number of shares covered by stock subscription rights
Type of stock
for stock
Details of stock subscription rights
At end ofIncrease in
Decrease in At end of
subscription
previous fiscal current interim current interim interim
rightsperiodperiodperiodperiodThe

Balance at
end of interim
period(¥ million)

Series 1

CompanyStocksubscription

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

50

-

-

-

-

-

478

rightsStock

Series 2

subscription

Stockrights as stock

subscription

optionsrightsSeries 3
Stocksubscription
rightsTotal

Note: The first day of the exercise period has not passed for all the stock subscription rights in the table above.

63

3. Matters concerning dividends(1) Dividend payment amount
Share category

Total dividend
amount(millions of yen)

Common stock

3,126

Resolved

Dividend per share(¥)

Date of record

Effective date

March 31, 2006

June 27, 2006

Annual general meeting ofshareholders

12

June 26, 2006
Note: The effective date denotes the payment start date(2) Dividends the date of record for which falls in the consolidated interim period and the effective date for which falls after the end of thecurrent consolidated interim period.
Share category
Resolved

Total dividend
amount(millions of yen)

Meeting of the Boardof Directors
October 26, 2006

Common Stock

3,126

Assetsunderlying
dividend
Retained
Earnings

64

Dividend pershare (¥)

12

Date of record

Effective date

September 30, 2006 December 8, 2006

For the interim period ended September 30, 2007
(April 1, 2007 to September 30, 2007)
1. Matters concerning the total number and category of shares in issue and the total number and category of treasury stock.
Number of shares at
Increase in number ofthe end of the previous shares in the current
fiscal periodinterim period

Decrease in number of Number of shares atshares in the current
the end of the current
interim periodinterim period

Issued shares
Common stock *1

260,580,191-

4,500,000

256,080,191

Total

260,580,191-

4,500,000

256,080,191

2,731,047

4,983,490

4,500,040

3,214,497

2,731,047

4,983,490

4,500,040

3,214,497

Treasury Stock
Common stock *2, *3
Total*1. The decrease in common stock in issue of 4,500,000 shares resulted from the cancellation of treasury stock.
*2. The increase in treasury stock (shares of common stock) of 4,983,490 shares consists of an increase of 4,980,000 shares from theacquisition of treasury stock in accordance with a resolution of the board of directors, an increase of 3,488 shares from the purchase of
fractional shares, and an increase of 2 shares from an increase in the shareholding ratio in respect of affiliates to which the equity method
applies.
*3. The decrease in treasury stock (shares of common stock) of 4,500,040 shares consists of a decrease of 4,500,000 from the retirement oftreasury stock and a decrease of 40 shares from the sale of fractional shares.

2. Notes to stock subscription rights and treasury stock subscription rights

Category

Number of shares covered by stock subscription rights
Type of stock
for stock
Details of stock subscription rights
Decrease in At end of
Increase in
At end ofsubscription
previous fiscal current interim current interim interim
rightsperiodperiodperiodperiodBalance at
end of interim
period(¥ million)

Series 1
Stock
subscription

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

247

-

-

-

-

-

40

-

-

-

-

-

175

-

-

-

-

-

507

-

-

-

-

-

1,399

rightsSeries 2
Stocksubscription
rightsSeries 3
Stock

Stock
The

subscription

Company

rights as stock
options

subscription
rightsSeries 4
Stocksubscription
rightsSeries 2 - 1
Stock
subscription
rightsSeries 2 - 2
Stock
subscription
rightsTotal

Note: The first day of the exercise period has not passed for all the stock subscription rights in the table above.

65

3. Matters concerning dividends(1) Dividend payment amount
Share category

Total dividend
amount(millions of yen)

Common stock

4,127

Resolved

Dividend per share(¥)

Date of record

Effective date

March 31, 2007

June 26, 2007

Annual general meeting ofshareholders

16

June 25, 2007

(2) Dividends the date of record for which falls in the consolidated interim period and the effective date for which falls after the end of thecurrent consolidated interim period.
Share category
Resolved

Total dividend
amount(millions of yen)

Meeting of the Boardof Directors
November 8, 2007

Common Stock3,035

Assetsunderlying
dividend
Retained
Earnings

66

Dividend pershare (¥)

12

Date of record

Effective date

September 30, 2007 December 10, 2007

For the previous fiscal year ended March 31, 2007
(April 1, 2006 to March 31, 2007)
1. Matters concerning the total number and category of shares in issue and the total number and category of treasury stock.
Number of shares at
Increase in number ofthe end of the previous shares in the current
fiscal period
periodDecrease in number of Number of shares atshares in the current
the end of the current
periodperiodIssued shares
Common stock

260,580,191--

260,580,191

Total

260,580,191--

260,580,191

Treasury Stock
Common stock *1, *2
Total

7,616,892

14,2774,900,122

2,731,047

7,616,892

14,2774,900,122

2,731,047*1. The increase in treasury stock (shares of common stock) of 14,277 shares consists of an increase of 6,191 shares from therepurchase of fractional shares, an increase of 17 shares as a result of an increase in the shareholding ratio in respect of affiliates towhich the equity method applies, and 8,069 shares being the company’s portion of treasury stock acquired by affiliated companies towhich the equity method applies.
*2. The decrease in treasury stock (shares of common stock) of 4,900,122 shares consists of decrease of 122 shares from the sale offractional shares and 4,900,000 shares from the disposal of treasury stock through private placements.

2. Notes to stock subscription rights and treasury stock subscription rights

Category

Number of shares covered by stock subscription rights
Type of stock
for stock
Details of stock subscription rights
At end ofsubscription
Increase in
Decrease in At end of
previous fiscal
rightscurrent period current period period
periodThe

Balance at
end of period(¥ million)

Series 1

CompanyStocksubscription

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

149

-

-

-

-

-

577

rightsStock

Series 2

subscription

Stockrights as stock
options

subscription
rights(See note)

Series 3
Stocksubscription
rightsTotal

Note: Exercise periods have not started for any of the stock acquisition rights tabulated above.

3. Matters concerning dividends(1)Dividend payment amount
Share category

Total dividend
amount(millions of yen)

Common stock

3,036

12

March 31, 2006

Common stock

3,036

12

September 30, 2006

Resolved

Dividend per share(¥)

Date of record

Annual general meeting ofshareholders
June 26, 2006
Board of Directors
October 26, 2006

Effective dateJune 27, 2006
(Note 2)

December 8, 2006

1. Information is stated net of dividends on treasury stock held by affiliates. Amounts before deductions are ¥3,126 million with respect to theannual general meeting of shareholders held June 26, 2006, and ¥3,126 million with respect to the board meeting held October 26, 2006.

67

2. The effective date denotes the payment start date.

(2) Dividends for the date of record which falls in the consolidated accounting period and for theeffective date which falls after the end of the consolidated accounting period.
Share category
Resolved

Total dividend
amount(millions of yen)

Assetsunderlying
dividend

Dividend pershare (¥)

Date of record

Effective date16

March 31, 2007

June 26, 2007

Annual general
meeting ofshareholders

Common Stock

4,127

Retained
Earnings

June 25, 2007

Notes to Interim Consolidated Statements of Cash Flows
Prior interim period

Current interim period

Fiscal year ended March 31, 2007

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)* Relationship between cash and cash
equivalents at the end of the interim
period and the amounts accounted for on
the consolidated balance sheets:* Relationship between cash and cash
equivalents at the end of the interim
period and the amounts accounted for on
the consolidated balance sheets:* Relationship between cash and cash
equivalents at the end of the period underreview and the amounts accounted for on
the consolidated balance sheets:(As of September 30, 2006)
Cash and time deposits:¥108,985 million
Short-term investments:¥4,434 million
Total¥113,419 million(As of September 30, 2007)
Cash and time deposits:¥97,641 million
Short-term investments:¥11,379 million
Total¥109,020 million(As of March 31, 2007)
Cash and time deposits:
Short-term investments:
Total

Time deposits with maturities exceeding
three months:(¥1,853 million)
Cash and cash equivalents:¥111,566 million

Time deposits with maturities exceeding
three months:(¥3,633 million)
Cash and cash equivalents:¥105,387 million

Time deposits with maturities exceeding
three months:(¥1,746 million)
Cash and cash equivalents:¥124,155 million¥113,710 million¥12,191 million¥125,901 million

Lease transactions
Lease transactions are not disclosed in the interim flash report (kessan tanshin) because it is considered unnecessary to do so.

68Marketable Securities

At the end of the prior interim period (As of September 30, 2006)
1. Bonds held to maturity with market values(¥ million)
Interimconsolidated
Market Price

Difference

balance sheet
amount
2,009

2,008

-

2. Corporate bonds

-

-

-

3. Other

-

-

-

2,009

2,008

-

1. Government and local government bonds, etc.

Total

2. Other securities with market values(¥ million)
Acquisition cost

Interimconsolidated
Difference
balance sheet
amount

1. Securities

2,537

8,672

6,135

-

-

-

100

98

(1)

-

-

-

222

258

36

2,860

9,030

6,169

2. Bondsi) Government and local government bonds, etc.
ii) Corporate bondsiii) Other
3. Other
Total

Note: Stocks and other securities with market values included in Other Securities were recognized as 459 million yen
for the prior interim period as impairment losses. These were:
Stocks whose market value declined 50% or more:
Stocks whose market value declined more than 30% but lessthan 50%:

All stocks
Stocks for which no recovery in value is
expected

3. Principal securities holdings without market value(¥ million)
Interim consolidated balance sheet amount
1. Bonds held to maturity
36

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

2,089ii) MMF

1,294

iii) Other

1,199

3. Securities of subsidiaries and affiliates
1,835

Unlisted stocks

69

At the end of the current interim period (As of September 30, 2007)
1. Bonds held to maturity with market values(¥ million)
Interimconsolidated
Market Price

Difference

balance sheet
amount20

20-

2. Corporate bonds

-

-

-

3. Other

-

-

-

20

20

-

1. Government and local government bonds, etc.

Total

2. Other securities with market values(¥ million)
Acquisition cost

Interimconsolidated
Difference
balance sheet
amount

1. Securities.

12,465

16,684

4,219

-

-

-

300

296

(4)

-

-

-

222

256

33

12,98817,2374,248

2. Bondsi) Government and local government bonds, etc.
ii) Corporate bondsiii) Other
3. Other
Total

Note: Stocks and other securities with market values included in Other Securities were recognized as126 million yen
for the current interim period as impairment losses. These were:
Stocks whose market value declined 50% or more:
Stocks whose market value declined more than 30% but lessthan 50%:

All stocks
Stocks for which no recovery in value is
expected

3. Principal securities holdings without market value(¥ million)
Interim consolidated balance sheet amount
1. Bonds held to maturity
36

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

1,617ii) MMF

8,972

iii Other

2,556

3. Securities of subsidiaries and affiliates
1,874

Unlisted stocks70

At the end of the prior fiscal year (As of March 31, 2007)
1. Bonds held to maturity with market values(¥ million)
Consolidatedbalance sheet

Market Price

Difference

amount
6,017

6,016

-

2. Corporate bonds

-

-

-

3. Other

-

-

-

6,017

6,016

-

1. Government and local government bonds, etc.

Total

2. Other securities with market values(¥ million)
Consolidatedbalance sheet

Acquisition cost

Difference

amount
1. Securities

9,376

17,514

8,138

-

-

-

100

98

(1)

-

-

-

222

264

42

9,699

17,8788,178

2. Bondsi) Government and local government bonds, etc.
ii) Corporate bondsiii) Other
3. Other
Total

Note: Stocks and other securities with market values included in Other Securities were recognized as 547 million yen
for the prior fiscal year as impairment losses. These were:
Stocks whose market value declined 50% or more:
Stocks whose market value declined more than 30% but lessthan 50%:

71

All stocks
Stocks for which no recovery in value is
expected3. Principal securities holdings without market value(¥ million)
Consolidated balance sheet amount
1. Bonds held to maturity
37

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

1,762ii) MMF

5,706

iii) Other549

3. Securities of subsidiaries and affiliates
2,041

Unlisted stocks

Derivative transactions
Derivative transactions are not disclosed in the interim flash report (kessan tanshin) because it is considered
unnecessary to do so.
Stock option and related information
Stock option transactions are not disclosed in the interim flash report (kessan tanshin) because it is considered
unnecessary to do so.
Business combinations
Business combinations are not disclosed in the interim flash report (kessan tanshin) because it is considered
unnecessary to do so.

72

5. Segment Information
1. By Business Segment(¥ million)
Prior interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Total

Eliminations
andCorporate

Consolidated

Net sales
1. To external customers
2. Intersegment sales andtransfers

82,61343,07450,7006,086

18,714

5,446

206,636−

206,636

3,171

141

6,307

179

568

5,496

15,865(15,865)−

Total

85,784

43,21657,007

6,266

19,282

10,943

222,501(15,865)

206,636

Operating expenses

77,59841,33255,154

5,725

14,765

10,043

204,619(15,247)

189,372

Operating income

8,186

1,883

1,853

540

4,516

899

17,881(617)

17,263

Notes:
1. Business segment classifications are in accordance with classifications adopted for internal management purposes.
(Changes in accounting policy)
As part of the group restructuring, a formational-divisive reorganisation was implemented splitting off the Amusement Facility
Management Business from NAMCO LIMITED (currently NAMCO BANDAI Games Inc.) and newly establishing NAMCO
LIMITED on March 31, 2006. With this reorganisation, the structure of each of the Group’s strategic business units has been
made clearer and in order to present details of the Group’s products and services more appropriately, NAMCO LIMITED’s
welfare and senior citizens facilities business and all the operations of Yunokawa Kanko Hotel Co., Ltd have been moved from
“Affiliated Business” to “Amusement Facility Business”. The NAMCO BANDAI Games Inc. incubation business has also been
moved from “Affiliated Business" to “Game Contents Business".
Segment information for the previous interim consolidated accounting period and the previous consolidated accounting year
compiled according to the business segments used in the current interim consolidated accounting period is as follows.
(¥ million)
Interim period ended September 30, 2005
(April 1, 2005 ~ September 30, 2005)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Eliminations
andCorporate

Consolidated−

218,873

8,676(8, 676)−

Total

Net sales
1. To external customers
2. Intersegment sales andtransfers

81,10641,92662,3685,805

22,557

5,108 218,873

1,432

74

1,621

144

495

Total

82,53942,001

63,9905,950

23,053

10,015 227,549(8,676)

218,873

Operating expenses

74,14240,01756,827

5,092

19,9589,471 205,510(4,184)

201,326

Operating income

8,397

1,983

7,162

857

3,095

(4,492)

17,546

4,906

543

22,039(¥ million)
Fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2005)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

176,474

80,769128,448

12,19642,27910,661324

1,048

10,142

Other
Business

Eliminations
andCorporate

Consolidated

450,829−

450,829

18,901(18,901)−

Total

Net sales
1. To external customers
2. Intersegment sales andtransfers

4,533

525

2,326

Total

181,007

81,294

130,774

12,521

43,32820,804

469,730(18,901)

450,829

Operating expenses

161,922

79,406

121,067

10,68537,141

19,616429,838(14,678)

415,160

Operating income

19,085

1,888

9,707

1,835

6,187

1,187

39,892(4,222)35,66973

2. Principal products and business in each business segment:(1) Toys and Hobby Business:

Toys, candy toys, products for vending machines, cards, plastic models, apparel,sundries, stationery and other products(2) Amusement Facility Business:

Amusement facility operations, and other operations(3) Game Contents Business:

Software for home videogames, coin-operated game machines, prizes for coinoperated game machines and other products(4) Network Business:

Mobile content and other services(5) Visual and Music Content
Business:

Video titles, visual software, on-demand video distribution and other products andservices(6) Other Business:

Transportation and warehousing of products, leasing, real estate management, printing,development and sale of environmental equipment and other activities

3. Operating expenses include an unallocatable amount of ¥1,336 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions the Company and NAMCO BANDAI HOLDINGS (USA) Inc.
4. Changes in accounting policy
As set out in “Changes in Important Information Constituting the Basis for Preparation of Interim Consolidated Financial
Statements” 4. (3) (ii), the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29, 2005)
applies from the current interim consolidated accounting period. Also, as set out in “Changes in Important Information Constituting
the Basis for Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options (Corporate
Accounting Standard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock Options(Corporate Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated
accounting period.
These changes had the following effect on Operating Income for each segment.
Toys & Hobby
Business

Amusement
Facility
Business

Game
Contents
Business(¥ million)

Visual ＆NetworkMusic Content
Business
Business

Directors’ bonus

(84)

(33)

(83)

(54)

(12)

Stock options

(100)

(31)

(99)

-

-

Operatingincome

(184)

(65)

(183)

(54)

(12)

74

Other
Business

Total

(19)
(19)

Eliminations
Consoliand
dated
Corporate

(286)

(50)

(337)

(232)

(246)

(478)

(518)

(296)

(815)

(¥ million)
Current interim period ended September 30, 2007
(April 1, 2007 ~ September 30, 2007)
Toys & Hobby Amusement
Business Facility Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music
Content
Business

Other
Business

Total

Eliminations
andCorporate

Consolidated

Net sales
1. To external customers
2. Intersegment sales andtransfers

81,69345,951

57,887

5,783

17,412

4,793

213,522―

213,522

1,884

172

3,947

153

475

5,271

11,905(11,905)―

Total

83,57846,124

61,835

5,936

17,88810,065

225,428(11,905)

213,522

Operating expenses

77,80944,04556,9785,505

14,852

9,588

208,779(10,343)

198,436

Operating income

5,768

2,078

4,856

431

3,035

476

16,648(1,562)

15,085

Notes:
1. Business segment classifications are in accordance with classifications adopted for internal management purposes.
2. Principal products and business in each business segment:(1) Toys and Hobby Business:

Toys, candy toys, products for vending machines, cards, plastic models, apparel,sundries, stationery and other products(2) Amusement Facility Business:

Amusement facility operations, and other operations(3) Game Contents Business:

Software for home videogames, coin-operated game machines, prizes for coinoperated game machines and other products(4) Network Business:

Mobile content and other services(5) Visual and Music Content
Business:

Video titles, visual software, on-demand video distribution and other products andservices(6) Other Business:

Transportation and warehousing of products, leasing, real estate management, printing,development and sale of environmental equipment and other activities

3. Operating expenses include an unallocatable amount of ¥1,552 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at Bandai Co., Ltd. and NAMCO LIMITED.
4. Change in accounting policy
As noted in "Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4 (2) (i),due to the revision of the Corporation Tax Law, the Company and some of its domestic consolidated subsidiaries have changed
the method of depreciating tangible fixed assets acquired since April 1, 2007 for accounting periods from the current interim period(April 1, 2007 to September 30, 2007) based on the revised Corporation Tax Law.
These changes had the following effect on Operating Income for each segment.
(¥ million)
Amusement
Toys & Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music
Content
Business

Other
Business

Total

Eliminations
andCorporate

Consolidated

Operating income

(182)
―
(46)
(3)
(25)
(1)
(260)
―
(260)
5. Additional information
As noted in "Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4 (2) (i),due to the revision of the Corporation Tax Law, the Company and some of its domestic consolidated subsidiaries are depreciating
the difference between the book value and an amount equivalent to 5% of the acquisition cost of tangible fixed assets acquired
prior to March 31, 2007 using the straight line method over a period of 5 years, based on the revised Corporation Tax Law.
These changes had the following effect on Operating Income for each segment(¥ million)

Operating income

Toys & Hobby
Business

Amusement
Facility
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music
Content
Business

(54)

―

(10)

―

―

75

Other
Business

―

Total

(65)

Eliminations
andCorporate

Consolidated

―

(65)

(¥ million)
Previous fiscal year (April 1, 2006 ~ March 31, 2007)
Toys &
Hobby
Business

Amusement
Facility
Business

Game
Contents
Business

Visual ＆Music
Content
Business

NetworkBusiness

Other
Business

Total

Eliminations
andCorporate

Consolidated

Net sales and operating
incomeNet sales(1) To externalcustomers

179,473

87,862

127,389

12,081

41,954

10,369 459,132

6,112

333

11,798407

1,051

10,530185,586

88,196

139,187

12,48943,006

20,900 489,366(30,234)

459,132

168,183

84,192

127,677

11,60833,50919,882 445,054(28,145)416,908(2) Inter-segment sales
and transfers
Total
Operating expenses

30,234-459,132(30,234)-

Operating income
17,403
4,004
11,509880
9,496
1,017 44,312(2,088)42,224
Notes:
1. Business segment classifications are in accordance with classifications adopted for internal management purposes.
(Changes in accounting policy)
As part of the group restructuring, a formational-divisive reorganisation was implemented splitting off the Amusement Facility
Management Business from NAMCO LIMITED (currently NAMCO BANDAI Games Inc.) and newly establishing NAMCO LIMITEDon March 31, 2006. With this reorganisation, the structure of each of the Group’s strategic business units has been made clearer
and in order to present details of the Group’s products and services more appropriately, NAMCO LIMITED’s welfare and seniorcitizens facilities business and all the operations of Yunokawa Kanko Hotel Co., Ltd have been moved from “Affiliated Business” to“Amusement Facility Business”. The NAMCO BANDAI Games Inc. incubation business has also been moved from “AffiliatedBusiness" to “Game Contents Business".
Segment information for the 2006 consolidated accounting year compiled according to the business segments used in thecurrent consolidated accounting year is as follows.
Fiscal year ended March 31, 2006 (April 1, 2005 ~ March 31, 2006)
Visual ＆Music
Content
Business

Toys &
Hobby Busines

Amusement
Facility
Business

176,474

80,769128,448

12,19642,27910,661 450,829-

450,829

4,533

525

2,326

324

1,048

10,142

18,901(18,901)-

181,007
161,922
19,08581,294
79,406
1,888

130,774
121,067
9,707

12,521
10,685
1,835

43,32837,141
6,187

20,804 469,730
19,616 429,838
1,187 39,892(18,901)(14,678)(4,222)450,829
415,160
35,669Net sales and operating
incomeNet sales(1) To external customers(2) Inter-segment sales
and transfers
Total
Operating expenses
Operating income

Game
Contents
Business

NetworkBusiness

Other
Business

Total

Eliminations
andCorporate

Consolidated

2. Principal products and business in each business segment:(1) Toys and Hobby Business:

Toys, candy toys, products for vending machines, cards, plastic models, apparel,sundries, stationery and other products(2) Amusement Facility Business:

Amusement facility operations, and other operations(3) Game Contents Business:

Software for home videogames, coin-operated game machines, prizes for coinoperated game machines and other products(4) Network Business:

Mobile content and other services(5) Visual and Music Content
Business:

Video titles, visual software, on-demand video distribution and other products andservices(6) Other Business:

Transportation and warehousing of products, leasing, real estate management, printing,development and sale of environmental equipment and other activities763. Operating expenses include an unallocatable amount of ¥2,538 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions the Company and NAMCO BANDAI HOLDINGS (USA) Inc.
4. Changes in accounting policy
As set out in “Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4. (3) (ii),the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29, 2005) applies from thecurrent interim consolidated accounting period. Also, as set out in “Changes in Important Information Constituting the Basis for
Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options (Corporate AccountingStandard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock Options (Corporate
Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated accounting period.
These changes had the following effect on Operating Income for each segment.
(¥ million)
Toys &
Hobby
Business

Amusement
Facility
Business

Game
Contents
Business(99)-

NetworkBusiness

Visual ＆Music
Content
Business

Other
Business

(162)

(61)

Directors’ bonus

(176)

(48)

Stock options

(100)

(31)

(99)

-

-

Operating income

(276)

(80)

(199)

-

(162)

Total

Eliminations
andCorporate

Consolidated

(547)

(110)

(657)

-

(232)

(345)

(577)

(61)

(779)

(455)

(1,235)

5. Additional information
Data Carddass units and software have previously been depreciated over a useful life of 5 years, but from the current
consolidated accounting period the useful life of units has been changed to 3 years and for software, to 1 year.
As a result of these changes operating expenses for the current consolidated accounting period in the Toys & Hobby Businesswere ¥560 million higher, and operating income was the same amount lower than would have been the case using the previous
useful lives.

772. By Geographic Segment(¥ million)
Previous interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)

Net sales
1. To external customers

Japan

Americas

Europe

Asia

Total

Eliminations
Consolidated
and Corporate

166,121

19,975

13,9986,541

206,636−

206,636

2. Intersegment sales and transfers

4,981

818

−

9,873

15,673(15,673)−

Total

171,103

20,793

13,99816,414

222,309(15,673)

206,636

Operating expenses

154,504

21,661

12,593

15,040203,799(14,427)

189,372

Operating income (loss)

16,598

(867)

1,405

1,373

18,509(1,245)

17,263

Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:
U.S.A. and Canada(ii) Europe:
France, U.K. and Spain(iii) Asia:
Hong Kong, Thailand and South Korea
2. Operating expenses include an unallocatable amount of ¥1,336 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at the Company and NAMCO BANDAI Holdings (USA) Inc.
3. Change in accounting policy
As set out in “Changes in Important Information Constituting the Basis for Preparation of Interim Consolidated Financial
Statements” 4. (3) (ii), the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29,2005) applies from the current interim consolidated accounting period. Also, as set out in “Changes in Important Information
Constituting the Basis for Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options(Corporate Accounting Standard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock
Options (Corporate Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated
accounting period.
These changes had the following effect on Operating Income for each segment.

Directors’ bonus

Japan

Americas(286)-Europe

Asia
-

Total
-

(286)

(¥ million)
Eliminations
Consolidated
and Corporate
(50)

(337)

Stock Options

(232)

-

-

-

(232)

(246)

(478)

Operating income

(518)

-

-

-

(518)

(296)

(815)

78

(¥ million)
Current interim period ended September 30, 2007
(April 1, 2007 ~ September 30, 2007)

Net sales
1. To external customers

Japan

Americas

Europe

Asia

Total

Eliminations
Consolidated
and Corporate

164,529

21,24921,0006,742

213,522―

213,522

2. Intersegment sales and transfers

6,040

710

4

10,556

17,312(17,312)―

Total

170,570

21,96021,004

17,298230,834(17,312)

213,522

Operating expenses

158,564

21,812

17,942

16,035214,355(15,918)

198,436

Operating income

12,005

147

3,062

1,263

16,479(1,393)15,085

Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:
U.S.A. and Canada(ii) Europe:

France, U.K. and Spain(iii) Asia:

Hong Kong, Thailand and South Korea

2. Operating expenses include an unallocatable amount of ¥1,552 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at the Company and NAMCO BANDAI Holdings (USA) Inc.
3. Change in accounting policy
As noted in "Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4 (2)(i),due to the revision of the Corporation Tax Law, the Company and some of its domestic consolidated subsidiaries have changed
the method of depreciating tangible fixed assets acquired since April 1, 2007 for accounting periods from the current interim
period (April 1, 2007 to September 30, 2007) based on the revised Corporation Tax Law.
As a result of this change, operating expenses for the current interim consolidated accounting period in Japan increased by¥260 million, and operating income decreased by the same amount.

4. Additional Information
As noted in "Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4 (2) (i),due to the revision of the Corporation Tax Law, the Company and some of its domestic consolidated subsidiaries are depreciating
the difference between the book value and an amount equivalent to 5% of the acquisition cost of assets acquired prior to March
31, 2007 using the straight line method over a period of 5 years, based on the revised Corporation Tax Law.
As a result of this change, operating expenses for the current interim consolidated accounting period in Japan increased by ¥65
million, and operating income decreased by the same amount.

79(¥ million)
Prior fiscal year ended March 31, 2007
(April 1, 2006 ~ March 31, 2007)
Eliminations
Consolidated
and Corporate

Japan

Americas

Europe

Asia

Total

Net sales
1. To external customers

356,248

52,31537,76312,805459,132―

459,132

2. Intersegment sales and transfers

11,1991,673―

24,25537,129(37,129)―

Total

367,447

53,98937,76337,060496,261(37,129)

459,132

Operating expenses

334,320

50,61232,51034,330451,773(34,865)

416,908

Operating income

33,127

3,376

5,253

2,730

44,487(2,263)42,224

Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:
U.S.A. and Canada(ii) Europe:
France, U.K. and Spain(iii) Asia:
Hong Kong, Thailand and South Korea
2. Operating expenses include an unallocatable amount of ¥2,538 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at the Company and NAMCO BANDAI Holdings (USA) Inc.
3. Change in accounting policy
As set out in “Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4. (3)(ii), the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29, 2005) applies from thecurrent interim consolidated accounting period. Also, as set out in “Changes in Important Information Constituting the Basis for
Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options (Corporate AccountingStandard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock Options (Corporate
Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated accounting period.
These changes had the following effect on Operating Income for each segment.

Europe

Asia

Total

(¥ million)
Eliminations
Consolidated
and Corporate

Japan

Americas

Directors’ bonus

(547)

-

-

-

(547)

(110)

(657)

Stock Options

(232)

-

-

-

(232)

(345)

(577)

Operating income

(779)

-

-

-

(779)

(455)

(1,235)

4. Additional information
Data Carddass units and software have previously been depreciated over a useful life of 5 years, but from the current
consolidated accounting period the useful life of units has been changed to 3 years and for software, to 1 year.
As a result of these changes operating expenses in Japan were ¥560 million higher, and operating income was the same amountlower than would have been the case using the previous useful lives.

803. Overseas Sales
Prior interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)
Americas
I

Overseas sales (¥ million)

II

Consolidated sales (¥ million)
Overseas sales as a ratio ofconsolidated sales (%)

III

Europe

Asia

Total

20,361

15,971

7,354

43,687―――

206,636

9.9

7.7

3.6

21.1

Notes:
1. Overseas sales represent the total of sales generated in countries and regions other than Japan by the Company and its
consolidated subsidiaries.
2. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:

I
II
III

U.S.A., Canada and Latin America(ii) Europe:

France, U.K., Spain, the Middle East, and Africa(iii) Asia:

Hong Kong, Singapore, Thailand, South Korea, Australia, China and Taiwan

Overseas sales (¥ million)
Consolidated sales (¥ million)
Overseas sales as a ratio ofconsolidated sales (%)

Americas22,214―Current interim period ended September 30, 2007
(April 1, 2007 ~ September 30, 2007)
EuropeAsia
21,233
10,388
―
―

10.4

9.9

Total
53,836
213,5224.9

25.2

Notes:
1. Overseas sales represent the total of sales generated in countries and regions other than Japan by the Company and its
consolidated subsidiaries.
2. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:

I
II
III

U.S.A., Canada and Latin America(ii) Europe:

France, U.K., Spain, the Middle East, and Africa(iii) Asia:

Hong Kong, Singapore, Thailand, South Korea, Australia, China and Taiwan

Overseas sales (¥ million)
Consolidated sales (¥ million)
Overseas sales as a ratio ofconsolidated sales (%)

Prior fiscal year ended March 31, 2007
(April 1, 2006 ~ March 31, 2007)
EuropeAsia
41,267
17,813――

Americas53,719
―
11.7

9.0

Total
112,799
459,132

3.9

Notes:
1. Overseas sales represent the total of sales generated in countries and regions other than Japan by the Company and its
consolidated subsidiaries.
2. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment(i) Americas:

U.S.A., Canada and Latin America(ii) Europe:

France, U.K., Spain, the Middle East, and Africa(iii) Asia:

Hong Kong, Singapore, Thailand, South Korea, Australia, China and Taiwan

81

24.6

Per share data
Prior interim period

Current interim period

Prior fiscal year ended March 31, 2007

(April 1, 2006 ~ September 30, 2006)(April 1, 2007 ~ September 30, 2007)(April 1, 2006 ~ March 31, 2007)

Net asset per share¥992.26

Net asset per share¥1,064.01

Net income per share¥43.53

Net income per share¥43.51

Diluted net income per
share

Diluted net income per
share

Net asset per share¥1,063.29¥31.33

Net income per share.

¥95.73¥31.28

Diluted net income pershare¥95.67

Note: The basis of calculation net income per share figure for the interim (current period) and the diluted net income per share figure
interim (current period) is as follows:
Prior fiscal year ended
March 31, 2007

Prior interim period

Current interim period(April 1, 2006 ~September 30, 2006)(April 1, 2007 ~September 30, 2007)

11, 0117, 97724, 252

Amount not applicable to common
stockholders (¥ million)

-

-

-

Unappropriated directors’ bonus

(-)

(-)

(-)

11, 0117, 97724, 252

252, 957, 362

254, 575, 911253, 331, 026

Net income adjustment (¥ million)

-

-

-

(Effect of dilutive shares in certain
affiliated companies)

(-)

(-)

(-)

Increase in number of common stock

118, 286

475, 430

182, 608(Stock subscription rights)(118, 286)

(475, 430)

(182, 608)

(April 1, 2006 ~March 31, 2007)

Net income per share
Net income (¥ million)

Net income available to common stock(¥ million)
Average number of common stock
outstanding

Diluted net income per share

Summary of potential shares not includedin the calculation of diluted net income
per share as they do not have a diluting
effect.

The Company

The Company

Affiliate

Third series of stock
subscription rights agreed
under resolution 9 of theannual general meeting ofshareholders on June 26,
2006.

Third series of stock
subscription rights agreed
under resolution 9 of theannual general meeting ofshareholders on June 26,
2006.

Bandai Networks Co., Ltd.

1,831,000 common stock

583, 000 common stock

Affiliate

Series 2-1 of subscription
Bandai Networks Co., Ltd. rights agreed underresolution 3 of the annual
Stock options agreed at
general meeting of
the annual generalshareholders on June 25,
meeting of shareholders
2007.
on June 23, 2004 (245
92,600 common stock
stock subscription rights)
Affiliate
1,225 common stock
Bandai Networks Co., Ltd.
Stock options agreed at
the annual general
meeting of shareholders
on June 23, 2004 (245stock subscription rights)
1,225 common stock82

Stock options agreed at
the annual general
meeting of shareholders
on June 23, 2004 (245stock subscription rights)
1,225 common stockSignificant Subsequent Events
Prior consolidated interim period (April 1, 2006 to September 30, 2006):
The Company and its US consolidated subsidiaries had a suit brought against them in California by Game
Ballers Inc, claiming compensatory damages in relation to certain business transactions. The Company isembarking upon proceedings to dispute the case.

Current consolidated interim period (April 1, 2007 to September 30, 2007)
None

Prior consolidated fiscal year (April 1, 2006 to March 31, 2007)
１．Acquisition of treasury stock
The Company resolved at a meeting of the Board of Directors held on April 18, 2007 to acquire treasury
stock as follows in accordance with article 156 of the Companies Act as applied reading it in accordancewith the provisions of article 165.3 of the same law.
(1) Reason for acquisition
In order to make effective use of assets owned and implement flexible capital policies in response tochanges in the business environment(2) Category of stock acquired
Common stock of the Company(3) Total number of shares acquired
5,000,000 (maximum)(4) Total acquisition cost of stock¥10,000 million (maximum)(5) Method of acquisition
Purchasing on the Tokyo Stock Exchange(6) Acquisition period
From May 10, 2007 to September 30, 2007
The purchase of 4,980,000 shares (¥9,960 million) had been implemented by June 12, 2007 and theCompany decided to complete the acquisition on that day.
2. Retirement of treasury stock
The Company resolved at a meeting of the Board of Directors held on June 20, 2007 to cancel treasury
stock under the provisions of article 178 of the Companies Act, and carried out the resolution as follows.
(1) Reason for retirement
In order to improve capital efficiency and increase shareholder value(2) Method of retirement
Reducing retained earnings(3) Category of stock retired
Common stock of the Company(4) Number of shares retired
4,500,000(5) Date of retirement
June 20, 2007

83