Annual Report 2011

NAMCO BANDAI
Holdings Inc.

The BANDAI NAMCO Group develops entertainment products and services in a wide range of fields, including
toys, arcade game machines, game software, visual and music software, and amusement facilities. By building
a strong operational foundation in the domestic market, as well as aggressively developing operations inoverseas markets to secure future growth, we aim to be a “Globally Recognized Entertainment Group.”

Our Mission Statement

Dreams, Funand Inspiration“Dreams, Fun and Inspiration” are the Engine of Happiness.
Through our entertainment products and services, BANDAI NAMCO will continue
to provide “Dreams, Fun and Inspiration” to people around the world, based on our
boundless creativity and enthusiasm.

Our Vision

The Leading
Innovator in Global
Entertainment
As an entertainment leader across the ages, BANDAI NAMCO is constantly
exploring new areas and heights in entertainment. We aim to be loved bypeople who have fun and will earn their trust as “the Leading Innovator in
Global Entertainment.”

The PointBANDAI NAMCO Group Annual Report 2011: Key Points
This annual report explains the initiatives implemented by the Group in FY 2011.3
and the Group’s management policies and business strategies in FY 2012.3.

Progress with the Restart Plan
The Restart Plan was launched in April 2010 with the objective of bolstering the Group’s
operational foundation to support the implementation of the current Mid-term Business
Plan. This section describes the progress that has been made with the Restart Plan.
Page 14: Message from the President

Second Year of the Current Mid-term Business Plan
Targeting the preparation of a foundation for global growth, the Group advanced the Restart
Plan and implemented a range of initiatives. This section covers the results of those efforts.
Page 4: Consolidated Financial Highlights
Page 6: Review of SBU Operations
Page 14: Message from the President

Fiscal 2012.3: The Final Year of the Mid-term Business Plan
This section describes the measures that will be implemented in the final year of the current
Mid-term Business Plan, in preparation for the next plan.
Page 14: Message from the President
Page 20: Special Feature: Solid Base—Toys and Hobby SBU

The BANDAI NAMCO Group will do its utmost to achieve
its medium-to-long-term vision of being a “Globally
Recognized Entertainment Group.”1

Contents

3 PROGRESS
Progress and Results
4 Consolidated Financial Highlights
6 Review of Strategic Business Units (SBU) Operations
12 Mid-term Business Plan

13 FOCUSThe Next Step
14 Message from the President
20 Special Feature: Solid Base—Toys and Hobby SBU

26

Corporate Governance28

The BANDAI NAMCO Group’s CSR Initiatives

30

Overview of Main Group Companies

32

Directors and Corporate Auditors

33

Financial Section

67

Corporate Data

Forward-Looking Statements
The forward-looking statements in this annual report are based on the information available to management as of August 2011, and include various risks anduncertainties. Accordingly, actual results may differ materially from these projections for a variety of reasons. Major factors that could influence actual results
include changes in the BANDAI NAMCO Group’s operating environment, market trends, and exchange rate fluctuations.
Notes
1. All figures in this report are rounded to the nearest unit.
2. FY 2011.3 and the year under review represent the one-year period ended March 31, 2011.
3. Figures in this annual report are as of August 2011.

2

PROGRESS
Progress and Results
In FY 2011.3, the Toys and Hobby business recorded strong results inJapan, and the Content business and Amusement Facility businesshad a certain degree of success with the initiatives implemented
under the Restart Plan. Consequently, we recorded substantial
year-on-year improvements in our results.

3Consolidated Financial Highlights
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
For the years ended March 31

Millions of yen% Change

Thousands of U.S.
dollars*1 except per
share data2010 vs 2011

2011

2009

2010

2011

Net sales¥ 426,400¥ 378,547¥ 394,179

4.1%$ 4,740,577

Gross profit

146,023

128,753

139,415

8.3

1,676,668

Operating income

22,3481,884

16,338767.2

196,488

Recurring income*2

24,513

1,908

16,399759.5

197,222

Net income (loss)

11,830(29,929)

1,848—

22,225

Capital expenditures

17,481

14,41813,439–6.8

161,624

Depreciation and amortization

22,54618,98918,001–5.2

216,488

Cash flows from operating activities

19,301

10,582

22,562113.2

271,341

Cash and cash equivalents at end of year

110,037

97,777

89,330–8.6

1,074,324¥ 363,445¥ 325,936¥ 308,269–5.4%$ 3,707,384

260,579

229,012

213,693–6.7

2,569,970

For the YearAt Year-End
Total assets
Total net assets

Per Share Data

Yen

% Change

Net income (loss) (Basic)

¥

47.95

¥ (123.98)

Total net assets

1,067.71

938.74896.83

–4.5

10.79

Cash dividends

24.00

24.00

24.00

—

0.29

Main Financial Indicators

¥

7.71

%

Return on equity (ROE)

4.3%–12.4%

0.8%

Return on assets (ROA)

6.3

0.6

5.2

Overseas sales proportion

25.1

24.4

21.9

Operating income margin

5.2

0.5

4.1

Shareholders’ equity ratio

70.9

69.5

68.8

*1 U.S. dollar amounts have been translated, for convenience only, at the rate of ¥83.15=U.S.$1, the approximate exchange rate on theTokyo Foreign Exchange Market on March 31, 2011.
*2 Recurring income is a Japanese accounting term denoting income before extraordinary items.

4—%

U.S.dollars*1$ 0.09

Net Sales (¥ billion) / Overseas Sales Proportion (%)
2007

Gross Profit (¥ billion) / Gross Profit Margin (%)
459.1

22.4

2008

460.5

24.7

2009

426.4

25.1

2010

378.5

24.4

2011

394.2

21.9%

Operating Income (¥ billion) / Operating Income Margin (%)
2007

42.2

9.2

2008
2009

2011

1.9
4.1%

16.3

Total Assets (¥ billion) / ROA (%)
2007

11.5
8.8

0.06

2011

2007

24.3
32.7
11.8

2010

–29.9

2011

1.8

284.3

9.4

260.6

4.3

229.0

–12.4

2011

213.7

0.8%

Free Cash Flows (¥ billion)
27.2
20.0

2008
20.8

2009

9.0

2010

12.5

0.7

2011

3.7

289.9

11.7

2007

0.08

2010

139.4

Net Income (Loss) (¥ billion)

2010

16.6

0.06

2009

35.4%

2009

13.9

0.05

146.0
128.8

2011

2007

Interest-Bearing Debt (¥ billion) / Debt/Equity Ratio (times)
2007

34.0

2008

308.3

5.2%

2008

2010

413.0

325.9

0.6

2011

34.2

408.5

363.4

6.3

2010

35.6

2009

Total Net Assets (¥ billion) / ROE (%)

2008
2009

2008

164.1

2009

22.3

5.2
0.5

2010

168.1

36.6

2008

33.4

7.3

2007

15.2

0.02 times*Free cash flows = Net cash provided by operating activities + Net cash used
in investing activities

Contribution to Net Sales by Segment (2011)

Consultation: Contribution to Net Sales byGeographic Region (2011)
Asia, excluding Japan

Other
4.4%

EuropeAmusement Facility

4.3%

9.4%

14.9%

Americas
Toys and Hobby

7.1%

37.8%

Content

Japan
79.2%

42.9%
Note: Percentage figures are calculated based on sales before
elimination of internal transactions.

Note: Percentage figures are calculated based on external sales.
Figures are estimates based on management accounting.

5

Review of SBU Operations

Toys and Hobby
Manufacturing and marketing of toys, cards, plastic models, candy toys, vending machine capsule products, apparel,sundries, and other products

Business Performance
For the fiscal years ended March 31

Net sales
Segment income
Segment income margin

Millions of yen
Results in 2009

Results in 2010

Results in 2011

% change

Forecasts for2012¥165,725¥148,844¥158,374

6.4%¥160,000

11,533

10,787

13,81328.1%

10,500

7.0%

7.2%

8.7%

—

6.6%

Note: Shows operating income for 2009

Sales Ratio in the Fiscal Year
Ended March 201137.8%
Note: The percentage figure is calculated
based on sales before eliminationof internal transactions.

Results in FY 2011.3: Key

The SBU turned in a strong performance in domestic operations,which offset sluggish results in overseas operations, centered on the
United States. As a result, the SBU recorded higher sales and profits.
Japan• Long-established character toys, such as Kamen Rider / OOO and HeartCatch PrettyCure, recorded very strong results.
• A strong start was registered by Kaizoku Sentai Gokaiger, in the Super Sentai (POWER RANGERS) series that was broadcast
from February 2011.
• Strong performances were turned in by digital card games, such as Dragon Ball Heroes, and by PRO BASEBAll OWNERS
lEAGuE, a card game linked with online games.
• In peripheral businesses, such as candy toys and children’s apparel, results improved due to product development linked
with each category, with a focus on popular characters, such as the Kamen Rider series.

Overseas• In the Americas and Europe, results were weak as the POWER RANGERS series was broadcast on TV less frequently.
• Targeting growth over the medium to long term, we worked to develop new categories and content, but results did notreach the level achieved in the previous year, when BEN10 recorded a strong performance.

The Tamagotchi series remains consistently
popular as an established product for girls.
These long-established characters for boys havebeen popular with children for many years.

6

This plastic model of the Mobile Suit Gundam series,
which marked the 30th anniversary of its debut in
2010, has sold more than 400 million units.

Strategic Themes

We will continue to take the offensive by implementing
our strategy of achieving a dominant No.1 position in
Japan and by continuing to invest in overseas growth.
Operating Environment• In the domestic market, ongoing trend toward fewer children• Diversification of consumer needs
Strategic Points in FY 2012.3

Japan

Reinforce stable foundation through promotion of long-established character products
Further expand share of card business
Expand targeted customers to include new customer groups, such as adults

Overseas

Implement strategy aligned with regional characteristics
Regain popularity of POWER RANGERS series
North America:

Conduct development centered on three pillars—
POWER RANGERS, Thunder Cats, and BEN10

Europe:Implement detailed product promotion and marketing in line with thecharacteristics of various regions

Asia:

Conduct lateral development of content from Japan

Sales of Major Characters (Group total)¥ billion

Market Data

FY2009.3 FY2010.3 FY2011.3

42.8

34.6

38.2

Size of Japan’s Toy Market (¥ billion)

Kamen Rider series

10.4

20.0

26.4

FY2009.3

655.3

POWER RANGERS series

25.6

17.5

13.7

FY2010.3

647.4
669.9

Mobile Suit Gundam series

ONE PIECE

4.6

4.3

15.5

FY2011.3

PrettyCure series

11.3

12.8

13.5

Source: Survey by the Japan Toy Association

BEN10

13.0

17.9

12.0

This mini-car series, which isbased on the concept oftransformation, was launched
as a new category, “VooV.”
These high-quality collectible
products are designed forolder consumers.

In the POWER RANGERS
series, the heroes from thedomestic series in Japan
have been remade foroverseas markets.

With the launch ofappealing characters,
card operations have
proven popular with awide range of customers.

7

Content
Developing and marketing of arcade game machines, game software, network contents, and prizes for amusement machines;
Producing visual and music content; developing and marketing visual package software and music software; distributing of video
on demand content; conducting live entertainment operations

Business Performace

Millions of yen
Results in 2009

Results in 2010

Results in 2011

% change

Forecasts for
2012¥184,529¥167,471¥179,917

7.4%¥180,000

Segment income (loss)

11,648(7,761)

3,092

—

6,500

Segment income margin

6.3%

—%

1.7%

—

3.6%

For the fiscal years ended March 31

Net sales

Notes: Shows operating income for 2009
The Game Contents SBU and the Visual and Music Content SBU were integrated from the fiscal year ended March 31, 2011,
and the results in the year ended March 31, 2009 are presented as the simple sum of the results of the two SBUs.

Sales Ratio in the Fiscal Year
Ended March 201142.9%
Note: The percentage figure is calculated
based on sales before eliminationof internal transactions.

Results in FY 2011.3: Key

Due to the effects of the Restart Plan, earnings improved andthe Content SBU recorded a profit.
Arcade Game Machines• Favorable results were recorded by MOBIlE SuIT GuNDAM EXTREME VS. and popular character prizes centeredon ONE PIECE.

Game Software• As a result of quicker responses to customer needs, software, such as GOD EATER BuRST and AKB1/48: Idol to Koishitara...
proved popular.
• NARuTO Shippuden: ultimate Ninja Storm 2 sold more than a million units worldwide.
• New challenge titles that were developed with the aim of building new franchises, centered on overseas markets,
did not achieve the expected level of results.

Network Content• The number of dues-paying subscribers declined, but a favorable start was recorded by Gundam Royale, a content
for SNS (Social Networking Services) platforms that was launched in December 2010.

Visual and Music Content• In addition to strong package sales of Mobile Suit Gundam uC (unicorn), profitability was enhanced through selection
and concentration in titles.

Other• In the previous fiscal year, an impairment loss was taken on goodwill for certain subsidiaries. Consequently, amortization of
goodwill declined year on year, and measures to increase efficiency were implemented, leading to a decline in fixed cost.

Game Software
Targeting a wide range of customers, we offer a well-balanced
lineup of software for multiple platforms.

8

Arcade Game Machines
Our business in this field centers on
machines that can only be enjoyedat amusement facilities.

Strategic Themes

We will work to maximize content value by making speedy
responses to changes in the business environment.
Operating Environment• Dramatic changes in the operating environment• Diversification of platforms, customers, and customer needs
Strategic Points in FY 2012.3

Arcade Game Machines

Leverage synergies with amusement facilities through the introduction of popular

Game Software

Shift to domestic development, increase quality and schedule control

game machines and prizes
Achieve balanced title composition, with a focus on franchise titles

Network Content
Visual and Music Content

Strengthen content utilization in new content outlets, such as SNS
Focus on creation of new content, and promote popular titles

Market Data

Unit Sales of Game Software by Region
FY2010.3
Number of Unit sales
new titles (thousand)

Japan
U.S.
EuropeAsia
Group total
Localized versions
Group total (Afterelimination of localizedversions)

93
39
52
41
225
139

8,878
5,829
7,326
704
22,73786

22,737FY2011.3
Number of Unit sales
new titles (thousand)

91
46
43
59
239
151

9,264
7,284
4,013
344
20,90588

20,90523.8%¥56.0 billion
Total

179.9 billion

1.0%

Others 11.6%

LEVEL-5 3.1%
Sony ComputerEntertainment Japan
SEGA SAMMY
4.6%
HOLDINGS

Nintendo

BANDAI
NAMCO
Group

30.1%

12.2%

KONAMI 10.1%

Arcade Game Machine¥42.7 billion

DWANGOTECMO KOEI
2.3%
HOLDINGS

3.2%

Content SBU Net Sales (FY2011.3)
Others, Elimination

Share of Unit Sales by Group, Domestic Manufacturer (2010)

31.1%

¥

CapcomSquare Enix 10.3%

11.5%

Source: Famitsu Game White Paper 2011 Published by: ENTERBRAIN INC.
(Period: December 28, 2009 to December 26, 2010)

Game Software¥81.2 billion
45.1%

Network Content
In line with diversifying needs, we
introduced content for new outlets,
such as SNS.

Motion Pictures
Providing diverse motion picturesin a wide range of formats, such as
movies, TV broadcasts, Blu-ray
Disc, DVD, and on-line distribution.

Motion Pictures
Taking on new challenges tocreate appealing content.

Prizes for ArcadeGame Machines
We offer popularcharacter goods andoriginal character
goods as prizes.

9Amusement Facility
Planning and operating of amusement and other facilities

Business Performace

Millions of yen
Results in 2009

Results in 2010

Results in 2011

% change

Forecasts for
2012¥77,270¥65,363¥62,338–4.6%¥61,000

Segment income

393

285

1,779

524.2%

1,500

Segment income margin

0.5%

0.4%

2.9%

—

2.5%

For the fiscal years ended March 31

Net sales

Note: Shows operating income for 2009

Sales Ratio in the Fiscal Year
Ended March 2011

14.9%
Note: The percentage figure is calculated
based on sales before eliminationof internal transactions.

Results in FY 2011.3: Key

The development of differentiated facilities supported
recovery in sales at existing facilities in Japan.
Japan• We implemented marketing strategies by customer segment. Favorable results were recorded by differentiated facilities
that enable customers to experience the worlds of characters such as ultraman, Kamen Rider, and Tamagotchi.
• In March 2011, the Great East Japan Earthquake affected operations, but nonetheless sales at existing facilities
in Japan were up 1.0% for the full fiscal year.
• Due to such measures as the withdrawal from related businesses that are unprofitable, sales declined but profitability improved.
• We recorded stable earnings due to continued implementation of measures to increase efficiency.

Overseas• In a challenging market environment, results in Europe were sluggish.
• In the Americas, results improved due to initiatives to increase efficiency that were implemented in the previous fiscal year.

Character package entertainment areas draw on the Group’s distinctive strengths.

The Company is developing a variety of facilities for a wide range of age groups.

10Strategic Themes

We will strive to cultivate new growth drivers
on a foundation of stable earnings, throughselection and concentration.
Operating Environment• Sluggish consumption due to continued lack of transparency in economic environment• Diversification of customer preferences
Strategic Points in FY 2012.3• Development of differentiated facilities using BANDAI NAMCO’s distinctive strengths in characters• Continued implementation of efficient initiatives in domestic and overseas operations• Consider the establishment of new earnings drivers for growth over the medium to long term, on a base of earnings stability.

Total Number of Amusement Facilities (March 31, 2011)

Facilities

Market Data

RegionRegional
total

Directly
managedfacilitiesof which
Revenuesharing
facilities*

Japan

239

217

19

North America

821

29

792

0

FY2009.3

Europe

13

12

1

0

Source: Leisure White Paper, Japan Productivity Center

Others

3

Asia

29

10

19

0

Total

1,102

268

831

3

Size of Japan’s Amusement Facilitiy Market (¥ billion)
678

FY2007.3
FY2008.3

595
515* Revenue-sharing facilities: Revenues from the operation of arcade game machines
are shared with operators.

NAMCO NAMJATOWN is one of the largest
indoor theme parks in Japan, featuring a wide
range of attractions and a food theme park.
This long-established amusement
facility was opened in 1853 in Asakusa,
in the Shitamachi region of Tokyo.

Amusement facilities that enable customers to experience the world’s ofpopular characters.

11Mid-term Business Plan

Mid- to Long-term Group Vision

Globally Recognized Entertainment Group
Next Mid-term Business Plan (April 2012–March 2015)
Substantial growth in global market• Generating returns from our investments• Making further investments for growth

Mid-term Business Plan (April 2009–March 2012)
Developing a global base for growth• Investments in growing
business areas• Improving profitabilityof each business

Aiming to be a “Globally Recognized Entertainment
Group” and to develop the base for global growth in
the Mid-term Business Plan, the BANDAI NAMCO
Group is pursuing two strategies: “Focus” as
our business strategy and “Enhance theEntertainment-Hub” as our function strategy.

Strategy A

Function Strategy: “Enhance
the Entertainment-Hub”

We clarify our missions and advance ourstrategies in accordance with the market
environment and our competitive
advantages in each of the Group’s SBUs.

The Entertainment-Hub function, which adds
a series of functions (from content creation
and acquisition through development to use)
inside the Group and aims to further
strengthen the functions through synergies
with external partners, is the greatest strengthof the BANDAI NAMCO Group. In the
Mid-term Business Plan, we will enhance thismodel, which was applied mainly in thedomestic market, by evolving into a global
model through coordination with the strategy
for each business.

Toys and Hobby SBU

Content SBU
We will work to maximize content value bymaking speedy responses to changes in thebusiness environment.
Amusement Facility SBU
We will strive to cultivate new growth drivers
on a foundation of stable earnings, throughselection and concentration.

12

Strategy B

Business Strategy: “Focus”

We will continue to take the offensive byimplementing our strategy of achieving adominant No.1 position in Japan and bycontinuing to invest in overseas growth.

More-thoroughapproach on developingbase for global growth

Evolve from a domestic model to a
global model
Maximize merchandisingdevelopment capability

Enhance IP marketing capability

Strengthen IP creation /acquisition capability

2010
RESTART PLAN
Transforming
into a Speedy Group
Improving Profitability
and Strengthening
Financial Standing

FOCUS
The Next Step
Under the current Mid-term Business Plan, which was commenced in
April 2009, we are working to prepare a foundation for global growth,targeting our medium-to-long-term vision of being a “Globally Recognized Entertainment Group.” FY 2012.3 will be the final year of thecurrent plan. During the year, we will complete preparations for the
next Mid-term Business Plan, under which we will target full-scale
global growth, and will step up our initiatives targeting the preparationof the foundation for that growth.

13

Message from the President

Shukuo Ishikawa
President and CEO, Representative Director
NAMCO BANDAI Holdings Inc.

14

Targeting the next stage of growth, we will doour utmost to “rebuild overseas operations”
and “fully restructure the Content business.”
On behalf of the BANDAI NAMCO Group, I would like to express our condolences to all those who suffered as aresult of the Great East Japan Earthquake that occurred on March 11, 2011.
A number of the Group’s amusement facilities and distribution facilities in eastern Japan were damaged.
In addition to a variety of support activities for the disaster-stricken areas, the Group will also strive to contribute to
the recovery by returning smiles to the faces of as many people as possible through our products and services as
we reaffirm our responsibility and pride as an entertainment company that offers “Dreams, Fun and Inspiration.”

FY 2011.3—Significant Improvement in Results

Solid Progress with the Restart Plan

In the fiscal year under review, the domestic economy was

The Restart Plan plays the role of reinforcing the base forsluggish as a result of the appreciation of the yen and thethe implementation of the Mid-term Business Plan, undersubstantial gains in crude oil prices that stemmed from thewhich we are working to prepare a foundation for global

growing tensions in the Middle East. Against this back-growth. We have implemented a range of initiatives

ground, the Great East Japan Earthquake occurred intargeting the Restart Plan’s objectives of “improving

March. Overall, the operating environment in the enter-

profitability and strengthening financial standing” andtainment industry was marked by uncertainty in the year

“transforming into a speedy Group.”

under review. In this setting, the Toys and Hobby businessTo “improve profitability and strengthen financial

recorded strong results in Japan, and the Content businessstanding,” we reduced costs by about ¥6.5 billion in theand Amusement Facility business had a certain degree offiscal year under review, as shown below.

success with the initiatives implemented under the RestartPlan. Consequently, we recorded substantial year-on-year
improvements in our results.
As a result, consolidated net sales in the year underreview were up 4.1%, to ¥394,179 million, and operating

Cost Reductions in FY2011.3
Cost reduction due to review of personnel system about ¥3.0 billion
Reduction in amortization of goodwill

about ¥2.5 billion

Other (overhauling indirect operations, etc.)

about ¥1.0 billion

Total

about ¥6.5 billion

income rose 767.2%, to ¥16,338 million. Due to therecording of other losses and to an increase in income

In addition, we achieved results with the steps that wetaxes, net income was ¥1,848 million, compared with a net

took to realize our objective of “transforming into a speedy

loss of ¥29,929 million in the previous fiscal year. (For further

group,” such as structural changes, reorganizational

information, please see the Financial Review on page 35.)

measures, and efficiency initiatives. Overall, our progressunder the Restart Plan has been generally in line with ourplans. Nonetheless, the Restart Plan has not yet beenconcluded. I believe that we need to continue striving
to achieve a speedy organization and a sound, robust
financial standing.

15

Implementing Initiatives to Prepare a Foundation forbusiness, multiple new game software titles slated for

Global Growth

worldwide development recorded weak performances.

Under the current Mid-term Business Plan, which was

In the domestic market, we are seeing the results of thecommenced in April 2009, we are working to prepare a

Restart Plan that we have implemented in response to

foundation for global growth, targeting our medium-to-changes in the market environment and user preferences.

long-term vision of being a “Globally Recognized Enter-

However, in overseas markets, it is essential that wetainment Group.” The fiscal year ending March 2012 will be

implement further thoroughgoing initiatives to prepare athe final year of the current plan. During the year, we willfoundation for growth. In FY 2012.3, the final year of thecomplete preparations for the next Mid-term Businesscurrent Mid-term Business Plan, we will tackle two priority

Plan, under which we will target full-scale global growth,challenges: “rebuilding overseas operations” and “fully

and will step up our initiatives targeting the preparation of

restructuring the Content business,” where restructuring

the foundation for that growth.

initiatives are currently under way.

In the fiscal year under review, our results improved

In the entertainment industry, the operating envi-

significantly from the previous year, but certain challenges

ronment in FY 2012.3 is expected to remain uncertain.

still remain. First, in the domestic market, basically all of ourAdverse factors will likely include concern about the situation

operations recorded favorable performances, especiallyin the Middle East, and, in Japan, sluggish consumption

the Toys and Hobby business, but in overseas markets,

due to the Great East Japan Earthquake and the antici-

particularly in North America and Europe, both the Toys

pated shortages of electricity. In consideration of theseand Hobby business and the Content business turned infactors, the consolidated projections for FY 2012.3 are as

weak results. This performance strongly underscores thefollows: net sales of ¥400.0 billion, a year-on-year increaseimportance of further initiatives targeting the preparation ofof 1.5%; operating income of ¥16.5 billion, a gain of 1.0%;

a foundation for global growth. Moreover, in the Content

and net income of ¥8.0 billion, an increase of 332.9%.

Domestic and Overseas Net Sales (¥ million)

Domestic and Overseas Operating Income (loss) (¥ million)

FY2007.3

FY2007.3
356,248

FY2008.3
346,736

113,737

24,48012,002

FY2009.3
319,535

15,863

106,864

FY2010.3

FY2010.3
286,209–947 5,537

92,337FY2011.3

FY2011.3
312,356–4,47081,822

Overseas

Notes: External sales after elimination
Figures for FY 2011.3 are estimates based on management accounting

16

11,359FY2008.3

FY2009.3

Japan

33,127

102,884

Japan

Overseas

23,5789,409

Key Challenges in FY 2012.3:

Key Challenges in FY2012.3:(1) Rebuild Overseas Operations(2) Fully Restructure the Content BusinessIn rebuilding overseas operations, it is especially important

In the Content business, we are targeting the full restruc-that the Toys and Hobby SBU and Content SBU step up

turing of the Content business. In order to “maximize

initiatives in the Americas and Europe. In the Toys andcontent value through rapid development in the optimal

Hobby business, we recorded a weak performancecontent outlet,” we believe it is necessary to emphasize

overseas in the fiscal year under review, but we madethe steady implementation of each of our strategies.

steady progress in preparing a foundation for FY 2012.3

In recent years, users have enjoyed a variety of(For further information about the strategies of the Toys andcontent, such as visual products, games, and music,

Hobby SBU, please refer to the Special Feature on page

without limiting themselves to specific content outlets.

20.). One especially significant achievement has been the

Moreover, a new trend has emerged, whereby content isfavorable start registered in the Americas and Europe by aenjoyed through the network on a variety of terminals,

new product in the POWER RANGERS series, an estab-such as smart phones and tablet PCs. In particular, in thelished character series that has faced difficult conditions

game software business, the conventional packaged

due to adverse trends in the broadcast environment.

software business is increasingly mature. I believe there isThis is a character that holds strong potential for success instill substantial potential in the conventional packaged

markets worldwide. As the broadcast environment began tosoftware business, depending on the method by which

improve, in February 2011 broadcasts of the new series

value is added. However, we have to move beyond thewere commenced. In this way, we established a foundation

past framework of investing substantial amounts in thefor new initiatives going forward. In FY 2012.3, we willdevelopment of packaged software. We need to build afurther expand the regions in which we have a presence

new business model that flexibly accommodates new

and will rapidly launch a variety of products. In this way,environments and user preferences. To that end, we must

the Toys and Hobby SBU will move ahead with a proactive

shift from the previous model, where the revenues end

approach in overseas markets, centered on efforts towith the sale of the packaged product, to a model thatre-energize the mainstay POWER RANGERS.

also secures ongoing revenues from a single piece ofIn the Content business, we launched a number ofcontent. This type of business model has been mademajor new titles worldwide, aiming to establish new gamepossible by advancing networks. By combining packaged

franchises. However, unit sales were weak and fell short ofsoftware with a variety of other content outlets, such as

our objective. I believe that we will need to reevaluate ourarcade game machines, smart phones, and SNS (Social

development system, steadily reinforce our footing, andNetworking Services), we can generate synergies andestablish a solid foundation. Specifically, our policy will be

maximize content value. Moving forward, we will taketo focus on franchise titles that have strong track records

steps to respond flexibly and rapidly to dramaticallyand for which we can expect a certain level of steady sales,changing environments and user preferences. For

while maintaining a balance in development by also taking

example, we will shift our investment of resources fromon the challenge of developing new franchise titles.

game software to arcade game machines, which provide

17

a stable revenue platform, and to network businesses,

long term. Previously, our strategies were principallysuch as SNS platforms, which offer a new outlet.

defensive, focusing on increasing profitability. Moving

Moreover, the most important initiative in the Content

forward, however, with a focus on growth over the medium

business will be reforming our approach to content outlet

to long term, we will utilize an integrated offensive/

strategies. Under the Restart Plan, we changed from thedefensive framework. On the other hand, we will work

previous system, which was organized by content outlet, toto achieve improved profits through continued gains ina system that is organized by content. As a result, producers

efficiency in overseas operations, centered on the Americas

and creators can focus on content first and consider theand Europe.

optimal content outlet from the customer’s point of view.
My role is to give the highest priority to building a system

Stable Dividends and Acquisition of Treasury Stockthat can continually generate hit products. To maximize

The Company considers the return of profits to share-content value, we will move toward a more clear, easy-to-

holders to be one of its most important management

understand organizational framework, thereby fostering

issues. Our basic policy for the payment of dividends is tofurther evolution in the way we think about our business.

continue to pay dividends and raise enterprise value while

To that end, as the president of NAMCO BANDAI Games,

further strengthening the Group’s competitiveness andI will set the overall direction of the SBU as we proceed tomaintaining a sound financial position. Specifically, ourfully restructure the Content business.

objectives are to maintain a base level of stable annual
per share dividend payments of ¥24 and a consolidated

18

Increasing Profits in the Amusement Facility SBU

dividend payout ratio of 30%. For FY 2011.3, we have paid

While the Great East Japan Earthquake had an effect on

dividends of ¥24 per share.

the Amusement Facility business, nonetheless the SBU

Furthermore, we will consider using a portion of theincreased its profitability and stabilized its operationsbalance remaining after the appropriation of dividends forthrough a variety of efficiency improvement and scrap-and-the acquisition of our own shares, with comprehensive

build initiatives. In addition, the Amusement Facility SBU is

consideration of aspects such as the level of cash on hand,seeing steady results with facilities that are differentiatedoperating performance, recent share price movement, andfrom those of competitors. Key means of differentiationplans for large-scale investments. In the year under review,

include character package entertainment areas andin accordance with a decision of the Board of Directors, weGroupwide campaigns, as well as marketing strategies.

acquired 5 million shares of treasury stock at a total cost of

In FY 2012.3, because these operations are susceptible¥4,169 million. At the end of February 2011, the Board of

to the influence of the economic environment andDirectors decided to purchase up to 20 million shares ofconsumption trends, we will need to pay careful attention

treasury stock at a total cost of up to ¥20 billion, and plansto changes in the domestic environment stemming fromcall for the retirement of all of the treasury stock that isthe disaster. Nonetheless, with our priority on continued

acquired. To efficiently advance the reinforcement of ourrevenue stability, we will implement initiatives targeting the

global growth foundation, we will also consider M&A

establishment of new revenue drivers for the medium totransactions and up-front investment, such as development

investment. We will consider actively implementing M&A

Inspiration” to people around the world. We will take ontransactions in the entertainment field when we believe

new challenges, targeting the provision of products andthat mutual synergies can be expected, following careful

services that draw on the distinctive strengths of theevaluation of investment conditions.

BANDAI NAMCO Group, so that we can put smiles on
the faces of the people of the world at the point where

Cash Dividends per Share (Yen)products and services are provided.

FY2007.3

28

FY2008.3

24

FY2009.3

24

FY2010.3

24

FY2011.3

24

The driving force in the creation of hit products andservices is the strong creativity and enthusiasm of individual
employees. As I have stressed since I became president,
to create “a group centered on human resourcesmanagement, with unique strengths in entertainment
and imagination,” we will advance people-centered
management. We will strive to make work more rewardingfor employees. In these ways, we will continue working
to increase the Group’s corporate value. Each individual

Doing Our Utmost to Build a Foundation for theemployee at the BANDAI NAMCO Group has unique

Next Mid-term Business Plan

capabilities. I will continue to focus on building an envi-

Our objective under the next Mid-term Business Plan willronment in which everyone can do their jobs with a spirit

be to take steps to achieve full-fledged global growth,of independence. In addition, we will strive to respond tocentered on initiatives to prepare a growth foundation. Itchanges in the operating environment in a speedy manner,

is my intention to target, as soon as possible, the level ofto compete not only against our competitors, but also

profits that we initially recorded after the management

within the Group in a positive manner, and to repeatedly

integration of Bandai and NAMCO. To create new enter-take on new challenges so that we can move beyond

tainment, we need a new approach to our business. We

existing boundaries. In this way, we will continue to provide

need to recognize that a flexible approach to change is

products, services, and business models that draw on theneeded on that basis.

distinctive strengths of the BANDAI NAMCO Group.

By moving quickly to take on various challenges, we

I would like to ask our shareholders, investors, andwill steadily expand each of the BANDAI NAMCO Group’s

other stakeholders for their continued support and guidanceentertainment products. With the next Mid-term Businessof the BANDAI NAMCO Group in the years ahead.

Plan, I would like to show our shareholders and investors
the true strength of the BANDAI NAMCO Group. To that
end, we have positioned the year ahead as a period forAugust 2011

building the foundation for dramatic growth.
The presence of the BANDAI NAMCO Group restson the continued provision of “Dreams, Fun and

19

SOLID BASE
Toys and Hobby SBU
A Core Business with a Stable Earnings Foundation
The Toys and Hobby SBU, which is one of the Group’s core businesses, is building a stableearnings foundation for the Group. The SBU is especially strong in Japan. Although the toy market
is mature and growth remains flat, with a share of about 20% to 25%, the SBU has establisheda position as a leading company in the domestic market. This special feature outlines the growthstrategy of the Toys and Hobby SBU and “character merchandising,” the original business model,
which has been developed over many years by Bandai, the SBU’s core company.

20Strong Business Model: “Character Merchandising”

Media
Character needs

Customer
Character information

Character
needs

TV, movie, publishing
Internet, mobile,
merchandise,sales areas, events

AdvertisingandPR

Products
andservices

Use of original
creations

Merchandising contracts

Authoror
Copyright holder

The character merchandising business model is thefoundation of the Toys and Hobby SBU. For nearly 50
years, Bandai, the SBU’s core company, has steadilyenhanced and refined this model, which is the SBU’s mostimportant intellectual property (IP). The character merchandising model is a framework for providing, with optimal
timing, “the worlds” and “appeal” of characters in the formof products and services. To that end, Bandai has built

Character
content

Character MerchandisingCharactercreation

Acquisition ofmerchandisingrightsstrong relationships with a wide range of partners involvedin character merchandising, and today Bandai is developing its business operations through cooperative initia-

Content
production

Product planningtives based on those deep relationships of trust. The
character merchandising process typically starts with theacquisition of merchandising rights from the copyrightContent
distribution

holder, such as a program production company, author, or

Sales
promotion,marketing

Manufacturing
management

publishing company. Products are then developed basedon the character’s world, and the products are put on themarket. At the same time, the appeal of the character is

Products andservices

Contents

promoted in a variety of ways through different media,
such as TV, publishing, Internet, and movies. In addition toacquiring character merchandising rights from outside, theGroup also creates and cultivates characters in-house.
As shown in the diagram, the provision of “character

Increase inpopularity

Customer

Product
procurement

content” to the customer and the “character merchandising” process move ahead in tandem. The result is asynergistic spiral, with the character content forming thefoundation on which we build relationships of trust with the
copyright holders.

21Interview

The role of the Toys and Hobby SBU is to always
implement new initiatives, make new proposals,
and be the first to take on new challenges.
Kazunori Ueno
President and Representative Director, Bandai Co., Ltd.
Director, NAMCO BANDAI Holdings Inc.

Current Status of the Toys and Hobby SBU

establish a stable source of earnings by establishing a

In FY2011.3, the Toys and Hobby SBU achieved thedominant No.1 position in this market. On the other hand,targets that were set out at the beginning of the fiscal year.

overseas markets are essential for the growth of the

In domestic operations, we recorded the highest level of

BANDAI NAMCO Group as a whole, and to recapture our

profits since the management integration in 2005. On thepotential in those markets, we will move forward withother hand, we struggled in overseas markets. Frankly, we

initiatives to build a foundation for growth.

earned the majority of our profits in Japan, and our results

22

in overseas operations were not satisfactory. Of course,

Domestic Operations: Dominant Presence

many factors played a part in the challenging conditions

in a Maturing Market

in overseas markets. However, considering the potential

The domestic market continues to mature, and in thisof the markets and the past performance of the Toys andenvironment considerable attention is being paid to

Hobby SBU in overseas markets, I believe that there isnegative factors, such as the trend toward fewer children

substantial room for improvement in our performanceand sluggish consumption. However, my thoughts about

overseas.

the domestic market are more positive. The Toys andIn this setting, the strategic themes for the Toys andHobby SBU has expanded its target customer range to

Hobby SBU in FY2012.3 will be to work toward a dominant

include not only children but also adults. With a multi-

No.1 position in Japan and to prepare a foundation for

directional strategy targeting all age groups, I believe thatgrowth by re-energizing its overseas business. These

we can build a dominant No.1 position through continued

themes are illustrated by our results in the past year. Even

proactive initiatives, even in areas in which we have not yet

though the market in Japan is maturing, we will strive toestablished a strong presence.

Net Sales by Toys and Hobby SBU (¥ billion)

Segment Income by Toys and Hobby SBU (¥ billion)
185.6

FY2007.3
FY2008.3

180.2
165.7

FY2009.3
FY2010.3

148.8

FY2011.3
Japan

158.4
Overseas

FY2007.3

17.4
14.3

FY2008.3
11.5

FY2009.3

10.8

FY2010.3
FY2011.3
Japan

13.8
Overseas

Shows operating income for FY 2007.3 to FY2009.3

We have special strengths in character businesses,

operating divisions. Since I became president of Bandai inwith series of long-established character products, such as2005, we have taken steps to increase cooperative initia-

Mobile Suit Gundam, Kamen Rider, POWER RANGERS,

tives among operating divisions. For example, we haveand PrettyCure. Each of these series has made a stable

increased personnel transfers among divisions and worked

contribution to earnings over many years and has built

to promote exchange among Company personnel. As aa dominant market presence. For example, more thanresult, we have been able to nurture young staff members

30 years have passed since the launch of Mobile Suitwith experience in multiple divisions, and accordingly have

Gundam, which has attained a strong position as content

promoted young employees. This initiative has had thethat is popular not only with children but also with their

desired effect, with cross-divisional initiatives proceeding

parents. By implementing a marketing strategy that is finely

more smoothly than in the past. Furthermore, by giving

tuned to the preferences of each generation, we are ableauthority and responsibility to a younger generation of

to implement extensive business development activities

employees, we have increased motivation and introduced

targeting a wide range of customers, from children to

new insight to management, which has resulted in theadults. These characters are assets that have been culti-

generation of new concepts and approaches.

vated over many years, and by leveraging them in this way,

These initiatives led to the major success of the Kamen

the Toys and Hobby SBU will be able to sustain a dominant

Rider series in FY2010.3 and FY2011.3. With the newest

No.1 position. We have also recently made a full-scale

product in this series, Kamen Rider / OOO, we have imple-

entry into the market for collectible products for adultmented coordinated activities among divisions, such as

customers. These products were previously a sub-section

toys, capsule toy vending machines, candy toys, and cardof Bandai’s boys’ toys department, but three years ago

machines. These activities, centered on the medal toys,

they were split off to form an independent department.

have enabled the product to become a major hit that has

By launching high-quality products with careful attention

drawn great attention in the domestic market. This successto detail for the target age range of customers in their 10s

clearly shows the effectiveness of initiatives that crossto 40s, we have positioned the products to earn strongorganizational boundaries, with Bandai using all customer

popularity and are targeting sales of ¥10 billion in FY2012.3.

touch points to enhance product value. I believe that theseThis is a good example of how the Company can use thetypes of initiatives will record further progress by fostering

popular characters to make a full-scale entry into a market,

mutual inspiration and cooperation among participating

thereby expanding the market and generating newdivisions.

business opportunities. We believe that there are still newmarkets in which the Toys and Hobby SBU can make fullOverseas Operations: Focus on Rebuilding

use of its characters. By implementing multidirectional

We are committed to rebuilding our overseas operations,product development in this way, the SBU will strive forand have positioned FY 2012.3 as a period of preparation

continued operational growth.

for the next stage. We will also keep potential overseas
development in mind as we work to create and nurture

Effective Initiatives Transcending Organizational

characters in Japan, providing another avenue for growth

Boundaries

overseas. We are already making steady progress in laying

Another factor behind the favorable results in domestica foundation for these initiatives. POWER RANGERS

operations is our active promotion of younger employees in

SAMuRAI, a new product in the POWER RANGERS series,

23

Variety of Kamen Rider / OOO Products that use the O-Medal

Vending machine
capsule products

Digital kids’
card game

O-MedalToys

Candy toys

got off to a strong start from February 2011. This mainstay

Further Growth Driven by Progress in Charactercharacter series has faced difficult conditions in recent

Merchandisingyears, especially in North America, due to adverse trends inPreviously, character merchandising operations were

the broadcast environment, but the new series is recording

substantially affected by cycles of favorable and negative

high viewer ratings as well as strong merchandise sales.

conditions. However, as a result of many years of devel-

Going forward, we will implement the same type of devel-

opment, we have been able to stabilize earnings throughopment activities for the POWER RANGERS series in

the acquisition of know-how and the establishment ofEurope. We will expand our production system, increase

relationships of trust with media. Moreover, the media

the number of stores that handle these products, andenvironment is diversifying, and in addition to the traditional

expand the sales area floor space. In FY 2012.3, we are

media, such as TV and publishing, products and services

aiming for sales of ¥5 billion in North America and Europe.

themselves are becoming a form of media. As a result, ourPrior to the worsening of the broadcast environment,

approach to determining the appropriate media mix is

POWER RANGERS products had been recording stablebecoming broader and more diverse, and we can increas-

sales of ¥10 billion to ¥20 billion a year in the Americas

ingly provide a variety of choices in response to diversifying

and Europe, and I believe the full potential of POWER

consumer preferences, even in character merchandising.

RANGERS is even higher than our target of ¥5 billion.

For example, with Mobile Suit Gundam, we are imple-

Moreover, we also need to improve our cooperative

menting nearly simultaneous global development, including

relationships with media in overseas operations. Moving

event screenings, visual package sales, visual distribution,

forward, development based on the same media mix usedand product launches. In this way, we are taking on thein Japan, centered on TV and other existing media, will bechallenge of a new business model for character merchan-an issue under the next Mid-term Business Plan. We havedising. In the future, a key source of strength for the Toys

been able to take the first step toward rebuilding the newand Hobby SBU will be our ability to apply these successes

series by closely linking our activities with media. We will

to other characters, thereby expanding the possibilities

use this success as an opportunity to strengthen our

open to our operations.

relationships with media, thereby striving to implement

The SBU is full of energy and an eagerness to take oncooperative initiatives for new characters and to cultivate

challenges. Moving forward, we will continue working tostrong characters. In North America and Europe, we will

activate our operations by promoting younger employees,

work to expand our possibilities for operational devel-

delegating authority, and promoting exchange. The mission

opment, centered on strong characters such as POWER

of the Toys and Hobby SBU will be to always implement

RANGERS. We will strive to fully leverage the characternew initiatives and make new proposals, both in themerchandising that we have cultivated in Japan to foster

industry and throughout the BANDAI NAMCO Group.

growth in overseas operations.
August 2011
Note: For further information about operations in North America,
please refer to page 25.

24

Current State of Operations in North America

We will take steps to build a solid growth
foundation in North America, centered on
initiatives to strengthen boys’ toys andexpand product categories.

Masayuki Matsuo
Senior Executive Officer, NAMCO BANDAI Holdings Inc.
President and CEO, BANDAI AMERICA INCORPORATED
President and CEO, NAMCO BANDAI Holdings (USA) Inc.

North America: Market Environment and Operational Activities
In 2010, the scale of the toy market in North America was
about $21 billion, or about three times the size of the market
in Japan. In recent years, the scale of the market has been
relatively flat.
BANDAI AMERICA INCORPORATED, which is based in
California, handles the business activities of the Toys andHobby SBU in North America as well as in Central and SouthAmerica. We offer a wide range of products, centered on boys’
action figures. Our two main characters are the POWER
RANGERS series, which is the localized version of Japan’s
Super Sentai series, and BEN10, which was developed locally.
However, to build a solid position in the market, we need toachieve further gains in our market share.
The Strategies of the Toys and Hobby SBU in North America
In North America, as one facet of the Mid-term Business
Plan’s strategy of preparing a foundation for growth, we haveworked to expand our target groups and extend our productcategories. However, due to the worsening of the broadcast
environment for our mainstay POWER RANGERS series,
our operations in this core business line have been sluggish.
Operating conditions in North America in FY 2011.3 werevery difficult.
Nonetheless, we are implementing a range of futurefocused initiatives, and I am confident that these initiatives willbear fruit in FY 2012.3. In turn, we will strive to use thoseresults to guide the way toward growth under the next
Mid-term Business Plan and in subsequent years.
Rebuilding and Strengthening Boys’ Toys Operations
Our business strategy is the rebuilding and strengthening ofboys’ toys, our core business. To that end, we will first strive torapidly rebuild the POWER RANGERS series. We have alreadymade solid progress with the new POWER RANGERSSAMuRAI. TV broadcasts commenced in February 2011, andthe series is so popular that action figures and other products
have been sold out in some stores. Moving forward, we willbolster our production system in preparation for the busy
Christmas sales period. From the fall, we will expand our
product lineup and work to achieve increases in the numberof stores handling our products and the amount of sales floor
space allocated to them. In addition, we will steadily step up
product promotion initiatives in Europe. In this way, we will

strive to cultivate characters with annual sales in the ¥20 billion
range by implementing product promotion in conjunction withTV broadcasts and by rapidly introducing competitive products.
Also, to strengthen our lineup of boys’ toys, we acquired alicense for Thunder Cats, which will join POWER RANGERS and
BEN10 as the third pillar of our boys’ toys operations. We havesuccessive commenced production initiatives promotion in
conjunction with Cartoon Network broadcasts of Thunder Cats,a remake of the hit 1980s animation. Thunder Cats has highname recognition, and we will be able to attract not only
children but also their parents, who were fans of the previous
Thunder Cats generation.
Stepping Up Initiatives in Toys for Preschoolers and Girls
Our second strategy is the expansion into new productcategories—toys for preschoolers and girls. These are large
markets, and with these products, we will leverage the character merchandising that is a special strength of the Toys andHobby SBU. We will actively acquire character licenses thatenable us to implement cooperative initiatives linked with TV
broadcasts.
Expanding Regions of Sales
Our third strategy calls for expanding the regions in which our
products are sold, with a focus on Central and South America.
We have already established a sales company in Mexico that
operates under the control of BANDAI AMERICA. Moving
forward, we will aggressively develop operations in regions
where markets are expanding rapidly, including not only
Mexico but also Brazil and Argentina, where sales are currently
handled through a sales agent.
Our highest priority is rebuilding and strengthening boys’
toys in North America, centered on the POWER RANGERS
series. In addition, having reinforced our organizational capabilities in development and sales, we will step up our promotionof toys for preschoolers and girls. At the same time, we will
strengthen our relationships with production operations in
Europe and Asia, thereby enhancing the competitiveness of
our products. Through these initiatives, we will strive to build astable growth platform in North America and contribute to theGroup’s global growth.
August 201125

Corporate GovernanceOur highest management priority is the provision of benefits to all of our stakeholders, who support ourbusiness activities. We believe that to achieve ongoing growth in enterprise value over the long term, thecontinuous enhancement of corporate governance is an important management issue. The Group aims to
be a corporate group that is trusted by society and that makes an ongoing contribution to society. While
striving to raise management soundness, transparency, and efficiency, we will build a corporate governancesystem that facilitates rapid information disclosure.
Corporate Governance System
NAMCO BANDAI Holdings is working to enhance management
oversight. As of June 20, 2011, the Company had nine directors,
including three outside directors. Moreover, to respond rapidly tochanges in the management environment and to further clarify the
responsibilities of directors, the term of directors has been set at
one year or less.
The Company uses the statutory auditor system and has established the Board of Statutory Auditors. The Company believes thatthe auditing system based on the statutory auditors, including
outside statutory auditors, is an effective means of implementing
the management oversight function. There are four statutory
auditors, of whom three are outside statutory auditors. Two of thestatutory auditors are full-time. In accordance with the allocation of
responsibilities as determined by the Board of Statutory Auditors,
each statutory auditor conducts audits, working with the independent auditors as needed.
Katsuhiko Kohtari, an outside statutory auditor, is a certified
public accountant and has extensive knowledge in areas related
to finance and accounting. Osamu Sudoh, an outside statutory
auditor, is an attorney, has participated in multiple corporate bankruptcy cases, and has knowledge in finance and accounting, which
are necessary for the handling of those cases.
In regard to internal audits, the Internal Auditing Division audits
business execution by conducting on-site audits or document
audits of each Company division in accordance with internal

auditing rules. The Internal Auditing Division reports the results of
those audits to the president. In addition, the Internal Auditing
Division formulates basic guidelines for internal audits within theGroup and monitors the implementation of internal audits at eachGroup company in accordance with the Group’s internal auditing
rules. In regard to audits by the statutory auditors, the four statutory
auditors (of whom two are standing statutory auditors and three areoutside statutory auditors), attend important meetings, such as
meetings of the Board of Directors. In addition, in accordance withthe auditing standards, auditing plans, and distribution of duties
determined by the Board of Statutory Auditors, the statutory auditors
conduct audits regarding the status of business execution by the
directors. The Internal Auditing Division, the statutory auditors, andthe independent auditors continually exchange opinions andmaintain close ties. The status of the Group’s business operations
is monitored, issues are identified and understood, and recommendations for resolving those issues are provided.
As shown in the table on page 27, the Company holds a variety
of top management meetings and has established a system thatfacilitates rapidly tracking and responding to Group management
information.
Moreover, the Company has established the Personnel
Committee, which objectively and neutrally considers personnel
and compensation issues regarding directors, as well as othermatters about which it has received inquiries, in particular fromthe president and representative director, (The majority of theGeneral Meeting of Shareholders
Appointment /Dismissal

Appointment /Dismissal

Board of Directors

Auditing

9 directors(of whom 3 are outside directors)
Appointment /Dismissal /Supervision

Board of Statutory Auditors

Appointment /Dismissal

Account Auditing /Reports on Results

Independent Auditors

4 statutory auditors(of whom 3 are outside statutory auditors)

Dismissal

Auditing

Representative Director

Personnel Committee
Reports

Directions

Cooperation

Reports

Internal Auditing Division
Directions

Committees

Group CSR Committee

Group CSR Subcommittee

Reports

Group Risk Compliance Committee

SBU Monthly Report MeetingGroup Information Security Committee

Group Management Meeting
SupportContent Business Strategy Meeting

Auditing

Internal Control Committee
Policy Directions

Reports

BANDAI NAMCO Group Companies
As of June 20, 201126

Meeting Name

Board of Directors
SBU Monthly Report
Meeting
Group Management
Meeting
Content Business
Strategy Meeting
Waigaya Meeting

ScheduleMonthly andotherwise asneededMonthlyMonthlyMonthly
WeeklyAgenda / Purpose

Resolutions and reports on matters prescribedby the Companies Act. Resolutions, deliberations,and reports on matters related to the BANDAI NAMCO Group
Report of montly consolidated results, monthly SBU reports,
and otherConsideration of Group management issues,
Mid-term Business Plans, and Groupwide issues
Sharing information and coordination among SBUs regarding
the BANDAI NAMCO Group’s major IP
Weekly reports on divisions supervised by NAMCO BANDAI
Holdings’ directors

committee members are from outside the Company.)
Furthermore, the Group comprises three SBUs and the affiliatedbusiness companies, which principally provide support services
to the SBUs. In each SBU, operating strategies for Japan andoverseas are formulated and implemented, with the lead role takenby the SBU’s core company.
The Company, which is a holding company, monitors each SBU;
holds meetings of Groupwide committees, such as the SBUMonthly Report Meeting, the Group Management Meeting, theGroup CSR Committee, and the Content Business Strategy
Meeting; and, for the Group as a whole, shares the status of operations and considers and formulates strategies.
The Board of Directors has decided fundamental policies
regarding internal control systems as stipulated by the Companies
Act. In regard to the internal control reporting system under the
Financial Instruments and Exchange Act, the Company’s Internal
Control Committee formulates policies regarding the establishment
and evaluation of internal control systems in the Group, sharesinformation, and conducts internal Group monitoring. The
committee also presents internal control system reports, andthe Board of Directors makes decisions on fundamental issues.
In addition, the Group Information Security Committee has been
established with the objective of decision-making, implementation
reporting, and information sharing in regard to the Group’s information security activities overall.

Outside Directors and Outside Statutory Auditors
Of the Company’s nine directors, three meet the conditions foroutside director. The Company is working to strengthen the
management oversight function. In addition, of the four statutory
auditors (including two full-time statutory auditors), three meet theconditions for outside statutory auditor. They work together andmonitor the Company’s internal control situation on a daily basis.
Based on their high levels of independence and specialized
knowledge, the outside directors and outside statutory auditors
conduct objective, neutral auditing and oversight. In this way,
they carry out the important functions and responsibilities ofmanagement supervision and contribute to the strengthening of
the Company’s corporate governance system.
The status of audits by internal auditors, audits by the statutory
auditors, and audits by the independent auditors are reported to
the Board of Directors. By attending meetings of the Board of
Directors, the outside directors track the status of these audits andwork to maintain close ties.
In addition to tracking the status of internal audits reported atmeetings of the Board of Directors, outside statutory auditors also
track the status of audits by the statutory auditors at meetings ofthe Board of Statutory Auditors and maintain cooperative relationships with the internal auditors and the other statutory auditors. In
addition, all members of the Board of Statutory Auditors, including

Participants

Directors, statutory auditors
Directors, statutory auditors,
corporate offcers, others
Full-time directors, representative directors of corecompany in each SBU, others
Directors with related responsibilities, directors frommajor subsidiaries with related responsibilities, others
Full-time directors, representative directors of corecompany in each SBU, others

outside statutory auditors, receive explanations from the independent auditors of the status of account audits on a quarterly
basis. In this way, they track the status of these audits, andmaintain cooperative relationships with the independent auditors.
Furthermore, through matters brought to the Board of Directors,
outside directors and outside statutory auditors track the status
of internal control departments (all of the Company’s departments). In addition, they attend the SBU Monthly Report Meeting,where reports on the status of the Group’s operations are
made; strengthen the supervision function; and provide advice
as needed.
None of the Company’s outside directors or outside statutory
auditors have personal relationships or transactional relationships
with the Company. Furthermore, notification has been filed with theTokyo Stock Exchange (TSE) that the outside directors and outside
statutory auditors are independent directors and independent
statutory auditors, respectively.

Compliance and Risk Management
The BANDAI NAMCO Group has formulated standards forcompliance and instituted a system that appropriately ensures thestrict observance of laws and regulations, ethical standards, andinternal regulations on a Groupwide basis. Under the Group’s
compliance system, the director in charge of compliance has
overall responsibility for compliance throughout the Group andleads the Group Risk Compliance Committee. This committee,
which is the top compliance entity, promptly considers and determines what action to take when there is a compliance violation or
the possibility of a compliance violation in the Group. The Group
Risk Compliance Committee works to prevent the occurrence of awide range of risk events, strives to ensure prompt responses if arisk event does occur, and audits and supervises important mattersregarding compliance for the entire Group.
In risk management, the Group works to prevent the occurrenceof risk events and to rapidly identify the causes of risk events.
In the event of the occurrence of a risk event, the Group establishes an emergency contact network, and in the event of theemergence of risk event information, including information about
violations of laws or regulations, such information is immediately
reported to the president. The Group is working to minimize any
influence on operations through the implementation of rapid andaccurate responses.
In addition, the Company has formulated the Group
Compliance Charter, and has published the BANDAI NAMCO
Group Compliance Handbook to ensure thorough knowledge ofcompliance throughout the Group. In addition, the Group implements training activities, such as through an education systemutilizing the Group’s intranet. Furthermore, the presidents of Group
operating companies submit written oaths pledging strict
compliance with the charter.

27

The BANDAI NAMCO Group’s CSR Initiatives

The mission of the BANDAI NAMCO Group is to provide “Dreams, Fun and Inspiration” to people aroundthe world through entertainment, drawing on our boundless creativity and enthusiasm. To ensure that we
continue to provide “Dreams, Fun and Inspiration,” we have formulated Groupwide CSR initiatives that are
based on the three types of responsibilities outlined below.
In accordance with these fundamental principles, a range of measures are implemented by theGroupwide Group CSR Committee and its subcommittee as well as by the Group Risk Compliance
Committee, the Group Information Security Committee, and the Internal Control Committee.

1

Environmental and Social Responsibilities(safety / quality, environmental conservation,
cultural / social support activities)

Environmental and Social Responsibility Initiatives(safety / quality, environmental conservation, cultural /social support activities)
Safety / quality initiatives
We follow industry standards and in-house standards, andhave built a system that facilitates the achievement of higher
levels of safety and quality so that customers can use our
products with confidence.
Environmental conservation initiatives
We are aggressively implementing forward-looking environmental conservation measures to ensure that we can continue
to provide “Dreams, Fun and Inspiration” to people aroundthe world.
Cultural / social support activities
We are also active in areas outside the provision of products andservices, such as museum operations and volunteer activities.

2

Economic Responsibilities

Economic Responsibility Initiatives
We are continually working to enhance management transparency
and monitoring the business plans and conditions of Group
companies. Moreover, we are working to provide maximum
returns to society and stakeholders by selecting the optimal
operational fields for Group development and focusing ourmanagement resources on those fields.

3

Legal and Ethical Responsibilities(compliance)

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

As a provider of “Dreams, Fun and Inspiration,” BANDAI NAMCO is committed to CSR activities

CSR Action Conceptthat contribute to the creation of a fun tomorrow and foster continuous happiness for society
and stakeholders.

CSR Key Phrase

At BANDAI NAMCO, CSR activities are “Fun for the Future.”
Our work is to provide inspiration to customers by realizing individual ideas of “Dreams, Funand Inspiration.”funfor thefuture
楽しみながら、楽しい未来へ。

In turn, those “Dreams, Fun and Inspiration” provide healing and encouragement as they
spread around the world. We believe that “Dreams, Fun and Inspiration” can change the world,and even change the future.
As a company that provides “Dreams, Fun and Inspiration,” our relationship with the naturalenvironment and society will be guided by the key phrase “Fun for the Future.” We will
implement CSR activities that lead to happiness for stakeholders by featuring fun today while
also contributing to the creation of fun tomorrow.
We believe that entertainment can contribute to society by fostering mutual communicationand inspiration among people around the world and creating a future filled with fun.

28

Topics“BANDAI NAMCO Forest” at Shiga Kogen

Manufacture of safe, reliable products

The BANDAI NAMCO Group participates in forest support activities in
Nagano Prefecture. The Group
provides support for forest
management activities at the
47-hectare “BANDAI NAMCO
Forest” at Shiga Kogen and works
to help foster a deeper understanding of forest conservation
issues.
“BANDAI NAMCO Forest” at Shiga Kogen

In a range of business fields, wefollow all legal and industry quality
and safety standards. We have alsoestablished our own more-rigorous
in-house standards, and pay carefulattention to safety.

Dropping products to test for quality

Initiatives to reduce the environmental burden of products

Wide-ranging environmental impact reduction activities

We are implementing measures
to reduce packaging, such as
decreasing packaging space ratios,developing packaging-free
products, using packaging thatutilizes low-environmental-impact
materials, reducing plastic model
runners, and reducing packaging
materials for amusement machines.

Decreasing packaging space ratio

Bandai Hobby Center (plastic model plant)

Social contribution activities

Omocha-no-Machi Bandai Museum

At the Bandai Hobby Center in thecity of Shizuoka, we are implementing a range of environmental
conservation initiatives, such as
solar power generation andresource recycling. Moreover,
BANDAI LOGIPAL Inc. has
acquired Green Management
Certification, which is given totransportation companies that
implement low-environmentalimpact operations.

Initiatives to prevent global warming
We are conducting a variety ofactivities to promote a deeper
understanding of culture, science,and entertainment. These include
the Omocha-no-Machi Bandai
Museum in Tochigi Prefecture,
which has a collection that includes
toys from Japan and overseas aswell as many items created by the
famous inventor Thomas Edison.
We also provide support for the
New Technology Foundation andtoy libraries.

Expanding employment opportunities for people with disabilities

Left: LED bulb

Right: halogen bulb

To help prevent global warming,the BANDAI NAMCO Group is
implementing initiatives to reduce
emissions of greenhouse gases.
To reach our targets, each Group
company is considering and implementing reduction initiatives in
its own business activities. For
example, at the amusement facilities operated directly by NAMCO,
the halogen bulbs in the Clena-Flexcrane game machine have been
replaced with LED bulbs.

Initiatives to motivate and support human resources

The BANDAI NAMCO Group is working to expand employment of people withdisabilities. In March 2006, we established NAMCO BANDAI Will Co., Ltd., withthe objective of employing people with disabilities. In May, NAMCO BANDAI
Will was certified as a special subsidiary as stipulated by Japan’s Law for
Employment, Promotion, etc., of the Disabled, and employees of NAMCO
BANDAI Will are regarded as being employed by the Group as a whole. Withconsideration for the characteristics of the Group’s operations and the skills of
people with disabilities, we are working to expand the range of work for people
employed by NAMCO BANDAI Will.

BANDAI NAMCO Award

The BANDAI NAMCO Group is
implementing a range of initiatives
regarding the motivation andsupport of human resources.
We have a system of awards torecognize products and businessmodels that contribute to increasing
Group value from a variety of viewpoints, such as sales, profit, topicality, and newness. Other
initiatives include active exchangesof human resources among Group
companies and entertainment
training. In these ways, we willcontinue working to promote
dynamic corporate activities.

29

Overview of Main Group Companies
As of April 1, 2011

NAMCO BANDAI Holdings Inc.
NAMCO BANDAI Holdings (USA) Inc.
NAMCO Holdings UK LTD.

Planning and execution of medium- and long-term management strategies; provision of
support for business strategy implementation by Group companies (Tokyo Stock Exchange,
First Section)
Execution of North American regional strategy; management support for North American
operating companies
Execution of European regional strategy; management support for European operatingcompanies

Toys and Hobby Strategic Business Unit
Bandai Co., Ltd.

Planning, production, and sales of toys, apparel, and vending machine products, etc.

Megahouse Corporation

Planning, manufacturing, and sales of toys, etc.

CCP Co., Ltd.

Planning, development, manufacturing, and sales of toys, hobby commodities, and homeelectric appliances

Plex Co., Ltd.

Planning, design, development, and sales of character-based products

Seeds Co., Ltd.

Planning, development, and manufacturing of toys, contract operations for various types ofinspecting and testing

People Co., Ltd.*

Planning, manufacturing, and sales of toys for infants (JASDAQ)TSUBURAYA PRODUCTION CO., LTD.*

Development of visual products and management of copyrights

Sun-Star Stationery Co., Ltd.*

Planning, production, and sales of stationery, sundries, and other products

BANDAI AMERICA INCORPORATEDSales of toy-related products

BANDAI S.A.

Regional management functions; sales of toy-related products

BANDAI U.K. LTD.

Sales of toy-related products

BANDAI ESPAÑA S.A.

Sales of toy-related products

BANDAI POLSKA sp. zoo

Sales of toy-related products

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

Regional management functions; import, export, manufacturing, and sales of toy-related
products

BANDAI ASIA CO., LTD.

Sales of toy-related products

BANDAI KOREA CO., LTD.

Manufacturing, import, and sales of toys, etc., and licensing operations

BANDAI (GUANGZHOU) CO., LTD.

Planning and sales of toy-related products

BANDAI INDUSTRIAL CO., LTD.

Manufacturing of toy-related products

BANDAI (SHENZHEN) CO., LTD.

Quality assurance and quality control operations, and factory inspections of trading partners

Content Strategic Business Unit
NAMCO BANDAI Games Inc.

Planning, development, and sales of game software and arcade machines, etc.

D3 PUBLISHER INC.

Planning, development, and sales of game software

Banpresto Co., Ltd.

Planning, development, and sales of amusement prizes, lottery prizes

VIBE Inc.

Provision of content and products using various interactive and media options, advertising,and promotion

B. B. STUDIO Co., Ltd.

Planning, development, and sales of game software

NAMCO TALES STUDIO LTD.

Planning, development, and sales of game software

Banpresto Sales Co., Ltd.

Sales of arcade machines and prizes, etc.

* Companies accounted for by the equity method30

NAMCO BANDAI Online Inc.

Planning, development, and operation of online games and other software

BANDAI VISUAL CO., LTD.

Planning, production, and sales of visual software, etc.

Sunrise Inc.

Planning and production of animation for TV and theatrical release, management and administration of copyrights

Bandai Channel Co., Ltd.

On-demand delivery of content, such as animations

SUNRISE MUSIC Publishing Co., Ltd.

Production of music for animations produced by Sunrise; overall management of music
publishing and master recording rights

Lantis Co., Ltd.

Planning, production, sales, and management of musical content

NAMCO BANDAI Live Creative Inc.

Planning and production of events and live performances, production of visual products,
ticket sales, etc.

NAMCO BANDAI Games America Inc.

Sales and marketing of game software

NAMCO AMERICA INC.

Sales of arcade machines

BANDAI ENTERTAINMENT INC.

Planning, production, sales, and copyright management of visual content

NAMCO BANDAI Games Europe S.A.S.

Sales and marketing of game software

NAMCO EUROPE LTD.

Sales of arcade machines

NAMCO BANDAI Partners S.A.S.
BEEZ ENTERTAINMENT S.A.S.
BANPRESTO (H.K.) LTD.

Holding company of the NAMCO BANDAI Partners Group, which conducts sales of gamesoftware; Shared services company
Production and sales of visual programming and movies; video and DVD sales; copyright
management
Manufacturing and production management of arcade machines and prizes

Amusement Facility Strategic Business Unit
NAMCO LIMITED

Planning and operation of amusement facilities

Pleasure Cast Co., Ltd.

Planning and operation of amusement facilities

Hanayashiki Co., Ltd.

Planning and operation of Asakusa Hanayashiki amusement park

NAMCO CYBERTAINMENT INC.

Planning and operation of amusement facilities in the United States

NAMCO OPERATIONS EUROPE LTD.

Planning and operation of amusement facilities in the U.K.

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of amusement facilities in Hong Kong

SHANGHAI NAMCO LTD.*

Planning and operation of amusement facilities in China

Affiliated Business Companies
BANDAI LOGIPAL INC.

Cargo trucking operations, logistics management, etc.

LOGIPAL EXPRESS INC.

Transportation, distribution, warehousing, etc.

NAMCO BANDAI Business Services Inc.

Support of Group operations and administration, etc.

Artpresto Co., Ltd.

Planning and designing of various printed materials

Happinet Corporation*

Wholesale of toys and video game consoles (Tokyo Stock Exchange, First Section)

Sotsu Co., Ltd.*

Planning and development of advertising and copyright business (JASDAQ)

Italian Tomato Ltd.*Management of directly operated restaurants; franchise operations

31

Directors and Corporate Auditors
As of June 20, 2011

President and CEO,
Representative Director

Director, Senior Advisor

Takeo Takasu

Shukuo Ishikawa

Director

Director

Director (Part-time)

Director (Part-time)

Shuji Ohtsu

Yuji Asako

Kazunori Ueno

Masahiro Tachibana

Director (Outside)

Director (Outside)

Director (Outside)

Manabu Tazaki

Nobuo Sayama

Tomohisa Tabuchi

Statutory Auditor

Koichiro Honma
Statutory Auditor (Outside)

Katsuhiko Kohtari
Statutory Auditor (Outside)

Osamu Sudoh
Statutory Auditor (Outside)

Kouji Yanase

32

Financial Section
Contents
34 Consolidated Six-Year Financial Summary
35 Financial Review
38 Consolidated Balance Sheets
40 Consolidated Statements of Operations andConsolidated Statements of Comprehensive Income
41 Consolidated Statements of Changes in Net Assets
42 Consolidated Statements of Cash Flows
43 Notes to Consolidated Financial Statements
66 Independent Auditors’ Report33consolidated Six-Year Financial Summary
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
For the years ended March 31

Millions of yen, except per share data and main financial indicators

2006

2007

2008

2009

2010

2011

Net sales¥450,829¥459,133¥460,474¥426,400¥378,547¥394,179

For the Year:

Gross profit

156,565

168,080

164,073

146,023

128,753

139,415

Selling, general and administrative
expenses

120,896

125,856

130,662

123,675

126,869

123,077

Operating income

35,66942,22433,411

22,3481,884

16,338Recurring income*1

37,12245,61636,19824,513

1,908

16,399Net income (loss)

14,15024,252

32,67911,830(29,929)

1,848

Capital expenditures

24,02027,925

34,115

17,481

14,41813,439Depreciation and amortization

19,144

21,201

24,75922,54618,98918,001

Cash flows from operating activities

31,80942,49335,00019,301

10,582

22,562

Total assets¥386,651¥408,490¥413,023¥363,445¥325,936¥308,269

Total current assets

240,635

257,209267,713230,086

217,763

210,934

Total current liabilities

107,528

110,829

101,649

84,30486,605

86,105

Total net assets

252,244284,254289,944

260,579

229,012

213,693

Net income (loss) per share (basic)¥54.39¥95.73¥128.65¥47.95¥(123.98)¥ 7.71

Cash dividends

12.00*5

28.00

24.00

24.00

24.00

24.00

Return on equity (ROE)*2, 4 (%)

5.8

9.4

11.7

4.3

–12.4

0.8

Return on assets (ROA)*3, 4 (%)

9.6

11.5

8.8

6.3

0.6

5.2

Selling, general and administrative
expenses to net sales (%)

26.8

27.4

28.4

29.0

33.5

31.2

Operating income margin (%)

7.9

9.2

7.3

5.2

0.5

4.1

Net income margin (%)

3.1

5.3

7.1

2.8

–7.9

0.5

Shareholders’ equity ratio (%)

63.0

67.1

69.4

70.9

69.5

68.8

Debt/equity ratio (times)

0.14

0.05

0.06

0.08

0.06

0.02

At Year-End:Per Share Data (yen):

Main Financial Indicators:*1 Recurring income is a Japanese accounting term denoting income before extraordinary items.
*2 ROE = Net income (loss) / Average total shareholders’ equity (= Net assets – Stock subscription rights – Minority interests)*3 ROA = Recurring income / Average total assets*4 Figures for shareholders’ equity and total assets as of March 31, 2006, are used in calculating ROE and ROA for the year ended March 31, 2006.
*5 In lieu of interim dividends, share transfer payments of ¥18 per share were paid to shareholders of Bandai and ¥12 were paid to shareholders of NAMCO.

34

Financial Review

Overview of Performance in the Fiscal Year
Ended March 31, 2011
In this fiscal year, signs of a mild recovery were overtaken by thesudden rise in the yen and soaring oil prices in conjunction with
the increasingly tense situation in the Middle East. The economy
thus continued to be largely stagnant. The impact of the Great East
Japan Earthquake, which struck on March 11, 2011, has added
further uncertainty to the outlook for the entertainment industry
in Japan.
In such environment, the BANDAI NAMCO Group (“the Group”)
pressed ahead with the development of its global managementfoundation based on the three-year Mid-term Business Plan thatstarted in April 2009, and sought to realize its medium-to-longterm Group vision of becoming a “Globally Recognized Entertainment Group.” Moreover, the Group commenced the “BANDAI
NAMCO Group Restart Plan” in April 2010, for the purpose of amore assured implementation of this global management foundation, and it carried out steps to transform itself into a speedy Group,
improving its profitability and strengthening its financial standing.
On the business front, the domestic long-established charactertoys and card products posted strong performances in the Toysand Hobby business. In addition, the Group benefitted fromcertain achievements, particularly in the Content business and theAmusement Facility business, through a range of measures being
implemented according to the Restart Plan.
net Sales
On a consolidated basis, the Group’s net sales were ¥394,179
million, a year-on-year increase of 4.1%.
cost of Sales
Cost of sales was ¥254,764 million, and the ratio of cost of sales
to net sales declined to 64.6%, from 66.0% in the previous year.
As a result, gross profit was ¥139,415 million, and the gross marginincreased to 35.4%, from 34.0% in the previous year.

SG&a expenses
Selling, general and administrative (SG&A) expenses were¥123,077 million, down 3.0%, and the ratio of SG&A expenses to
net sales decreased to 31.2%, from 33.5% in the previous year.
Principal items included advertising expenses of ¥28,782 million,
directors’ remuneration and employees’ wages of ¥32,012 million,
employees’ retirement and severance benefits of ¥1,470 million,
and research and development expenses of ¥16,091 million.
operating income
Operating income was ¥16,338 million, an increase of 767.2%, and theoperating margin increased to 4.1%, from 0.5% in the previous year.
other income (loss)
Other income (loss) included loss on valuation of investment securities of ¥2,103 million. However, loss on impairment of fixed assets,
which was ¥15,903 million in the previous fiscal year, decreased to¥997 million in the year under review. In addition, other loss, whichwas ¥5,187 million in the previous fiscal year, declined to ¥1,948
million in the year under review. As a result, other loss totaled¥4,878 million, a substantial decline from the previous year.
net income (loss)
The Group recorded net income of ¥1,848 million, compared withnet loss of ¥29,929 million in the previous fiscal year. The net
margin in the year under review was 0.5%. Net income per sharewas ¥7.71, compared with net loss per share of ¥123.98 in theprevious year. Other losses were ¥4,878 million, and losses atcertain subsidiaries increased, chiefly at overseas sales companies. On the other hand, due mainly to increased profits atdomestic subsidiaries, income taxes exceeded the initial forecast,reaching ¥9,471 million.

Results by Segment
Net sales (Millions of yen)Segment income (loss) (Millions of yen)

2011

2010

Year on year

2011

2010

Toys and Hobby¥158,374¥148,844¥9,530¥13,813¥10,787

Content

179,917

167,471

12,446

3,092(7,761)

10,853

Amusement Facility

62,33865,363(3,025)

1,779

285

1,494

Other

18,504

15,790

2,714

810

323

487

toys and Hobby BusinessIn the Toys and Hobby business, sales of the domestic longestablished character toys, particularly the Kamen Rider / OOO(pronounced “O’s”) and Heart Catch Pretty Cure!, trended quite
strongly. In addition, GOKAIGER, the new member of the Super
Sentai (POwER RAnGERS) series, launched in February 2011, hasmade a strong start. Digital card games such as Dragon Ball
Heroes and PRO BASEBALL OwnERS LEAGUE card game,
which connects with the online game, also performed well, making
a significant contribution to this business performance. Candy
toys, children’s clothing, and other peripheral toy categories also
reported improved performance due to developing product tie-ups
in each category around popular characters in the Kamen Rider
and other series.
Overseas in North America and Europe, facing a struggling
performance from the POwER RAnGERS series due to a decline
in the frequency of TV broadcasts, the Group started to expand

Year on year

¥

3,026

into new categories and contents in the aim of achieving growth in
the medium to long term. However, performance did not reach thelevel of the previous fiscal year, which enjoyed strong performancefrom BEn10.
As a result, net sales in the Toys and Hobby business were¥158,374 million, a year-on-year increase of 6.4%, and segment
income was ¥13,813 million, a year-on-year increase of 28.1%.
content BusinessIn the Content business, nARUtO Shippuden: Ultimate ninja
Storm 2, a home video game software for the PlayStation 3 andXbox 360, achieved over a million units sold worldwide. In domestic
sales, speedier response to changing customer preferences madesuch titles as GOD EAtER BURSt and AKB1/48: Idol to Koishitara...,which are games for the PlayStation Portable, hugely popular.
The performance of new titles developed towards creating new
franchises, however, fell below expectations, particularly overseas.

35

In the arcade game machines area, MOBILE SUIt GUnDAM
ExtREME VS. and prizes for amusement based on popularcharacters such as OnE PIECE trended favorably. In the visual andmusic content area, in addition to strong package sales of Mobile
Suit Gundam UC (Unicorn), selecting and focusing on popular
titles has led to improved profitability. In the network content
area, the number of monthly subscribers to existing services has
declined, but Gundam Royale for SNS (social networking
services), for which service provision began in December 2010,
has made a strong start.
With impairment of goodwill related to some subsidiaries in theprevious fiscal year, total amortization of goodwill declined relative
to the previous fiscal year, while the implementation of measures
to improve efficiency has reduced fixed costs.
As a result, net sales in the Content business were ¥179,917
million, a year-on-year increase of 7.4%, and segment income was¥3,092 million, compared with segment loss of ¥7,761 million in
the previous fiscal year.

Total liabilities amounted to ¥94,576 million, a decrease of¥2,348 million from the end of the previous fiscal year. The main
factors contributing to this decline were decreases of ¥5,448
million in short-term borrowings, ¥3,333 million in long-termborrowings due to repayment, and ¥4,195 million in advances
received, which are included in other current liabilities. These
declines offset an increase of ¥9,810 million in accrued expenses.
Total net assets at the end of the year stood at ¥213,693 million,a decrease of ¥15,319 million from the end of the previous year.
This decline was mainly due to decreases of ¥6,876 million inforeign currency translation adjustments and ¥3,962 million inretained earnings due to such factors as the payment of dividends,
as well as to the acquisition of ¥4,172 million in treasury stock
through open market purchase.
As a result, the equity ratio was 68.8%, compared with 69.5% at
the end of the previous fiscal year. The current ratio* was 245.0%,
compared with 251.4% a year earlier; the quick ratio* was 172.1%,
compared with 174.8%; and the interest coverage ratio* was 42.0
times, compared to 33.0 times.

amusement Facility BusinessIn the Amusement Facility business, amid a perception that thisbusiness has bottomed out in the domestic market, we havecarried out the sales strategy to accommodate each specificcustomer need. Our facilities, having differentiated themselves by
being able to offer the experience of the distinctive worldviews ofsuch characters as Ultraman, Kamen Rider, and tamagotchi,
performed well. While this business facilities did suffer somedamage in the Great East Japan Earthquake in March 2011,
existing domestic amusement facilities’ net sales for the year roseto 101.0% of the previous fiscal year. Due to the withdrawal from
related businesses with poor profitability, in Japan, net sales
decreased but profitability was improved.
In the challenging environment presented by countries outside
Japan, performance continued to be sluggish in the European
region, but measures to improve efficiency implemented in the
North American region in the previous fiscal year have borne fruit,with improved profitability.
As a result, net sales in the Amusement Facility business were¥62,338 million, a year-on-year decrease of 4.6%, and segment
income was ¥1,779 million, a year-on-year increase of 524.2%.

* Current ratio: Current assets / Total current liabilities
Quick ratio: (Cash and time deposits + Short-term investments+ Trade receivables ) / Total current liabilities
Interest coverage ratio: Cash flows from operating activities /Interest paid

Other Businesses
Other businesses consist of companies that conduct operations,such as logistics support and building management, for each of
the Group’s strategic business units. During the fiscal year ended
March 31, 2011, efforts were made to improve the efficiency ofthese operations related to Group support.
As a result, net sales in the Other businesses were ¥18,504
million, a year-on-year increase of 17.2%, and segment income
was ¥810 million, a year-on-year increase of 150.8%.

Financial Position
As of March 31, 2011, total assets stood at ¥308,269 million, adecrease of ¥17,667 million from the end of the previous year.
The main factors contributing to this decline were decreases of¥8,522 million in cash and time deposits, ¥2,264 million in finishedgoods and merchandise included in inventories, ¥2,224 million
in goodwill, and ¥2,105 million in investment securities due tovaluation loss and other factors.

36

Cash Flows
As of the end of the year, cash and cash equivalents (hereafter“funds”) were down ¥8,447 million from the end of the previous
year, to ¥89,330 million.
cash Flows from operating activities
Net cash provided by operating activities was ¥22,562 million, an
increase of 113.2%. Principal outflows included income taxes paidof ¥10,437 million, compared with ¥8,762 million in the previous
year, and increase in trade receivables of ¥8,155 million, comparedwith decrease in trade receivables of ¥13,478 million in the previous
year. Principal inflows included income before income taxes andminority interests of ¥11,460 million, compared with loss before
income taxes and minority interests of ¥19,294 million in theprevious year; depreciation and amortization of ¥18,001 million,
compared with ¥18,989 million in the previous year; and increasein accrued expenses was ¥10,966 million, compared with thedecrease of ¥6,218 million in the previous year.
cash Flows from investing activities
Net cash used in investing activities totaled ¥7,373 million,a decrease of 25.2% from the previous year. Principal inflows
included collection of guarantee money deposited of ¥1,221
million, compared with ¥2,739 million in the previous year.
However, purchases of property, plant and equipment and of
intangible assets totaled ¥9,313 million, compared with ¥10,008
million in the previous year.
cash Flows from Financing activities
Net cash used in financing activities was ¥18,825 million,
up 23.2% compared with the previous fiscal year. Principal items
included repayment of long-term borrowings of ¥8,657 million,
compared with ¥8,762 million in the previous year; cash dividends
paid of ¥5,797 million, compared with ¥5,796 million in theprevious year; and increase in treasury stock, net of ¥4,172 million,
compared with ¥8 million in the previous year.

Basic Policy on the Distribution of Profits andthe Payment of Dividends
The Company positions the return of profits to stockholders as
one of its highest management priorities. The fundamental policy
is to maintain a stable dividend and increase corporate value while
becoming an even more competitive Group, and preserving asound financial position. The Company is maintaining the consolidated dividend payout ratio at a level of 30%, based on stableannual dividend payments of ¥24 per share.
Decisions about dividends for the current and subsequent fiscal
years are made in accordance with this basic policy. The Company
plans to pay dividends of ¥24 per share for the year ended March
31, 2011. For the year ending March 31, 2012, the Company plans
to maintain dividends at the same level of ¥24 per share. In addition,
after appropriation of dividends from the consolidated net income
for the period, the Company has resolved to attribute a portion of
the remaining balance to the acquisition of its own shares, withcomprehensive consideration of aspects such as the level of cash
held, operating performance, share price trend, and plan for largescale investments. The Company’s acquisition of treasury stockand decision to acquire treasury stock in the year ended March 31,
2011 were made below in accordance with this basic policy.
Resolution made by the Board of Directors at a meeting held on
November 5, 2010
a. Period of acquisition: From November 11, 2010 to January 31, 2011b. Total number of shares acquired: 5,000,000 sharesc. Total amount for share acquisition: ¥4,169 million
Resolution made by the Board of Directors at a meeting held on
February 25, 2011
a. Period of acquisition: From February 28, 2011 to December 31, 2011b. Total number of shares to be acquired: 20,000,000 shares (maximum)c. Total amount for share acquisition: ¥20,000 million (maximum)

Targets and Management Performance Indicators
The Group has adopted ROE (Return on Equity) as a management
performance indicator. Looking ahead, we will work to further
expand profits by stepping up investment, particularly in overseas
business. In addition, we will take steps to build a strong andstable management base by effectively utilizing stockholders’equity. Over the medium to long term, we aim to achieve consolidated ROE of 10% or higher.

Outlook for the Fiscal Year Ending March 31,
2012
A wide range of factors are expected to have an impact on theeconomy in the future such as the increasingly tense situation in
the Middle East, and a weakening of consumption in Japan as aresult of the Great East Japan Earthquake and anticipatedelectricity power shortages, and other factors, and a difficult
business environment is expected to continue. Such factors arealso expected to have a global impact on the entertainment
industry, in which the Group is extensively involved, resulting inongoing uncertainty in this business environment.
Facing these circumstances, the Group is working to steadily
develop its global management foundation as outlined in thethree-year Mid-term Business Plan that started in April 2009, andexpects these efforts will lead to medium to long term growth in
the global market.

Specifically, in the Toys and Hobby business, our plan for theJapanese market is to promote long-established character toys,
such as Kamen Rider / OOO (pronounced “O’s”) and GOKAIGER(POwER RAnGERS series) for boys and SUItE PREttY CURE forgirls, and strengthen card product development including digital
card games and PRO BASEBALL OwnERS LEAGUE. In addition,
while aiming for an overwhelming position of No.1 in Japan,
we will consecutively launch new products aimed at new targets.
Overseas, the Group will strive to improve profitability by focusing
on the core products POwER RAnGERS SAMURAI, the first new
creation from the POwER RAnGERS series in two years, and theBEn10 character toys, which have now become a longestablished character series, while working to expand new
categories such as girls’ toys and preschool toys.
In the Content business, the Group aims to improve profitability
in home video game software by expanding its market in Japanand overseas by focusing on popular franchise titles that weredeveloped in Japan, such as ACE COMBAt ASSAULt HORIZOn
for PlayStation 3 and Xbox 360. The Group will also strengthen
its business through the latest machines for the popular series
tekken and Dragon Ball in arcade game machines and Mobile Suit
Gundam UC (Unicorn) in visual and music content. In addition, in
network content, the Group will aim to maximize content value by
strengthening content and online games for SNS (social networking
services) while interlinking these businesses with other categories.
In the Amusement Facility business, the operations at four
stores in Japan remain suspended due to damage from the Great
East Japan Earthquake. However, while cooperating with electricity
power conservation activities, we will continue to promote differentiated facilities that offer the experience of the Group’s distinctive
worldviews of characters. Overseas, we will strive to boost profitability by continuing to implement various efficiency measures.
In light of the above considerations, the consolidated projections of the fiscal year ending March 31, 2012 are as follows: net
sales of ¥400,000 million, a year-on-year increase of 1.5%, operating
income of ¥16,500 million, a year-on-year increase of 1.0%, andnet income of ¥8,000 million, a year-on-year increase of 332.9%.

The Year Ending March 31, 2012
Consolidated Plan
Segments
Toys and Hobby
Content
Amusement Facility
Other
Adjustments
Consolidated(Millions of yen)

Net sales¥160,000
180,000
61,00021,000(22,000)¥400,000

Segment income¥10,500
6,500
1,500
500
(2,500)¥16,500

Forward-Looking Statements
Forecasts for the next year and other future projections in thisannual report are based on information available to the Group at thetime they were made and are therefore subject to various risks anduncertainties. Actual results therefore may differ materially fromprojections for a variety of factors. Major factors that could influence
results include changes in the Company and the Group’s operating
environment, market trends, and exchange rate fluctuations.

37

consolidated Balance Sheets
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2010 and 2011

Thousands of
U.S. dollars(note 3)

Millions of yen

2010

2011

2011

$1,059,844

AssetsCurrent assets:
Cash and time deposits (notes 4 and 12)¥ 96,648¥ 88,126

Short-term investments (notes 4, 5 and 12)

2,038

2,818

33,891

Trade receivables (notes 6 and 12)

52,72657,263

688,671

Allowance for doubtful receivables(1,139)(820)(9,862)Inventories (note 7)

40,95741,701

501,515

Deferred tax assets (note 13)

5,763

6,592

79,278Other current assets

20,77015,254

183,452

217,763

210,934

2,536,789

23,275

21,170254,600

Total current assets

Investments and other assets:
Investment securities (notes 5 and 12)
Deferred tax assets (note 13)

5,886

5,760

69,272Other investments and assets

22,303

21,181

254,733

Allowance for doubtful receivables(1,807)(1,905)(22,910)49,657

46,206555,695

Buildings and structures

24,671

24,160290,559

Amusement facilities and machines

60,827

61,618741,046

Land

11,592

10,786

129,717

Total investments and other assets

Property, plant and equipment:

Other property, plant and equipment
Total
Less accumulated depreciation
Net property, plant and equipment

71,18068,423822,886

168,270

164,987

1,984,208(122,256)(122,395)(1,471,978)46,014

42,592512,230

2,951

727

8,743

Intangible assets:
Goodwill
Other intangible assets
Total intangible assets
Total assets
See accompanying Notes to Consolidated Financial Statements.

38

9,551

7,810

93,927

12,502

8,537

102,670¥325,936¥308,269$3,707,384

Thousands of
U.S. dollars(note 3)

Millions of yen

2010

2011

2011

Liabilities and net assets
Current liabilities:
Short-term borrowings (notes 9 and 12)

¥

8,877

¥

3,429

$

41,239Trade payables (notes 10 and 12)

35,95636,641

440,661

Accrued expenses

20,147

29,957360,277

Accrued income taxes (notes 12 and 13)

8,240

7,980

95,971Other current liabilities (notes 9, 13 and 21)

13,385

8,098

97,39086,605

86,105

1,035,538

Total current liabilities

Long-term liabilities:
Long-term borrowings (notes 9 and 12)

3,333

—

—

Accrued retirement and severance benefits (note 11)

2,436

2,764

33,241

Deferred tax liabilities (note 13)

1,289

1,245

14,973

Other long-term liabilities (notes 9 and 21)

3,261

4,462

53,662

Total long-term liabilities

10,3198,471

101,876

Total liabilities

96,924

94,576

1,137,414

120,265

Net assets:
Shareholders’ equity
Common stock (note 18)
Authorized: 1,000,000,000 shares
Issued: 250,000,000 shares in 2010, 240,000,000 shares in 2011

10,00010,000Additional paid-in capital

79,96069,924

840,938

Retained earnings (note 16)
Treasury stock, at cost; 8,540,776 shares in 2010 and
3,497,884 shares in 2011 (note 18)

163,454

159,492

1,918,124(9,455)(3,496)(42,045)

243,959

235,920

2,837,282

Unrealized gains or losses on other securities, net of tax (note 5)

19

448

5,388

Deferred gains or losses on hedges, net of tax

80

3

36

Land revaluation, net of tax (note 17)(6,492)(6,492)(78,076)

Foreign currency translation adjustments(10,900)(17,776)(213,782)(17,293)(23,817)(286,434)

810

—

—

1,536

1,590

19,122

Total net assets

229,012

213,6932,569,970

Total liabilities and net assets¥325,936¥308,269$3,707,384

Subtotal
Accumlated other comprehensive income (loss)

Subtotal
Stock subscription rights
Minority interests

39

consolidated Statements of operations and consolidated Statements ofcomprehensive income
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2011

consolidated Statements of operations
Thousands of
U.S. dollars(note 3)

Millions of yen

2010

2011

2011

¥378,547
249,794
128,753
126,869
1,884¥394,179
254,764
139,415
123,077
16,338$4,740,577
3,063,909
1,676,668
1,480,180
196,488

584
(378)
151
(141)
(304)
(15,903)(5,187)(21,178)

389
(143)
246
(2,103)(322)(997)(1,948)(4,878)

4,678(1,720)2,959(25,292)(3,873)(11,990)(23,427)(58,665)

Income (loss) before income taxes and minority interests(19,294)

11,460137,823

Income taxes (note 13)

10,4999,471

113,902

Income (loss) before minority interests(29,793)

1,989

23,921

136

141

1,696

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses (note 14)
Operating income
Other income (loss):
Interest and dividend income
Interest expense
Gain (loss) on sales of investment securities, net
Loss on valuation of investment securities
Gain (loss) on sales and disposal of fixed assets, net
Loss on impairment of fixed assets (note 8)
Other

Minority interests
Net income (loss)¥ (29,929)

¥

1,848

22,225
U.S. dollars(note 3)

Yen

Data per common share (note 15):
Net assets at March 31
Net income (loss):
Basic
DilutedCash dividends applicable to period (note 16)

$

2010

2011

2011

¥ 938.74¥896.83$10.79(123.98)
—
24.00

7.71
7.71
24.00

0.09
0.09
0.29

See accompanying Notes to Consolidated Financial Statements.

consolidated Statements of comprehensive income
Thousands of
U.S. dollars(note 3)

Millions of yen

Income (loss) before minority interests
Other comprehensive income (loss)
Unrealized gains or losses on other securities, net of tax
Deferred gains or losses on hedges, net of tax
Land revaluation, net of tax
Foreign currency translation adjustments
Share of other comprehensive income (loss) of associates accounted forusing equity method
Other comprehensive income (loss)
Comprehensive Income (loss)
Comprehensive income (loss) attributable to:
Owners of the parent
Minority interests
See accompanying Notes to Consolidated Financial Statements.

40

2010

2011

2011

¥(29,793)¥ 1,989$ 23,921

1,880
185
(192)
2,906

465
(77)
—
(6,928)

5,592
(926)
—
(83,320)54
4,833¥(24,960)(49)(6,589)¥(4,600)(589)(79,243)$(55,322)¥(25,150)
190¥(4,676)76$(56,236)
914

consolidated Statements of changes in net assets
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2011

Thousands of
U.S. dollars(note 3)

Millions of yen

2010

2011

2011

¥ 10,000¥ 10,000$ 120,265

10,00010,000120,265

79,88879,960961,636

72

42

505

Common stock (note 18):
Balance at beginning of year
Balance at end of year
Additional paid-in capital:
Balance at beginning of year
Disposal of treasury stock
Retirement of treasury stock—(10,078)(121,203)

79,96069,924

840,938

Balance at beginning of year

199,453

163,454

1,965,773

Net income (loss)(29,929)

1,848

22,225

116

(13)

(157)

Balance at end of year
Retained earnings (note 16):

Change in scope of consolidation
Change in scope of application of equity method
Cash dividends
Increase due to company split
Balance at end of year

(416)

—

—

(5,796)(5,797)(69,717)26——

163,454

159,492

1,918,124(113,710)

Treasury stock (note 18):
Balance at beginning of year

(9,624)(9,455)

Net change during year

169

5,959

71,665

Balance at end of year

(9,455)(3,496)(42,045)

Unrealized gains or losses on other securities, net of tax (note 5):
Balance at beginning of year

(1,911)

19229

Net change during year

1,930

429

5,159

Balance at end of year

19

448

5,388

Balance at beginning of year

(105)

80

962

Net change during year

185

(77)

(926)

Balance at end of year

80

3

36
(78,076)

Deferred gains or losses on hedges, net of tax:

Land revaluation, net of tax (note 17):
Balance at beginning of year

(6,300)(6,492)

Net change during year

(192)

—

—

Balance at end of year

(6,492)(6,492)(78,076)

Foreign currency translation adjustments:
Balance at beginning of year

(13,756)(10,900)(131,088)

Net change during year

2,856

(6,876)(82,694)

Balance at end of year

(10,900)(17,776)(213,782)

Balance at beginning of year

1,468

810

9,741

Net change during year

(658)

(810)

(9,741)

Balance at end of year

810

—

—
18,473

Stock subscription rights:

Minority interests:
Balance at beginning of year

1,466

1,536

Net change during year

70

54

649

Balance at end of year

1,536

1,590

19,122¥229,012¥213,693$2,569,970

Total net assets at end of year
See accompanying Notes to Consolidated Financial Statements.

41

consolidated Statements of cash Flows
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2011

Thousands of
U.S. dollars(note 3)

Millions of yen

2010

2011

2011

Cash flows from operating activities:
Income (loss) before income taxes and minority interests¥(19,294)¥ 11,460$137,823

Depreciation and amortization

18,98918,001

216,488

Loss on impairment of fixed assets

15,903997

11,990Loss (gain) on sales and disposal of fixed assets

304

322

3,873

Loss on disposal of amusement facilities and machines

570

426

5,123

Loss (gain) on sales of investment securities

(151)

(444)

(5,340)Loss on valuation of investment securities

141

2,103

25,292

Decrease (increase) in trade receivables

13,478(8,155)(98,076)

Decrease (increase) in inventories(1,726)(1,850)(22,249)

Acquisition of amusement facilities and machines(4,410)(4,126)(49,621)

Increase (decrease) in trade payables(6,701)

3,669

44,125

Others

1,980

10,754

129,333

19,08333,157398,761

582

379

4,558

SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

(321)

(537)

(6,458)(8,762)(10,437)(125,520)

10,582

22,562

271,341

Cash flows from investing activities:
Decrease (increase) in time deposits, net
Purchases of property, plant and equipment
Sales of property, plant and equipment
Purchases of intangible assets

327

(709)

(8,527)(7,177)(6,643)(79,892)

124

1,110

13,349(2,831)(2,670)(32,111)Purchases of investment securities

(422)

(92)

(1,106)

Sales of investment securities

472

605

7,276

Acquisition of shares in consolidated subsidiaries, net of cash acquired

(81)

—

—

(1,760)

—

—

—

8

96

(1,070)(1,372)(16,500)
13,963Purchase of subsidiary shares affecting the scope of consolidation
Sales of subsidiary shares affecting the scope of consolidation
Payment of loans receivableCollection of loans receivable

171

1,161

Payment of guarantee money deposited

(398)

(371)

(4,462)

Collection of guarantee money deposited

2,739

1,221

14,684

OthersNet cash used in investing activities

43

379

4,559

(9,863)(7,373)(88,671)

Cash flows from financing activities:
Increase (decrease) in short-term borrowings, net

(577)

(105)

(1,263)

Repayment of long-term borrowings(8,762)(8,657)(104,113)

Payment of lease obligations

(83)

(73)

(878)

Decrease (increase) in treasury stock, net(8)(4,172)(50,174)(5,796)(5,797)(69,717)

(51)

(21)

(253)

(15,277)(18,825)(226,398)

2,010(4,838)(58,184)

Cash dividends paid
Cash dividends paid to minority interests
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(12,548)(8,474)(101,912)

Cash and cash equivalents at beginning of year

110,037

97,777

1,175,911
325

Increase in cash and cash equivalents due to consolidation of additional subsidiaries

271

27

Increase in cash and cash equivalents due to merger of non-consolidated subsidiaries

62

—

—

Decrease in cash and cash equivalents due to company split

(45)

—

—

¥ 97,777¥ 89,330$1,074,324

Cash and cash equivalents at end of year (note 4)
See accompanying Notes to Consolidated Financial Statements.

42notes to consolidated Financial Statements
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries

1 Basis of Presentation
NAMCO BANDAI Holdings Inc. (“the Company”) and its consoli-

Japanese GAAP and filed with the appropriate Local Financedated subsidiaries have prepared their financial statements in

Bureau of the Ministry of Finance as required by the Financial

accordance with the provisions set forth in the Japanese Financial

Instruments and Exchange Act.

Instruments and Exchange Act and its related accounting

Some supplementary information included in the statutory

regulations, and in conformity with accounting principles generally

Japanese-language consolidated financial statements that is not

accepted in Japan (Japanese GAAP), which are different in certain

required for fair presentation is not presented in the accompanying

respects as to application and disclosure requirements ofconsolidated financial statements.

International Financial Reporting Standards (IFRSs).
The accounts of overseas subsidiaries are based on their

In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated

accounting records maintained in conformity with IFRSs or accounting

financial statements issued in Japan in order to present them inprinciples generally accepted in the United States (U.S. GAAP).

a form that is more useful to readers outside Japan.

The accompanying consolidated financial statements have been

Certain reclassifications have been made to the prior year

prepared and translated into English from the consolidated financial

consolidated financial statements to conform to the presentation

statements of the Company prepared in accordance withused for the year ended March 31, 2011.

2 Summary of Significant Accounting Policies(a) Principles of Consolidation

The assets and liabilities of foreign consolidated subsidiaries

The accompanying consolidated financial statements include

and affiliates are translated into yen at the rates of exchange in

the accounts of the Company and its significant subsidiaries.

effect at the balance sheet date. Revenue and expenses of foreign

Consolidation of the remaining subsidiaries would have had noconsolidated subsidiaries and affiliates are translated into yenmaterial effect on the accompanying consolidated financial state-at the average rates of exchange during the year. Gains andments. Investments in significant affiliates are accounted for using

losses, and those resulting from the translation of foreign currency

the equity method.

financial statements are generally excluded from the consolidated

Investments in unconsolidated subsidiaries and certain affiliates

statements of operations and are included in “Translation

other than those accounted for using the equity method are statedadjustments” and “Minority interests” in “Net assets” in theat cost. If the equity method had been applied to the investments

Consolidated Balance Sheets.

in these companies, there would have been no material effect on
the accompanying consolidated financial statements.
All significant intercompany accounts and transactions have(d) Accounting Standards for Income and Expenses
Video Game Software Revenue Recognition:

been eliminated in consolidation. The excess of cost over theConsolidated subsidiaries operating in the United States recognize

underlying fair value of the net assets of consolidated subsidiaries

revenue in accordance with “Software Revenue Recognition” ofacquired is being amortized over a five-year period.

Financial Accounting Standards Board (FASB) AccountingStandards Codification No. 985-605, treating video game software(b) Cash and Cash Equivalentswith online functions as software products with multiple-element

In reporting cash flows, the Company considers cash on hand, demandarrangements. Unless the vendor can objectively and reasonably

deposits, and all highly liquid investments with original maturities

identify the fair value of undelivered elements specified by theof three months or less to be cash and cash equivalents (note 4).

vendor, recording of any revenue attributable to video gamesoftware is deferred until all the elements are delivered.

(c) Foreign Currency Translation

Accounting for video game software production expenses:

Foreign currency transactions are translated into yen at rates in

A distinctive characteristic of video game software is the processeffect at the dates they are transacted, and the gains or losses

through which the software is highly integrated with content that

arising from the settlement of the related receivables or payables

cannot be separated into identifiable components.

are included in “Other income (loss)” in the Consolidated
Statements of Operations.

The content is considered to be an important component ofeach video game title, which includes the game content andReceivables and payables denominated in foreign currencies

visual/music data. Once management makes a decision to go

at the balance sheet date are translated at the rates in effect as

forward in distributing a title, the Company records the softwareof the balance sheet date and the unrealized gains or losses are

and content development costs as inventories.

included in “Other income (loss)” in the Consolidated Statementsof Operations.

The capitalized production costs are amortized to cost of sales
based on projected sales volumes.

43

(e) Short-Term Investments and Investment Securities(i) Property, Plant and Equipment

The Company and its consolidated subsidiaries classify its

The Company and its domestic consolidated subsidiaries:

securities into one of the following three categories: held-to-

Depreciation of property, plant and equipment is principally

maturity securities, investments in unconsolidated subsidiaries

computed by the declining-balance method based on estimatedand affiliated companies, or other securities.

useful lives. The straight-line method is used for buildings (except for

Held-to-maturity securities are amortized to face value over thebuilding fixtures) acquired since April 1, 1998. The estimated usefulperiod remaining to the maturity date. Investments in unconsoli-

lives for Buildings and structures and Amusement facilities anddated subsidiaries and affiliated companies are carried at cost.

machines are 2–50 years and 3–15 years, respectively.

Other securities with fair value are principally carried at fair value. The

Foreign consolidated subsidiaries:

difference, net of tax, between the acquisition cost and the carrying

Depreciation of property, plant and equipment is principally computed

amount of other securities with fair value is recognized in “Unreal-by the straight-line method based on estimated useful lives. The

ized gains or losses on other securities, net of tax” in “Net assets”

estimated useful lives for Buildings and structures and Amusement

until realized. Other securities without fair value are principally carriedfacilities and machines are 5–50 years and 2–7 years, respectively.

at cost. The cost of other securities sold is principally computed
based on the moving average method.

(j) Intangible Assets
Amortization of intangible assets is computed by the straight-line(f) Allowance for Doubtful Receivables

method based on estimated useful lives. Software for internal use

The allowance for doubtful receivables is provided for possible losses

is depreciated over 1–5 years.

on unrecoverable receivables. For ordinary receivables, the amount

Goodwill is amortized over 5 years using the straight-line method.

of the allowance is based on the historical rate of loss. For receivables from debtors at risk of bankruptcy and receivables from debtors(k) Leases

in bankruptcy or under reorganization, the amount of the allow-

Depreciation of lease assets is computed by the straight-line

ance is based on individually estimated unrecoverable amounts.

method, over the period of the lease, with a residual value of zero.
Before the change, the accounting treatment for finance lease(g) Inventories

except for those where the legal title to the underlying property is

Domestic consolidated subsidiaries:

transferred from the lessor to lessee at the end of the lease term

Inventories are stated at cost determined by the average costfollowed the method for operating lease transactions. However,method. The value stated on the balance sheet is calculated by

the “Accounting Standard for Lease Transactions” (ASBJ State-

writing down the carrying amount based on declining profitability.

ment No. 13 [Business Accounting Council Committee No. 1, June

Foreign consolidated subsidiaries:

17, 1993; revised March 30, 2007]) and the “Guidance on

Inventories are stated at the lower of cost, determined principally

Accounting Standard for Lease Transactions” (ASBJ Guidance No.

by the average cost method, or net realizable value.

16 [The Japanese Institute of Certified Public Accountants (JICPA)

Both domestic and foreign consolidated subsidiaries state gamesoftware work in process by the specific-cost method. The value

Accounting Standard Committee, January 18, 1994; revised
March 30, 2007]) are applied and the accounting treatment forstated on the consolidated balance sheets is calculated by writing

such transactions follows the method for ordinary purchase or

down the carrying amount based on declining profitability.

sales transactions.

(h) Income Taxes

titles to leased property are determined to be transferred to lessees,

Current income taxes are accounted for based on income.

which started on or before March 31, 2008, are stated by applying

Deferred income taxes are accounted for under the asset andthe accounting treatment applicable to ordinary operating leaseliability method. Deferred tax assets and liabilities are recognizedtransactions.

However, finance lease transactions other than those in which

for future tax consequences attributable to dif ferences between
the financial statement carrying amounts of existing assets and(l) Impairment of Fixed Assets

liabilities and their respective tax bases and operating loss and

The amount of accumulated losses on impairment of fixed assets

tax credit carryforwards. Deferred tax assets and liabilities areis deducted directly from the carrying amount of each asset

measured using enacted tax rates expected to apply to taxable

pursuant to the Regulations Concerning Financial Statements.

income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized inincome in the period that includes the enactment date.

44

(m) Derivatives and Hedging Activities(o) Retirement and Severance Benefits

The Company and its consolidated subsidiaries use derivative

The Company has established a retirement lump-sum benefits

instruments, such as forward foreign exchange contracts andsystem and a defined contribution pension plan. With the excep-

interest rate swap contracts, to reduce market risks arising fromtion of certain companies, domestic consolidated subsidiaries

fluctuations in foreign exchange rates and interest rates. The

have established qualified retirement benefit plans, retirement

Company and its consolidated subsidiaries use these derivative

lump-sum benefits, or comprehensive employee pension funds.

instruments solely for the purpose of reducing the risks resulting

At the Company’s discretion, additional benefits may be paid atfrom such fluctuations to which they are exposed in the course ofretirement. Certain foreign consolidated subsidiaries have estab-their ordinary business activities. Accordingly, the Company andlished defined contribution pension plans or retirement lump-sum

its consolidated subsidiaries do not use derivative instruments or

benefits system.

other financial instruments for speculative purposes.
The Company and its consolidated subsidiaries’ counterparties

Accrued retirement and severance benefits for employees inrespect of defined benefit plans is provided for based on thefor derivative instruments are all highly creditworthy financial institu-

estimated values of projected benefit obligations and pension plantions and, therefore, the Company believes that it is exposed toassets at the end of the fiscal year. Unrecognized actuarial gain oralmost no counterparty risk. Derivative transactions are conducted

loss is amortized, beginning from the fiscal year following the yearin accordance with internal rules that specify transaction authority

in which it is incurred, using the straight-line method over a period

and transaction amount limits.

that does not exceed the average remaining years of service ofAs a general rule, derivative instruments are stated at fair value.

employees as of the end of the fiscal year in which it is incurred

For derivative instruments that meet the criteria for hedge(9 to 19 years). Certain domestic consolidated subsidiaries

accounting, recognition of unrealized gains or losses is deferred.

amortize prior service costs over a fixed period (10 to 11 years)

In cases where forward foreign exchange contracts meet certainthat does not exceed the average remaining years of service ofhedging criteria, the hedged receivables and payables are

employees at the point when the costs are incurred. Provision fortranslated at the corresponding forward foreign exchange contract

retirement benefits to directors and corporate auditors of certain

rate (the “Allocation Method”). Interest rate swaps that meetdomestic consolidated subsidiaries is provided based on thespecific matching criteria are accounted for using specific allowed

amount payable at the end of the fiscal year in accordance withmethods under relevant accounting standards.

internal regulations.

The Company and its consolidated subsidiaries assess theeffectiveness of hedging transactions from the start of the(p) Provision for Losses from Business Restructuringtransaction to the point at which effectiveness is assessed by

Provision for losses from business restructuring is provided based

comparing the cumulative changes in the fair value or theon the estimated losses to be incurred on restructuring of operations.

cumulative changes in the cash flows of the hedged item with the
cumulative changes in the fair value or the cumulative changes in(q) Provision for Sales Returns

the cash flows of the hedging instrument. In the event that critical

The Company and its consolidated subsidiaries provide for losses

terms are the same for the hedging instrument and the hedged

on returned goods after the end of the fiscal year based on historic

assets, liabilities, or scheduled transaction, it is assumed that theexperience.

hedge is 100% effective, so the assessment of effectiveness is
not performed. Also, for interest rate swaps for which the specific(r) Provision for Loss on Disasterallowed methods are applied, the assessment of effectiveness isProvision for loss on disaster is provided based on the estimatednot performed.

amount at the end of this fiscal year for expenditures to restore

In the event that a hedge becomes ineffective, hedge accounting

assets damaged by the Great East Japan Earthquake.

is no longer applied and the recognition of the gains or losses on
the hedge transaction is no longer deferred.

(s) Appropriation of Retained Earnings
In Japan, retained earnings with respect to a given financial period(n) Provision for Directors’ Bonuses

are appropriated by resolution of the shareholders at a general

Accrued bonuses for directors are provided for based on themeeting to be held subsequent to the close of such financial

estimated amounts to be paid in respect of the fiscal year.

period. The accounts for that period do not, therefore, reflect suchappropriations.

45

(t) Data per Common Share
In computing basic net income (loss) per common share, the average
number of shares outstanding during each year has been used.
Diluted net income per share assumes the dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock, or resulted in issuanceof common stock.
Cash dividends per common share are computed based on
dividends declared with respect to the income for the year.
(u) Asset Retirement Obligations“Accounting Standard for Asset Retirement Obligations” (ASBJ
Statement No. 18, March 31, 2008) and “Guidance on AccountingStandard for Asset Retirement Obligations” (ASBJ Guidance No. 21,
March 31, 2008) were applied from the year ended March 31, 2011.
As a result, gross profit, and operating income have eachdecreased by 83 million yen and income before income taxes andminority interests decreased by ¥1,334 million for the year ended
March 31, 2011.
(v) Business Combinations“Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, December 26, 2008), “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No. 22,
December 26, 2008), “Partial Amendments to AccountingStandard for Research and Development Costs” (ASBJ Statement
No. 23, December 26, 2008), “Accounting Standard for Business
Divestitures” (ASBJ Statement No. 7, December 26, 2008),“Accounting Standard for Equity Method of Accounting forInvestments” (ASBJ Statement No. 16, December 26, 2008), and“Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, December 26, 2008) were applied from the year
ended March 31, 2011.
(w) Comprehensive Income“Accounting Standard for Presentation of Comprehensive Income,”(ASBJ Statement No. 25, June 30, 2010) was applied from theyear ended March 31, 2011.

46

3 Financial Statement Translation
The consolidated financial statements are expressed in yen. However, solely for the convenience of the reader, the consolidated financial
statements as of and for the year ended March 31, 2011 have been translated into U.S. dollars at the rate of ¥83.15=U.S.$1, theapproximate exchange rate on the Tokyo Foreign Exchange Market on March 31, 2011.
This translation should not be construed as an indication that the amounts shown could be converted into U.S. dollars at such rate.

4 Cash and Cash Equivalents
Reconciliations of cash and cash equivalents as of March 31, 2010 and 2011 between the amounts shown in the consolidated balance
sheets and the consolidated statements of cash flows are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Short-term investments
Time deposits with maturities in excess of three months
Cash and cash equivalents

2010

2011

2011

¥96,648¥88,126$1,059,844

2,038

2,818

33,891(909)(1,614)(19,411)¥97,777¥89,330$1,074,324

Cash and time deposits of ¥4 million and ¥4 million ($48 thousand) are pledged as collateral for bank transaction guarantees
as of March 31, 2010 and 2011, respectively.

5 Short-Term Investments and Investment Securities
Short-term investments and investment securities as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Held-to-maturity securities
Other securities with fair value
Other securities without fair value
Investments in non-consolidated subsidiaries and affiliated companies
Total of short-term investments and investment securities

2010

2011

¥

¥

28
14,286
1,578
9,421¥25,31326
13,165
1,460
9,337¥23,988

2011
$

313
158,328
17,559112,291$288,491

Note: The fair values of held-to-maturity securities are the same as those on the consolidated balance sheets.

The original cost, carrying amount (fair value), and gross unrealized holding gain (loss) for other securities with fair value as of March 31,
2010 and 2011 are summarized as follows:
Millions of yen

2010

Other securities with fair value:
Equity securities
Debt securities
Other
Total

Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(fair value)¥11,317100
2,461¥13,878¥3,242——¥3,242¥(2,704)—(130)¥(2,834)¥11,855100
2,331¥14,286

Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(fair value)¥ 9,1273,241¥12,368¥2,495—¥2,495¥(1,548)(151)¥(1,699)¥10,075
3,090¥13,165

Millions of yen

2011

Other securities with fair value:
Equity securities
Other
Total

47

Thousands of U.S. dollars

2011

Other securities with fair value:
Equity securities
Other
Total

Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(fair value)$109,765
38,978$148,743$30,006—$30,006$(18,617)(1,816)$(20,433)$121,166
37,162$158,328

The following is a summary of the carrying amount of other securities without fair value as of March 31, 2010 and 2011:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

Carrying
amountCarrying
amountCarrying
amount¥1,578¥1,460$17,559¥1,578¥1,460$17,559

Other securities without fair value:
Unlisted securities
Total

Proceeds and gross realized gains and losses from the sales of other securities in the years ended March 31, 2010 and 2011 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2010
Equity securities

2011

2011

¥269

¥505

$6,073
1,203

Debt securities
Corporate bond securities

200

100

Other

41

—

—

Proceeds from the sales of other securities

510

605

7,276

Gross realized gains from the sales of other securities

176

252

3,031

Gross realized losses from the sales of other securities

(25)

(6)

(72)

6 Trade Receivables
Trade receivables as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

Notes receivable¥ 4,372¥ 3,416$ 41,082

Accounts receivable-trade

48,23953,759646,531

115

88

1,058

¥52,726¥57,263$688,671

Lease receivables and investment assets
Total

7 Inventories
Inventories as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

Finished goods and merchandise¥12,817¥10,553$126,915

Work in process

23,80526,741

321,599

Raw materials and supplies

4,335

4,407

53,001¥40,957¥41,701$501,515

Total

48

8 Loss on Impairment of Fixed Assets
Evaluation of fixed asset impairment is performed by grouping assets according to management accounting classifications based on
strategic business units, excluding significant idle assets, assets scheduled for disposal, and leased assets. In the amusement facility
business, the individual facility is the smallest unit used in management accounting and is the basic unit for evaluating impairment.
The carrying amounts of the following assets, which exclude reusable assets, were reduced to the recoverable amount. The amounts ofreduction recorded as an impairment loss in “Other income (loss)” for the years ended March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Location
Muko City, Kyoto, and others(Note 1)
Toshima-ku, Tokyo (Note 2)

Items
Amusement facility

Kishiwada City, Osaka (Note 3)

Amusement facility

Illinois, U.S.A., and others (Note 4)
Braintree, U.K., and others (Note 1)

Amusement facility
Amusement facility

Newterritories, H.K., and others(Note 1)
Cambridge, U.K. (Note 1)

Amusement facility

Shinagawa-ku, Tokyo (Note 4)

Assets for business use

Kasuya-gun, Fukuoka (Note 1)

Warehouse— (Note 5)
Nakagami-gun, Okinawa, and others(Note 1)
Tyne and wear, U.K., and others(Note 1)Essex, U.K., and others (Note 4)—
Amusement facility

Taito-ku, Tokyo (Note 6)
Taito-ku, Tokyo (Note 7)
Cergy-pontoise, FRANCE(Note 1)Seoul, KOREA (Note 1)

Assets for business use
Assets for business use
Assets for business use

Shinagawa-ku, Tokyo, and others(Note 8)
Sapporo City, Hokkaido (Note 1)
Total

Amusement facility

Assets for business use

Amusement facility
Amusement facility

Software for Internet
content business
Assets scheduled for
disposalAssets for business use

Classification
Amusement facilities and machines,
and other assets
Amusement facilities and machines,
and other assets
Amusement facilities and machines,
Land, and other assets
Amusement facilities and machines
Amusement facilities and machines,
and other assets
Amusement facilities and machines,
and other assets
Buildings and structures, and Other
property, plant and equipment
Other property, plant and equipment,
Other intangible assets, and otherassetsBuildings and structures, and Other
property, plant and equipment
Goodwill
Amusement facilities and machines,
and other assets
Other intangible assets, and otherassetsAmusement facilities and machines,
and other assets
Other property, plant and equipment
Investments and other assets (other)
Other property, plant and equipment

¥

2010

2011

2011

285

¥ —

90

—

—

1,153
481

—
—

—
—

342

—

—

1

—

—

3

—

—

747

—

—

$

—

50

—

—

12,751

—

—

—

205

2,465

—

20

241

—
—
—

364
28
28

4,377
337
337

—

15

180

—

253

3,043

—
—
¥15,903

83
1
¥997

998
12
$11,990

Other intangible assets
Buildings and structures, and otherassetsOther property, plant and equipment

Notes:
1. Impairment loss was recorded because it was forecasted that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability.
In addition, these assets were determined to have no fair value.
2. Impairment loss was recorded because it was judged that the carrying amount that could be recovered for these fixed assets had fallen substantially due to the decision to close thefacility. In addition, these assets were determined to have no fair value.
3. Impairment loss was recorded because it was forecasted that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability.
The recoverable amount was measured based on the estimated net selling price, which is based on a rational estimate of the selling price.
4. Impairment loss was recorded because it was forecasted that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability.
The recoverable amount was measured as the estimated value in use based on forecast future cash flows.
5. It was determined that the future profit assumed in the business plan considered at the time of acquisition of the shares was unlikely to be realized. Therefore, the total unamortizedbalance was recorded as impairment loss. It includes impairment loss of ¥7,043 million on goodwill associated with NAMCO BANDAI Partners S.A.S. becoming a wholly owned
subsidiary.
6. Impairment loss was recorded on these fixed assets, for which no future use is anticipated. The recoverable amount was evaluated as a memorandum value.
7. It was determined that the profit assumed at the time of acquisition was unlikely to be realized. Therefore, the total balance was recorded as impairment loss.
8. Impairment loss was recorded on these fixed assets, for which no future use is anticipated. In addition, these assets were determined to have no fair value.

49

9 Borrowings and Lease Obligations
Short-term borrowings and lease obligations (current) as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

Short-term borrowings

¥ 219

¥

96

$ 1,155

Long-term borrowings due within one year

8,658

3,333

40,084

8,877

3,429

41,239Subtotal
Lease obligations due within one year
Total

71

66

793

¥8,948¥3,495$42,032

The weighted average interest rates on short-term borrowings outstanding as of March 31, 2010 and 2011 were 4.31% and 4.15%,
respectively.
Long-term borrowings and lease obligations (non-current) as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Borrowings, principally from banks, maturing in installments through March 31, 2012;
the weighted average interest rates of current installments at March 31, 2011
was 0.75%, and there were no non-current installments at March 31, 2011
Lease obligations maturing in installments through March 31, 2015;
the weighted average interest rates of current installments at March 31, 2011 was
3.14%, and non-current installments at March 31, 2011 was 1.87%
SubtotalLess long-term borrowings due within one year
Less lease obligations due within one year
Total

2010

2011

2011

¥11,991¥ 3,333$ 40,084

295

222

2,670

12,286

3,555

42,754(8,658)(3,333)(40,084)(71)¥ 3,557

¥

(66)

(793)

156

$ 1,877

The aggregate annual maturities of borrowings and lease obligations outstanding as of March 31, 2011 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars¥3,399$40,877

58

698

43

517

38

457

2012
2013
2014
2015
2016
Total

17

205

¥3,555$42,754

10 Trade Payables
Trade payables as of March 31, 2010 and 2011 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Notes payable
Accounts payable-trade
Total

50

2010

2011

2011

¥ 5,349¥ 5,150$ 61,936

30,60731,491

378,725¥35,956¥36,641$440,661

11 Retirement and Severance Benefits
The plans’ funded status and amounts recognized in the accompanying consolidated balance sheets as of March 31, 2010 and 2011 are
as follows:
Thousands of
U.S. dollars

Millions of yen

Employee retirement and severance benefits:
Projected benefit obligations
Plan assets at fair value
Projected benefit obligation in excess of plan assets
Unrecognized loss
Unrecognized prior service cost
Net retirement and severance benefits recognized on the consolidated balance sheets
Prepaid pension costAccrued retirement and severance benefits
Directors’ and corporate auditors’ retirement and severance benefits:
Accrued retirement and severance benefits
Total accrued retirement and severance benefits

2010

2011

2011

¥14,474¥14,999$ 180,385(10,402)(9,949)(119,651)

4,072

5,050

60,734(2,114)(2,618)(31,486)

393

311

3,740

2,351

2,743

32,988

52

21

253

2,403

2,764

33,24133——¥ 2,436¥ 2,764$ 33,241

Notes:
1. In addition to the above plan assets, plan assets of ¥566 million and ¥311 million ($3,740 thousand) as of March 31, 2010 and 2011, respectively, are managed by a governmental
welfare pension benefit plan, which was jointly established by the Company and various third-party companies. The aforementioned plan assets are computed based on a pro-rata
allocation of contributions paid.
2. Certain consolidated subsidiaries use a simplified method for calculating projected benefit obligations.

Net periodic cost of employee retirement and severance benefits for the years ended March 31, 2010 and 2011 consists of the following:Thousands of
U.S. dollars

Millions of yen

Service cost for benefits earned, net of employee contributions
Interest cost on projected benefit obligations
Expected return on plan assets
Amortization of unrecognized actuarial gain or loss
Amortization of prior service cost
Net periodic cost

2010

2011

2011

¥1,662¥1,691$20,337

253

252

3,031

(213)

(285)

(3,428)

429

407

4,894

(47)

(55)

(661)

¥2,084¥2,010$24,173

Notes:
1. In addition to the net periodic cost of employee retirement and severance benefits, contributions to a governmental welfare pension benefit plan are charged to Cost of sales andSelling, general and administrative expenses. Contributions to the governmental welfare pension benefit plan of ¥30 million and ¥29 million ($349 thousand) were charged to Cost of
sales and Selling, general and administrative expenses in the years ended March 31, 2010 and 2011, respectively. Also, additional discretionary retirement allowances of ¥93 millionand ¥194 million ($2,333 thousand) were charged to Selling, general and administrative expenses in the years ended March 31, 2010 and 2011, respectively.
In addition, for certain domestic consolidated subsidiaries, due to the retirement of employees through the voluntary early retirement system, additional retirement allowances of¥1,694 million were recorded for the year ended March 31, 2010, and due to the transfer and restructuring of operations, additional retirement allowances of ¥849 million($10,210 thousand) were recorded for the year ended March 31, 2011.
2. The retirement benefit expense for the Company and certain consolidated subsidiaries that use a simplified calculation method is recorded as service cost.
3. The defined contribution expenses for the Company and certain consolidated subsidiaries that have established defined contribution retirement pension systems is recorded as aservice cost.
4. The contributions of certain consolidated subsidiaries that simultaneously participate in the Smaller Enterprise Retirement Allowance Mutual Aid Scheme are recorded as service cost.

Actuarial assumptions and the basis for the calculation of retirement and severance benefits in 2010 and 2011 are as follows:
2010

2011

“Benefits/years-of-service” approach“Benefits/years-of-service” approach

Discount rate

1.25%~2.0%

1.25%~2.0%

Expected rate of return on plan assets

2.5%~3.0%

2.5%~3.1%

Period of amortization of unrecognized prior service cost

10~11 years

10~11 years

Period of amortization of unrecognized actuarial gain or loss

9~19 years(from the year following
the year incurred)

9~19 years(from the year following
the year incurred)

Method of benefit attribution

51

12 Financial Instruments
1. Financial Instruments(1) Policy for financial instruments
The Company and its consolidated subsidiaries manage funds by means of highly secure financial instruments only and procures funds
through borrowing from banks and other methods, such as issuing corporate bonds.
The Company and its consolidated subsidiaries utilize derivatives to hedge the risks noted below and do not engage in speculativetransactions.
(2) Contents and risks of financial instruments
With regard to credit risk posed by customers with respect to trade receivables, the Company and its consolidated subsidiaries manage
balances by counterparty and due date, and credit information on major customers is updated at least once a year to minimize suchcredit risk. The Company and its consolidated subsidiaries have a system for immediately sharing within the Company and its consolidated
subsidiaries adverse credit and other information regarding counterparties in the event that such information is received.
As of March 31, 2010 and 2011, designated large customers were counterparties for 14.2% (2010) and 15.6% (2011) of trade receivables.
Receivables denominated in foreign currencies arising as a result of the fact that the Company and its consolidated subsidiaries conductbusiness on a global basis are subject to foreign exchange rate fluctuation risk. The Company and its consolidated subsidiaries manage
balances by counterparty and currency, and in addition the Company and its consolidated subsidiaries track market trends and, as
necessary, utilize forward foreign exchange contracts for hedging.
Short-term investments and investment securities are principally money market funds, held-to-maturity securities, and the shares ofcompanies with which the Company has a business relationship. These investments are exposed to the risk of fluctuations in market
prices. The market price is confirmed at least once per quarter, and for investments other than held-to-maturity securities, the holdings
are reevaluated once per year with consideration of market conditions and relationships with counterparties.
Trade payables substantially all have due dates within one year. Certain trade payables are denominated in foreign currencies and are
exposed to the risk of fluctuations in foreign exchange rates. In the same manner as receivables, the Company and its consolidated
subsidiaries manage balances by counterparty and currency, and in addition the Company and its consolidated subsidiaries track market
trends and, as necessary, utilize forward foreign exchange contracts for hedging.
Borrowings are used mainly to procure funds needed for capital expenditures and for investment financing. Variable rate borrowings
are exposed to the risk of fluctuations in interest rates. With consideration of market trends, the Company and its consolidated subsidiaries
implement hedging as necessary through the use of interest-rate swaps or interest-rate options. (Note)
Trade payables, borrowings, and accrued income taxes are exposed to liquidity risk. The Company and its consolidated subsidiaries
manage this risk through the formulation and revision of monthly funding plans for the Company and its consolidated subsidiaries.
Derivative transactions are used for hedging purposes. With regards to hedging methods and hedged items, hedging policies, andmethods of assessing the effectiveness of hedging transactions, for which hedge accounting is applied, please refer to “2 Summary of
Significant Accounting Policies—(m) Derivatives and Hedging Activities.”
Derivative transactions are executed and managed according to internal rules that determine trading authority and limits on amounts
traded. Derivatives are used in ways that minimize credit risk, and thus transactions are carried out only with highly creditworthy financial
institutions.
Note: As of March 31, 2010, the Company and its consolidated subsidiaries had not conducted any hedging activities using interest-rate options.

52

(3) Supplementary explanation on the fair value of financial instruments
The fair value of financial instruments includes, in addition to the value determined based on market prices, valuations calculated ona reasonable basis if no market price is available. However, as certain variables are used for these calculations, the result of suchcalculations may vary if different assumptions are used.
The contract amounts of derivative transactions in Note “20 Foreign Exchange Risk Management and Interest Rate Risk Management”
in the Notes to Consolidated Financial Statements should not be considered indicative of the market risk associated with the derivative
financial instruments.
2. Fair Value of Financial Instruments
The carrying amounts of financial instruments as stated in the consolidated balance sheets, their fair values as of March 31, 2010 and2011, and the differences between carrying amounts and fair values are as stated below. This table does not include assets for which it
was judged extremely difficult to assess the fair value. (Note 2)
Millions of yen

Thousands of U.S. dollars

2010

2011

2011
Carrying
amountCarrying
amountFair value

Difference—¥ 88,126¥ 88,126¥—

57,26357,263—

688,671688,671—(1,704)

20,376

17,852(2,524)

245,051

214,696(30,355)¥(2,524) $1,993,566 $1,963,211$(30,355)

Carrying
amountFair value

Difference(1) Cash and time deposits¥ 96,648¥ 96,648¥(2) Trade receivables(3) Short-term investments
and investment securities
Total assets

52,72652,726

21,40019,696

Fair value— $1,059,844 $1,059,844

Difference$—¥170,774¥169,070¥(1,704)¥165,765¥163,241(1) Trade payables

35,95635,956—36,64136,641—

440,661

440,661—(2) Short-term borrowings

8,877

8,877

—

3,429

3,429

—

41,23941,239—(3) Accrued income taxes

8,240

8,240

—

7,980

7,980

—

95,971

95,971—(4) Long-term borrowings

3,333

3,333

—

—

—

—

—

—

—

¥ 56,406¥ 56,406¥—¥ 48,050¥ 48,050¥— $ 577,871 $ 577,871

$

—

¥

¥

¥

—

¥

¥

¥

— $

$

—

Total liabilities
Derivative financial instruments*

92

92

(107)

(107)

(1,287) $(1,287)* Assets and Liabilities derived from derivative transactions are stated on a net basis. Items for which the total is a net liability are shown in parentheses.
Notes: 1. Method for calculating the fair value of financial instruments securities and derivative transactions
Assets(1) Cash and time deposits and (2) Trade receivables
Since these are readily convertible into cash, their fair values are almost identical with the carrying amount; and these are stated at the carrying amount.
(3) Short-term investments and investment securities
The fair value of these investments is stated at the quoted price on the stock exchange or the price as provided by counterparty financial institutions. In addition,with regard to short-term investments and investment securities by holding purpose, please refer to “5 Short-Term Investments and Investment Securities” in the Notes toConsolidated Financial Statements.
Liabilities(1) Trade payables, (2) Short-term borrowings, and (3) Accrued income taxes
Since these are readily convertible into cash, their fair values are almost identical with the carrying amount; and these are stated at the carrying amount.
(4) Long-term borrowings
The fair value of long-term borrowings is calculated by discounting the total principle and interest by the current market interest rate for comparable debt.
Derivative financial instruments
Please refer to “20 Foreign Exchange Risk Management and Rate Interest Risk Management” in the Notes to Consolidated Financial Statements.

53

2. Financial instruments for which fair value is extremely difficult to determine
2010

2011

¥1,578¥1,4602011
Carrying amount（Thousands of U.S. dollars）$17,559

2,335

2,152

25,881

Carrying amount（Millions of yen）
Unlisted securities
Investments in non-consolidated subsidiaries andinvestments in affiliated companies (unlisted securities）

As these instruments do not have readily available market values, and their fair values are extremely difficult to determine, they are not included in “(3) Short-term investments
and investment securities” in the table above.
3. Maturity analysis of financial assets and securities with contractual maturities
Millions of yen

Withinone year
Cash and time deposits
Trade receivables

2010
More than More than
one year, five years, More than
within five within ten ten years
years
years

Thousands of U.S. dollars

Withinone year

2011
More than More than
one year, five years, More than
within five within ten ten years
years
years

2011
More than More than
one year, five years, More than
within five within ten ten years
years
years

Withinone year¥ 96,648¥ —¥—¥— ¥ 88,126

¥ —

¥—

¥—

$1,059,844

52,488224

14—56,998261

4—685,484

$

—

$—

$—

3,139

48

—

Short-term investments andinvestment securities
Held-to-maturity securities
Corporate bonds
Total

—

27

—

—

—

25

—

—

—

301

—

—

¥149,136

¥251

¥14

¥— ¥145,124

¥285

¥ 4

¥—

$1,745,328$3,428$48$—

13 Income Taxes
The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on
income which, in the aggregate, resulted in a normal tax rate of approximately 40.6% in 2010 and 2011.
Income tax expenses reflected in the accompanying consolidated statements of operations for the years ended March 31, 2010 and2011 consist of the following:Thousands of
U.S. dollars

Millions of yen

Income taxes—current
Income taxes for previous year
Income taxes—deferred
Total

2010

2011

2011

¥ 7,064964
2,471¥10,499¥10,946—(1,475)¥ 9,471$131,641—(17,739)$113,902

Reconciliation of the normal tax rate and the effective tax rate as a percentage of income before income taxes and minority interests forthe year ended March 31, 2011 is as follows:
2011
Normal tax rate
Increase in valuation allowance for deferred tax assets
Amortization of goodwill
Entertainment expenses not deductible for tax purposes
Directors’ bonuses
Differences of tax rates of foreign consolidated subsidiaries
Corporate inhabitant tax on per capita basis
Tax credit for research and development expenses
Reversal of stock acquisition rights
Other
Effective tax rate
Note: The note has been omitted for the year ended March 31, 2010 because the Company recorded a loss before income taxes and minority interests.

54

40.6%
26.7
7.4
3.8
3.5
3.5
1.9
(2.2)
(1.9)
(0.7)
82.6%

Significant components of deferred tax assets and liabilities as of March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010
Deferred tax assets:
Land revaluation
Excess depreciation of fixed assets
Losses carried forward
Loss on valuation of advance payments
Inventory valuation losses
Accrued employee bonuses
Allowance for doubtful receivables
Loss on impairment of fixed assets
Accrued enterprise taxes and others
Accrued retirement and severance benefits
Research and development expenses
Unrealized gains or losses on other securities
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Retained earnings of foreign consolidated subsidiaries
Unrealized gains or losses on other securities
Land revaluation
Reserve for deferred income
Other
Total deferred tax liabilities
Net deferred tax assets

2011

2011

¥ 3,036
4,434
14,185
1,068
3,570
1,273
669
1,686
428
923
576
209
3,736
35,793(25,117)
10,676

¥

3,036
4,694
15,797
1,078
8,090
2,700
756
901
939
1,226
480
2
6,477
46,176(33,962)
12,214$ 36,512
56,452
189,982
12,96597,29432,471
9,092
10,836
11,293
14,7445,773
24
77,895555,333(408,442)
146,891

(508)
(392)
(674)
(122)
(59)
(1,755)¥ 8,921

(397)
(344)
(674)
(115)
(184)
(1,714)¥ 10,500(4,775)(4,137)(8,106)(1,383)(2,212)(20,613)$ 126,278

Net deferred tax assets are included in the following line items in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen

Current assets–Deferred tax assets

2010

2011

2011

¥ 5,763¥ 6,592$ 79,278

Investments and other assets–Deferred tax assets

5,886

5,760

69,272Current liabilities–Other (deferred tax liabilities)(1,439)(607)(7,299)Long-term liabilities–Deferred tax liabilities(1,289)(1,245)(14,973)¥ 8,921¥10,500$126,278

Total

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the years ended March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

¥ 29,515¥ 28,782$ 346,146

Directors’ remuneration and employees’ wages

31,64532,012384,991

Employees’ retirement and severance benefits

1,517

1,470

17,679422

965

11,606Advertising expenses

Provision for directors’ bonuses
Provision for directors’ and corporate auditors’ retirement and severance benefits
Research and development expenses
Allowance for doubtful receivables, investments, and other assets
Other
Total selling, general and administrative expenses

33

—

—

16,14416,091

193,518

276

88

1,058

47,31743,669525,182¥126,869¥123,077$1,480,180

55

15 Reconciliation of Differences between Basic and Diluted Net Income per Common Share
The reconciliation of the differences between basic and diluted net income per common share for the years ended March 31, 2010 and2011 is as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2011

Net income (loss)¥(29,929)¥1,848$22,225

Net income (loss) available to common stockholders(29,929)

1,848

22,225

Net income for diluted EPS calculation¥¥1,848$22,225—

Thousands of shares

Average number of common shares outstanding
Effect of dilutive securities:
Stock options

241,402

Average number of common shares for diluted EPS calculation

239,810—31—

239,841
Yen

U. S. dollars

Net income (loss) per common share:Basic¥(123.98)

¥7.71

$0.09

Diluted

—

7.71

0.09

Note: For the year ended March 31, 2010, dilutive shares exist, but diluted net income per common share is not reported because the Company recorded net loss.

16 Retained Earnings and Dividends

17 Land Revaluation

In Japan, in the event a dividend distribution of surplus is made,In accordance with the “Law Concerning Land Revaluation” (Lawthe lesser of an amount equal to 10% of the dividend or the

No. 34, promulgated on March 31, 1998), the land used forexcess, if any, of 25% of common stock over the total of additional

business purposes was revalued and “Land revaluation, net of tax”

paid-in capital and legal earnings reserve must be set aside as a

was reported in “Net assets.”

legal reserve until the aggregate amount of capital surplus and thelegal reserve equals 25% of stated capital.

The fair value of land is determined based on official notice prices

appropriate their earnings to legal reserves under the laws of thethat are calculated by the method assessed and published by therespective countries.

Commissioner of the National Tax Agency. The Commissioner

The Company’s retained earnings includes legal reserves ofassesses and publishes the method to calculate land value that

¥1,645 million and ¥1,645 million ($19,784 thousand) at March 31,

forms the foundation for calculating taxable value for land value

2010 and 2011, respectively. Proposed appropriations of retained

tax prescribed in “Article 16 of Land Value Tax Law” (Law No. 69,

earnings have not been reflected in the consolidated financial

promulgated on May 2, 1991), as stipulated in “Article 2-4 of thestatements at the end of the fiscal year. The Company’s approved

Ordinance Implementing the Law Concerning Land Revaluation”

appropriations of retained earnings for the year ended March 31,(Cabinet Order No. 119, promulgated on March 31, 1998).

2011 were cash dividends of ¥2,839 million ($34,143 thousand).

Reasonable adjustments are made to the official notice prices.

In addition, a mid-year dividend may be paid based on approval by

56

Revaluation method:

Certain foreign consolidated subsidiaries are also required to

Unrealized losses for land of ¥749 million ($9,008 thousand)the Board of Directors, which is subject to limitations. The mid-year

were recognized based on the difference between the land

dividend for the year ended March 31, 2011 was ¥2,899 million

carrying amount, which was revalued as of March 31, 2002, and($34,865 thousand).

the fair value of the land as of March 31, 2011.

18 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the year ended March 31, 2011 were as follows:
Common stock (number of shares)
March 31, 2010

250,000,000

Retirement of treasury stock(10,000,000)

March 31, 2011

240,000,000

Treasury stock (number of shares)
March 31, 2010

8,540,776

Purchase of treasury stock as per a decision made by the Board of Directors

5,000,000

Repurchase of fractional shares

2,566

Increase in holdings in equity method affiliates

5,410

Retirement of treasury stock(10,000,000)

Exercise of stock options(50,300)

Sale of fractional shares(568)

March 31, 2011

3,497,884

19 Leases
1. Lessee
The Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under finance and operating leasearrangements.
(1) Finance leases
Finance lease transactions other than those in which title to leased property are determined to be transferred to lessees, which started onor before March 31, 2008, are stated by applying the accounting treatment applicable to ordinary operating lease transactions.
The pro-forma original cost and accumulated depreciation of assets under such finance leases as if they had been accounted for as
finance leases as of March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Original cost at inception of leases
Less accumulated depreciation
Assets under finance leases, net

2010

2011

2011

¥ 507
(386)
¥ 121

¥ 246
(204)
¥ 42

$ 2,959(2,454)$ 505

Future minimum payments due under finance leases as of March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010
Due within one year
Due after one year
Total

2011

¥ 75
46
¥121

¥33
9
¥42

2011
$397
108
$505

Lease expense and pro-forma depreciation expense for such finance leases as if they had been accounted for as finance leases for theyears ended March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010
Lease expense
Depreciation expense

¥152
152

2011
¥71
71

2011
$854
854

57

(2) Operating leases
Future minimum payments required under operating leases as of March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2010

2011

2011

¥ 3,410
8,174¥11,584¥2,7085,608¥8,316$ 32,568
67,444$100,012

2. Lessor
Finance leases
Finance lease transactions other than those in which title to leased property are determined to be transferred to lessees, which started onor before March 31, 2008, are stated by applying the accounting treatment applicable to ordinary operating lease transactions.
The acquisition cost, accumulated depreciation, and net value of assets under such finance leases included in fixed assets as ofMarch 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Acquisition costLess accumulated depreciation
Assets under finance leases, net

2010

2011

2011

¥ 330
(220)
¥ 110

¥ 227
(176)
¥ 51

$ 2,730(2,117)$ 613

Future minimum payments due under finance leases as of March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010
Due within one year
Due after one year
Total

2011

¥ 58
66
¥124

¥41
17
¥58

2011
$494
204
$698

Lease income and depreciation expense for finance leases for the years ended March 31, 2010 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010
Lease income
Depreciation expense

58

¥100
89

2011
¥58
52

2011
$698
625

20 Foreign Exchange Risk Management and Interest Rate Risk Management
Derivative financial instruments are comprised principally of forward foreign exchange contracts and interest-rate swaps. These
instruments are used to reduce the risks of changes in foreign exchange rates and interest rates, but are not used for speculation.
The Company is exposed to credit risk related to nonperformance by the counterparties to forward foreign exchange contracts andinterest rate swaps, but the Company does not expect any instances of nonperformance due to the high credit ratings of the counterparties.
Contract amounts, fair values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31,
2010 and 2011 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated withthe derivative financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

Thousands of U.S. dollars

2010

2011

2011

Contract
amountEstimated
fair value

Unrealized
gain (loss)

Contract
amountEstimated
fair value

Unrealized
gain (loss)

Contract
amountEstimated
fair value

Unrealized
gain (loss)

¥ 875

¥(25)

¥(25)

¥1,222¥(128)¥(128)$14,696$(1,539)$(1,539)

771

(18)

(18)

65

(0)

(0)

782

(0)

(0)

2,354

56

56

228

16

16

2,742

192

192

10

(0)

(0)

1

(0)

(0)

12

(0)

(0)

¥4,010¥ 13¥ 13¥1,516¥(112)¥(112)$18,232$(1,347)$(1,347)

Forward foreign exchange
contracts
Sold:
Yen
U.S. dollars
Purchased:
U.S. dollars
Yen
Total
Notes: 1. Method of calculating fair value
Calculated based on prices provided by counterparty financial institutions.
2. For certain of the above forward foreign exchange contracts, hedge accounting is applied for the transactions between consolidated subsidiaries in non-consolidated financial
statements, but these transactions have been eliminated in the consolidated financial statements, and as a result these transactions are not treated as effective hedges of thehedged assets and/or liabilities in the consolidated financial statements.

(2) Derivative transactions qualifying for hedge accounting
Millions of yen

Hedge accounting
Hedging method
methodDeferred2010
Hedge targets

Forward foreign exchange contracts
Sold:
Yen
Accounts receivable-trade
Polish zloty
Accounts receivable-trade
U.S. dollars
Accounts receivable-trade
Purchased:
U.S. dollars
Accounts payable-trade
HK dollars
Accounts payable-trade

Total
Foreign exchange
allocation method

2011

2011

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value¥3,684
—
—

¥121
—
—

¥ 4,034
271
111

¥(17)
(3)
1

$ 48,514
3,259
1,335

$(205)
(36)
12

4,622
60
¥8,366

(47)
4
¥ 78

6,225
60
¥10,701

23
1¥ 5

74,865722$128,695

277
12
$ 60

—
43
—
43

—
1
—
¥ 1

31
106
17
154

1
(3)
0
¥ (2)

373
1,275
204
$ 1,85212(36)
0$ (24)

Forward foreign exchange contracts
Purchased:
Yen
Accounts payable-trade
U.S. dollars
Accounts payable-trade
GB pounds
Other

Total

Thousands of U.S. dollars¥¥

Note: Method of calculating fair value
Calculated based on prices provided by counterparty financial institutions.

59

21 Asset Retirement Obligations
Asset retirement obligations recorded on the consolidated balance sheets as of March 31, 2011 are summarized as follows:
1. Overview of asset retirement obligations
Obligation for restoration to original condition, accompanying real estate lease contracts for amusement facilities.
2. Method of calculating amounts of asset retirement obligations
In calculating the amount of asset retirement obligations, the estimated period of use is determined based on period of the lease
contract and the useful life of the building (principally 15 years), and the discount rate is the rate used in accounting for retirement andseverance benefits (principally 2%).
3. Change in total amount of asset retirement obligations in the year ended March 31, 2011
Millions of yen

Thousands of
U.S. dollars¥1,777$21,37181

974

Balance at beginning of the year (note)
Increase due to acquisition of property, plant and equipment
Adjustment due to passage of time
Decrease due to fulfillment of asset retirement obligations
Other
Balance at end of year

25

301

(13)

(156)

(11)

(133)

¥1,859$22,357

Note: This is the balance at the beginning of the period due to the adoption from the year ended March 31, 2011 of “Accounting Standards for Asset Retirement Obligations” (ASBJ
Statement No. 18, March 31, 2008) and “Guidance on Accounting Standards for Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008).

22 Segment Information
The reportable segments of the Company are components of the Group whose separate financial information is available. These segments
are periodically evaluated by the Board of Directors in deciding how to allocate management resources and in assessing performance.
The Group is made up of three strategic business units (“SBU”), one for each business domain, namely the Toys and Hobby SBU, theContent SBU, and the Amusement Facility SBU, and the affiliated business companies that mainly serve a supporting role for thesestrategic business units. The major company of each strategic business unit leads the planning and promotion of the business strategiesof the strategic business unit for Japan and overseas.
Accordingly, the Group has the following three reportable segments: Toys and Hobby Business, Content Business, and Amusement
Facility Business.
The Toys and Hobby Business conducts manufacturing and sales of toys, candy toys, and products for vending machines. The Content
Business conducts production and sales of home-use video game software and video related products, and the manufacturing and salesof arcade game machines. The Amusement Facility Business conducts the operation of amusement facilities.
The methods for accounting for reportable segments are the same as those described in Note “2 Summary of Significant Accounting
Policies.” Further, segment income (loss) is based on operating income (loss), and segment assets are based on total assets. Additionally,
amounts of inter-segment transactions are based on the prevailing market price.
Millions of yen

2010
Reportable Segment

Net sales
To external customers
Inter-segment sales and transfers
Total
Segment income (loss)
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Loss on impairment of
fixed assets
Investments in associates
accounted for using equity
methodIncrease in property, plant andequipment and intangible
assets60

Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other(Note 1)

Total

Adjustments(Note 2)

Consolidated
total (Note 3)¥145,673
3,171¥148,844
10,787111,993¥161,644
5,827¥167,471(7,761)
120,335¥65,112251¥65,363285
38,775¥372,429
9,249¥381,678
3,311
271,103¥ 6,118
9,672¥15,790323
17,279¥378,547
18,921¥397,468
3,634
288,382¥—(18,921)¥(18,921)(1,750)37,554¥378,547—¥378,547
1,884
325,936

¥

¥

3,299
4,449

¥ 7,146173¥ 18,575
4,687

¥

479
0

¥ 19,054
4,687

¥

(65)
281

¥ 18,989
4,968

146

13,3552,351

15,85251

15,903—

15,903

1,419

—

175

1,594

7,244

8,838

—

8,838

6,866

2,385

4,496

13,747422

14,169249

14,4188,130
65

Millions of yen

2011
Reportable Segment

Net sales
To external customers
Inter-segment sales and transfers
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Loss on impairment of
fixed assets
Investments in associates
accounted for using equity
methodIncrease in property, plant andequipment and intangible
assetsToys and
Hobby

Content

Amusement
Facility

Subtotal

Other(Note 1)

Total

Adjustments(Note 2)

Consolidated
total (Note 3)¥154,707
3,667¥158,374
13,81399,386¥170,653
9,264¥179,917
3,092
119,044¥62,26870¥62,338
1,779
34,154¥387,628
13,001¥400,629
18,684
252,584¥ 6,551
11,953¥18,504810
17,980¥394,179
24,954¥419,133
19,494
270,564¥—(24,954)¥(24,954)(3,156)37,705¥394,179—¥394,179
16,338308,269

¥

¥

2,435
1,792

¥ 6,184
148¥ 18,095
1,943

¥

471
—

¥ 18,566
1,943

¥

(565)
282

¥ 18,001
2,225

325

83

588

996

1

997

—

997

1,097

—

138

1,235

7,344

8,579

—

8,579

7,075

1,688

4,185

12,948220

13,168271

13,439Adjustments(Note 2)

Consolidated
total (Note 3)

9,476
3

Thousands of U.S. dollars

2011
Reportable Segment
Toys and
Hobby

Content

Net sales$1,860,578 $2,052,351
To external customers
44,101
111,413Inter-segment sales and transfers$1,904,679 $2,163,764
Total
166,12137,186
Segment income
1,195,261 1,431,678
Segment assets
Other items:$ 113,963 $ 29,284
Depreciation and amortization
36
21,551
Amortization of goodwill
Loss on impairment of
3,909
998
fixed assets
Investments in associates
13,193—
accounted for using equity
methodIncrease in property, plant and85,087
20,301equipment and intangible
assetsAmusement
Facility

Other(Note 1)

Subtotal

Total$748,863 $4,661,792
842
156,356$749,705 $4,818,148
21,395
224,702410,752 3,037,691$ 78,785 $4,740,577
143,753
300,109$222,538 $5,040,686
9,742
234,444
216,236 3,253,927$— $4,740,577(300,109)—$(300,109) $4,740,577(37,956)
196,488453,457 3,707,384$ 74,372 $ 217,619
1,780
23,367$$

5,664 $ 223,283—
23,367(6,795) $ 216,488
3,391
26,758

7,071

11,97812

11,990—11,9901,660

14,85388,322

103,175—

103,175

50,331

155,719

2,645

158,364

3,260

161,624

Notes:
1. “Other” which is not a reportable segment, includes logistics services for the Group’s SBU, building management, and others.
2. Details of “Adjustments” are as follows:(1) The adjustment to segment income (loss) of -¥1,750 million for the year ended March 31, 2010 includes elimination of inter-segment transactions of ¥935 million and corporate
expenses not allocated to reportable segments of -¥2,685 million. The adjustment to segment income of -¥3,156 million (-$37,956 thousand) for the year ended March 31, 2011,
includes elimination of inter-segment transactions of -¥255 million (-$3,067 thousand) and corporate expenses not allocated to reportable segments of -¥2,901 million (-$34,889
thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
(2) The adjustment to segment assets of ¥37,554 million for the year ended March 31, 2010 includes elimination of inter-segment transactions of -¥6,615 million and corporate
expenses not allocated to reportable segments of ¥44,169 million. The adjustment to segment assets of ¥37,705 million ($453,457 thousand) for the year ended March 31, 2011
includes elimination of inter-segment transactions of -¥7,328 million (-$88,130 thousand) and corporate expenses not allocated to reportable segments of ¥45,033 million($541,587 thousand). Principal corporate assets are cash and deposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
(3) The adjustment to depreciation and amortization expense of -¥65 million for the year ended March 31, 2010 includes elimination of inter-segment transactions of -¥152 million anddepreciation and amortization expense not allocated to reportable segments of ¥87 million. The adjustment to depreciation and amortization expense of -¥565 million (-$6,795
thousand) for the year ended March 31, 2011 includes elimination of inter-segment transactions of -¥812 million (-$9,765 thousand) and depreciation and amortization expense notallocated to reportable segments of ¥247 million ($2,971 thousand).
(4) The adjustment to amortization of goodwill of ¥281 million for the year ended March 31, 2010, and ¥282 million ($3,391 thousand) for the year ended March 31, 2011 are related togoodwill not allocated to reportable segments.
(5) The adjustment to property, plant and equipment and intangible assets of ¥249 million for the year ended March 31, 2010, and ¥271 million ($3,260 thousand) for the year ended
March 31, 2011 are related to corporate assets not allocated to reportable segments.
3. Segment income (loss) is reconciled to operating income (loss) on the consolidated statements of operations.

61

Additional information“Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, March 27,2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ
Guidance No. 20, March 21, 2008) were applied from this fiscal year.
For the years ended March 31, 2010 and 2011, additional segment information is as follows:
1. Information by product and service
This information is included in the segment information above.
2. Information by geographic region(1) Net sales
Millions of yen

2010
Japan

Americas

EuropeAsia, excluding Japan

Total¥279,260¥31,370¥46,197¥21,720¥378,547

Millions of yen

2011
Japan

Americas

EuropeAsia, excluding Japan

Total¥307,660¥29,691¥37,274¥19,554¥394,179

Thousands of U.S. dollars

2011
Japan

Americas

EuropeAsia, excluding Japan

Total$3,700,060$357,078$448,274$235,165$4,740,577

Note: Net sales are classified by country and region based on customer location.

(2) Property, plant and equipment
Millions of yen

2010
Japan

Americas

EuropeAsia, excluding Japan

Total¥38,995¥2,211¥2,774¥2,034¥46,014

Millions of yen

2011
Japan

Americas

EuropeAsia, excluding Japan

Total¥37,245¥1,674¥1,954¥1,719¥42,592

Thousands of U.S. dollars

2011
Japan

Americas

EuropeAsia, excluding Japan

Total$447,925$20,132$23,500$20,673$512,230

3. Information by major customer
Year ended March 31, 2010

Year ended March 31, 2011

62

Name

Net sales

Name of related segment

Happinet Corporation¥38,196 million

Toys and Hobby,
Content

Name

Net sales

Name of related segment

Happinet Corporation¥43,047 million($517,703 thousand)Toys and Hobby,
Content

4. By reportable segment, information regarding the amount of amortization of goodwill for the years ended March 31, 2010 and 2011,
and the unamortized balance of goodwill as of March 31, 2010 and 2011, is as follows:
Millions of yen

2010

Amortization of goodwill
Unamortized balance

Toys and Hobby

Content¥65
3¥4,4492,176

Amusement Facility

¥173
149

Other

Corporate andeliminations (Note)

Total

¥ 0
—

¥281
623

¥4,968
2,951

Other

Corporate andeliminations (Note)

Total

¥—
—

¥282
342

¥2,225727

Millions of yen

2011

Amortization of goodwill
Unamortized balance

Toys and Hobby

Content¥3—¥1,792
384

Amusement Facility¥148
1

Thousands of U.S. dollars

2011

Amortization of goodwill
Unamortized balance

Toys and Hobby

Content

Amusement Facility

Other

Corporate andeliminations (Note)

Total

$36
—

$21,551
4,618$1,78012$——$3,391
4,113$26,758
8,743

Note: The amount of “Corporate and eliminations” is the amount related to investment securities. Transferred from domestic consolidated subsidiaries to the Company on account of
the business combination.

5. By reportable segment, information regarding the amount of amortization of negative goodwill for the years ended March 31, 2010 and2011, and the unamortized balance of negative goodwill as of March 31, 2010 and 2011, is as follows:
Millions of yen

2010
Toys and Hobby

Amortization of negative goodwill
Unamortized balance¥——Content¥10
13

Amusement Facility

Other (Note)

¥—
—

¥114
115

Corporate andeliminations

¥—
—

Total

¥124
128

Millions of yen

2011
Toys and Hobby

Amortization of negative goodwill
Unamortized balance¥——Content¥4
9

Amusement Facility¥——

Other (Note)¥114—

Corporate andeliminations

¥—
—

Total

¥118
9

Thousands of U.S. dollars

2011
Toys and Hobby

Amortization of negative goodwill
Unamortized balance$——Content$ 48
108

Amusement Facility$——

Other (Note)$1,371—

Corporate andeliminations

$—
—

Total

$1,419108

Note: The amount of “Other” is the negative goodwill related to logistics services for each of the Group’s strategic business units.

63

23 Related Party Disclosures
Transactions with Related Parties
Year ended March 31, 2010
(1) Transactions of the Company with officers and major individual shareholders of the Company
Type

Name

Position

Ratio of voting rights
ownership

Content

Transaction amount

Officer

Takeo Takasu

Chairman and Director of
the Company

Ownership
directly 0.0%

Disposal of treasury stock
accompanying exercise ofstock options (Note)¥25 million

Officer

Shukuo Ishikawa

President
and CEO, Representative
Director of the Company

Ownership
directly 0.0%

Disposal of treasury stock
accompanying exercise ofstock options (Note)¥23 million

OfficerJun Higashi

Director of the Company

Ownership
directly 0.0%

Disposal of treasury stock
accompanying exercise ofstock options (Note)¥22 million

Officer

Kazunori Ueno

Director of the Company

Ownership
directly 0.0%

Disposal of treasury stock
accompanying exercise ofstock options (Note)¥28 million

Officer of a subsidiary

Masahiro Tachibana

President and CEO,representative director of
NAMCO LIMITED

Ownership
directly 0.0%

Disposal of treasury stock
accompanying exercise ofstock options (Note)¥13 million

Note: The price at which treasury stock is disposed of is determined based on the stock options (stock subscription rights) exercise price set by the resolution at the first Ordinary
General Meeting of Shareholders of the Company. The figure in the “Transaction amount” column is the book value as stated on the Company books at the time of such disposal.

(2) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companiesof the Company
Type

Company

Affiliatedcompany

Happinet
Corporation

Address

Capital orcontribution
to capital

Taito-ku, Tokyo ¥2,751 million

Content ofbusiness

Ratio ofvoting rights
ownership

Wholesaler ofHoldingToys, Video games,
directly 26.4%
and Amusement
indirectly 0.3%
products

Relationshipwith related
party
Sales
agencyContent

Transaction
amountSales ofproducts, etc. ¥38,196 million(Note 2)

Account
items

Balance
as of March 31,
2010

Account
receivabletrade¥7,490 million

Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2. Transaction terms and policy for determining transaction terms.
For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

Year ended March 31, 2011
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companiesof the Company
Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku, Tokyo

Capital orcontribution
to capitalContent ofbusiness

Ratio ofvoting rights
ownership

Wholesaler ofHolding¥2,751 million
Toys, Video games,
directly 26.4%($33,085
and Amusement
indirectly 0.3%
thousand)products

Relationshipwith related
party
Sales
agencyContent

Transaction
amount¥43,047 million
Sales of($517,703
products, etc.
thousand)(Note 2)

Account
items

Balance
as of March 31,
2011

Account
receivabletrade¥8,929 million($107,384
thousand)

Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2. Transaction terms and policy for determining transaction terms.
For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

24 Business Combinations
Year ended March 31, 2010

Networks Co., Ltd. due to company split (absorption-type company

Transactions conducted by commonly controlled entities

split) on such date.

Merger of subsidiaries and succession to part of the businesses of

1. Names and Business Content of Combined Companies,

subsidiaries due to company split in the course of the restructuring

Legal Form of Business Combinations, and Overview ofof the Group’s businesses

Transaction Including Transaction Objectives

On April 1, 2009, NAMCO BANDAI Games Inc. merged with and(1) Names and Business Content of Combined Companies

absorbed Bandai Networks Co., Ltd. due to an absorption-type64(i) NAMCO BANDAI Games Inc.

merger. Also, the Company succeeded to a part of the share

Planning, development, and sales of home-use video gamemanagement business that had been carried out by Bandai

software and arcade game machines, and others

(ii) Bandai Networks Co., Ltd.

operations, such as e-commerce, centered on the distribution

Distribution of content for mobile phones, consignment ofof mobile phone content and the provision of technicalwebsite development, mail order sales, and others

solutions. NAMCO BANDAI Games Inc. and Bandai Networks(iii) NAMCO BANDAI Holdings Inc. (the Company)
Planning and implementation of management strategy andCo., Ltd. have each worked to grow their businesses byleveraging their respective strengths.
The merger of these two companies and the establishment

business management and instruction of the group companiesof a new business unit within NAMCO BANDAI Games Inc.
(2) Legal Form of the Business Combinations(i) An absorption-type merger in which Bandai Networks Co.,
Ltd. was the disappearing company; and NAMCO BANDAI

are designed to reinforce the total power of the network
business within the Group and to create new content andbusinesses through the synergistic fusion of varied strengths.
In addition, upon this restructuring within the Group, theGames Inc. was the surviving company.
(ii) An absorption-type company split in which Bandai

Company has succeeded to a part of the share management

Networks Co., Ltd. was the split company; and thebusiness that had been carried out by Bandai Networks

Company was the successor company.

Co., Ltd. due to company split (absorption-type company split).

(3) Overview of Transaction Including Transaction Objectives

2. Overview of Accounting Process

The Group has considered what its optimal organizational

The accounting process for the consolidated financial statements

structure would be to work for further growth in the network-

was conducted as transactions conducted by commonly controlled

related market, which includes distributing content for mobile

entities, handled in accordance with the provisions of “Accounting

phones; this is a market for which technological progress andStandard for Business Combinations” (issued by the Businessother factors have produced drastic changes in the environ-Accounting Council on October 31, 2003) and “Guidance onment and in which competition is becoming increasingly

Accounting Standard for Business Combinations and Accounting

intense on a global scale. Thus far, NAMCO BANDAI Games

Standard for Business Divestitures” (ASBJ Guidance No. 10, final

Inc. has strengths in leveraging its in-house technical develop-

revision issued on November 15, 2007).

ment capabilities and effectively utilizing content for eachplatform, including home-use video game software, arcade

Year ended March 31, 2011

game machines, and mobile phones. Also, Bandai Networks

Omitted because it is insignificant.

Co., Ltd. has strengths in the comprehensive development of

25 Significant Subsequent Events
Concerning a resolution made by the Board of Directors at the3. Period of acquisition

meeting held on February 25, 2011 on the acquisition of treasury

From May 11, 2011 to December 31, 2011

stock, the Company, at a Board of Directors’ meeting held on May

4. Other10, 2011, resolved the acquisition method set out below in accor-

Contents of resolution at Board of Directors’ meeting held on

dance with the provision of Article 156, Paragraph 1 of the Compa-

February 25, 2011

nies Act as applied by replacing the relevant terms pursuant to(1) Type of shares

Article 165, Paragraph 3 of the Companies Act and the Company’s
Articles of Incorporation.
1. Reason for acquisition
To improve capital efficiency by effectively utilizing assets held andto execute capital policy with the flexibility to respond to change inthe business environment.
2. Acquisition method
Acquisition from market

Common stock(2) Total number of shares to be acquired
20,000,000 shares (maximum)(3) Total amount for share acquisition¥20,000 million (maximum)(4) Period of share acquisition
From February 28, 2011 to December 31, 2011(5) Status of shares acquired after above Board of Directors’

The Company will acquire shares from the market up to the total

resolution

number and amount not exceeding those calculated after deducting

Total number of acquired shares: 6,718,464 shares

the number and amount (number of acquired shares 5,005,364

Total amount paid for acquired shares: ¥5,949 million

shares, amount paid for acquired shares ¥4,434 million) of the sharesacquired by tender offer from February 28 to March 28, 2011.

The number of shares of treasury stock listed above includes
the treasury stock acquired through a tender offer bid approved
at a meeting of the Board of Directors held on February 25, 2011.

65

independent auditors’ Report

To the Board of Directors of
NAMCO BANDAI Holdings Inc.:

We have audited the accompanying consolidated balance sheets of NAMCO BANDAI Holdings Inc. (“the Company”) andconsolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive
income, changes in net assets and cash flows for the years then ended expressed in Japanese yen. These consolidated financial
statements are the responsibility of the Company’s management. Our responsibility is to independently express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of NAMCO BANDAI Holdings Inc. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations andtheir cash flows for the years then ended, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to Note 25 to the consolidated financial statements. The Company resolved a
concrete method to acquire its treasury stock at the board of directors meeting held on May 10, 2011.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2011 arepresented solely for convenience. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and,in our opinion, such translation has been made on the basis described in Note 3 to the consolidated financial statements.

Tokyo, Japan
June 21, 201166

Corporate Data
As of March 31, 2011

Corporate Name:
Head Office:Capital:Stock Exchange Listing:Main Business:

Stock Information:

NAMCO BANDAI Holdings Inc.
NAMCO BANDAI Mirai Kenkyusho
4-5-15, Higashi-Shinagawa, Shinagawa-ku, Tokyo 140-8590, Japan
URL: www.bandainamco.co.jp/¥10 billion
Tokyo Stock Exchange, First Section (Code number: 7832)
Planning and execution of medium- and long-term management strategies for the BANDAI NAMCO Group;
provision of support for business strategy implementation by Group companies and managementof business activities
Number of Shares Authorized: .................. 1,000,000,000 shares
Number of Shares Issued:...................... 240,000,000 shares
Number of Shareholders: ....................... 39,513
Number of Shares per Trading Unit: ....... 100 shares

Major Shareholders:Ownership Breakdown:

Name% of Total

Individuals, etc.

Financial institutions

Northern Trust Company (AVFC) Sub-account American
Clients

9.60%

MAL Ltd.

5.00%

Masaya Nakamura

4.98%

Northern Trust Company (AVFC)
Re U.S. Tax Exempted Pension Funds

4.93%

Japan Trustee Services Bank, Ltd. (Trust Account)

4.13%

Other corporate
entities

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

4.09%

12.38%The Silchester International Investors International Value
Equity Trust

3.42%

The Nomura Trust and Banking Co., Ltd.
(Retirement and Severance Benefits Trust,
The Bank of Tokyo-Mitsubishi UFJ Account)

1.91%

Nintendo Co., Ltd.

1.60%

MELLON BANK, N.A. AS AGENT FOR ITS CLIENTMELLON OMNIBUS US PENSION

1.53%

18.75%

22.68%

Brokerages
0.56%

Foreign corporate
entities and others
45.63%

Group Organization:
Strategic Business Units

Toys and Hobby
Core Company: Bandai

NAMCO BANDAI Holdings

Content
Core Company: NAMCO BANDAI Games

Amusement Facility
Core Company: NAMCO• SBU Monthly Report Meeting• Group Management Meeting• Content Business Strategy Meeting• Group CSR Committee
Group CSR Subcommittee• Group Risk Compliance Committee• Group Information Security Committee• Internal Control Committee

Affiliated Business Companies©2011 ISHIMORIPRO·TV ASAHI·ADK·TOEI ©2011 ISHIMORIPRO·TV ASAHI·TOEI AG·TOEI ©SOTSU·SUNRISE ©BANDAI·WiZ 2004 ©Dynamic Planning Inc. ©SCG Power Rangers LLC ©BIRD STUDIO/SHUEISHA·FUJI TV·TOEI ANIMATION ©BANDAI 2010 ©2010 NBGI ©2002 MASASHI KISHIMOTO/2007 SHIPPUDEN All Rights Reserved. ©2010 NBGI ©2011 NAMCO BANDAI Games Inc.
©SOTSU·SUNRISE ©SOTSU·SUNRISE·MBS ©SOTSU·SUNRISE ©SOTSU·SUNRISE·MBS ©SOTSU·SUNRISE ©SUNRISE/T&B PARTNERS, MBS ©尾田栄一郎／集英社・フジテレビ・東映アニメーション©Tsuburaya Production ©BANDAI·WiZ/TVTOKYO·2010·Team Tamagotchi TV ©Tsuburaya Production ©1976, 2011 SANRIO CO., LTD. H © 2011 Gullane (Thomas) Limited ©SOTSU·SUNRISE·MBS©Takashi Yanase/Froebel-kan·TMS·NTV ©ABC·TOEI ANIMATION

67

www.bandainamco.co.jp/

Printedin JapanPrinted in Japan