[English Translation of Convocation Notice Originally Issued in the Japanese Language]【Note】This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.
The Company assumes no responsibility for this translation or for direct, indirect or any other forms ofdamages arising from the translation.

Securities Code: 6460
June 1, 2017
Haruki Satomi
President (Representative Director)
SEGA SAMMY HOLDINGS INC.
Shiodome Sumitomo Building,
1-9-2 Higashi Shimbashi, Minato-ku, Tokyo, Japan
Dear Shareholders:

Notice of the 13th Ordinary General Meeting of
Shareholders to be held on June 23, 2017
You are cordially invited to attend the 13th Ordinary General Meeting of Shareholders of SEGA SAMMYHOLDINGS INC. (the “Company”) to be held at Ho-Oh-No-Ma (Main Hall), 2F, Tokyo Prince Hotel, 3-3-1
Shiba-koen, Minato-ku, Tokyo, 105-8560, Japan on Friday, June 23, 2017 at 10:00 a.m. for the purposes listed
below.
If you are unable to attend the meeting in person, you may exercise your voting rights by either mail (inwriting) or via the Internet. Therefore, please review the attached Reference Documents for General Meetingof Shareholders, and kindly exercise your voting rights before 6:00 p.m., Japan Standard Time, on Thursday,June 22, 2017.
Details of the Meeting
1. Date and time:

Friday, June 23, 2017 at 10:00 a.m.

2. Venue:

Ho-Oh-No-Ma (Main Hall), 2F, Tokyo Prince Hotel
3-3-1 Shiba-koen, Minato-ku, Tokyo, 105-8560, Japan

3. Agenda:
Matters to be reported:

1. The Business Report and the Consolidated Financial Statements for the 13th

fiscal year (from April 1, 2016 to March 31, 2017) and results of audits by
the Independent Auditor and the Audit & Supervisory Board on theConsolidated Financial Statements
2. Non-Consolidated Financial Statements for the 13th fiscal year (from April
1, 2016 to March 31, 2017)
Matters to be resolved:
Proposal 1: To elect eight (8) Directors
Proposal 2: To elect four (4) Audit & Supervisory Board Members
Proposal 3: To elect one (1) Substitute Audit & Supervisory Board Member* If you attend the meeting in person, please submit the enclosed voting form at the reception desk at the meeting location on the
day of the meeting.
* Please note that persons other than shareholders of the Company such as a proxy and an accompanying person cannot attend
the meeting.
* Should any change need to be made to the Reference Documents for General Meeting of Shareholders, Business Report or
Consolidated/Non-Consolidated Financial Statements, such changes shall be posted on the website of the Company.
* For voting results, an extraordinary report shall be posted on the website of the Company in place of the Notice of Resolutions.
Information in English will be posted on our English website (http://www.segasammy.co.jp/english/ir/event/meeting.html).
There will be no gifts or convivial party for attending shareholders. We thank you for your understanding.

1

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Information on Disclosure on the Internet
Pursuant to the provisions of laws and regulations and the Articles of Incorporation, the Consolidated
Statement of Changes in Net Assets, Notes to Consolidated Financial Statements, Non-Consolidated
Statement of Changes in Net Assets and Notes to Non-Consolidated Financial Statements are posted on thewebsite(http://www.segasammy.co.jp/english/ir/event/meeting.html) of the Company and not attached to thisdocument.
* The Consolidated Financial Statements and Non-Consolidated Financial Statements audited by the Independent Auditor andthe Audit & Supervisory Board include the above documents posted on the website of the Company.

Information on Method of Receiving Convocation Notice
You may request the receipt of the convocation notice, shareholder information and other documents for
future General Meetings of Shareholders by email if your email address is registered with the Company.
(Please note that mobile phone email addresses are not accepted.)
If you wish to receive the above documents by email, please access the voting website designated by theCompany (http://www.evote.jp/) from a PC or smartphone, log on using the “logon ID” and “temporary
password” printed on the enclosed voting form and follow the on-screen instructions from the “Receipt byemail” screen.
The statutory convocation notice and other documents to be sent by email to the registered addresses(including the notice that such documents have been posted on the website designated by the Company) are asshown below. The convocation notice will be sent by email by the Shareholder Registry Administrator.
(1) Convocation Notice of Ordinary General Meeting of Shareholders: Date and time, venue, agenda,
attached documents (including Business Report) and Reference Documents for General Meeting of
Shareholders(2) Convocation Notice of Extraordinary Meeting of Shareholders: Date and time, venue, agenda andReference Documents for General Meeting of Shareholders* Please note that if you carry out the procedures a certain period after the General Meeting of Shareholders record date (thefiscal year end in the case of an Ordinary General Meeting of Shareholders and a date separately determined by the Board of
Directors in the case of an Extraordinary Meeting of Shareholders), your email address may not be reflected in the recipient
list of the convocation notice.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Information on Exercise of Voting Rights
Exercise of voting rights by mail (in writing)
Indicate “for” or “against” the proposals on the voting form enclosed and return the said form to theCompany so that it is received no later than the deadline for exercising your voting rights, indicated above.
Exercise of voting rights via the Internet(1) Exercise of voting rights(i) Access the voting website designated by the Company (http://www.evote.jp/), log on using the“voting rights exercise code” and “temporary password” printed on the enclosed voting form, andfollow the on-screen instructions (Japanese language only) to enter “for” or “against” the proposals
before the deadline for exercising your voting rights, indicated above.
(ii) In order to prevent unauthorized access by persons other than shareholders (spoofing) andfalsification of entries, you are kindly requested to change the “temporary password” once you log
on to the voting website.
(2) Voting website(i) You may exercise your voting rights by accessing the voting website
designated by the Company (http://www.evote.jp/) from a PC, smartphone ormobile phone (i-mode, EZweb or Yahoo! Keitai). (Please note that the website
cannot be accessed between 2:00 a.m. and 5:00 a.m. daily, Japan Standard
Time.) (“i-mode”, “EZweb” and “Yahoo!” are trademarks or registeredtrademarks of NTT DOCOMO, Inc., KDDI Corporation and U.S. Yahoo! Inc.,
respectively.)
You may also access the voting website by using a smartphone or mobile
phone equipped with a QR code reader to read the QR code on the right:
Please check the usage instructions for your smartphone or mobile phone forfurther details regarding the use of the QR code reader.
(“QR code” is a registered trademark of DENSO WAVE INCORPORATED.)(ii) You may be unable to use the voting website depending on your Internet configuration, firewall,anti-virus software and proxy server settings.
(iii) You must have access to either i-mode, EZweb or Yahoo! Keitai services to exercise your voting
rights via mobile phone. Please note that the voting website is only accessible from a mobile
handset capable of communicating encrypted data (i.e. TLS) and mobile phone data for security
purposes.
(iv) Please note that any costs incurred in accessing the designated voting website (e.g. internet
connection fees, etc.) shall be borne by the shareholder. Please note that any costs incurred invoting via mobile phone, including packet charges, shall also be borne by the shareholder.
Treatment of votes cast more than once(i) When any shareholder exercises voting rights both by voting form and via the Internet, only theInternet vote will be deemed as valid.
(ii) When any shareholder exercises voting rights more than once via the Internet, only the last votewill be deemed as valid. Similarly, when any shareholder exercises voting rights more than once
via PC, smartphone and / or mobile phone, only the last vote will be deemed as valid.
Electronic proxy voting platform for institutional investors
Institutional investors can use the electronic proxy voting platform that is operated by Investor
Communications Japan, Inc., which is designed for institutional investors to exercise their voting rights
electronically.

3

[English Translation of Convocation Notice Originally Issued in the Japanese Language]For inquiries concerning the online voting system:[Helpdesk]
Shareholder registry administrator: Transfer Agent Department,
Mitsubishi UFJ Trust and Banking Corporation
Direct line:
0120-173-027 (Domestic [Japan] call only)(Weekdays 9:00 a.m. - 9:00 p.m.)* Please note that the above contact number is not for inquiries concerning shares.

4

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Business Report(From April 1, 2016 To March 31, 2017)
I Outline of the Group’s Business1. The Current Business Development and Results of Operations
With regard to the pachislot and pachinko industry, in the pachislot machine market, sales of new
standard machines have continued to be sluggish. Meanwhile, in the pachinko machine market, based on
the “Statement of Promoting Restoration of the Pachinko and Pachislot Industry” declaring collection or
removal of “pachinko machines possibly different from the tested version” by Pachinko and Pachislot
Industry 21st Century Club, comprised of 14 organizations in the industry, by the end of December 2016,
with the purpose of further restoration of the pachislot and pachinko machine industry, the Group
proceeded the collection and removal of applicable machines. Under such circumstances, titles receiving
high appraisal are arising mainly in some series with successful track records, and in order to revitalize
the market going ahead, it is essential to develop and supply machines that are compliant with various
voluntary regulations and capable of appealing to a wide range of players.
Regarding the environment of the Entertainment Contents Business, a slowdown in the spread ofsmartphones in Japan and the predominance of leading publishers are accelerating in the market for
digital games for smart devices. Therefore, provision of higher-quality content is expected, resulting in atrend of longer development lead times and higher operating costs. Meanwhile, in overseas business,
future growth is expected mainly in Asia.
With regard to the packaged game software market, expectations are rising for future expansion of themarket due to the penetration of next generation hardware in addition to current generation hardware ofhome video game console. In Europe, the U.S., and Asia, large markets have been developed for PC
games. As for the market for amusement centers and amusement machines, signs of improvement infacilities utilization and expansion of the player base are showing mainly in new video game titles.
In the resort industry, although the growth rate is slowing down, the number of foreign visitors to Japanis increasing constantly, and an upward trend in the hotel occupancy rate is still evident. With a view toestablishing Japan as a popular tourist destination, a bill concerning the promotion of the establishmentof specified integrated resort areas (Integrated Resort Promotion Bill) was established, issued andenforced.
In this business environment, net sales for the fiscal year ended March 31, 2017 amounted to ¥366,939
million, an increase of 5.4% from the previous fiscal year. The Group posted an operating income of¥29,527 million (an increase of 67.6% from the previous fiscal year), ordinary income of ¥28,542
million (an increase of 73.9% from the previous fiscal year). In addition, as a result of recording
extraordinary income of ¥13,319 million, including gain on sales of noncurrent assets, while recording
extraordinary loss of ¥8,123 million, including impairment loss, the Group posted profit attributable toowners of parent of ¥27,607 million (an increase of 414.2% from the previous fiscal year).

Result of each segment is as follows
Net sales in each segment here do not include Inter-segment sales between segments.
《Pachislot and Pachinko Machines》
In the pachislot machine business, overall sales of pachislot machines were 215 thousand units, owing
to sales of series of titles with successful track records, such as mainstay title “Pachislot Hokuto No Ken
Syura no kuni hen” and “Pachislot CODE GEASS Lelouch of the Rebellion R2.” (Overall sales ofpachislot machines were 142 thousand units for the previous fiscal year).
In the pachinko machine business, although sales were strong for each titles such as “Pachinko CR
SOUTEN-NO-KEN Tenki” and “Pachinko CR Monster Hunter 4,” overall sales of pachinko machines
were 138 thousand units due to the strategic postponement of launches of large titles until the following
5

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
year (Overall sales of pachinko machines were 199 thousand units for the previous fiscal year).
In addition, the Group worked to improve profitability through cost improvements by reusing
components, and reduced expenses including development expenses.
As a result, net sales in this segment were ¥148,222 million (an increase of 5.1% from the previous
fiscal year) and operating income was ¥26,331 million (an increase of 25.7% from the previous fiscal
year).
《Entertainment Contents》
With regard to the Entertainment Contents Business, performances were robust in every business field.
In the field of digital game software, sales remained robust for “PHANTASY STAR ONLINE 2,”
which celebrated its fourth anniversary from its release and PlayStation®4 version was launched in April
last year. With regard to titles for smart devices, sales were strong mainly for existing major titles
including “Hortensia SAGA” and “Puyopuyo!! Quest,” for which the Group conducted various events,
updates and other measures.
In the packaged game software field, sales amounted to 10,280 thousand copies (9,220 thousand copies
for the previous fiscal year), thanks to the launch of mainstay titles including “Total War:WARHAMMER,” a new installment in the “Total War” series, which is highly popular mainly in Europe
and were sold more than 20 million copies for 16 years, as well as “Persona5,” a new installment in the“Persona” series.
In the amusement machine field, as operations of “KanColle Arcade” continued to be favorable,
revenue share models made contributions to income. Sales of new titles including “SANGOKUSHI
TAISEN,” a new version of the popular trading card game, were also strong.
In the amusement center operations field, like-for-like sales were robust at 108.5% compared with theprevious fiscal year owing to favorable operations of mainly video games, including the new title“KanColle Arcade” at the existing game center operations.
In the animated film and toy field, the Group recorded income from distributing “Detective Conan The
Darkest Nightmare,” a popular theater film in Japan, and production income of TV animation andanimated films. In addition, the Group sold classic and mainstay toy products including “Anpanman”
series and “Puni♡ Gel” series.
As a result, net sales in this segment were ¥205,704 million (an increase of 8.0% from the previous
fiscal year) and operating income was ¥11,176 million (an increase of 165.1% from the previous fiscal
year).
《Resort》
In the Resort Business, for “Phoenix Seagaia Resort,” one of the leading resorts in Japan, the largest
renovation since the start of operations of “Sheraton Grande Ocean Resort” was completed in August
2016, and the Group conducted promotions and other efforts particularly in the Kyushu region. However,these measures were not enough to make up for the cancellations and other impacts due to the 2016
Kumamoto Earthquake, which occurred in the first half of the fiscal year.
In addition, in the Resort Business, the Group carried out projects such as the sale of a portion of theshares of a company engaged in development and operation of an indoor theme park business.
Overseas, the Group not only operates existing casino facilities in Incheon, South Korea, throughPARADISE SEGASAMMY Co., Ltd. (associate accounted for using the equity method), a joint venture
between Paradise Co., Ltd., a major tourism enterprise in South Korea, and the Company but also
proceeds with preparations for the opening of South Korea’s first full-fledged integrated resort (IR)“PARADISE CITY.”
As a result, net sales in this segment were ¥13,012 million (a decrease of 20.6% from the previous
fiscal year) and operating loss was ¥2,244 million (operating loss of ¥1,825 million for the previous
fiscal year).
2. Issues to be Addressed
Pachinko parlor operators continue to face increasingly harsh business conditions due to widespreadpractice of lowering ball rental fees and a decline in the number of players amidst the significant
reforms in the market environment and regulation environment. In the Pachislot and Pachinko Machines
6

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Business, under these circumstances, it is necessary for the Group to develop and supply products with
innovative gameplay that meet market needs to maintain and expand market share. In addition, the needto improve profitability by increasing efficiency in areas such as development and by reducing costs
through such means as the reuse of pachislot and pachinko machine parts is considered as amanagement issue.
With regard to Entertainment Contents Business, the predominance of leading publishers in theJapanese digital game software market is increasing, provision of higher-quality content is expected.
Meanwhile, in overseas business, future growth is expected mainly in Asia. In this environment, in
addition to the need to maximize product quality focusing on the existing major titles, a key issue formanagement is the need to develop and distribute new titles that will be among the highest ranking insales and to create global hit titles paving the way for entry to the overseas digital game market.
With regard to Resort Business, through the development and operation of resort facilities in Japan aswell as integrated resorts overseas, while preparing for a full-fledged integrated resort business in the
future, it is an important management issue of the Group to accumulate expertise.
The Group aims to achieve an operating income margin of 15% and ROA (return on assets) of 5% for
the fiscal year ending March 31, 2020. To achieve the targets for the fiscal year ending March 31, 2020,
the Group's management issue is to improve the profit margin and enhance capital efficiency in themedium term by promoting allocation of management resources to growth businesses such as digital
games and integrated resorts, as well as improving profitability of the core businesses centered on the
Pachislot and Pachinko Machines Business.
3. Fund Procurement, etc.
(1) Fund Procurement
The Company concluded commitment line contract with financial institutions covering ¥30,000
million aimed at securing medium- to long-term capital liquidity and otherwise providing a Groupwide safety net.
Regarding fund procurement for the fiscal year ended March 31, 2017, the Company procured¥2,000 million by borrowings from financial institutions, for the purpose of securing medium- tolong-term working capital.
For effective use of the Group funds, the Group is operating the Cash Management System(“CMS”) involving fifteen Group companies including the Company, Sammy Corporation and
SEGA Holdings Co., Ltd. etc.
(2) Capital Expenditures
The Group’s capital expenditures totaled ¥27,063 million, including ¥5,871 million in the pachislot
and pachinko machines business, ¥16,667 million in the entertainment contents business and¥4,505 million in the resort business.
(3) Business Transfers, Absorption-type Demergers, and Incorporation-type Demergers
The Company sold a portion of the shares of SEGA LIVE CREATION Inc. (now CA Sega
Joypolis Ltd., “SLC”), a consolidated subsidiary, on January 1, 2017. Consequently, SLC and
SEGA (QINGDAO) ENTERTAINMENT PARK CO., LTD., a subsidiary of SLC have been
excluded from the scope of consolidation.
(4) Business Transfer from Other Companies
There is no applicable material information for the fiscal year ended March 31, 2017.
(5) Succession of Rights and Obligations Related to Businesses of Other Corporations, etc., throughAbsorption-type Mergers or Demergers
There is no applicable material information for the fiscal year ended March 31, 2017.
(6) Acquisition or Disposition of Stocks and Other Interests or Share Subscription Rights, etc., of
Other Companies
SEGA Games Co., Ltd., a consolidated subsidiary of the Company, acquired all the shares of
Amplitude Studios SAS on July 1, 2016, and made Amplitude Studios SAS its consolidated
subsidiary.

7[English Translation of Convocation Notice Originally Issued in the Japanese Language]
4. Assets and Profits and Losses for the Previous Fiscal Years
Fiscal YearItem
Net sales(¥ million)
Ordinary income (¥ million)
Profit (loss)
attributable to(¥ million)
owners of parent
Net income (loss)(¥)
per share
Total assets(¥ million)
Net assets(¥ million)

FY2014FY2015FY2016
From April 1, 2013 From April 1, 2014 From April 1, 2015
To March 31, 2014 To March 31 2015 To March 31 2016

FY2017
From April 1, 2016
To March 31 2017

378,01140,531

366,813
16,879347,981
16,409366,939
28,54230,721(11,375)

5,369

27,607126.42(46.70)22.90

117.79542,936
348,270

528,659
322,452

532,957
299,950

521,599
311,497

Notes: 1. Figures shown in millions of yen have been rounded down to the nearest million.
2. Net income (loss) per share is calculated based on the average number of shares outstanding
during the period.
3. From the fiscal year ended March 31, 2016, some of the consolidated subsidiaries of theCompany have changed revenue recognition methods for sales of merchandise and finishedgoods, etc. and revenue presentation for the digital game software field. Accordingly, therelevant key management indices for the fiscal year ended March 31, 2015 are restated afterreflecting retroactive treatments.
5.

Major Business Segments
The business segments of the SEGA SAMMY Group are Pachislot and Pachinko Machines Business,
Entertainment Contents Business and Resort Business. The primary business activities are as follows.
Segment
Pachislot and Pachinko
Machines Business

Main Business
Development, manufacture and sales of pachislot and pachinko machines

Entertainment Contents
Business

Development and sales of digital game software serving as the main axisof segments, development and sales of packaged game software andamusement machines, development and operation of amusement centers,planning, production and sales of animated films, development,
manufacture and sales of toys

Resort Business

Development and operation of hotels and theme parks in the integrated
resorts business and other facilities businesses

6. Major Business Locations of the Group(1) The Company: SEGA SAMMY HOLDINGS INC.
Head Office (Minato-ward, Tokyo)(2) Office of the main subsidiaries① Sammy Corporation
Head Office (Toshima-ward, Tokyo)
Kawagoe Factory (Kawagoe, Saitama)
Branches (8 Branches)② SEGA Holdings Co., Ltd.
Head Office (Shinagawa-ward, Tokyo)③ SEGA Games Co., Ltd.
Head Office (Shinagawa-ward, Tokyo)
Roppongi Office (Minato-ward, Tokyo)

8

[English Translation of Convocation Notice Originally Issued in the Japanese Language]④ SEGA ENTERTAINMENT Co., Ltd.
Amusement Center Operating Locations: (191 locations)(3) Employees of the Group
Number of employees (change from end of previous year) 7,639 (33 up)
Note: The number of employees includes full-time staff and staff on loan, but not temporary
employees.

7.

Material Parent Company and Subsidiaries(1) Relationships with parent company
There is no pertinent matter.
(2) Relationships with subsidiaries

CapitalPercentage
ratio ofissuedsharesSammy Corporation¥18,221 million

100.0%SEGA Holdings Co., Ltd.

¥44,092 million

100.0％

Company

RODEO Co., Ltd.

¥100 million

TAIYO ELEC Co., Ltd.

¥100 million

SEGA Games Co., Ltd.

¥100 million

SEGA Interactive Co., Ltd.

¥100 million

Sega Logistics Service Co., Ltd.

¥100 million

SEGA ENTERTAINMENT
Co., Ltd.

¥100 million

DARTSLIVE Co., Ltd.

¥10 million

Sega Amusements InternationalLtd.

￡26,485
thousand
US$110,000
thousand￡10,000
thousand￡0
thousandSega of America, Inc.
Sega Europe Ltd.
Sega Publishing Europe Ltd.
ATLUS CO., LTD.

¥10 million

Sammy Networks Co., Ltd.

¥100 million

SEGA TOYS CO., LTD.

¥100 million

TMS ENTERTAINMENT CO.,LTD.

¥100 million

9

65.0%
(Note 1)100.0%(Note 1)100.0％(Note 1)100.0％(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)100.0%(Note 1)Main business
Development/manufacture/sales ofpachislot and pachinko machines
Management of SEGA Group and allbusinesses appertaining thereto
Development/manufacture/sales ofpachislot machines
Development/manufacture/sales ofpachislot and pachinko machines
Planning/development/sales ofgame-related content for mobiles, PCs,
smart devices and home video gameplatforms
Development/manufacture/sales ofamusement machine
Maintenance service, transportation andwarehouse business
Operation of amusement centers
Planning/development/sales of gameequipment and game software
Import/manufacture/sales of amusement
equipment
Development/management/sales of home
video game software
Sales of home video game software
Sales of home video game software
Development of home video gamesoftwarePlanning/production/sales of game andmusic contents through mobile phones
and Internet, etc.
Development/manufacture/sales of toys
Planning/production/sales and otheractivities involving animated movies

[English Translation of Convocation Notice Originally Issued in the Japanese Language]Company

Percentage
ratio ofissuedsharesCapitalMain business

Production of computer graphics
animations, planning/production ofanimated movies, licensing businessInformation providing service, call center
Japan Multimedia Services¥100 million
100.0%
Corporation
service and temporary staffing service
Operation of resort facilities, including
hotels, spas, golf courses,
PHOENIX RESORT CO., LTD.
¥93 million
100.0%
restaurants and international conference
halls
Development and operation of a complex
KR₩124,000
100.0%SEGA SAMMY BUSAN INC.
comprised of hotel, entertainment
million(Note 1)
facilities, commercial facilities, etc.
Development/production/sales of casino
SEGA SAMMY CREATION¥10 million
100.0%
INC.
gaming machines
Notes: 1. Percentage of ratio of issued shares includes rights of indirectly owned shares.
2. SEGA LIVE CREATION Inc. (now CA Sega Joypolis Ltd.,) which was the consolidated
subsidiary of the Company in the previous fiscal year, has been excluded from the scope of
consolidation due to sale of its shares.
MARZA ANIMATION
PLANET INC.

¥100 million

100.0%(Note 1)

(3) The status of the specified wholly owned subsidiaries
Name of specified wholly owned
subsidiary
Sammy Corporation
SEGA Holdings Co., Ltd.

Address of specified wholly owned
subsidiary3-1-1, Higashi-Ikebukuro, Toshima-ward,Tokyo
1-39-9, Higashi-Shinagawa,Shinagawa-ward, Tokyo

Book value of shares ofwholly owned subsidiary¥153,307 million¥125,267 million

Note: Amount of total assets of the Company: ¥482,468 million

8.

Main Banks and Borrowings
Lenders
Balance of loans payable
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
¥14,100 million
Aozora Bank, Ltd.
¥5,300 million
Mizuho Bank, Ltd.
¥4,800 million
Resona Bank, Limited.
¥4,400 million
Sumitomo Mitsui Banking Corporation¥4,100 million
The Bank of Yokohama, Ltd.
¥3,713 million
Mitsubishi UFJ Trust and Banking Corporation¥2,400 million
Sumitomo Mitsui Trust Bank, Limited¥2,400 million
Shinsei Bank, Limited¥2,400 million
The Hokuriku Bank, Ltd.
¥2,200 million
Others¥5,041 million
Total¥50,855 million
Note: In addition to the above, the Company has ¥25,400 million and ¥1,600 million of privately placed bonds
underwritten by Sumitomo Mitsui Banking Corporation and the Bank of Tokyo-Mitsubishi UFJ, Ltd.
respectively.

10[English Translation of Convocation Notice Originally Issued in the Japanese Language]
9.

Where the Articles of Incorporation Provide for the Board of Directors to Determine
Distributions, etc., of Retained Earnings, Policy Regarding Exercise of Such Authority
SEGA SAMMY HOLDINGS INC. gives priority to returning profits to shareholders. The Company’s
basic policy is to pay an appropriate dividend that is commensurate with earnings.
For the distribution of surplus, the Company paid dividends of ¥20 per share for the second quarter andplans to pay dividends of ¥20 per share for year-end dividends. This reflects the Group’s policy of
paying dividends stable to shareholders.
Furthermore, the Company’s policy is to effectively use retained earnings to bolster its financial
position and operation structure as well as for investments in line with business expansion.

10. Other Significant Events of the Group
There is no applicable material information for the fiscal year ended March 31, 2017.

II Shares Outstanding and Shareholders
1.

Number of shares authorized for issue

800,000,000 shares

2.

Total shares issued and outstanding

266,229,476 shares

3.

Number of shareholders

85,486

4.

Principal shareholders (Top 10)
Investment in
SEGA SAMMY HOLDINGS
Shareholding ratio
Shares held(%)

Name of shareholder
Hajime Satomi

31,869,338

13.59

FSC Co., Ltd.

12,972,840

5.53

HS Company

11,750,000

5.01Japan Trustee Services Bank, Ltd. (Trust account)

8,169,900

3.48

The Master Trust Bank of Japan, Ltd. (Trust account)

6,650,700

2.83

CBNY-ORBIS SICAVCHASE MANHATTAN BANK GTS CLIENTSACCOUNT ESCROWJapan Trustee Services Bank, Ltd. (Trust account 5)5,464,067

2.33

4,357,947

1.85

3,644,400

1.55

Haruki Satomi
3,139,561
STATE STREET BANK WEST CLIENT - TREATY
2,923,652
505234
Note: Shareholding ratio was calculated excluding treasury stock (31,841,869 shares)

11

1.33
1.24

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Company’s Share Subscription Rights
1.

Outline of Share Subscription Rights Issued to the Company’s Directors and Audit &Supervisory Board Members as Remuneration for Their Services as of the End of the Fiscal Year
Ended March 31, 2017
Date of Resolutions of the Ordinary
General Meeting of Shareholders
Number of individuals with rights
Company Directors
Number of share subscription rights (Note 1)
Class of shares for share subscription rights
Number of shares for share subscription rights

August 2, 2016
5

Payment on exercise of share subscription rights
Capital contribution upon exercise of sharesubscription rights (per share)
Period for exercise of share subscription rights
Terms and conditions for exercise of sharesubscription rights

2,500
Common stock
250,000
There is no need of delivering payment toexchange with the share subscription rights.
¥1,413September 2, 2018 – September 1, 2020
(Note 2)

When transferring share subscription rights,
approval must be obtained from the Board of
Directors
Notes: 1. Number of shares of share subscription rights is 100 per the right.
2. Terms and conditions for exercise of share subscription rights are as follows:
The grantee shall be Director, Audit & Supervisory Board Member, Executive Officer,
Consultant, Counsel, or employee of the Company or any of its subsidiaries when he or
she exercises the rights. However, the following cases are treated as exceptions.
a. Where the loss of such position is due to expiration of the term of office or amendmentof law or Articles of Incorporation of the Company or any of its subsidiaries;
b. Where the loss of such position is due to company regulations, including mandatory
retirement or termination on account of business contraction;c. Where, immediately after the loss of such position due to the reasons held by theCompany, the grantee becomes Director, Audit & Supervisory Board Member,
Executive Officer, Consultant, Counsel, or employee of the Company, any of its
Group companies, any of its business partners or any other company sanctioned by theCompany.

Matters concerning the transfer of sharesubscription rights

12

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
2.

Outline of Share subscription rights Issued to Company Employees or Subsidiary Directors, Audit& Supervisory Board Members, or Employees as Remuneration for Their Services During the
Fiscal Year Ended March 31, 2017
Date of Resolutions of the Ordinary
General Meeting of Shareholders
Number of share subscription rights (Note 1)
Class of shares for share subscription rights
Number of shares for share subscription rights

August 2, 2016

Payment on exercise of share subscription rights
Capital contribution upon exercise of sharesubscription rights (per share)
Period for exercise of share subscription rights
Terms and conditions for exercise of sharesubscription rights

38,445
Common stock
3,844,500
There is no need of delivering payment toexchange with the share subscription rights.
¥1,413September 2, 2018 – September 1, 2020
(Note 2)Matters concerning the transfer of sharesubscription rights

Company employees

When transferring share subscription rights,
approval must be obtained from the Board of
Directors
Number of share
1,358
subscription rights
Number of shares for
135,800
share subscription rights
Number of recipient

Issuance to employees,
etc.
Subsidiary Directors,
Corporate Auditors or
employees

Number of sharesubscription rights
Number of shares forshare subscription rights
Number of recipient

18
37,087
3,708,700
911

Notes: 1. Number of shares of share subscription rights is 100 per the right.
2. Terms and conditions for exercise of share subscription rights are as follows:
The grantee shall be Director, Audit & Supervisory Board Member, Executive Officer,
Consultant, Counsel, or employee of the Company or any of its subsidiaries when he or
she exercises the rights. However, the following cases are treated as exceptions.
a. Where the loss of such position is due to expiration of the term of office or amendmentof law or Articles of Incorporation of the Company or any of its subsidiaries;
b. Where the loss of such position is due to company regulations, including mandatory
retirement or termination on account of business contraction;c. Where, immediately after the loss of such position due to the reasons held by theCompany, the grantee becomes Director, Audit & Supervisory Board Member,
Executive Officer, Consultant, Counsel, or employee of the Company, any of its
Group companies, any of its business partners or any other company sanctioned by theCompany.

13

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
IV Company Directors and Audit & Supervisory Board Members
1. Directors and Audit & Supervisory Board Members (As of March 31, 2017)
Title and Areas ofName
Responsibility
Chairman of the Board and
CEO and COO
Hajime Satomi
General Manager of Group
Structure Reform Division
Senior Executive Vice President(Director of the Board)in charge of New BusinessNaoya Tsurumi
Development Department,
Corporate Business Promotion
Department
Executive Vice President and
CFO (Director of the Board)in charge of Business Planning
Division, Finance andAccounting Division, General
Koichi Fukazawa
Affairs Division, Group Legal
Head Office
Deputy General Manager ofGroup Structure Reform
Division
Executive Vice President(Director of the Board)

Haruki Satomi

Important Concurrent Posts
Chairman, Representative Director (CEO,)Sammy Corporation
Chairman, Representative Director (CEO,)SEGA Holdings Co., Ltd.
Vice Chairman of the Board, SEGA Holdings
Co., Ltd.

President, Representative Director (COO,)
Sammy Corporation
Executive Vice President and Representative
Director, SEGA Holdings Co., Ltd.
President and COO (Representative Director,)
SEGA Holdings Co., Ltd.

Senior Vice President (Director
Hideki Okamuraof the Board)
Senior Vice President (Director
Yuji Iwanaga
Attorneyof the Board)
Senior Vice President (Director
Takeshi Natsunoof the Board)
Senior Vice President (Director
Kohei Katsukawaof the Board)Standing Audit & Supervisory
Tomio Kazashi
Board Member
Standing Audit & Supervisory
Shigeru Aoki
Board Member
Audit & Supervisory Board
Standing Audit & Supervisory Board Member,
Yukito Sakaue
MemberSEGA Holdings Co., Ltd.
Audit & Supervisory Board
Audit & Supervisory Board Member, SEGA
Mineo Enomoto
MemberHoldings Co., Ltd., Attorney
Notes:1. Yuji Iwanaga, Takeshi Natsuno and Kohei katsukawa are External Director of the Board as
stipulated in Article 2, Clause 15 of the Companies Act.
2. Tomio Kazashi and Mineo Enomoto are External Audit & Supervisory Board Member as
stipulated in Article 2, Clause 16 of the Companies Act.
3. The Company has submitted an Independent Directors/Audit & Supervisory Board Members
Notification Form to register Directors Yuji Iwanaga, Takeshi Natsuno and Kohei Katsukawa,
Standing Audit & Supervisory Board Member Tomio Kazashi, and Audit & Supervisory
Board Member Mineo Enomoto as Independent Directors/Audit & Supervisory Board
Members at Tokyo Stock Exchange, Inc.
4. The Company has adopted the executive officer system to speed up decision-making,strengthen oversight of business execution, and reinforce business execution functions. The
Company has eight executive officers: Toru Nakahara, Managing Director of Group Legal
Head Office; Makoto Takahashi, Managing Director of Business Planning Division and
14

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Assistant to Group Structure Reform Division; Yoichi Owaki, Managing Director of Financeand Accounting Division; Hiroshi Ishikura, Managing Director of Group Internal Control
Office, Group CSR Promotion Office and Internal Audit Office; Takaharu Kato, Managing
Director of General Affairs Division; Takatoshi Akiba, Koichiro Ueda and Seiichiro Kikuchi,
Assistant to General Affairs Division.
5. Changes made in the title, area of responsibilities and important concurrent Posts outside theCompany of Directors on and after April 1, 2017 are as follows: Chairman of the Board
Hajime Satomi assumed the position of Chairman and CEO (Representative Director,)
Chairman of the Board (Representative Director) of Sammy Corporation and Honorary
Chairman of the Board of SEGA Holdings Co., Ltd.; Executive Vice President (Director of
the Board) Haruki Satomi assumed the position of President and COO (Representative
Director,) President and CEO (Representative Director) of Sammy Corporation and
Chairman and CEO (Representative Director) of SEGA Holdings Co., Ltd. On the same date,Senior Vice President (Director of the Board) Hideki Okamura assumed the position of
Executive Vice President (Director of the Board).
6. Since April 1, 2017, the Company has the following seven executive officers: Yuichi Amari,Managing Director of Executive Secretariat Division; Makoto Takahashi, Managing Directorof President's Office; Toru Nakahara, General Counsel; Yoichi Owaki, Managing Director of
Finance and Accounting Division; Hiroshi Ishikura, Managing Director of Group Internal
Control Office, Group CSR Promotion Office and Internal Audit Office; Takaharu Kato,Managing Director of General Affairs Division; Seiichiro Kikuchi, Assistant to General
Affairs Division.
7. At the Ordinary General Meeting of Shareholders held on June 17, 2016, Kokichi
Matsuzawa was elected as a Substitute External Audit & Supervisory Board Member inaccordance with Article 329, paragraph 3 of the Companies Act in preparation for the casewhere the number of External Audit & Supervisory Board Members becomes less than thenumber prescribed by the laws and regulations.
2. Total Remuneration, etc., to Directors and Audit & Supervisory Board Members
Title
Number of individuals Remuneration, etc.
Directors
10¥555 million(of which External Directors)(3)(¥43 million)
Audit & Supervisory Board Members
3¥40 million(of which External Audit & Supervisory Board Members)(2)(¥27 million)
Total
13¥595 million
Notes: 1. Remuneration, etc. to Directors (excluding External Directors) includes bonuses of ¥108
million and expenses concerning share subscription rights granted as stock options for theyear of ¥18 million.
2. Two Directors who retired at the conclusion of the Ordinary General Meeting of
Shareholders held on June 17, 2016 are included in the number of individuals for Director
above.
3. The remuneration limit for Directors is ¥1,000 million, pursuant to the resolution at theOrdinary General Meeting of Shareholders on June 19, 2012.
4. The remuneration limit for Audit & Supervisory Board Members is ¥50 million, pursuant to
the resolution at the Ordinary General Meeting of Shareholders of Sammy Corporation on
June 25, 2004, and at the Ordinary General Meeting of Shareholders of SEGACORPORATION on June 29, 2004.
3. Liability Limitation Agreements
It is stipulated in the Articles of Incorporation that the Company may enter into agreements with
Directors (excluding executive Directors etc.) and Audit & Supervisory Board Members that limit their
liabilities for damages.
The outline of the liability limitation agreement that the Company entered into with Directors(excluding Executive Directors, etc.) and Audit & Supervisory Board Members respectively inaccordance with the Articles of Incorporation is as follows:15

[English Translation of Convocation Notice Originally Issued in the Japanese Language](Outline of Liability Limitation Agreement)
The liability to compensate for damages under Article 423, Section 1 of the Companies Act will belimited to the minimum liability set forth by law in the absence of malicious intent or material
negligence.
4. External Directors and Audit & Supervisory Board Members(1) Main Activities of External Directors and Audit & Supervisory Board Members
Title

Name

Major Activities
He attended 14 Board of Directors meetings out of
the 14 meetings during the year (12 out of 12 regularmeetings) and expressed his opinion on professional
External Director
Yuji Iwanaga
and managerial view points as an attorney. He also
made some proposals to secure the adequateness andfairness of decision making of the Board of
Directors.
He attended 14 Board of Directors meetings out of
the 14 meetings during the year (12 out of 12 regularmeetings) and expressed his opinion on managerial
External Director
Takeshi Natsuno
viewpoints. He also made some proposals to secure
the adequateness and fairness of decision making of
the Board of Directors.
He attended 11 Board of Directors meetings out of
the 11 meetings held following his assumption of
office (10 out of 10 regular meetings) and expressed
External Director
Kohei Katsukawa his opinion on managerial viewpoints. He also madesome proposals to secure the adequateness andfairness of decision making of the Board of
Directors.
He attended 14 Board of Directors meetings out of
the 14 meetings during the year (12 out of 12 regularmeetings) and expressed his opinion on managerial
viewpoints. He also made some proposals to secure
External Audit &the adequateness and fairness of decision making of
Tomio Kazashi
Supervisory Board Member
the Board of Directors.
He also attended 16 Audit & Supervisory Board
meetings out of the 16 meetings during the year
exchanging the opinions on auditing results anddeliberating the significant issues related to audits.
He attended 14 Board of Directors meetings out of
the 14 meetings during the year (12 out of 12 regularmeetings) and expressed his opinion on professionaland managerial viewpoints as an attorney. He also
made some proposals to secure the adequateness andExternal Audit &Mineo Enomoto fairness of decision making of the Board ofSupervisory Board Member
Directors.
He also attended 15 Audit & Supervisory Board
meetings out of the 16 meetings during the year
exchanging the opinions on auditing results anddeliberating the significant issues related to audits.

16

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Total Remuneration, etc., to External Directors and Audit & Supervisory Board Members
Number ofindividuals

Remuneration, etc.

Of which Remuneration,etc., from subsidiary

Total remuneration, etc., to External
Directors and Audit & Supervisory6¥80 million¥9 million
Board Members
Notes: One Audit & Supervisory Board Member who retired at the conclusion of the Ordinary
General Meeting of Shareholders held on June 17, 2016 is included in the number ofindividuals above.
V

Independent Auditors
1.

Name
KPMG AZSA LLC

2.

Liability Limitation Agreement with Independent Auditors
Although, the Company amended its articles of incorporation and established regulations regarding
liability limitation agreements with independent auditors at the Second Ordinary General Meeting of
Shareholders on June 20, 2006, the Company has not entered into the liability limitation agreement with
KPMG AZSA LLC.

3.

Remuneration, etc.
Remuneration, etc.
Remuneration, etc., related to the fiscal year ended March 31, 2017
¥144 million
Total of cash and other profits that should be paid to independent¥326 million
auditors by the Company and its subsidiaries
Notes: 1. The Company’s subsidiaries, Sega Europe Ltd., etc. are audited by auditors that differ fromthe Company’s.
2. As a result of checking and reviewing the independent auditor’s audit plan and record of
remuneration for the last year, the Audit & Supervisory Board of the Company gaveconsent to the remuneration etc. for the independent auditor pursuant to Article 399,
Paragraph 1 of the Companies Act.
3. The non-audit services for which the Company paid remuneration to auditing certified
public accountants and other accountants include contracted business research and IFRS
advisory services, which are outside the scope of the services stipulated in Article 2,
Paragraph 1 of the Certified Public Accountants Law.

4.

Policy Regarding Determination of Termination or Not Reappointing
The Company will include in objectives of the General Meeting of Shareholders the dismissal of the
independent auditor prescribed in any clause within Article 340, Section 1 of the Companies Act aswell as the dismissal or non-reappointment of the independent auditor if it is deemed difficult for the
independent auditor to perform its duty appropriately.

VI Outline of Resolutions Regarding Preparation of Internal Control System and so forth to Ensure
Appropriate Business Execution
Based on the Companies Act, the Company made the following resolutions regarding the “Basic Policy on
Preparation of Internal Controls System” and has worked to prepare this system.
(1) System to Ensure the Efficient Implementation of the Duties of the Company’s Directors andCompliance with Laws and the Articles of Incorporation
Establish a Group CSR Charter, Group Code of Conduct, Group Management Policies, andGuidelines (hereinafter, collectively referred to as “Group Philosophy and Code”) and President(Representative Director) will repeatedly communicate the spirit of Group Philosophy and Code to
employees in administrative post, in order to thoroughly establish compliance with laws, etc., as a17

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
condition for all corporate activities. These efforts will reflect the Company’s fundamental policy offulfilling its social responsibility as a member of society and provide a basis for establishing acompliance system that comprises such policy.
In addition, in the interest of further strengthening corporate governance, the Board of Directors will
make efforts to build an effective internal controls system and to secure a system for compliancewith laws for the Company as a whole, based on the Group Management Policies stipulated for a
unified management of the entire Group and the Guidelines that show the standard for operation andmanagement of the entire Group so that the Company’s business execution is appropriate and sound.
Also, the Audit & Supervisory Board will audit the effectiveness and functionality of this internal
controls system, and make efforts to identify and correct issues early through regular inspection.
In order to prevent participation in management by anti-social forces, it will be specified that all
relations with anti-social forces are removed in the Group Code of Conduct. Moreover, the Groupwill contain so-called “Bo-hi jyoko” (terms and clauses concerning exclusion of organized crimegroups) in contracts, establish a system to check whether or not our business partners correspond toanti-social forces, and establish a system to address systematically in corporation with outsideorganizations including the police and lawyers appropriately when anti-social forces approach theGroup.
(2) System Related to the Retention and Management of Information Related to the Implementation of
the Duties of the Company’s Directors
President (Representative Director) will appoint the Director in charge of the Administrative
Division as the person in charge of the entire Company with respect to preservation andmanagement of information related to execution of Directors’ duties. Information related to
execution of Directors’ duties will be recorded in writing or electronic media based on the Company
regulations etc., and preserved and managed so that the Directors and Audit & Supervisory Board
Members are able to appropriately view such information and also so that such information is easy
to search.
In order to manage trade secrets and other information, etc., properly, policies concerning
information management and IT security, as well as guidelines for IT security will be established,
and it is planned that they will be fully informed of and complied with.
(3) Regulations and Other Systems Regarding Risk Management for Losses of the Company
With respect to risks related to the Company’s business, each relevant division and department will
analyze and identify anticipated risks and clarify the risk management system. The Internal Audit
Department will audit each division’s and department’s risk management and report the results
regularly to the management decision-making body and executive and supervisory management
organization.
In order to capture and manage properly important risks underlying inside and outside themanagement including emergency responses, policies concerning risk management and crisis
management guidelines will be established as one of the Group Management Policies andGuidelines, and in the event of a situation likely to have a severe impact on the Group, crisis
management teams of the Company and the Group companies shall cooperate to discuss aboutcountermeasures for prompt and effective actions.
(4) System to Ensure that the Duties of the Company’s Directors are Implemented Efficiently
Adopt an Audit & Supervisory Board Member system for efficient execution of Directors’ duties, aswell as for Company Directors and Audit & Supervisory Board Members to be well-informed about
the Group’s businesses and promptly and appropriately make decisions for the Group. The systemshould also enable appropriate and efficient execution of duties under rules related to authorities anddecision-making based on the Regulations of the Board of Directors, etc.
(5) System to Ensure Appropriate Compliance with Laws and the Articles of Incorporation Concerning
the Implementation of the Duties of the Company’s Employees
The Company will promote the group compliance measures for employees to act appropriately incompliance with laws, the Articles of Incorporation, Company regulations, and social norms. These
measures must be based on the Group Philosophy and Code as code of conduct.
18

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Establish a “Hot Line” system that enables an employee to report as a whistle-blowing any violationof laws, the Articles of Incorporation, Company regulations, or conduct in violation of social norms
that they learn. Also establish a system that enables the person in charge promptly to report any
material matters to the Board of Directors and the Audit & Supervisory Board.
Such a whistle-blower will be kept in secret, and will not receive any disadvantageous treatments
due to the report. Establish an internal reporting contact offices comprised of outside counsel, etc. as
recipients of an informant’s report other than the ordinary reporting line, as part of a system thatmaintains transparency and accurately addresses relevant issues.
(6) System Shown Below and Other Systems to Ensure that the Businesses of the Group, Comprised of
the Company, its Parent, and its Subsidiaries, are Implemented Properly① System to report to the Company matters related to the execution of the duties by the directors,
the Statutory Executive Officers, officers executing the duties, and people who should executethe duties of Article 598, Section 1 of the Companies Act of the Company’s subsidiaries(referred to as “the directors, etc.” in ③ and ④ below)
By having the Company’s employees in administrative post concurrently serve as the directors or
the Audit & Supervisory Board members of its Group companies, a system will be established toreport and share information of the Group companies to and with the Company through suchofficers.
At the same time, a system will be established to communicate important matters, report, share
information on matters of whistle-blowing, report and share information on matters ofaccounting wrongdoings and errors based on the vertical chain of the Regulations ofManagement of Related Companies between the Company and its Group companies. However,
the whistle-blower will be kept in secret, and will not receive any disadvantageous treatments
due to the report.
Hold meetings, etc. for the Group’s Compliance and the Group’s Audit & Supervisory Board
Members, where various problems in the Group or governance matters with material risks are
addressed. The Company’s department in charge of internal audit will conduct audits for the
benefit of the Group as a whole, and efforts will be made to ensure to the extent possible that
information is shared among members of the Group and businesses are properly executed.
② System regarding risk management for losses of the Company’s subsidiaries
Regarding common priority items and measures of the Group that the Company has stipulated,while they will be addressed by each of its Group companies, specific risks of each subsidiary
will be managed in consideration of scale, nature, business category, etc. of each of its Group
companies.
③ System to ensure that the duties of the directors, etc. of the Company’s subsidiaries are executed
efficiently
As with the Company, in its Group companies, adopt an Audit & Supervisory Board member
system for efficient execution of directors’ duties, as well as for Company Directors and Audit &Supervisory Board members to be well-informed about the Group’s businesses and promptly andappropriately make decisions for the Group. The system should also enable appropriate andefficient execution of duties under rules related to authorities and decision-making based on theRegulations of the Board of Directors, etc. However, the system will be established inconsideration of scale, nature, business category, etc. of each of its Group companies.
④ System to ensure appropriate compliance with laws and the Articles of Incorporation concerning
execution of the duties of the directors, etc. and employees of the Company’s subsidiaries
As with the Company, the Board of Directors of its Group companies will establish a compliancesystem in order to fulfill Group Philosophy and Code based on importance of compliance withlaws, etc. and of fundamental policy of fulfilling social responsibilities as a member of a society.
(7) Matters Regarding Employees whom Audit & Supervisory Board Members of the Company with
Audit & Supervisory Board Members Request to Assist Them in Their Duties, Matters Related to
the Independence of the Employees from the Directors of the Company with Audit & Supervisory
Board Members, and Matters Related to Ensuring Effectiveness of Instructions to the Employees by
Audit & Supervisory Board Members of the Company with Audit & Supervisory Board Members
Establish an Audit & Supervisory Board Member’s Office as an organization that reports directly to19[English Translation of Convocation Notice Originally Issued in the Japanese Language]
the Audit & Supervisory Board and employees in such office will assist the Audit & Supervisory
Board Members’ duties under their direction and order.
Employees who assist the Audit & Supervisory Board Members in their duties will be dedicatedemployees in principle and will not be directed or supervised by the Directors. However, underunavoidable circumstances, employees who serve concurrently in a position of the executive side
will be assigned. Concerning such concurrent employees, independence will be especiallyconsidered. Appointment, dismissal, personnel transfer, evaluation, disciplinary action, revision ofwages, etc. of the employees will require a prior agreement of the Audit & Supervisory Board.
(8) System Shown Below and Other Systems Related to Reporting to Audit & Supervisory Board
Members of the Company with Audit & Supervisory Board Members① System to enable Directors, Accounting Advisors, and employees of the Company with Audit &Supervisory Board Members to report to Audit & Supervisory Board Members of the Company
with Audit & Supervisory Board Members
The Directors and employees of the Company must report promptly to the Audit & Supervisory
Board on material violations of laws and the Articles of Incorporation or a fact of illegal conduct
related to execution of the duties or a fact that might cause conspicuous harm to the Company
that they learn. Decisions that materially affect the Company’s business or organization andresults of internal audits will be treated in the same way.
② System to enable directors, Accounting Advisors, Audit & Supervisory Board members,
Statutory Executive Officers, officers executing the duties, people who should execute the duties
of Article 598, Section 1 of the Companies Act of subsidiaries of the Company with Audit &Supervisory Board members and other people equivalent to these people and employees or
people who received reports from these people to report to the Audit & Supervisory Board
Members of the Company with Audit & Supervisory Board Members
The directors, the Audit & Supervisory Board members, the Executive Officers, employees, etc.
of the Group companies or people who received reports from these people must report promptly
to the Audit & Supervisory Board of the Company on material violations of laws and the Articles
of Incorporation or a fact of illegal conduct related to execution of the duties or a fact that mightcause conspicuous harm to the Company that they learn. Decisions that materially affect theCompany’s business or organization and results of internal audits will be treated in the sameway.
The Audit & Supervisory Board Members of the Company will make efforts to maintain systems
from the perspective of focusing on so-called group management so that the Audit &Supervisory Board Members of the Group companies are able to become receivers of reportfrom the business execution side and to become mediators.
(9) System to Ensure that People Who Made the Report Described in the Previous Clause Will Not
Receive Disadvantageous Treatments Because of Making Such Report
The reporter described in the previous clause will not receive disadvantageous treatments because of
making such report. Such disadvantageous treatments will be subject to punitive action.
(10) Matters Concerning Policies Related to Procedures of Prepayment or Reimbursement of Expenses
Arising from Implementation of the Duties of the Audit & Supervisory Board Members of theCompany with Audit & Supervisory Board Members and Other Treatments of Expenses or
Liabilities Arising from Implementation of Such Duties
The Company will bear expenses arising from the execution of the duties of the Audit &Supervisory Board Members in accordance with the Company regulations, responding to requests
from the Audit & Supervisory Board or Standing Audit & Supervisory Board Members. This
includes expenses incurred in using outside advisors, etc., as prescribed in the clause (11).
(11) Systems Established to Ensure the Efficacious Performance of Auditing Responsibilities by Audit &Supervisory Board Members of the Company with Audit & Supervisory Board Members
Representative Directors regularly will meet with Audit & Supervisory Board Members, exchange
opinions related to Company management, in addition to business reports, and otherwise
communicate effectively with them.
20

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
The Board of Directors will ensure Audit & Supervisory Board Members’ participation in importantwork-related meetings to ensure that the Company’s business is executed properly.
The Audit & Supervisory Board will use attorneys, certified public accountants, and other outsideadvisors, as necessary for itself, and its opportunities to receive advice related to audit work will be
guaranteed.
(Outline of implementation status of internal control system to ensure appropriate business execution)
The implementation status of the foregoing Basic Policy of the Company is as outlined below:(1) Compliance① Compliance training is held every fiscal year for the officers of the Company and the Group,
divided into separate groups of new officers and existing officers. For Directors of the Company,
officer training is held (one session on workstyle reform was held during the current fiscal year).
② As a place to share important issues and relevant measures for internal controls such ascompliance and risk management, the Group compliance liaison meeting is in place and took
place twice during the current fiscal year. The main contents of the meeting are presented as
feedback to the board of directors, etc. of major Group companies.
③ In an effort to enhance the compliance system, the Company designates priority compliancematters each fiscal year that are common across the Group, from among all social requirements
and issues affecting the Group. During the fiscal year under review, the Group implemented
group training on themes such as “the latest trends in personnel management” (two sessions
were held during the current fiscal year). The Company also engages in “compliance promotion
activities” on a continual basis for the purpose of boosting compliance awareness and knowledge
among the Group employees.
④ As an initiative to eliminate anti-social forces, the Company has introduced a Group-widechecking system to detect if business partners apply as anti-social forces and supports its
implementation.
⑤ For the purpose of early detection and preventing misconduct such as violations of laws andregulations, the Company has established a whistle-blowing system (alias “Corporate Ethics Hot
Line”). While providing contact points internally and externally, the Company is actively
involved in informing employees of the system.
⑥ The Company’s internal audit department conducts internal audits of the Company and theGroup companies and strives to further enhance the internal audit system by sharing audit
information and strengthening mutual cooperation with the internal audit departments of theGroup companies.
(2) Risk management
By identifying significant risks underlying inside and outside management and clarifying issues tobe addressed, the Company and the Group companies are committed to business executions andmitigating loss of management resources and recurrence thereof.
(3) Effectiveness of audits by Audit & Supervisory Board Members① In order to complement enhanced information provision to Audit & Supervisory Board
Members for internal control purposes, the meetings of “Holdings Audit Liaison Committee”
consisting of Audit & Supervisory Board Members and the Independent Auditor, “Auditors andOffice of Corporate Auditors Liaison Committee” where Audit & Supervisory Board Members
and the internal audit department discuss progress in audits and exchange information, and“Group Audit Liaison Committee” consisting of all Standing Audit & Supervisory Board
Members of the Group are held (6 meetings, 11 meetings, and 3 meetings were held respectively
during the current fiscal year).
② The Company assigns employees concurrently serving as an assistant to Audit & Supervisory
Board Members to provide support for Audit & Supervisory Board Members in executing theirduties.

21

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Consolidated Balance Sheet(As of March 31, 2017)

Item
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Income taxes receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles,net
Amusement machines and facilities,
net
Land
Construction in progress
Other, net
Intangible assets
Goodwill
Other
Investments and other assets
Investment securities
Long-term loans receivable
Lease and guarantee deposits
Net defined benefit assets
Deferred tax assets
Other
Allowance for doubtful accounts

Amount324,115
137,494
44,50065,203
18,66914,83813,933
1,559
6,929
21,317(329)
197,483
81,60935,564
4,921（Unit: millions of yen）
AmountItem
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors' bonuses
Provision for point card certificates
Provision for dismantling of fixed
assetsAsset retirement obligations
Deferred tax liabilities
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable

9,579

Net defined benefit liability

23,740577
7,226
22,16010,807
11,352
93,713
69,845
1,757
11,123828
535
10,363(739)

Deferred tax liabilities
Deferred tax liabilities for land
revaluation
Asset retirement obligations
Provision for dismantling of fixed
assets
Other
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive
incomeValuation difference on
available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Subscription rights to shares
Non-controlling interests
Total net assets
Total assets
521,599
Total liabilities and net assets
Note: Figures shown in millions of yen have been rounded down to the nearest million.

22

112,567
45,631
6,354
19,5002,950
13,961
5,907
595
5
815
303
15
16,524
97,53432,50044,500
3,303
2,574
640
3,735
420
9,860
210,102300,345
29,953
117,521
207,639(54,769)
7,419
11,041(71)
340(4,479)
588
303
3,428
311,497
521,599

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Consolidated Statement of Income(From April 1, 2016 To March 31, 2017)

Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Gain on investments in partnership
Foreign exchange gains
Gain on bad debts recovered
Gain on valuation of compound financial instruments
Other
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Sales discounts
Commission fee
Loss on investments in partnership
Penalty payment for cancellation of game center leaseagreement
Loss on retirement of noncurrent assets
Settlement package
Other
Ordinary income

23(Unit: millions of yen)Amount366,939
231,261
135,678
106,150
29,527
337
929
460
294
0
520
1,344

3,886

940
1,457
9
58
243
48
685
505
921

4,870
28,542

[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)AmountItem
Extraordinary income
Gain on sales of noncurrent assets
9,518
Gain on sales of investment securities
1,382
Gain on liquidation of subsidiaries and affiliates
290
Gain on reversal of subscription rights to shares
801
Gain on reversal of provision for dismantling of fixed assets
177
Other
1,148
Extraordinary loss
Loss on sales of noncurrent assets
81
Impairment loss
6,034
Loss on valuation of investment securities
1,105
Loss on valuation of shares of subsidiaries and associates
56
Early extra retirement payments
149
Restructuring loss
419
Other
276
Income before income taxes
Income taxes-current
6,354
Income taxes-deferred(686)
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent
Note: Figures shown in millions of yen have been rounded down to the nearest million.

24

13,3198,123
33,738
5,667
28,070462
27,607

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

1. Consolidated Statement of Changes in Net Assets(From April 1, 2016 To March 31, 2017)(Unit: millions of yen)

Balances as of April 1, 2016
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Change of scope of equity method
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve forland
Total changes of items during the period
Balances as of March 31, 2017

Shareholders’ equity
Retained
Treasury
earnings
stock

Capitalstock

Capitalsurplus29,953

118,404

194,505

Total shareholders’equity(54,758)

288,105(11)
0(9,375)27,607
(11)
0
155
(312)

(9,375)27,607
(0)
155
(312)
(883)

(883)
(4,941)(883)
117,521─

29,953

13,133
207,639(4,941)(10)(54,769)

12,239300,345

Accumulated other comprehensive income
Valuation
Deferred gains Revaluationdifference on
reserve foror losses onavailable - for land
hedgessale securities
Balances as of April 1, 2016
Changes of items during theperiodDividends from surplus
Profit attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
Change of scope of
consolidation
Change of scope of equity
methodPurchase of shares of
consolidated subsidiaries
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balances as of March 31,
2017

Total accumulated
Foreign
Remeasurements
othercurrencyof definedcomprehensive
translation
benefit plansincomeadjustment

11,494(40)(4,600)

(876)

651

6,628

(452)

(31)

4,941

(3,602)

(63)

790

(452)

(31)

4,941

(3,602)(63)790

11,041(71)

340(4,479)

588

7,419

25

[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)
Subscription Non-controllingrights to sharesinterests
Balances as of April 1, 2016
Changes of items during the period
Dividends from surplus
Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Change of scope of equity method
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve forland
Net changes of items other thanshareholders’ equity
Total changes of items during theperiodBalances as of March 31, 2017

801

4,415

Total
net assets

299,950(9,375)27,607
(11)
0
155
(312)
(883)
(4,941)

(497)

(987)

(693)

(497)

(987)

11,546

303
3,428
311,497
Note: Figures shown in millions of yen have been rounded down to the nearest million.

26

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

2. Notes to Consolidated Financial Statements
I Significant Accounting Policies Used in Preparation of Consolidated Financial Statements(1) Scope of Consolidation
Number of consolidated subsidiaries
78
For a complete list of major consolidated subsidiaries, refer to the section “I Outline of the Group’s
Business” under “7. Material Parent Company and Subsidiaries” of “(2) Relationships withsubsidiaries”.
From the fiscal year ended March 31, 2017, the followings were included in the Company’s
consolidated subsidiaries; Amplitude Studios SAS and three other companies, because of theCompany’s acquisition.
From the fiscal year ended March 31, 2017, the followings have been excluded from the scope of
consolidation; CA Sega Joypolis Ltd. (SEGA LIVE CREATION Inc. changed its name in January2017) and two other companies, because of sale of the share of stocks; Sega Jinwin (Shanghai)
Amusements Co., Ltd. and one other company, because of liquidation; patina Co.,Ltd. and one
other company, because of merger with J-NEXT Co.,Ltd. (HONEST Co.,Ltd. changed its name in
April 2016).
Number of non-consolidated subsidiaries
15
Major non-consolidated subsidiaries: GO GAME PTE. LTD. etc.
Non-consolidated subsidiaries are excluded from the scope of consolidation because the combined
amount of each of assets, net sales and net income corresponding to the percentage of equity
interest held by the Company, and the combined amount of retained earnings corresponding to thepercentage of equity interest held by the Company, do not have significant effect on the
consolidated financial statements.
(2) Application of the Equity Method
Number of non-consolidated subsidiaries accounted for under the equity-method
5
Major non-consolidated subsidiaries accounted for under the equity-method: GO GAME PTE.
LTD. etc.
The following have been included in the scope of application of equity-method; GO GAME PTE.
LTD. and four other companies, because of increase of importance.
Number of affiliated companies accounted for under the equity method
11
Major equity-method affiliates: PARADISE SEGASAMMY Co., Ltd. and INTERLIFE
HOLDINGS CO., LTD. etc.
The following have been excluded from the scope of application of the equity-method; Zen Tiger
S.à r.l., because of sale of the share of stocks.
Number of non-consolidated subsidiaries and affiliated companies which are not accounted forunder the equity method
13
Major non-consolidated subsidiaries and affiliated companies which are not accounted for underthe equity method: CHARA-WEB.CO., LTD. etc.
Some of the Company’s non-consolidated subsidiaries and affiliates are not accounted for underthe equity method because the combined amount of net income corresponding to the percentage ofequity interest held by the Company, and the combined amount of retained earnings corresponding
to the percentage of equity interest held by the Company do not have significant effect on the
consolidated financial statements even if they are excluded from the scope of equity method, andhave no significance as a whole.

27

[English Translation of Convocation Notice Originally Issued in the Japanese Language](3) Fiscal Year for Consolidated Subsidiaries
Consolidated subsidiaries whose fiscal year-ends differ from the consolidated balance sheet date
are listed below. Necessary adjustments are made on consolidation for material transactions that
occurred between the end of the fiscal years of these subsidiaries and the end of the consolidatedbalance sheet date.
Consolidated subsidiary
Sega Amusements Taiwan Ltd.
Beijing SEGA Mobile Entertainment Technology Co., Ltd.
Dartslive China Ltd.
Play Heart, Inc.
Sega Black Sea EOOD

Fiscal year-end
December 31
December 31
December 31
December 31
December 31(4) Accounting Policies① Valuation standards and accounting treatment for important assets
a. Held-to-maturity debt securities
Held-to-maturity debt securities are stated at amortized cost (the straight - line method).
b. Available-for-sale securities
Securities with fair market value
Securities with fair market value are stated at fair market value. The difference between
acquisition cost and market value is accounted for as valuation difference on
available-for-sale securities in net assets, with cost of sales determined by themoving-average method.
With respect to compound financial instruments whose fair values cannot be categorized
and measured for each embedded derivative, the entire compound financial instruments areappraised by fair value, and unrealized gains or losses are reported as income or expenses
for the fiscal year ended March 31, 2017.
Securities without quoted market prices
Securities without quoted market prices are carried at cost, which is determined by themoving-average method.
The net amount of equity included in the Company’s financial statements from limited
liability investment partnerships and similar investments, regarded as marketable securities
under Article 2-2 of the Financial Investment and Exchange Law of Japan, is calculated
based on the relevant financial statements for the partnership available as of the reporting
date stipulated in the partnership agreement.
c. Derivatives
Derivatives are stated at fair market value.
d. Inventories
Inventories are stated at cost, cost being determined mainly by the gross-average method (orat the net realizable value (NRV) calculated by writing down the book value to reflect a
decrease in the NRV).
Work in process is also stated at cost, cost being determined by the specific identification
method (or at the NRV calculated by writing down the book value to reflect a decrease in the
NRV).
② Depreciation and amortization for important assets
a. Property, plant and equipment (excluding lease assets):
Depreciation is calculated primarily using the straight-line method.
Range of useful life for the assets is as follows:
Buildings and Structures: 2-50 years
Machinery, equipment and vehicles: 2-16 years
Amusement machines and facilities: 2-5 years
b. Intangible assets (excluding lease assets):
Amortization is calculated using the straight-line method. The software used in the Company
is amortized by the straight-line method based on the useful lives within the Company (lessthan 5 years).
28

[English Translation of Convocation Notice Originally Issued in the Japanese Language]c. Lease assets
Finance leases which transfer ownership:
Depreciation method for such assets is the same as that which applies to property, plant andequipment owned by the Company.
Finance leases which do not transfer ownership:
Depreciated, using the straight-line method over a useful life equal to the lease period with aresidual value of zero.
③ Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.
④ Accounting for allowances and provisions
a. Allowance for doubtful accounts
Allowance for doubtful accounts is provided in the amount sufficient to cover possible losses
based on a historical write-off of general receivables. Receivables with default possibility
and bankrupt receivables are calculated based on an individual assessment of the possibilityof collection.
b. Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses,
an amount corresponding to the current fiscal year.
c. Provision for directors’ bonuses
The estimated amount of bonuses was recorded to meet the payment of Directors and Audit& Supervisory Board Members bonuses, an amount corresponding to the current fiscal year.
d. Provision for point card certificatesIn order to provide for the usage of points granted to customers under the point system, theestimated future usage amount for the end of the fiscal year ended March 31, 2017 has beenrecorded.
e. Provision for dismantling of fixed assets
To provide for expenses for dismantling unused decrepit buildings, estimated future
expenses are recorded.
⑤ Accounting method for retirement benefitsa. Attribution method for projected retirement benefits
In calculating retirement benefits obligations, benefit formula attribution is adopted for the
purpose of attributing projected retirement benefits to the period up to the end of the fiscal
year ended March 31, 2017.
b. Treatment of actuarial gains and losses and prior service costs
Prior service costs are amortized equally over a certain number of years (10 years inprinciple) within the average remaining years of service for the employees at the time ofaccrual, or are charged to income collectively at the time of accrual. Actuarial gains andlosses are amortized by the straight-line method over a certain number of years (10 years inprinciple) within average remaining years of service for the employees at the time of accrualin each fiscal year, commencing from the following fiscal year after the accrual for each
employee, or are charged to income collectively in the following fiscal year after the accrual.
⑥ Accounting for significant hedge
a. Hedge accounting
SEGA SAMMY Group (the “Group”) adopts deferred hedge accounting. However, special
treatment is used for qualifying interest rate swap transactions. Moreover, allocation hedge
accounting is applied to qualifying currency swap transactions and forward exchange
contracts.
b. Hedging instruments and hedged items
Hedging instrument: Currency swaps, interest rate swaps, and forward exchange contracts
Hedged item: Interest on loans payable, receivables and payables denominated in foreign
currencies
c. Hedge policy
Derivative instruments are used to mitigate risks associated with foreign exchange and29

[English Translation of Convocation Notice Originally Issued in the Japanese Language]interest rate fluctuations.
As a rule, hedging is only used for items in which actual demand exists, and not for
speculative purposes.
d. Evaluation of hedge effectivenessHedge effectiveness is evaluated through comparative analysis of the cumulative fluctuationsin the market between the hedged item and the hedging instrument. Evaluation of hedge
effectiveness at fiscal year-end is omitted for currency swap transactions, as material
conditions for the notional principal of hedging instruments and those for hedged items are
the same and these transactions are deemed to offset the market fluctuations. Evaluation ofhedge effectiveness at fiscal year-end is omitted also for interest rate swap transactions
applied to special treatment.
⑦ Amortization method and period of goodwill
If the duration of the effect of goodwill can be rationally estimated, amortization is made overthe estimated number of years by the straight-line method. In other cases, amortization is madeover a five-year-period by the straight-line method.
⑧ Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method,and non-deductible consumption taxes and local consumption taxes on assets are posted mainly
as expenses when incurred.
⑨ Application of the Consolidated Taxation System
The Company and certain domestic consolidated subsidiaries applied the Consolidated
Taxation System.
(5) Additional information① Application of Accounting Standard for implementation guidance on recoverability ofdeferred tax assets
The Company and its domestic subsidiaries adopted “Revised Implementation Guidance on
Recoverability of Deferred Tax Assets” (Accounting Standards Board of Japan (ASBJ)
Guidance No. 26, March 28, 2016), from the current fiscal year.
② Amendment of deferred tax assets and deferred tax liabilities due to changes in income tax rate
With the enactment of the “Act to Partially Revise the Act on Partial Revision to theConsumption Tax Act for the Drastic Reform of the Taxation System for Ensuring Stable
Financial Resources for Social Security” (Act No. 85 of 2016) and the “Act to Partially Revise
the Act for Partial Revision to the Local Tax Act and Local Allocation Tax Act for the Drastic
Reform of the Taxation System for Ensuring Stable Financial Resources for Social Security”(Act No. 86 of 2016) in the Diet on November 18, 2016, the effective statutory tax rate used forthe calculation of deferred tax assets and deferred tax liabilities for the fiscal year ended March
31, 2017 has been changed from that for the previous fiscal year.
Due to these changes in statutory income tax rates, net deferred tax assets at the end of the
fiscal year ended March 31, 2017 decreased by ¥352 million while income taxes-deferredincreased by ¥352 million.
II

Changes in Accounting Estimates
At a meeting of the Board of Directors held on March 31, 2017, the Company resolved to relocate theheadquarters of the Company and some of the companies of the SEGA SAMMY Group located in theTokyo metropolitan area. As a result, the Company and certain subsidiaries have shorten the useful
lives of the noncurrent assets that will become unable to use as a result of the relocation, and the effectsof this change are accounted for prospectively.
This change has no impact on profit and loss for the consolidated fiscal year ended March 31, 2017.
The Company and certain subsidiaries are currently in the process of determining the effect of thischange on the consolidated financial statement.

30

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Notes to Consolidated Balance Sheet(1) Accumulated depreciation of property, plant and equipment¥157,193 million(2) Assets pledged
Shares of subsidiaries and associates (Note)¥21,274 million(Note) For loans from financial institutions to the equity-method affiliate PARADISESEGASAMMY Co., Ltd. at the end of the current fiscal year ¥62,258 million(KR₩642,500 million), the shares of this company were provided as a pledge.
(3) Revaluation reserve for Land
Consolidated subsidiary SEGA Holdings Co., Ltd. has revalued land for business, pursuant toJapan’s Law Concerning Revaluation of Land (Law No. 34, March 31, 1998) and Amendments to
the Law Concerning Revaluation of Land (Law No. 19, March 31, 2001). Accordingly, SEGA
Holdings Co., Ltd. has recorded an item for the revaluation reserve for land under net assets.
Revaluation method
SEGA Holdings Co., Ltd. computed the value of land based on the methodology regarding rational
adjustments to valuation of fixed assets stipulated in Article 2-3, and appraisals by licensed realestate appraisers prescribed in Article 2-5 of the Enforcement Ordinance No. 119 (March 31, 1998)
pertaining to the Law Concerning Revaluation of Land.
Date of the revaluation

March 31, 2002

(4) Outstanding balance of overdraft account:
Outstanding balance of commitment line:¥93,400 million¥30,000 million

IV Notes to Consolidated Statement of Income(1) The book value devaluation of inventories held for normal sales purpose based on decline inprofitability.
Cost of sales¥7,228 million(2) R&D expenses included in general and administrative expenses and the manufacturing cost for thecurrent fiscal year
¥44,612 million(3) Breakdown of major extraordinary items① Breakdown of gain on sales of noncurrent assets
Buildings and structures¥721 million
Machinery, equipment and vehicles¥2 million
Land¥8,790 million
Other property, plant and equipment¥3 million
Other intangible assets¥0 million
Total¥9,518 million② Breakdown of loss on sales of noncurrent assets
Buildings and structures¥69 million
Other property, plant and equipment¥11 million
Total¥81 million

31

[English Translation of Convocation Notice Originally Issued in the Japanese Language]③ Breakdown of impairment loss.
Use

Location

Amusement facilities

China and 5
other locations

Assets for businessToshima -ward,
Tokyo and 8other locations

A complex consisting ofa hotel, entertainment
South Korea
facilities, and commercial
facilities
Minato -ward,
Other
Tokyo and 2other locations(Unit: millions of yen)
Impairment
Type
loss
Buildings and structures
261
Amusement machines and facilities
886
Other property, plant and equipment
346
Other intangible assets
117
Buildings and structures
93
Amusement machines and facilities
116
Other property, plant and equipment
207
Other intangible assets
91
Other property, plant and equipment
914
Other intangible assets
Land

0
2,568

Goodwill

430
Total

6,034

For each business segment, the Group classifies assets or asset groups based on whether
their cash flows can be estimated independently. The book values of assets or asset groups
whose market values declined significantly or that are projected to consistently generate
negative cash flows are reduced to their recoverable value. The amount of this reduction isdeemed an impairment loss and is recorded under extraordinary loss.

32

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
V

Notes to Consolidated Statement of changes in Net Assets(1) Issued Stock
Type of stock
Common stock

As of April 1,
2016
266,229,476

Increase(Unit: shares)
As of March 31,
2017266,229,476

Decrease──(2) Treasury Stock
As of April 1,
Type of stock
Increase
2016
Common stock
31,834,807
7,340(Outline of Causes of Change)
The causes of the increase are as follows:
Increase due to purchase of odd-lot stock(Unit: shares)
As of March 31,
201731,841,869

Decrease278

7,340 shares

The causes of the decrease are as follows:
Decrease due to sales of odd-lot stock

278 shares(3) Dividends① Dividend AmountResolution
Board of Directors’Meeting held on
May 13, 2016
Board of Directors’Meeting held on
November 2, 2016

Type of
Stock

Dividend
Total
dividend per share(¥)(¥ million)

Record date

Effective dateCommon
stock

4,687

20

March 31, 2016

May 27, 2016

Common
stock

4,687

20

September 30,
2016

December 1,
2016② Of the dividends of which the record date is in the fiscal year ended March 31, 2017, but
the effective date is in the following fiscal year.
Type of
Stock

Resourceof dividend

Board of Directors’CommonMeeting held on May
Stock
12, 2017

Retained
Earnings

Resolution

Dividend
Total
dividend per share(¥)(¥ million)
4,687

20

Recorddate

Effective
date

March 31,2017

June 2,
2017(4) Number and type of shares to be issued upon exercise of subscription rights to shares (except
for the ones before the first day of the exercisable period) as of the end of the fiscal year ended
March 31, 2017.
Not applicable.

33

[English Translation of Convocation Notice Originally Issued in the Japanese Language]VI

Notes on the Financial Instruments(1) Matters regarding the current status of financial instruments
The Group’s signed an agreement concerning commitment lines with financial institutions,such as securing medium- to long-term fund liquidity with the Company as a holding company,
as a safety net for the entire Group. In addition, capital for each business is financed based on
the financial plan as needed, through bank borrowing or bond issue applying CashManagement System for the purpose of the efficient utilization of the Group funds. Most funds
are invested primarily in low-risk and high-liquidity financial assets, while some are invested
in compound financial instruments such as bonds etc. for the purpose of efficiently managing
funds. Derivatives are mainly used, not for speculative purposes, but to manage exposure tofinancial risks as described later.
Credit risks of the clients in terms of notes and accounts receivable - trade are mitigated under
the credit management rules, etc. at each Group company.
Short-term investment securities are mainly negotiable certificates of deposit. The Group’s
credit risk exposure is minimal as these transactions are restricted to highly rated financial
institutions in accordance with the capital management rules etc. of each Group company.
Investment securities are mainly stocks and the relevant information such as market prices ofthese stocks and financial conditions of the issuers (business partners) is reviewed and reported
to the Board of Directors of each Group company, etc. on a regular basis. Shareholding status isalso continually reviewed in view of the relationship with business partners that issue thesestocks. With certain compound financial instruments etc., the Group is exposed to risks
associated with market price fluctuations etc. in the stock markets but periodically evaluatesthem on a mark-to-market basis.
Borrowings as well as bonds is intended to secure funds necessary for the purpose of working
capital and capital expenditures etc. and diversify means for procuring funds. Each Group
company reviews its own actual and projected cash position on a monthly basis, which is
eventually verified collectively by the Company as part of the Group’s liquidity risk
management.
The Group’s derivative transactions are restricted to forward exchange contracts and currency
swap transactions as hedges against currency fluctuation risks on its foreign
currency-denominated operating receivables and debt as well as foreign currency-denominatedloans payable, and interest rate swap transactions etc. to mitigate interest rate risks on some of
the Group’s variable interest rate loans payable. These transactions are executed and managed
mainly by the financial department or the accounting department upon obtaining internal
approvals in compliance with the derivative transactions management rules, etc. of each Group
company. Furthermore, reports on the status of the derivative transactions are made to theBoard of Directors at each company as appropriate.

34

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Matters regarding the market value etc. of financial instruments
Consolidated balance sheet amounts and market values of the Group’s financial instruments
and the difference between the two as of the end of the fiscal year ended March 31, 2017 are as
follows. Market values of financial instruments named in Note 2 below are extremely difficult
to grasp, thus are not included in the following list.
(Unit: millions of yen)
Consolidated balanceMarketDifference
sheet amountvalue(1) Cash and deposits
137,494
137,494
─(2) Notes and accounts receivable - trade
44,50044,499(0)(3) Short-term investment securities andinvestment securities
1) Held-to-maturity debt securities
2,319
2,331
12
2) Available-for-sale securities (*1)
98,744
98,744
─3) Stocks of affiliates
895
1,092
196
(4) Notes and accounts payable - trade
45,631
45,631─(5) Short-term loans payable
6,354
6,354
─
(6) Long-term loans payable
44,50044,903(403)(7) Current portion of bonds
19,50019,500─(8) Bonds payable
32,50032,543(43)(9) Derivative transactions (*2)
1) Transactions outside the scope of
(4)
(4)
─
hedge accounting
2) Transactions subject to hedge
(71)
(71)
─
accounting(*1) Since market values of embedded derivatives cannot be reasonably categorized andmeasured, those of the entire compound financial instruments are evaluated, and included ininvestment securities.
(*2) Receivables and payables incurred by derivative transactions are presented in net amount.
Notes: 1 Matters regarding the methods to calculate the market values of financial instruments
and securities and derivative transactions(1) Cash and deposits; and (2) Notes and accounts receivable - trade
Of these, items that are settled in the short term (within a year) are recorded usingbook values, as their market values approximate book values. In addition, ofnotes and accounts receivable - trade, those which more than a year to the payment
date from the end of the fiscal year ended March 31, 2017 are stated at the present
values by discounting the amount of claim for each receivable with the interest rate
calculated by the payment period and credit risk.
(3) Short-term investment securities and investment securities
The market values of stocks are determined using the quoted price at the stock
exchange, and those of debt securities are determined using the quoted price at thestock exchange or the quoted price obtained from the financial institutions. In
addition, negotiable certificates of deposit included in available-for-sale securities
are recorded using book values, as they are settled in the short term (within a year)
and their market values approximate book values.
(4) Notes and accounts payable – trade; (5) Short-term loans payable; and (7) Current
portion of bonds
Of these, items that are settled in the short term (within a year) are recorded usingbook values, as their market values approximate book values. Of the short-termloans payable, market values of the loans hedged by interest rate swap contracts
meeting certain conditions are calculated applying the special treatment by
combining them with the relevant interest rate swap.
35

[English Translation of Convocation Notice Originally Issued in the Japanese Language](6) Long-term loans payable; and (8) Bonds payable
These are stated with the present values calculated by discounting the aggregatedvalues of the principal and interest using an assumed interest rate if loans are
newly made. Of the long-term loans payable, fair values of the loans hedged byinterest rate swap contracts with special treatment applied and by interest rate andcurrency swap contracts with combined treatment applied (subject to special
treatment and allocation hedge accounting) are calculated by combining them withthe relevant interest rate swap or interest rate and currency swap.
(9) Derivative transactions
Market values of these are the prices quoted by the counterparty financial
institutions. Meanwhile, certain derivative transactions such as forward exchange
contracts subject to allocation hedge accounting are treatment on a combined basiswith the receivables and payables that are hedged; therefore, their fair values arepresented as part of the fair values of such receivables and payables.
2 Financial instruments whose market values are not readily determined
Consolidated balance sheet
Categoryamount(Millions of yen)
Investments in unlisted stocks, etc.
2,228
Investments in investment limited partnerships, etc.
6,430
Stocks of non-consolidated subsidiaries
298
Stocks of affiliates
22,893
Investments in capital of subsidiaries and associates
1,238
Items above are not included in “(3) Short-term investment securities and investment
securities,” because there is no market price, future cash flows cannot be estimated and
it is very difficult to identify market values.
VII Note Regarding Investment and Rental Property
Status and market value of investment and rental property
This disclosure is omitted due to the immateriality of the total amount of the investment and rental
property.
VIII Note Regarding Per Share Information
Net assets per share¥1,313.06
Net income per share¥117.79
IX

Note Regarding Material Subsequent Events
Not applicable.

36

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Independent Auditor’s Report
May 11, 2017
The Board of Directors
SEGA SAMMY HOLDIGNS INC.
KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Naoya Miyaki (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of changes in net assets and the related notesof SEGA SAMMY HOLDIGNS INC. as at March 31, 2017 and for the year from April 1, 2016 to March 31,2017 in accordance with Article 444-4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the entity’s preparationand fair presentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

37

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and the results of operations of SEGA SAMMY HOLDIGNS INC. and its consolidated
subsidiaries for the period, for which the consolidated financial statements were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to theprovisions of the Certified Public Accountants Law of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Companies Act.

38

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Non-Consolidated Balance Sheet（As of March 31, 2017）
Item
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Short-term investment securities
Prepaid expenses
Short-term loans receivable fromsubsidiaries and associates
Accounts receivable-other
Deferred tax assets
Other
Noncurrent assets
Property, plant and equipment
Buildings, net
Structures, net
Machinery and equipment, net
Aircraft, net
Vehicles, net
Tools, furniture and fixtures, net
Land
Intangible assets
Software
Other
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital ofsubsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates
Long-term loans receivable
Long-term prepaid expenses
Other
Allowance for doubtful accounts

Amount

Item(Unit: millions of yen)AmountLiabilities
Current liabilities
Current portion of long-term loans
payableCurrent portion of bonds
Accounts payable-other
Income taxes payable

122,897
49,049518
65,003318
230

Accrued expenses

7,155
72
550
359,571
5,347
836
589
1
1,785
36
679
1,418
39
37
1
354,184
28,277
312,219992
16,26115
44
1,595(5,223)

3,600
12,100
4,265
125
630

Deposits received
Unearned revenue
Provision for bonuses
Provision for directors' bonuses
Deferred tax liabilities
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable
Long-term deposits received
Provision for retirement benefits
Asset retirement obligations
Deferred tax liabilities
Other
Total liabilities
Net assets
Shareholders' equity
Capital stock

296,316
29,953

Capital surplus

192,244

Legal capital surplus

29,94558,782
0
164
108
0
450
98,01432,50043,98817,500
73
79
3,573
299
178,242

Other capital surplus
Retained earnings
Other retained earnings
Retained earnings brought
forwardTreasury stock
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities
Subscription rights to shares(55,054)

Total net assets

304,226

Total assets
482,468 Total liabilities and net assets
Note: Figures shown in millions of yen have been rounded down to the nearest million.

39

80,227

162,299
129,172
129,172
129,172
7,606
7,606
303
482,468

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Non-Consolidated Statement of Income(From April 1, 2016 To March 31, 2017)(Unit: millions of yen)AmountItem
Operating revenue
Consulting fee income
Dividends income

5,763
7,686

13,450Operating expenses
Selling, general and administrative expenses

6,961

6,961

Operating income
Non-operating income
Interest income
Interest on securities
Dividends income
Gain on investments in partnership
Income from operation of noncurrent assets
Gain on valuation of compound financial instruments
Foreign exchange gains
Other

6,489
401
150
826
307
30
62
25
145

1,949

Non-operating expenses
Interest expenses
Interest on bonds
Commission fee
Loss on investments in partnership
Other

514
316
50
97
9

988

Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on reversal of subscription rights to shares
Gain on liquidation of silent partnership

7,450
60
801
1,087

1,948

Extraordinary loss
Loss on support to subsidiaries and associates
Provision of allowance for doubtful accounts
Loss on valuation of shares of subsidiaries and associates
Loss on sales of shares of subsidiaries and associates
Loss on sales of investment securities

2,607
2,004
2,525
943
34

8,114

Income before income taxes
Income taxes-current
Income taxes-deferred

1,284
(858)
67

Net income
Note: Figures shown in millions of yen have been rounded down to the nearest million.

40

(791)
2,076

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

3. Non-Consolidated Statement of Changes in Net Assets(From April 1, 2016 To March 31, 2017)(Unit: millions of yen)
Shareholders’ equity
Capital surplus
Legal capital
Other capitalsurplussurplus29,945
162,299

Total capitalsurplus192,244(0)(0)
162,299(0)(0)
192,244

Shareholders’ equity
Retained earnings
Other retained
earnings
Total retained Treasury stock
Retainedearnings
earnings
brought
forward136,472
136,472(55,043)

Total
shareholders’equityCapital stock
Balances as of April 1, 2016
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balances as of March 31, 2017

Balances as of April 1, 2016
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balances as of March 31, 2017

29,953──

29,95329,945(9,375)
2,076(7,299)129,172(9,375)
2,076(7,299)129,172

(11)
0
(10)
(55,054)

Valuation andtranslation adjustments
Subscription
Valuation
Total
rightsto shares
difference on valuation andavailable - for - translation
sale securities adjustments
Balances as of April 1, 2016
8,263
8,263
801
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than
(657)
(657)
(497)
shareholders’ equity
Total changes of items during the period
(657)
(657)
(497)
Balances as of March 31, 2017
7,606
7,606
303
Note: Figures shown in millions of yen have been rounded down to the nearest million.

41

303,626(9,375)
2,076
(11)
0
(7,310)296,316

Total
net assets
312,691(9,375)
2,076
(11)
0
(1,154)(8,465)304,226

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

4.
I

Notes to Non-Consolidated Financial Statements
Notes Regarding Material Matters Related to Accounting Policies

1. Valuation standards and accounting treatment for assets(1) Valuation standards and methods for securities① Stocks of subsidiaries and affiliates are stated at moving-average cost.
② Available-for-sale securities
Securities with fair market value are stated at fair market value. The difference between
acquisition cost and market value is accounted for as valuation difference on available-for-salesecurities, with cost of sales determined by the moving average method.
With respect to compound financial instruments whose fair values cannot be categorized andmeasured for each embedded derivative, the entire compound financial instruments areappraised by fair value, and unrealized gains or losses are reported as income or expenses forthe fiscal year ended March 31, 2017.
Securities without fair market value are stated at moving-average cost.
The net amount of equity included in the Company’s financial statements from limited liability
investment partnerships and similar investments, regarded as marketable securities under
Article 2-2 of the Financial Investment and Exchange Law of Japan, is calculated based on therelevant financial statements for the partnership available as of the reporting date stipulated in
the partnership agreement.
(2) Derivatives
Derivatives are stated at fair market value.
2. Depreciation and amortization of noncurrent assets(1) Property, plant and equipment
Depreciation is calculated by the straight-line method.
Range of useful life for the assets is as follows:
Buildings: 2 - 50 years
Structures: 2 - 47 years
Aircraft:
8 years
Tools, furniture and fixtures : 2 - 15 years(2) Intangible assets
Amortization is calculated using the straight-line method. The software used in the Company isamortized by the straight-line method based on the useful lives within the Company (less than 5
years).
3. Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.
4. Accounting for provisions(1) Allowance for doubtful accounts
The reserve for doubtful accounts is provided in amount sufficient to cover possible losses.
Allowance for doubtful accounts is calculated on an individual assessment of the possibility ofcollection.
(2) Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses, anamount corresponding to the current fiscal year.
(3) Provision for directors’ bonuses
The estimated amount of bonuses was recorded to meet the payment of Directors and Audit &Supervisory Board Members bonuses, an amount corresponding to the current fiscal year.

42

[English Translation of Convocation Notice Originally Issued in the Japanese Language](4) Provision for retirement benefits
The liability for retirement benefits is based on the estimated amount of benefit obligations at theend of the fiscal year. Simplified method is used to calculate provision for retirement benefits.
5. Accounting for hedge(1) Accounting for hedge
Allocation hedge accounting is used for qualifying currency swap transactions, while special
treatment is applied to qualifying interest rate swap transactions.
(2) Hedging instruments and hedged items
Hedging instrument: Currency swaps, Interest rate swaps
Hedged item: Foreign currency-denominated loans payable and associated interest(3) Hedge policy
The Company engages in currency swap transactions with the purpose to avoid risks associatedwith foreign exchange fluctuations of loans payable, along with interest rate swap transactions withthe purpose to avoid risks associated with interest rate fluctuations of loans payable. The Company
has a policy not to engage in speculative derivative transactions.
(4) Evaluation of hedge effectivenessEvaluation of hedge effectiveness at fiscal year-end is omitted for currency swap transactions, as
material conditions for the notional principal of hedging instruments and those for hedged items
are the same and these transactions are deemed to offset the market fluctuations. Evaluation ofhedge effectiveness at fiscal year-end is omitted also for interest rate swap transactions as they
adopt special treatment.
6. Other material matters that form the basis of accounting documents(1) Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method, andnon-deductible consumption taxes and local consumption taxes on assets are posted mainly as
expenses when incurred.
(2) Application of the Consolidated Taxation System
The Company applied the Consolidated Taxation System.
7. Additional information
The Company adopted “Revised Implementation Guidance on Recoverability of Deferred Tax Assets”(Accounting Standards Board of Japan (ASBJ) Guidance No. 26, March 28, 2016), from the current
fiscal year.
II

Changes in Accounting Estimates
At a meeting of the Board of Directors held on March 31, 2017, the Company resolved to relocate theheadquarters of the Company and some of the operating companies of the SEGA SAMMY Group
located in the Tokyo metropolitan area. As a result, the Company has shorten the useful lives of thenoncurrent assets that will become unable to use as a result of the relocation, and such change iseffective into the future.
These changes have no impact on profit and loss for the fiscal year ended March 31, 2017. Meanwhile,the impact of these changes on profit and loss for the fiscal year ending March 31, 2018 onward is in
the process of being calculated.

43

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Notes to Balance Sheet(1) Accumulated depreciation of property, plant and equipment ¥3,379 million(2) Assets pledged
Shares of subsidiaries and associates (Note)¥20,737 million(Note) For loans from financial institutions to the affiliated company PARADISE SEGASAMMY
Co., Ltd. at the end of the current fiscal year ¥62,258 million (KR₩642,500 million), theshares of this company were provided as a pledge.
(3) Guaranteed obligation
Guarantee
SEGA Holdings
Co., Ltd.

Amount¥445 million(US $4 million)

Description
Accounts payable- other(4) Receivables from and payables to affiliates
Short-term receivables from affiliates
Short-term payables to affiliates
Long-term payables to affiliates
IV Notes to Statement of Income(1) Transactions with affiliates
Consulting fee income
Dividends income (Operating revenue)
SG&A expenses
Non-operating transactions¥7,731 million¥63,185 million¥17,500 million¥5,763 million¥7,686 million¥109 million¥523 million(2) Extraordinary loss
¥2,607 million of loss on support to subsidiaries and associates is recorded due to debt forgivenessof loans receivable from two of the Company’s subsidiaries.
V

Notes to Statement of Changes in Net Assets
Number and type of Treasury stock as of the end of the fiscal year ended March 31, 2017
Common stock
31,841,869 shares

44

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VI Notes Regarding Tax Effect Accounting(1) Significant components of deferred tax assets and deferred tax liabilities(Unit: millions of yen)
Deferred tax assets
Loss carried forward
Exclusion from the deductible expenses of provision forbonuses
Exclusion from the deductible expenses of provision ofallowance for doubtful accounts
Exclusion from the deductible expenses of loss on
valuation of shares of subsidiaries and associates
Disallowed portion of loss on investments in partnership
Valuation difference on available-for-sale securities
Other
Subtotal deferred tax assets
Valuation allowance
Offset against deferred tax liabilities
Total deferred tax assets

5
91
411
11,616(11,542)(1)
72

Deferred tax liabilities
Valuation difference on available-for-sale securities
Other
Subtotal deferred tax liabilities
Offset against deferred tax assets
Total deferred tax liabilities
Deferred tax liabilities, net(3,486)(87)(3,574)
1(3,573)(3,500)

1,384
50
1,599
8,073

(2) Breakdown by major causes of the significant difference between the statutory tax rate and theeffective tax rate for financial statement purposes, if any, by item.
Normal effective statutory tax rate
(Adjustment)
Permanently non-deductible expenses including
entertainment expenses
Exclusion from the deductible expenses of donation
Changes in valuation allowance
Amount excluded from gross revenue such as dividend
incomeAdjustment of book value of investment in shares ofsubsidiaries
Other
Effective tax rate after tax effect accounting

30.9%
13.0%
62.6%
130.9%(213.0%)(84.4%)(1.6%)(61.6%)(3) Amendment to deferred tax assets and deferred tax liabilities due to changes in income tax rate
With the enactment of the “Act to Partially Revise the Act on Partial Revision to the Consumption
Tax Act for the Drastic Reform of the Taxation System for Ensuring Stable Financial Resources forSocial Security” (Act No. 85 of 2016) and the “Act to Partially Revise the Act for Partial Revision
to the Local Tax Act and Local Allocation Tax Act for the Drastic Reform of the Taxation System
for Ensuring Stable Financial Resources for Social Security” (Act No. 86 of 2016) in the Diet on
November 18, 2016, the effective statutory tax rate used for the calculation of deferred tax assets
and deferred tax liabilities for the fiscal year ended March 31, 2017 has been changed from that forthe previous fiscal year.
As a result, net deferred tax assets at the end of the fiscal year ended March 31, 2017 decreased by¥4 million while income taxes-deferred increased by ¥4 million.
45

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VII Notes Regarding Transactions with Related Parties(1) Subsidiaries and Affiliates(Unit: millions of yen)Type

Name of thecompany

Votingrights (%)

Relationship

Description of thetransactions
Consulting fee
income(Note 2)

Subsidiary

Sammy
Corporation

100.0

Management

Consolidated

guidance to thetaxation systemcompany,

Reception ofinterlocking

deposits(Note 3)

Transaction
amount(Note 1)interests(Note 4)
Consulting fee
income(Note 2)
Consolidated
taxation system
Lending of funds
Collection of loans

Subsidiary

SEGA Holdings
Co., Ltd.

100.0

Management

receivableguidance to the

Debt forgivenesscompany,(Note 5)interlocking

Reception of

directorate

interests(Note 4)
Reception ofdeposits(Note 3)

Payment ofinterests(Note 4)
Collection of loans
Subsidiary

SEGA Games
Co., Ltd.

100.0

Interlocking
directorate

receivable
Reception ofinterests(Note 4)

Balance at
end offiscal year

3,458

Accounts receivable - trade311

─

Accounts receivable - other

4,098

─

Deposits received

52,619Long-term deposits received

15,000directorate
Payment of

Accounts

115

2,305

─
5,636

Interest payable
Accounts receivabletrade
Accounts receivable - other

82

207

706

─

─

60

─

─

─

Deposits received

6,008

Long-term deposits received

2,500

6,010
1,765

19

Interest payable

7

10,720

─

─

91

─

─

Long-term loans receivable
Lending of funds
Subsidiary

SEGA SAMMY
CREATION INC.

100.0

1,700

6,200

associates(Note 6)

Interlocking
directorate

from subsidiaries andReception ofinterests(Note 4)

46

77

Accrued interest

0

Deferred interest

0[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)
Name of thecompanyType

Votingrights (%)

Relationship

Description of thetransactions

Transaction
amount(Note 1)

Accounts

Balance at
end offiscal year

Long-term loans receivable
Lending of funds

6,290

from subsidiaries and8,196

associates
Collection of loans
receivable

PHOENIX
Subsidiary

RESORT CO.,

100.0

LTD.

Interlocking

Debt forgivenessdirectorate(Note 7)
Reception ofinterests(Note 4)

3,440
841
108

Accrued interest

3

3,360

─

─

20,737──

Underwriting of
capital increase(Note 8)PARADISE
Affiliate

SEGASAMMY
Co., Ltd.

45.0

Interlocking

Provision of security

directorate(Note 9)Notes: 1. Consumption taxes are not included in transaction amounts.
2. The amount of the Consulting fee income is decided based on the Company’s necessary
expenses.
3. Cash management system transactions are used for the purpose of uniformly andefficiently procuring and managing funds within the Group. Lending and borrowing offunds is executed at any time between the Group companies, thus the transaction amount isomitted.
4. Interest is determined with consideration to market interest rates.
5. For ¥1,765 million of long-term loans receivable from SEGA Holdings Co., Ltd., theCompany implemented debt forgiveness. Debt forgiveness of ¥1,765 million of long-termloans receivable was recorded as loss on support to subsidiaries and associates for the
fiscal year ended March 31, 2017.
6. For long-term loans receivable from subsidiaries and associates from SEGA SAMMY
CREATION INC., the Company recorded provision of allowance for doubtful accounts of¥5,216 million while recorded allowance for doubtful accounts of ¥2,004 million for the
fiscal year ended March 31, 2017.
7. For ¥841 million of long-term loans receivable from PHOENIX RESORT CO., LTD., theCompany implemented debt forgiveness. Debt forgiveness of ¥841 million of long-termloans receivable was recorded as loss on support to subsidiaries and associates for the
fiscal year ended March 31, 2017.
8. The Company underwrote a capital increase through allotment to shareholders.
9. For part of the loans from financial institutions to PARADISE SEGASAMMY Co., Ltd.,the shares of the company were provided as a pledge.

47

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Directors, Key Individual Shareholders, etc.
(Unit: millions of yen)Type

Name of
Votingrelatedrightsindividual and(%)
company

Company
in which
Directors
FSC Co., Ltd.
or their(Note 2)
relatives own
majority
voting rights

Transaction
Balance atamountAccounts
end of(Note 1)
fiscal year

Relationship

Description of
the transactions

Insurance
representative

Payment of
insurance
premium(Note 3)8

Prepaid
expenses5

Lending ofreal-estate andequipment

Rental income
from real-estateand equipment(Note 3)

3

─

─

5.57

Notes: 1. Consumption taxes are not included in transaction amounts.
2. Hajime Satomi, Chairman of the Board and CEO and COO, and Haruki Satomi,
Executive Vice President (Director of the Board,) directly hold a majority of the sharesof FSC Co., Ltd.
3. Transaction prices are determined in the same way as for general transactions and withreference to market prices.
VIII

Note Regarding Per Share Information
Net assets per share¥1,296.67
Net income per share¥8.86

IX Notes Regarding Material Subsequent Events
Not applicable.

48

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Independent Auditor’s Report
May 11, 2017
The Board of Directors
SEGA SAMMY HOLDINGS INC.
KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Naoya Miyaki (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the financial statements, comprising the balance sheet, the statement of income, the statementof changes in net assets and the related notes, and the supplementary schedules of SEGA SAMMYHOLDINGS INC. as at March 31, 2017 and for the year from April 1, 2016 to March 31, 2017 in accordancewith Article 436-2-1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of the financial statements and the
supplementary schedules in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of financial statements andthe supplementary schedules that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the supplementary schedules basedon our audit as independent auditor. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the supplementary schedules are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the supplementary schedules. The procedures selected depend on our judgement,
including the assessment of the risks of material misstatement of the financial statements and the
supplementary schedules, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation and fair presentation of the financial statements and the
supplementary schedules in order to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

49

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
OpinionIn our opinion, the financial statements and the supplementary schedules referred to above present fairly, in allmaterial respects, the financial position and the results of operations of SEGA SAMMY HOLDINGS INC. forthe period, for which the financial statements and the supplementary schedules were prepared, in accordancewith accounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to theprovisions of the Certified Public Accountants Law of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Companies Act.

50

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Audit Report
The Audit & Supervisory Board has received the reports of the audit procedures and results concerning theexecution of the duties of the Directors during the 13th fiscal year from April 1, 2016 through March 31, 2017prepared by each of the Audit & Supervisory Board Members. After discussing the reports, we have preparedthis Audit Report and report as follows.
1. Procedures and details of the audits by the Audit & Supervisory Board Members and the Audit &Supervisory Board(1) The Audit & Supervisory Board established the audit policy, allocation of duties, and other relevant
matters, and received reports from each Audit & Supervisory Board Member regarding theimplementation of audits and results thereof, as well as reports from the Directors, other relevant
personnel, and the independent auditor regarding the execution of their duties, and sought explanations
as necessary.
(2) Each Audit & Supervisory Board Member complied with the auditing standards for Audit &Supervisory Board Members established by the Audit & Supervisory Board, followed the audit policies,
allocation of duties, etc., communicated with Directors, the internal audit department, and other
employees, as well as worked to enhance environment for information collection and auditing, while
conducting the audit by the following methods:
1) Each Audit & Supervisory Board Member participated in meetings of the Board of Directors andother important meetings, received reports from the Directors, employees, and other relevant
personnel regarding performance of their duties, and sought explanations as necessary. We
examined important authorized documents and associated information, and investigated theoperations and assets at the head office and principal offices.
With respect to subsidiaries, we communicated and exchanged information with Directors, Audit &Supervisory Board Members, and other relevant personnel of the subsidiaries, and received business
reports from the subsidiaries as necessary.
2) We received the periodical reports from Directors, employees, and other relevant personnel, sought
explanations as necessary, and expressed our opinions on the status of development and operation of
the system for ensuring that the execution of the duties of the Directors conforms to the relevantlaws and regulations and the Articles of Incorporation, as well as the details of the resolutions of theBoard of Directors regarding the organization of the system stipulated in Article 100, Paragraph 1
and 3 of the Enforcement Regulations of the Companies Act and the status of the system (internal
control system) based on said resolutions, a necessary measure for ensuring proper businessexecution by a joint stock corporation and a corporate group consisting of its subsidiaries.
As to the internal control system associated with financial reports, we received reports from
Directors and the independent auditor, KPMG AZSA LLC regarding the evaluation of the internal
control and its audit, and sought explanations and expressed our opinions where necessary.
3) We monitored and verified whether the independent auditor maintained its independence andimplemented appropriate audits, and we received reports from the independent auditor regarding theperformance of its duties and sought explanations as necessary. In addition, we received notice fromthe independent auditor that “systems for ensuring that duties are performed properly” (matters set
forth in each Item of Article 131 of the Corporate Calculation Regulations) were maintained inaccordance with the “Quality Management Standards Regarding Audits” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought explanations as necessary.
Based on the above methods, we examined the business report and supporting schedules, financial
statements (balance sheet, statement of income, statement of changes in net assets, and notes tonon-consolidated financial statements) and supporting schedules, and consolidated financial statements(consolidated balance sheet, consolidated statement of income, consolidated statement of changes in net
assets, and notes to consolidated financial statements) for the current fiscal year.
2. Result of audit(1) The Report of Business Operations
1) In our opinion, the business report and supporting schedules are in accordance with the related laws
and regulations and Articles of Incorporation, and fairly represent the Company’s condition.
2) With regard to the execution of the duties of the Directors, we have found no evidence of wrongfulaction or material violation of the relevant laws and regulations, nor of any violation with respect to51

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
the Articles of Incorporation.
3) In our opinion, the contents of the resolutions of the Board of Directors regarding the internal
control system are fair and reasonable. In addition, we have found no matters on which to remark inregard to the execution of the duties of the Directors regarding the internal control system, including
the one associated with financial reports.
(2) Audit result of the Financial Statements and supporting schedules
In our opinion, the audit procedures and audit results received from the independent auditor KPMG
AZSA LLC are appropriate.
(3) Audit result of the Consolidated Financial Statements and consolidated supporting schedules
In our opinion, the audit procedures and audit results received from the independent auditor KPMG
AZSA LLC are appropriate.
May 12, 2017
Audit & Supervisory Board,
SEGA SAMMY HOLDINGS INC.
Tomio Kazashi, Standing Audit & Supervisory Board Member(External)
Shigeru Aoki, Standing Audit & Supervisory Board Member
Yukito Sakaue, Audit & Supervisory Board Member
Mineo Enomoto, Audit & Supervisory Board Member(External)

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Reference Documents for General Meeting of Shareholders

Proposals and reference information

Proposal 1: To elect eight (8) Directors
The terms of office of all eight (8) Directors will expire at the conclusion of this Ordinary General Meetingof Shareholders. Accordingly, we are seeking to elect eight (8) Directors.
The nominees for Directors are as described below:
Nominee
No.

1

Name
(Date of Birth)

Hajime Satomi(January 16, 1942)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Mar.

1980

Feb.

2004

May

2004

Jun.

2004

Jun.

2004

Oct.

2004

Mar.

2005

Dec.

2006

May

2007

Jun.

2007

May
Apr.
Jun.

2008
2012
2012

May

2013

Apr.

2015

Jun.
Jun.

2015
2016

Apr.

2017

Apr.

2017

Apr.

2017

Apr.

2017

President (Representative Director) of Sammy Industry Co.,
Ltd. (now Sammy Corporation)
Chairman of the Board (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Chairman of JAMMA (JAPAN AMUSEMENT MACHINERYMANUFACTURERS ASSOCIATION) (now Japan
Amusement Machine and Marketing Association, Inc.) (current
position)
Chairman and CEO (Representative Director) of Sammy
Corporation
Chairman and CEO (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Chairman, President and CEO (Representative Director) of theCompany
Senior Advisor to NICHIYUKYO (Japan Play Equipment
Industry Association) (current position)
Chairman of Japan Amusement Industry Association(current position)
Chairman of NDK (Japan Electric Game Manufacturers’
Association)
President, CEO and COO (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Chairman and CEO (Representative Director) of the above
Chairman of the Board of Sammy Corporation
Chairman of the Board of PHOENIX RESORT CO., LTD.
(current position)
Chairman and CEO (Representative Director) of Sammy
Corporation
Chairman and CEO (Representative Director) of SEGA
Holdings Co., Ltd.
Advisor to NDK (current position)
Chairman, President, CEO and COO (Representative Director)of the Company
Chairman and CEO (Representative Director) of the Company(current position)
Chairman of the Board (Representative Director) of Sammy
Corporation
Honorary Chairman of the Board of SEGA Holdings Co., Ltd.
(current position)
Chairman of the Board of MARZA ANIMATION PLANET
INC. (current position)

Number of theCompany’s
Shares Owned

31,869,338
shares[Reason for nomination as candidate for Director]
Mr. Hajime Satomi has demonstrated leadership over many years as the CEO of the Company and Group companies andcontributed to the development of the Group.
We seek appointment of Mr. Hajime Satomi as Director as we expect he will continue to benefit the decision making of theCompany’s Board of Directors with such wealth of experience, career record and hard-earned insight, and contribute toimproving the corporate value of the Company.

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Nominee
No.

2

Name
(Date of Birth)

Haruki Satomi(January 11, 1979)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Mar.
Jan.
Oct.
Nov.

2004
2005
2005
2011

Apr.
Jun.
Jun.

2012
2012
2012

Jul.

2012

Apr.

2014

Jun.
Nov.

2014
2014

Apr.

2015

Apr.

2015

Nov.
Apr.
Apr.

2015
2016
2016

Jun.

2016

Apr.

2017

Apr.

2017

Apr.

2017

Apr.

2017

Joined Sammy Corporation
Joined SEGA CORPORATION (now SEGA Games Co., Ltd.)
Director of SEGA of America, Inc.
Senior Vice President (Director of the Board) of Sammy
Networks Co., Ltd.
President and CEO (Representative Director) of the above
Senior Vice President (Director of the Board) of the Company
Senior Vice President (Director of the Board) of SEGACORPORATION (now SEGA Games Co., Ltd.)
President and CEO (Representative Director) of SEGA
Networks Co., Ltd. (now SEGA Games Co., Ltd.)
Senior Vice President (Director of the Board) of Sammy
Corporation
Director of Sanrio Company, Ltd.
Deputy COO (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Deputy COO (Representative Director) of SEGA Holdings
Co., Ltd.
President and CEO (Representative Director) of SEGA Games
Co., Ltd.
Deputy COO (Representative Director) of Sammy Corporation
President and COO (Representative Director) of the above
Chairman of the Board (Representative Director) of Sammy
Networks Co., Ltd. (current position)
Executive Vice President (Director of the Board) of theCompany
President and COO (Representative Director) of the Company(current position)
President and CEO (Representative Director) of Sammy
Corporation (current position)
Chairman and CEO (Representative Director) of SEGA
Holdings Co., Ltd. (current position)
Chairman and CEO (Representative Director) of SEGA Games
Co., Ltd. (current position)

Number of theCompany’s
Shares Owned

3,139,561
shares[Reason for nomination as candidate for Director]
Mr. Haruki Satomi has served as a corporate manager of the Company and Group companies and contributed to theimprovement of corporate earnings. He currently serves as President and COO (Representative Director) of the Company anddemonstrates leadership as a Chief Operating Officer of the Group.
We seek appointment of Mr. Haruki Satomi as Director as we expect he will continue to benefit the decision making of theCompany’s Board of Directors with such experience, career record and leadership, and contribute to improving the corporate
value of the Company.

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Nominee
No.

3

Name
(Date of Birth)

Naoya Tsurumi(February 8, 1958)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Mar.
Dec.

1992
2004

Sep.
Jun.

2005
2006

Jun.
Oct.
May

2006
2006
2008

Jun.
Sep.
Apr.

2009
2009
2012

May

2012

Jun.
Jun.
Apr.

2012
2012
2014

Apr.

2014

Jun.

2014

Jun.

2014

Apr.

2015

May

2015

Jun.

2015

Jun.
Jun.

2015
2016

Jan.

2017

Joined SEGA Enterprises, Ltd. (now SEGA Games Co., Ltd.)
Vice President, Executive Officer of SEGA CORPORATION(now SEGA Games Co., Ltd.)CEO of SEGA Publishing Europe Ltd.
Vice President, Senior Executive Officer of SEGACORPORATION (now SEGA Games Co., Ltd.)CEO and President of SEGA Holdings U.S.A., Inc.
Chairman of SEGA of America, Inc.
Senior Vice President (Director of the Board) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Executive Vice President (Director of the Board) of the above
Chairman of SEGA Europe Ltd.
President and COO (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Vice Chairman and CEO of Sega Jinwin (Shanghai)
Amusements Co., Ltd.
Senior Vice President (Director of the Board) of the Company
CEO and President of SEGA Holdings Europe Ltd.
Senior Executive Vice President (Representative Director) of
the Company
Vice Chairman of the Board of SEGA CORPORATION (nowSEGA Games Co., Ltd.)
Vice Chairman of the Board of PHOENIX RESORT CO.,LTD. (current position)
Member of the Board of Directors of PARADISESEGASAMMY Co., Ltd. (current position)
Vice Chairman of the Board of SEGA Holdings Co., Ltd.
(current position)
Chairman, Representative Director and President of SEGALIVE CREATION Inc. (now CA Sega Joypolis Ltd.)
Chairman of the Board of Sega Sammy Golf Entertainment
Inc. (current position)
President of SEGA SAMMY BUSAN INC. (current position)
Senior Executive Vice President (Director of the Board) of theCompany (current position)
Chairman and Director of CA Sega Joypolis Ltd. (current
position)

Number of theCompany’s
Shares Owned

12,100shares[Reason for nomination as candidate for Director]
Mr. Naoya Tsurumi has been engaged in the Resort Business, one of the main focuses of the Company, and promoting theIntegrated Resort Business overseas with his wealth of experience as a corporate manager of the Company and Group
companies.
We seek appointment of Mr. Naoya Tsurumi as Director as we expect he will continue to benefit the decision making of theCompany’s Board of Directors with such experience and career record, and contribute to improving the corporate value of theCompany.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Nominee
No.

4

Name
(Date of Birth)

Koichi Fukazawa(November 2,
1965)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Apr.

1990

Jul.
Aug.

2003
2003

Oct.

2004

Oct.

2004

Jun.

2005

Jan.

2007

Aug.

2007

May

2008

Apr.

2009

Jun.

2009

Apr.

2014

Apr.
Jun.
Jun.

2015
2015
2016

Joined The Sanwa Bank, Limited (now The Bank ofTokyo-Mitsubishi UFJ, Ltd.)
Joined Sammy Corporation
Vice President, Executive Officer and Managing Director of
President’s Office of the above
Vice President, Executive Officer and Managing Director of
President’s Office of the Company
Vice President, Executive Officer and Managing Director of
Chairman’s Office and President’s Office of SEGACORPORATION (now SEGA Games Co., Ltd.)
Senior Vice President (Director of the Board) and Managing
Director of Chairman’s Office and President’s Office of theabove
President (Representative Director) of SEGA SAMMY ASSETMANAGEMENT INC. (now MARZA ANIMATION
PLANET INC.)
Senior Executive Officer and in charge of the
Corporate Strategy and External Affairs of the Company
Senior Vice President (Director of the Board) and Managing
Director of New Business Division of SEGA CORPORATION(now SEGA Games Co., Ltd.)
Officer of Keizai Doyukai (Japan Association of Corporate
Executives) (current position)
President (Representative Director) of SEGASAMMY
VISUAL ENTERTAINMENT INC. (now MARZAANIMATION PLANET INC.)
Senior Executive Vice President (Representative Director) of
SEGA TOYS CO., LTD.
Senior Vice President (Director of the Board) of the above
Senior Vice President (Director of the Board) of the Company
Executive Vice President and CFO (Director of the Board) of
the Company (current position)

Number of theCompany’s
Shares Owned

20,000shares[Reason for nomination as candidate for Director]
Mr. Koichi Fukazawa has served as a corporate manager of the Group companies in various fields including corporate planning,
administration and new businesses. He currently serves as CFO of the Company and promotes the Integrated Resort Business inJapan.
We seek appointment of Mr. Koichi Fukazawa as Director as we expect he will continue to benefit the decision making of theCompany’s Board of Directors with such wealth of experience and career record, and contribute to improving the corporate
value of the Company.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Nominee
No.

5

Name
(Date of Birth)

Hideki Okamura(February 1, 1955)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Jan.
Jun.
Jun.

1987
1997
2002

Jun.

2003

Jun.
Jun.

2004
2004

Oct.
Jun.

2004
2007

Jun.

2008

Apr.
Apr.

2014
2014

Jun.
Apr.

2014
2015

Apr.
Apr.

2015
2015

Apr.

2015

Apr.

2015

Apr.

2015

Apr.

2015

May

2015

Sep.

2015

Apr.

2017

Apr.

2017

Apr.

2017

Apr.

2017

Joined SEGA Enterprises, Ltd. (now SEGA Games Co., Ltd.)
Senior Vice President (Director of the Board) of the above
Vice President and Representative Director of DigiCube Co.,Ltd.
Vice President, Senior Executive Officer of SEGACORPORATION (now SEGA Games Co., Ltd.)
Director of the Board of TMS ENTERTAINMENT CO., LTD.
Executive Vice President (Director of the Board) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Senior Vice President (Director of the Board) of the Company
Senior Vice President (Director of the Board) of SEGACORPORATION (now SEGA Games Co., Ltd.)
President (Representative Director) of TMS
ENTERTAINMENT CO., LTD.
Vice Chairman of the Board of the above
President and COO (Representative Director) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Senior Vice President (Director of the Board) of the Company
President and COO (Representative Director) of SEGA
Holdings Co., Ltd. (current position)
Chairman of the Board of SEGA Games Co., Ltd.
Chairman of the Board of SEGA Interactive Co., Ltd. (current
position)
Chairman of the Board (Representative Director) of TMS
ENTERTAINMENT CO., LTD. (current position)
Chairman of the Board (Representative Director) of SEGATOYS CO., LTD. (current position)
Chairman of the Board (Representative Director) of MARZAANIMATION PLANET INC.
Chairman of the Board (Representative Director) of
DARTSLIVE Co., Ltd. (current position)
Chairman of the Board (Representative Director) of SEGA
Games Co., Ltd.
President (Director of the Board) of SEGAENTERTAINMENT Co., Ltd.
Executive Vice President (Director of the Board) of theCompany (current position)
Senior Vice President (Director of the Board) of SEGA Games
Co., Ltd. (current position)
President (Representative Director) of MARZA ANIMATION
PLANET INC. (current position)
Chairman of the Board of SEGA ENTERTAINMENT Co.,
LTD. (current position)

Number of theCompany’s
Shares Owned

19,112shares[Reason for nomination as candidate for Director]
Mr. Hideki Okamura has served as a corporate manager of entertainment content business companies of the Group over the years
and contributed to the improvement of corporate earnings.
We seek appointment of Mr. Hideki Okamura as Director as we expect he will continue to benefit the decision making of theCompany’s Board of Directors with such experience and career record, and contribute to improving the corporate value of theCompany.

57

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

NomineeNo.

Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Apr.
Sep.

1964
1970

Number of theCompany’s
Shares Owned

Joined Tohato Tokyo Seika Co., Ltd. (now Tohato Inc.)
Joined General Aircon Inc. (now DENSO AIRCOOLCORPORATION)
Apr.
1981 Registered with the Japan Federation of Bar Associations
Apr.
1981 Joined Yanagita Sakuragi Law Office (now Yanagida &Partners)
Sep.
1984 Partner of Lillick McHose and Charles Law Office (nowPilsbury Winthrop Shaw Pittman LLP) (current position)
Yuji Iwanaga
6−
Dec.
1984 Registered with the State Bar of California(April 3, 1941)
Apr.
2003 Outside Director of Manufacturers Bank
Jun.
2005 Outside Director of JMS North America Corporation (current
position)Jun.
2006 Outside Director of TAIYO YUDEN CO., LTD.
Jun.
2007 Senior Vice President (Director of the Board (External)) of theCompany (current position)
Jun.
2016 Advisor of TAIYO YUDEN CO., LTD. (current position)[Reason for nomination as candidate for External Director]
Mr. Yuji Iwanaga has performed exceptional achievements concerning international corporate legal affairs of global
corporations from his expert vantage point as an international attorney-at-law. Although he has not been involved in corporate
management other than having served as External Directors, we seek appointment of Mr. Yuji Iwanaga as External Director as
we deem that he will continue appropriately executing his duties as an External Director with his abundant experience andsophisticated knowledge of international legal affairs.
Apr.
1988 Joined TOKYO GAS Co., Ltd.
Sep.
1997 Joined NTT Mobile Communications Network, Inc. (now NTT
DOCOMO, Inc.)
Jun.
2005 Executive Officer and General Manager of Multimedia
Services Department of the aboveMay
2008 Guest Professor, Graduate School of Media and Governance of
Keio UniversityJun.
2008 Senior Vice President (Director of the Board (External)) of theCompany (current position)
Jun.
2008 Director of PIA Corporation (current position)
Jun.
2008 Outside Director of transcosmos inc. (current position)
Jun.
2008 Director of NTT Resonant Inc. (current position)
2,000
Takeshi Natsuno
7(March 17, 1965)
sharesDec.
2008 Director of DWANGO Co., Ltd. (current position)
Jun.
2009 Outside Director of DLE, Ltd. (current position)
Sep.
2009 Outside Director of GREE, Inc. (current position)Dec.
2010 Outside Director of U-NEXT Co., Ltd. (current position)
Apr.
2013 Guest Professor, Faculty of Environment and Information
Studies of Keio University
Nov.
2013 Guest Professor, Graduate School of Media and Governance of
Keio University (current position)Oct.
2014 Director, Member of the Board of KADOKAWA DWANGOCORPORATION (current position)
Aug.
2016 Outside Director of Oracle Corporation Japan (current
position)[Reason for nomination as candidate for External Director]
We seek appointment of Mr. Takeshi Natsuno as External Director as we deem that he will continue to provide valuable
opinions and suggestions on the management of the Company based on his wealth of experience as a corporate manager andsophisticated technical knowledge related to the information communication field.

58

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

NomineeNo.

Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position and Responsibilities at the Company
Apr.

Number of theCompany’s
Shares Owned

1974

Joined Sumitomo Bank (now Sumitomo Mitsui Banking
Corporation)
Apr.
2001 Executive Officer, Head of Osaka Corporate Banking Division
II of Sumitomo Mitsui Banking Corporation
Apr.
2005 Managing Executive Officer, Deputy Head of Whole sale
Banking Unit (in charge of East Japan) of the aboveJun.
2007 Executive Vice President and Representative Director of NIF
SMBC Ventures Co., Ltd. (now SMBC Venture Capital Co.,
Ltd.)
Kohei Katsukawa
8−Jul.
2010 President and Representative Director of SMBC Venture(January 8, 1951)
Capital Co., Ltd.
Apr.
2014 President and Representative Director of GINSEN Co., Ltd.
Dec.
2014 Outside Director of Kyoto University Innovation Capital Co.,
Ltd. (current position)
Jun.
2016 Senior Vice President (Director of the Board (External)) of theCompany (current position)
Jun.
2016 Special Advisor of GINSEN Co., Ltd. (current position)
Jun.
2016 Outside Director of ELECOM CO., LTD (current position)[Reason for nomination as candidate for External Director]
We seek appointment of Mr. Kohei Katsukawa as External Director as we deem that he will continue to provide valuable
opinions and suggestions on the management of the Company based on his wealth of experience and broad-ranging insight
related to finance which he gained over many years in financial institutions.
Notes: 1. The Company conducts transactions relating to intermediary services for insurance with FSC Co., Ltd., of which Mr.
Hajime Satomi and Mr. Haruki Satomi own a majority of voting rights.
2. There are no special interests between the Company and the other Director-nominees.
3. Mr. Yuji Iwanaga, Mr. Takeshi Natsuno and Mr. Kohei Katsukawa are External Director-nominees, and theCompany has notified the Tokyo Stock Exchange (TSE) of their inauguration as independent directors under the
regulations of TSE.
4. The Company has concluded a liability agreement that limits his liability to the minimum liability amount stipulated
in laws and regulations with Mr. Yuji Iwanaga, Mr. Takeshi Natsuno and Mr. Kohei Katsukawa, respectively. If the
proposal to elect Directors is approved at the Ordinary General Meeting of Shareholders, the Company plans tocontinue limited liability agreements with Mr. Yuji Iwanaga, Mr. Takeshi Natsuno and Mr. Kohei Katsukawa.
5. Mr. Yuji Iwanaga, Mr. Takeshi Natsuno and Mr. Kohei Katsukawa shall have served as External Director of theCompany for ten years, nine years and one year, respectively, at the conclusion of this Ordinary General Meeting of
Shareholders.
6. Mr. Takeshi Natsuno has formerly served as External Director of the Company’s subsidiary SEGA Networks Co.,
Ltd. (now SEGA GAMES Co., Ltd.).
7. Other positions and responsibilities held at the Company by each of the candidates who are currently serving as
Director of the Company are stated in “1. Directors and Audit & Supervisory Board Members (As of March 31,2017)” of “IV. Company Directors and Audit & Supervisory Board Members” of the Business Report.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Proposal 2: To elect four (4) Audit & Supervisory Board Members
The terms of office of all four (4) Audit & Supervisory Board Members will expire at the conclusion of thisOrdinary General Meeting of Shareholders. Accordingly, we are seeking the election of four (4) Audit &Supervisory Board Members.
We have obtained the consent of the Audit & Supervisory Board with respect to the submission of this
proposal.
The nominees for Audit & Supervisory Board Members are as described below:
NomineeNo.

Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position at the Company
May

2005

Number of theCompany’s
Shares Owned

Joined SEGA CORPORATION (now SEGA Games Co., Ltd.)as Head Councilor
Jun.
2005
Vice President, Executive Officer and Managing Director of
Office of China and Asia Business Management of the above
Aug. 2006 President of Sega Networks (China) Co., Ltd.
Jun.
2008 Vice President, Executive Officer and Managing Director of
Business Administration Department of Sammy Corporation
Aug. 2008 Vice President, Executive Officer and Managing Director of
Corporate Division of the above
Apr.
2009 Senior Vice President (Director of the Board) and Managing
Director of Corporate Division of the above
24,000
Shigeru Aoki
1
Jun.
2011
Executive Vice President (Director of the Board) andshares(January 3, 1952)
Managing Director of Corporate Division of the above
Apr.
2012 President and COO (Representative Director) of the aboveJun.
2013 Senior Vice President (Director of the Board) of the Company
May2015 Supervisor of Japan Pachinko Machine Industry Association
Apr.
2016 Vice Chairman of the Board (Representative Director) of
Sammy CorporationJun.
2016 Standing Audit & Supervisory Board Member of the Company(current position)
Aug. 2016 Audit & Supervisory Board Member of Japan Multimedia
Services Corporation (current position)[Reason for nomination as candidate for Audit & Supervisory Board Member]
We seek appointment of Mr. Shigeru Aoki as Audit & Supervisory Board Member as we deem that he will continue to provide
valuable opinions and suggestions on the management of the Company based on his knowledge as a corporate manager, which
he has gained from such roles as Director of the Company as well as President (Representative Director) of its subsidiary(Sammy Corporation).

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

NomineeNo.

Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company,
and Position at the Company
Apr.
Jan.

2003
2004

Number of theCompany’s
Shares Owned

Joined Sammy Corporation as Director of Audit OfficeDirector of Legal Department of Administration Division of
the above
Nov.
2006 Director of Audit & Supervisory Board Members’ Office of theCompanyJun.
2014 Audit & Supervisory Board Member of the Company (current
position)Jun.
2014 Standing Audit & Supervisory Board Member of SEGACORPORATION (now SEGA Games Co., Ltd.)
Apr.
2015 Audit & Supervisory Board Member of SEGA Holdings Co.,
Yukito Sakaue
3,100
Ltd.
2
(December 23,
shares1951)
Apr.
2015 Audit & Supervisory Board Member of SEGA Interactive Co.,
Ltd. (current position)
Jun.
2015 Standing Audit & Supervisory Board Member of SEGA
Holdings Co., Ltd. (current position)
Jun.
2015 Audit & Supervisory Board Member of SEGA Games Co.,
Ltd. (current position)
Jun.
2015 Audit & Supervisory Board Member of TMS
ENTERTAINMENT CO., LTD. (current position)
Jun.
2015 Audit & Supervisory Board Member of SEGAENTERTAINMENT CO., LTD. (current position)[Reason for nomination as candidate for Audit & Supervisory Board Member]
We seek appointment of Mr. Yukito Sakaue as Audit & Supervisory Board Member as we deem that he will continue to provide
valuable opinions and suggestions on the management of the Company based on his knowledge of audit, corporate ethics andcorporate governance which he gained through his duties concerning legal and audit issues since he joined the Company’s
subsidiary (Sammy Corporation).
Jun.
1990 Director of Cosmo Securities Co., Ltd. (now IwaiCosmo
Securities Co.,Ltd.)
Mar.
1996 Managing Director of the aboveJun.
1999 Managing Director of Cosmo Investment Management Co.,
Ltd. (now Meiji Yasuda Asset Management Company Ltd.)
Jun.
2005 Standing Audit & Supervisory Board Member of Sammy
Networks, Co., Ltd.
Jun.
2008 Substitute Audit & Supervisory Board Member (External) of
the Company
Tomio KazashiJun.
2009 Standing Audit & Supervisory Board Member (External) of the2,665
3(November 24,
Company (current position)
shares1944)
Jun.
2009 Audit & Supervisory Board Member of Sammy Networks Co.,
Ltd.
Jun.
2009 Audit & Supervisory Board Member of SEGA TOYS CO.,
LTD.
Jul.
2012 Audit & Supervisory Board Member of SEGA Networks Co.,
Ltd. (now SEGA Games Co., Ltd.)Jul.
2015 Audit & Supervisory Board Member of SEGA LIVECREATION Inc. (now CA Sega Joypolis Ltd.)
Oct.
2015 Audit & Supervisory Board Member of SEGA SAMMY
BUSINESS SUPPORT INC. (current position)[Reason for nomination as candidate for Audit & Supervisory Board Member (External)]
We seek appointment of Mr. Tomio Kazashi as Audit & Supervisory Board Member (External) as we deem that he will continue
to provide valuable opinions and suggestions on the management of the Company based on his knowledge of corporate
management that he gained through his roles in management and as an Audit & Supervisory Board Member.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

Nominee No.

Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company
and Position at the Company
Apr.
May
Jun.

1978
2000
2004

Number of theCompany’s
Shares Owned

Registered with the Japan Federation of Bar Associations
Established Enomoto Law Office
Audit & Supervisory Board Member (External) of Sammy
Networks Co., Ltd.
Jun.
2004 Audit & Supervisory Board Member (External) of SEGACORPORATION (now SEGA Games Co., Ltd.)
Jun.
2005 Substitute Audit & Supervisory Board Member (External) of
the Company
Jun.
2006 Outside Audit & Supervisory Board Member of Nippon Koei
Mineo EnomotoCo., Ltd. (current position)
2,000
4(December 12,
shares
Jun.
2007
Audit
&
Supervisory
Board
Member(External)
of
the
1950)
Company (current position)
Jun.
2014 Outside Audit & Supervisory Board Member of SHIMOJIMA
Co., Ltd. (current position)
Apr.
2015 Audit & Supervisory Board Member of SEGA Holdings Co.,
Ltd. (current position)
Apr.
2015 Audit & Supervisory Board Member of SEGA Games Co.,
Ltd.
Apr.
2015 Audit & Supervisory Board Member of SEGA Interactive Co.,Ltd.
[Reason for nomination as candidate for Audit & Supervisory Board Member (External)]
We seek appointment of Mr. Mineo Enomoto as Audit & Supervisory Board Member (External) as we deem that he willcontinue to provide valuable opinions and suggestions on the management of the Company based on his abundant experienceand deep insight as a lawyer.
Notes: 1. There are no special interests between each candidate and the Company.
2. Mr. Tomio Kazashi and Mr. Mineo Enomoto are Audit & Supervisory Board Member (External) nominees, and theCompany has notified the Tokyo Stock Exchange (TSE) of their inauguration as independent directors under the
regulations of TSE.
3. The Company has concluded a limited liability agreement that limits his or her liability to the minimum liability
amount stipulated in laws and regulations with Mr. Shigeru Aoki, Mr. Yukito Sakaue, Mr. Tomio Kazashi, and Mr.
Mineo Enomoto, respectively. If the proposal to elect the Audit & Supervisory Board Members is approved at theOrdinary General Meeting of Shareholders, the Company plans to continue limited liability agreements with Mr.
Shigeru Aoki, Mr. Yukito Sakaue, Mr. Tomio Kazashi and Mr. Mineo Enomoto.
4. Mr. Tomio Kazashi and Mr. Mineo Enomoto shall have served as Audit & Supervisory Board Member (External) of
the Company for eight years and ten years, respectively, at the conclusion of this Ordinary General Meeting of
Shareholders.
5. Mr. Tomio Kazashi has formerly served as Audit & Supervisory Board Member of the Company’s subsidiary
Sammy Networks Co., Ltd., SEGA TOYS CO., LTD. and SEGA Networks Co., Ltd. (now SEGA Games Co., Ltd.).
In addition, Mr. Tomio Kazashi currently serves as Audit & Supervisory Board Member of the Company’s specified
business partner, SEGA SAMMY BUSINESS SUPPORT INC.
6. Mr. Mineo Enomoto has formerly served as Audit & Supervisory Board Member of the Company’s subsidiary
Sammy Networks Co., Ltd., SEGA CORPORATION (now SEGA Games Co., Ltd.) and SEGA Interactive Co., Ltd.
In addition, Mr. Mineo Enomoto currently serves as Audit & Supervisory Board Member of the Company’s
specified business partner, SEGA Holdings Co., Ltd.
7. A relative of Mr. Mineo Enomoto within the third degree of kinship is an employee of the Company’s specified
business partner, SEGA Games Co., Ltd.

62

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Proposal 3: To elect one (1) Substitute Audit & Supervisory Board Member
We are seeking to elect one (1) Substitute Audit & Supervisory Board Member (External), in preparation forthe case where the number of Audit & Supervisory Board Members (External) becomes less than thenumber prescribed by the laws and regulations.
We have obtained the consent of the Audit & Supervisory Board with respect to the submission of this
proposal.
The nominee for Substitute Audit & Supervisory Board Member (External) is as described below:
Name(Date of Birth)

Brief Career Profile, Important Concurrent Duties outside the Company
and Position at the Company

Registered with the Japan Federation of Bar Associations
284
Established Ogata Izumi Law OfficesharesAudit & Supervisory Board Member of PHOENIX RESORT
CO., LTD (current position)[Reason for nomination as candidate for Substitute Audit & Supervisory Board Member (External)]
We seek appointment of Mr. Izumi Ogata as Substitute Audit & Supervisory Board Member (External) as we deemthat his considerable insight accumulated through his long career as an attorney-at-law will benefit the Company’s
audit and compliance activities, and that he will be able to provide appropriate advice and suggestions to the
management of the Company although he has not been involved in corporate management other than having served as
outside directors.
*Izumi Ogata(August 10, 1947)

Apr.
Jan.
May

Number of theCompany’s
Shares Owned

1985
1987
2012

(A nominee marked with “*” is a new nominee for Substitute Audit & Supervisory Board Member.)Notes: 1. There are no special interests between Mr. Izumi Ogata and the Company.
2. Mr. Izumi Ogata is an Audit & Supervisory Board Member of the Company’s specified business partner, PHOENIXRESORT CO., LTD.
3. The Company’s specified business partners, Sammy Corporation and RODEO Co., Ltd. have entered into a legal
advisory contract with Mr. Izumi Ogata and pay advisory fees monthly, which is comparable in amount to advisory
fees that these companies pay to other law firms. In addition, he does not receive substantial financial reward fromthe Group in terms of independence criteria for Outside Directors stipulated by the Company.
4. Mr. Izumi Ogata is a candidate for Substitute Audit & Supervisory Board Member (External).
5. The Company intends to notify the Tokyo Stock Exchange (TSE) of the inauguration of Mr. Izumi Ogata as
independent director under the regulations of TSE, if he assumes the position as Audit & Supervisory Board Member(External).
6. If Mr. Izumi Ogata assumes the position as Audit & Supervisory Board Member (External), the Company plans toconclude a limited liability agreement that limits his liability to the minimum liability amount stipulated in laws andregulations with him.

63