BANDAI
NAMCO
Group
ANNUAL REPORT2015

DREAMS,FUN AND
INSPIRATIONISSIONO UR M
ENT
STATEM“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 V

ISION

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

The BANDAI NAMCO Group develops entertainment-related products and services
in a wide range of fields, including toys, network content, home video game software,
arcade game machines, visual and music content, and amusement facilities.
In accordance with our Mid-term Plan, which includes
the vision of “NEXT STAGE—Empower, Gain Momentum, Accelerate Evolution,”
we are aiming to be No. 1 with strong conviction. On that basis,
we are committed to being “the Leading Innovator in Global Entertainment”
and recording strong growth.

CONTENTS

02

04

06

TODAY’S BANDAI NAMCO Group

The BANDAI NAMCO Group
10 YEARS of Progress

The BANDAI NAMCO Group
1 YEAR of Results—FY2015.3

02
04
06
08

08

10

12

16

BOARD OF DIRECTORSAND AUDIT & SUPERVISORY
BOARD MEMBERSCHAIRMAN’S MESSAGEPRESIDENT’S MESSAGE

MID-TERM STRATEGYBY STRATEGIC BUSINESSUNIT (SBU)

SPEC

18

29

37

The Evolving IP Axis Strategy

CORPORATE GOVERNANCE

FINANCIAL SECTION

IAL F

EATU

RE

10
12
16
18
29
37

—Taking the IP Axis Strategy to the NEXT STAGE—

75 CORPORATE DATA

76 OVERVIEW OF MAIN GROUP COMPANIESForward-Looking Statements
The forward-looking statements in this annual report are based on the information available to management as of August 2015 and include various risks and uncertainties.
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 annual report are rounded to the nearest unit.
2. FY2015.3 and the year under review represent the one-year period ended March 31, 2015.
3. Figures in this annual report are as of August 2015.

01

TODAY’S BANDAI NAMCO GroupFY2015.3

Net Sales¥565.5billion

NAMCO Holdings Inc., which is a pure holding
company, three strategic business units (SBUs),

Operating Income¥56.3

The BANDAI NAMCO Group comprises BANDAI

and affiliated business companies that support
the work of the SBUs.
The SBUs, which encompass the operating

billioncompanies in each field, formulate and implement business strategies and provide a diverse
range of entertainment in Japan and overseas.

Return on Equity (ROE)

13.2 %

Overseas Sales Proportion

16.7 %> Group Organization

R&D Investment¥55.8 billion

BANDAI NAMCO Holdings

Net Income Per Share (EPS)¥171.10

Shareholders’ Equity Ratio (%)

68.6 %

Free Cash Flows¥30.6 billion
Number of Employees

7,221
02

Europe

5.6%

Asia, excluding Japan

4.8%

Americas6.3%

ReferenceContributions
to Net Sales byGeographic Region

Japan

83.3%
Note: Percentage‌figures are calculated based on external sales.
Figures are estimates based on management accounting.

Strategic Business Units (SBUs)

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

Toys and Hobby
Core Company: BANDAI
Toys

Vending machine
capsule toys

Sundries

Plastic models

Cards

Stationery

Confectionery, Foods

ApparelNet Sales

Operating Income¥230.9 billion¥17.0 billion

Sales Ratio

Operating Income Ratio

38.6%

29.4%

Network Entertainment
Network content

Arcade game machines

Home video gamesoftwarePrizes for amusement
machines

Amusement facilities

Net Sales

Operating Income¥296.4 billion¥29.3 billion

Sales Ratio

Operating Income Ratio

49.6%

TODAY’S BANDAI NAMCO Group

Core Company: BANDAI NAMCO Entertainment

50.6%

Visual and Music Production
Core Company: BANDAI VISUAL
Visual software

Distribution of video on
demand (VOD) content

Music software

Live entertainment
operations

Net Sales

Operating Income¥43.8billion¥10.1billion

Sales Ratio

Operating Income Ratio

7.3%

17.4%

Affiliated Business Companies (Supporting the Group)
03

The BANDAI NAMCO Group

10 YEARS of Progress2007.3–2009.3 Mid-term Plan
Net Sales and Operating Income
For the Fiscal Years Ended March 31

NET SALES

2008

2007

2006

¥460.5 billion¥459.1 billion¥450.8 billion

2009¥426.4 billion

2007¥42.2 billion
2006

OPERATING INCOME¥35.7 billion

2008¥33.4 billion

2009¥22.3 billion

Overseas Sales (sales after
elimination of internal transactions)

(Billions of yen)

2006

2007

2008

2009

85.01

102.88

113.74

106.86

Operating Income Margin

(%)

7.9

9.2

7.3

5.2

Return on Equity (ROE)

(%)

5.8

9.4

11.7

4.3

Cash Dividends per Share

(Yen)

12

28

24

24

Debt/Equity Ratio

(Times)

0.14

0.05

0.06

0.08

Free Cash Flows(Billions of yen)

6.6

27.3

20.5

9.9

Gundam series

(Billions of yen)

51.8



54.5

50.9

42.8

KAMEN RIDER series

(Billions of yen)

7.3



8.7

13.1

10.4

Power Rangers series

(Billions of yen)

27.4



32.0

25.4

25.6

Net Sales of Established IPs*

* IP: Characters and other intellectual property

04





RE

S TA

RT

!

Implementing the Restart Plan

2013.3–2015.3 Mid-term Plan2015

2010.3 –2012.3 Mid-term Plan

¥565.5 billion

Recordhigh

2015

Record
high

2014

2013

¥487.2 billion¥507.7 billion¥56.3 billion

2012¥454.2 billion
2013¥48.6 billion

2011

2010

¥378.5 billion¥394.2 billion

2014¥44.7 billion

2012¥34.6 billion
The BANDAI NAMCO Group—10 YEARS of Progress

2011¥16.3 billion

2010¥1.9 billion

2010

2011

2012

2013

2014

2015

92.34

81.82

75.82

81.0680.98

94.62

0.5

4.1

7.6

10.0

8.8

10.0

–12.4

0.8

9.1

14.1

9.7

13.2

24

24

26

45

35

62

0.06

0.02

0.09

0.05

0.03

0.01

1.0

15.2

23.8

21.6

26.9

30.6

34.6

38.2

44.7

65.2

80.2

76.7

20.0

26.4

31.9

34.0

30.7

26.2

17.5

13.7

20.2

20.8

25.3

23.2

05

Return on Assets (ROA)

The BANDAI NAMCO Group

1

14.0%

FY2015.3

YEAR of Results

441.8
374.2

405.1

342.2
308.3

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

14.0

Total assets(¥ billion)

12.2

10.7

ROA
(%)

303.5
248.8

Return on Equity (ROE)

268.0

14.0

5.2

2011

2012

2013

2014

2015

213.7 213.1

13.2%

14.1

Total net
assets13.2(¥ billion)

Debt/Equity Ratio*

9.7

9.1

0.01Times

ROE
0.8

(%)

2011

2012

2013

2014

2015

19.8

Interest-bearing debt

Net income(¥ billion)

Net Income

32.4

19.3

YOY

9.2

Debt/equity ratio*¥37.6 billion

25.1(Billions of yen)

0.09 13.3

37.6(Times)

0.03

0.02

50.0 %

4.4

0.05

3.7

2011

2012

2013

2014

0.01
2015

1.8
2011

2012

2013

2014

Cash Flows from Operating Activities¥50.1billion
YOY* ‌Debt/equity ratio = Interest-bearing‌
debt/
Total shareholders’ equity

2015

Cash dividends per share
(Yen)

62

¥62

45
35

21.3%

24

Cash Dividends per Share

26

YOY

¥27

Free cash flows*(¥ billion)

30.6

2011

2012

2013

2014

2015

26.9
23.8

21.6

15.2

Net Income per Share (Basic)¥171.10

2011

2012

2013

2014

2015

YOY
*F
 ree cash flows = ‌Net cash provided by operating activities +Net cash used in investing activities

06¥57.05

Consolidated Dividend
Payout Ratio

36.2%

Sales of Major IPs (Group total)¥76.7 billion¥55.2 billion¥26.2 billion¥24.6 billion¥23.2 billion

Mobile Suit Gundam series
Yo-kai Watch series


KAMEN RIDER series
ONE PIECE
Power Rangers seriesNetwork Entertainment Business: Sales by Major Category

Arcade game machines

Network content¥72.1 billion¥82.3 billion
Home video game software

Amusement facilities¥55.5 billion

Visual and Music Production SBU:
Number of copyrighted productsHome Video Game Software Sales Volumes(Group total)

21,683 thousand(As of 2015.3)

Sales of packaged
softwareEuropeJapan

7,874 thousand

7,075 thousand

36.3%

32.6%

¥17.9 billion

59.0%

41.0%

31.1%
North America

6,734 thousand

Manufacturing of animation, licensing operations,distribution and events, and others¥25.8 billion
Net Sales of Visual and Music Production SBU¥43.8

billionThe BANDAI NAMCO Group—1 YEAR of Results¥86.5 billion

Number of
copyrighted products
BANDAI VISUAL CO., LTD.

746

Sunrise Inc.,BANDAI NAMCO Pictures INC.

287

Number of works withmaster license recordings
Lantis Co., Ltd.

Approx.

67,00007

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY BOARD MEMBERS
As of August 5, 2015

We will build a solid foundation

the “NEXT STAGE — Empower, GainSHU K UOISHI K AWA

MITSUAKITA G U C H I

SH UJ IOH TSUYUJI
ASA KOKA Z UN OR I
UE NO

Board of Directors
Chairman and
Representative Director

Shukuo Ishikawa

Director (Part-time)

Shuji Ohtsu

Kazunori Ueno
Chairman and Directorof BANDAI Co., Ltd.

President andRepresentative Director

Mitsuaki Taguchi

08

Director

Director

Yuji Asako

and continue to aim for

Momentum, Accelerate Evolution.”

KAZUMIK AWA S H I RO

YU ZU R U
MATSU DATO M O HI S ATA B U C HINO BUOSAYAMA

Director (Part-time)

Director (Outside)

Director (Outside)

Satoshi Oshita

Nobuo Sayama

Yuzuru Matsuda

President andRepresentative Directorof BANDAI NAMCO Entertainment Inc.

Director (Part-time)

Director (Outside)

Kazumi Kawashiro

Tomohisa Tabuchi

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

S AT O S H I
O S HI TA

President andRepresentative Directorof BANDAI VISUAL CO., LTD.

Audit & Supervisory Board Members
Audit & Supervisory Board Member(Full-time)

Audit & Supervisory Board Member(Full-time, Outside)

Audit & Supervisory Board Member(Outside)

Audit & Supervisory Board Member(Outside)Kazuo Asami

Katsuhiko Kohtari

Osamu Sudoh

Katsuhiko Kamijo

09

CHAIRMAN’S MESSAGE

Continued Growth
We Will Build a Strong Foundation as We Move Forward.
New Management System

In the future, I will focus on management strategies targeting

Targeting new goals under a system of
two representative directors

growth over the medium to long term, and Mr. Taguchi will lead theAfter the ordinary general meeting of shareholders held in June

together to ensure that everyone in the Group is highly motivated.

implementation of the Mid-term Plan as the Company’s President
and operational leader. We are determined to continually work

2015, I became Chairman and Representative Director, and Mitsuaki
Taguchi became the new President and Representative Director.
The objective of this change in our management is to steadily
advance the strategies in our Mid-term Plan and to build a strong
foundation as we move forward so that the Group can record

Evaluation of Results

Record-high net sales and operating income.
Record-high net sales for three consecutive years.

continued growth in the future. Mr. Taguchi has many years of

In FY2015.3, the BANDAI NAMCO Group worked to provide theexperience at BANDAI Co., Ltd., and is highly knowledgeable

ideal products and services at the ideal time in accordance with

about the IP axis strategy, which is the Group’s greatest strength.

the IP axis strategy, which is the Group’s greatest strength.

As a leader, he has strong qualities and proven results.

The sound initiatives that were implemented on the front lines

In addition, the Group is continuing to Empower, Gain Momentum,of each business were effective, and our results substantiallyand Accelerate Evolution as we work to achieve new goals. I believe

exceeded our initial expectations. Consolidated net sales rosethat Mr. Taguchi’s personality will enable him to support our

11.4%, to ¥565.5 billion, and consolidated operating income was

employees as they take on challenges and to bring out the bestup 26.1%, to ¥56.3 billion, marking the highest levels of net sales

in each individual. I think he is the ideal person for this position.

and operating income since the management integration.

Shukuo Ishikawa
Chairman and Representative Director
BANDAI NAMCO Holdings Inc.

10

Our achievement of three consecutive years of growth in net sales

policy. After appropriation of dividends from the consolidated

was especially noteworthy.

periodical net income, we will consider attributing a portion

The reasons for this strong performance were the solid resultsof the remaining balance to the acquisition of our own shares,of the Toys and Hobby Business in Japan and Asia, as well aswith comprehensive consideration of aspects such as the level

favorable results in the Content Business, including networkof cash held, operating performance, recent share price trends,

content, visual and music content, and, in overseas markets,and plans for large-scale investments. In a continuation from thehome video game software. The creation of hit products exceeded

previous Mid-term Plan, we have positioned the next three years

our expectations in all businesses and offset the weak results in

as a period for aggressive business development. In the future,

the Toys and Hobby Business in Europe and the Americas andtargeting new opportunities linked to growth for the Group, wein the Amusement Facility Business.

will continue to invest aggressively such areas as new IP initia-

FY 2015.3 was the final year of the Mid-term Plan that we started

tives and business expansion.

in April 2012. Since we launched the plan, we have advanced the
IP axis strategy in accordance with our mid-term vision—Empower,

10th Anniversary of the BANDAI NAMCO Group

Gain Momentum, Accelerate Evolution. As a result, we were able

To the NEXT STAGE as an entertainment group

to close out the plan’s final year in excellent shape. Nonetheless,we have not yet resolved certain challenges. Specifically, we need

The BANDAI NAMCO Group will mark the 10th anniversary of theto achieve recoveries in the Toys and Hobby Business in Europe

management integration in fall 2015. I became president in 2009,

and the Americas and in the Amusement Facility Business.

and we had our worst results immediately thereafter in FY2010.3.

However, I believe that over the past three years we have been

In response, we implemented the Restart Plan, under which weable to build an important foundation for a new growth stage.

reevaluated our strengths and decided to change direction toward
the IP axis strategy. Now, we are steadily establishing stable
operations, even though our industry is marked by dramatic

Aiming for a base level of stable annual
per share dividend payments of ¥24 anda consolidated dividend payout ratio of 30%

change. The driving force behind these results has been the hard

The Company follows a basic policy of providing a return to share-

and I believe that we have been able to reach a point where

holders that targets a consolidated dividend payout ratio at a level

we can now achieve growth that leverages BANDAI NAMCO’sof 30% based on stable annual dividend payments of ¥24 perdistinctive strengths. Under the Mid-term Plan that commenced

share. In accordance with this policy and in consideration of ourin April 2015, we will further reinforce the IP axis strategy andresults for FY2015.3, in addition to the stable dividend we decided

expand our business in the Asia region, which has high growth

to pay a performance-based dividend of ¥28 and a special divi-

potential. In these ways, we will aim for the NEXT STAGE as andend of ¥10, resulting in an annual dividend of ¥62 per share.

entertainment group.

Under the Mid-term Plan, there will be no change to our basic

work of all of our employees, who have pulled together and gone
all out under the IP axis strategy.
Ten years have passed since the management integration,

Chairman’s Message

Shareholder Return

Under the previous Mid-term Plan, I called on everyone to“go all out.” Our employees have taken the initiative in implementing the IP axis strategy, which is the Group’s greatest

Per Share Dividends and Dividend Payout Ratio(Yen / %)strength, and as a result we have been able to achieve solid

62

results in both operational and quantitative areas, and motivation levels are high throughout the Group. Over the next three45

years, I would like our employees to continue to “go all out” ina positive sense. We will continue to take on challenges as we

35
26
Per share dividend

Consolidated dividend
payout ratio

36.2

30.4

30.5

30.7

2012

2013

2014

move forward to achieve growth for the next 10 or 20 years. You
can continue to expect great things from the BANDAI NAMCO
Group, and I would like to ask for your continued support andencouragement in the years ahead.

2015

For the Fiscal Years Ended March 31

August 2015

11

PRESIDENT’S MESSAGE

Challenge and Fusion on
We Will Continue toEmpower, Gain Momentum, and Accelerate Evolution.
Greetings

the Mid-term Plan, are net sales of ¥600.0 billion and operating

I have recently been appointed President and Representative

income of ¥60.0 billion. We are also targeting ROE at 10% or more

Director of BANDAI NAMCO Holdings. At BANDAI Co., Ltd., whichon a consistent basis, despite the dramatic changes in our oper-

diversified and globalized its businesses, I was able to gain expe-

ating environment.

rience in a large number of divisions and to participate in the

Under the current Mid-term Plan, guided by the mid-term

start-up of many new businesses over a period of more than 30

vision of “NEXT STAGE—Empower, Gain Momentum, Accelerate

years. Moving forward, I will strive to advance the new Mid-term

Evolution,” we will take steps to further reinforce the IP axis

Plan and will work together with Chairman Ishikawa to achieve

strategy, which is the Group’s greatest strength. To that end,

further gains in the Group’s corporate value.

we will implement focus strategies in three areas—businessI believe that it is now, when we are recording stable results,

strategies, region strategies, and function strategies.

that we need to once again emphasize our corporate culture of

To steadily advance the Mid-term Plan, as outlined below

taking on challenges. If we do not take on challenges we will not

we have reorganized our SBUs, which encompass the operating

be able to create new entertainment. In an organization such ascompanies. The Toys and Hobby SBU will continue to reinforce

a company, there are people who scatter things around, that is,the IP axis strategy and aim for growth in global markets.

they search for new ideas and take on challenges one by one.

The Network Entertainment SBU will aim to transcend the exist-

And there are also people who straighten things up, incorporate

ing game business framework and create new forms of entertain-

them into businesses, and fix parts that are not going well.

ment. Moreover, the addition of the Amusement Facility BusinessNo matter how large an organization becomes, it is importantto the Network Entertainment SBU will unify the value chain andthat the functions of these two types of people are well balanced.

foster the fusion of real-life and digital entertainment. The VisualCompanies that forget to take on challenges and address

and Music Production SBU will step up IP creation and strengthenchange cannot survive. Aiming to become the world’s most

initiatives targeting new content outlets.

inspiring entertainment group and to never be satisfied with thecurrent situation, BANDAI NAMCO will continue to take on challenges in the years ahead.

Mid-term Plan (FY2016.3 to FY2018.3)

Aiming to build a strong foundation and achieve
net sales of ¥600.0 billion and operating incomeof ¥60.0 billion
Our first objective in building a foundation for growth is to become

Previous System

New System(–2015.3)(2015.4–)

Toys and Hobby SBU

Toys and Hobby SBU

Core Company:
BANDAI Co., Ltd.

Core Company:
BANDAI Co., Ltd.

Content SBU

Network Entertainment
SBUCore Company:
BANDAI NAMCO Games Inc.

Core Company:
BANDAI NAMCO Entertainment Inc.*a group that can consistently achieve net sales of more than¥500.0 billion and operating income of more than ¥50.0 billion,
without regard to whether or not we have hit products. After
we develop that degree of strength and power, we will strive to

Amusement Facility SBU
Core Company:
NAMCO LIMITED

Visual and Music
Production SBUCore Company:
BANDAI VISUAL CO., LTD.

record further growth in global markets. Those initiatives
will be guided by the three-year Mid-term Plan that we launchedin April 2015. Our numerical targets for FY2018.3, the final year of12* On April 1, 2015, the name was changed to BANDAI NAMCO Entertainment Inc. fromBANDAI NAMCO Games Inc.

a NEW STAGEIn FY2016.3, the first year of the Mid-term Plan, withconsideration for our product lineup and sales plan at the
beginning of the year, we are forecasting results that represent declines from the previous year—net sales of ¥530.0
billion and operating income of ¥45.0 billion. The reasonsfor this decision are as follows. We concluded that we could
not assume that we would have hit products that exceeded
expectations, as we had enjoyed in the previous year. In addition, change in the entertainment industry is dramatic, and itis necessary to take a cautious approach to market trends.
The Group’s caution is due to our focus on enhancing our true
power and recording steady growth rather than emphasizing
a single year’s results. In FY2016.3, we will do our utmost to
create hit products and IP and to generate results that exceed
our initial forecasts.

Mitsuaki Taguchi

Mitsuaki Taguchi

President’s Message

President and Representative Director
BANDAI NAMCO Holdings Inc.

April 1982: Joined BANDAI Co., Ltd.
April 1999: General Manager, Vending Machine Business
Department of BANDAI Co., Ltd.
June 2003: Director of BANDAI Co., Ltd.
April 2006: Managing Director in charge of new business policyof BANDAI Co, Ltd.
April 2009: Senior Managing Director in charge of media policy
and new business policy of BANDAI Co., Ltd.
April 2010: Executive Vice President and Director in charge of media
policy and new business policy of BANDAI Co., Ltd.
April 2012: Executive Vice President and Representative Director
in charge of global media policy and human resources
policy of BANDAI Co., Ltd.
April 2015: Advisor of BANDAI NAMCO Holdings Inc.
June 2015: P
 resident and Representative Director of
BANDAI NAMCO Holdings Inc. (current position)

13

Business strategies“Accelerate evolution in IP axis strategy”

from products and services, working with IP that originated over-Through the business strategies, we will implement initiatives

for submissions within the Group.

seas, actively investing in high-potential IP, and utilizing a system

to further refine and deepen the IP axis strategy, which leverages

To enhance content outlets, we are taking steps to expand thethe distinctive strengths of the BANDAI NAMCO Group, and to

production business, which is becoming one our new businessdraw out the full potential of our IP.

pillars. In cooperation with the visual and music content busi-

In the area of IP creation, in April 2015 we established a newness, the production-related business will step up live events ascompany through the separation of a division from an animation

well as live viewings and sales of related merchandise. We willproduction company that is a part of the BANDAI NAMCO Group.

also strive to aggressively develop overseas business. In addition,

The new company will focus on the creation of products for chil-

we will steadily move ahead with the themes of developing

dren and families. In this way, we strengthened collaboration

amusement facilities with new added value; opening up new

among the Group’s products and services. Moreover, we are using

target markets, such as adult women; and strengthening collabo-

a variety of methods to actively create IP, such as generating IP

ration among and within SBUs.

Mid-Term Vision

Focus Strategies

Under the Mid-term Plan, we promote three Focus Strategies.

Business Strategies

Region Strategies

Accelerate e­ volution in the IP axis strategy

Through the IP axis strategy Gain momentum
in global markets

In order to further solidify the IP axis strategy, the BANDAI NAMCO Group’s strength,
we will reinforce our functions for creating, cultivating, and deploying IP.

The BANDAI NAMCO Group will expand the IP axis strategy worldwide and aim togain momentum in global markets.

Cultivate Original Group IPs

Expand Target Market

Expand in Asia and Japan

Enlarge New IP Businesses

Collaborate across SBUs

Renew in Americas and Europe

IP fostering / creation / acquisition
Create and foster new IP business
Deepen the current IP businesses

Strengthen collaboration among
businesses and regions

Build a foundation for IP axis
strategy

Function Strategies

Empower and innovate business model through BANDAI NAMCO market advantages


We will take on the challenge of creating and fostering new IP business. At the same time, we will build a foundation for IP axis strategy on the global market.

Deepen the current business model

Numerical Targets
Net sales: ¥600 billion

14

Create and foster the new IP business

Implement IP axis strategy in global market

Numerical targets for the fiscal year ending March 31, 2018

Operating income: ¥60 billion

ROE: More than 10%

Region strategies“Gain momentum in global markets”

R&D Investments and Capital Investments(¥ million)

In the region strategies, we will strive to maintain No. 1 positions
in domestic markets, to expand the IP axis strategy throughout

40,102the world, and to achieve further growth in global markets.
Asia has especially high potential because Japan-originated
IP is very popular in Asian markets. Over the three years of theWe have unified the names of major companies in each Asian

43,194

41,193

R&D
investments

Mid-term Plan, we are aiming to double net sales in Asia fromthe current level of about ¥30.0 billion to about ¥60.0 billion.

55,761

51,81523,46018,535
10,768

Capitalinvestments

market as one part of the “ALL BANDAI NAMCO System,” and on

2011

22,29812,808

2012

2013

2014

2015

For the Fiscal Years Ended March 31

that basis we will advance our strategies. Specifically, we will
enhance our IP lineup and implement detailed business strate-

the worlds of IP, and responses to changes in popular devices,gies in line with regional characteristics. The Toys and Hobby

such as game machines and mobile phones. I believe that we canBusiness will focus on expanding in the ASEAN region, and theincrease the stability of this structure by working to increase the

Network Entertainment Business will bolster network content

lifespan of IP and heighten the speed of content outlet development.

operations in China and other markets, with its subsidiary inShanghai serving as the base for these initiatives.

First, we must extend the lifespan of IP. To maintain the popularity of IP for 40 or 50 years, it is necessary to continually foster

In Europe and the Americas, the Toys and Hobby Businessawareness of its appeal, such as providing ongoing new topics forhas posted weak results for several years, and the business has

existing fans, attracting new generations of fans, and responding

migrated to a new system under which development will be

to changes in the environment. Through these types of initiatives,consolidated in Japan while sales and marketing are handled

it is possible to continue to secure stable, high levels of IP value.

in Europe and the Americas. In this way, we will strive to achieve

The BANDAI NAMCO Group is aiming to increase the percentage

a recovery in revenues and profits by increasing efficiency andof established IP that can be expected to generate stable profits

taking steps to strengthen our IP lineup and our relationships

by working together with IP rights holders to implement thesewith local license holders. Moreover, for the network content

types of initiatives. And because we have this stable foundation, itbusiness we will steadily advance growth measures in Europe

is possible for us to take on challenges in the areas of initiatives

and the Americas as well as Asia, such as the implementation

with new IP. Moving forward, we will aggressively implementof full-scale business development initiatives.

initiatives, including strategic investment, to increase the lifespanof IP.
enable us to increase the speed at which we develop content

In the function strategies, we will take steps to deepen our exist-

outlets. For example, as a part of the recent organizationaling business models, and we will also strive to create and fosterchanges the Amusement Facility Business joined the Network

new IP businesses that fuse real and digital entertainment. These

Entertainment SBU, and through this initiative we have opened

measures will enhance our ability to respond rapidly to changes

up possibilities for new fusion. The Group’s traditions are rich inin the industry’s operating environment and in consumer prefer-individuality, and by fusing these traditions I believe that we areences. We are also taking steps to build a foundation for the IP axis

fostering creativity on the front lines and developing a new corpo-

strategy in global markets. For example, the Anime Consortium

rate culture. This also indicates that “It is ok for us to change

Japan Inc., which was jointly established in fall 2014 by content

even more. We can extend our business in any direction.”On the other hand, it is “challenge” and “fusion” that will

holders in Japan, the Cool Japan Fund Inc., and others, has com-

We will establish “a corporate culture where people take on

menced full-scale operations. The consortium distributes legiti-

challenges” in a way that transcends the frameworks of organiza-

mate Japanese animation content overseas and promotes

tions and businesses, and fuse the Group’s various strengths toawareness of IP in overseas markets.

draw out their full potential. In the future, we will always continue

President’s Message

Function strategies
Empower and innovate business model

to push forward as we aim to become the leading innovator in

In Closing

Opening up new possibilities in the IP businesswith strategic investment and ongoing changes tothe corporate culture
The earning capacity of the IP business is significantly influenced
by a number of factors, such as the presence or absence of hit
products, planning and development capabilities that leverage

global entertainment and provide “Dreams, Fun and Inspiration.”
The BANDAI NAMCO Group will continue to provide Empower,
Gain Momentum, and Accelerate Evolution on a new stage,and I would like to ask our shareholders, investors, and otherstakeholders for their continued support and encouragementof the BANDAI NAMCO Group in the years ahead.
August 201515

MID-TERM STRATEGY BY STRATEGIC BUSINESS UNIT (SBU)

Toys and Hobby SBU
Mid-Term Vision

Globalization, Asia No. 1,
Europe and the Americas
Challenge

Focus Strategies

	Strengthen the IP-based businessmodel	No.1 in all Asia and in eachbusiness in each country	Europe and Americas Challenge	Strengthen the Global Foundation

Masaru Kawaguchi
President and Representative Director of
BANDAI Co., Ltd.

Network Entertainment SBU
Mid-Term Vision

Evolution to Network Entertainment,
Breakthrough to the Next Stage,
Network x Entertainment x Global
Satoshi Oshita
Director (Part-time)
President and Representative Director of
BANDAI NAMCO Entertainment Inc.

Focus Strategies	Implement new business development in the real and digital fields
	Take steps to expand business inthe network field	Advance regional expansion (China)	Reinforce local models for products
and services originating in current
markets (Europe and the Americas)
	Develop original classic IP anduser-generated content
	Take on the challenge of creating
new IP

Visual and Music Production SBU
Mid-Term Vision

Focus Strategies

	Cultivate original Group IP assets

No.1 Group in Animation,
Visual, and Music Products

Kazumi Kawashiro
Director (Part-time)
President and Representative Director of
BANDAI VISUAL CO., LTD.

16

	Strengthen IP production
capabilities
	Pursue overall optimization

Mid-Term Numerical Plan

For the Fiscal Years Ended March 31

Net Sales

Operating Income

The Toys and Hobby SBU will continue to implement(¥ billion)(¥ billion)

the mid-term vision that it has followed since 2009

230.9

210.0

230.0

250.0

18.0

17.0
15.0

— “True Globalization.” Three years after the startof the new plan, the SBU will strive to realize

16.0“Globalization, Asia No. 1, Europe and the Americas
Challenge.” In Asia, we will strengthen Japan-Asia
coordination under an all Asia strategy and aim forfurther growth, while in Europe and the Americas
we will build a foundation for growth by taking on thechallenge of a new kind of competition. In these ways,
we will strengthen the IP axis business model on

2015
2016
Actual result Plan

2017
Plan

Mid-Term Numerical Plan

2018
Plan

2015
2016
Actual result Plan

2017
Plan

2018
Plan

a worldwide basis.

For the Fiscal Years Ended March 31

Net Sales

Operating Income

We are entering a period in which digital networks will(¥ billion)(¥ billion)

be integrated and incorporated into our real lives and

310.0 320.0
296.4 300.0

35.0

new types of entertainment and value will be provided.
The Network Entertainment SBU has been created

29.3

28.0

in preparation for those changes. The Amusement

25.0

Facility Business will be incorporated into the Network
Entertainment SBU. Accordingly, companies that havein the past focused on the development of content andbusinesses for digital networks will now also implement aggressive development for real networks.
We will strive to transcend previous frameworks,

2017
Plan

Mid-Term Numerical Plan

2018
Plan

2015
2016
Actual result Plan

2017
Plan

2018
Plan

enhance entertainment, and reach a new stage.

For the Fiscal Years Ended March 31

Net Sales

Operating Income

The mission of the Visual and Music Production SBU(¥ billion)(¥ billion)

is to “entertain people around the world through IP

45.0

43.8

production initiatives, centered on visual and music

10.1

40.0

products.” Through comprehensive production activi-

35.0
7.0

7.5

8.0

ties in the field of visual and music content, from IP
creation to utilization, the SBU will implement busi-

MID-TERM STRATEGY BY STRATEGIC BUSINESS UNIT (SBU)

2015
2016
Actual result Plan

ness development initiatives in Japan and aroundthe world. Moving forward, the production-related
business is expected to record growth, and we willtake on the challenge of expanding this business,
including live events, music publishing, fan clubs,
2015
2016
Actual result Plan

2017
Plan

2018
Plan

2015
2016
Actual result Plan

2017
Plan

2018
Plan

and merchandising.

17

SPECIAL FEATURE:
The Evolving IP Axis Strategy

Taking the IP Axis Strategy totheNEXT STAGE

The BANDAI NAMCO Group is leveraging the worlds of IP to provide the ideal products andservices at the ideal time under the IP axis strategy.
The IP axis strategy is the BANDAI NAMCO Group’s greatest strength and will remain the core of
the Group’s operations in the years ahead. Under the Mid-term Plan, we will advance initiatives
from multiple directions to “Accelerate Evolution in IP Axis Strategy,” which is the cornerstoneof our business strategies.

The Group’s Greatest Strength

IP Axis Strategy
The IP axis strategy is the greatest strength of the BANDAI NAMCO Group,
which has a diverse range of businesses and extensive know-how in the field of

PLASTICMODELS

entertainment. The advancement of this strategy is made possible by the know-

MOVIES

how that the BANDAI NAMCO Group has accumulated over many years.

gy

Plan
n

i ng

an
dD
ev
el
op

TOYS
en
t

NEW
IP

sources
an R e

m

Te
ch
no
lo

Hum

POWERFUL IP(CONTENT)

Generating Growth from New IP on a Foundation of
Established IP
IP is the starting point of the IP axis strategy, and the BANDAI NAMCO Group candemonstrate its strengths by leveraging both established IP, which enjoys stable
popularity, and new IP. Established IP, which makes a steady contribution, provides
a robust foundation on which the Group can realize further growth by taking on thechallenge of new IP.

18

Rapid Uptake andExpansion throughMultifaceted Initiatives
The BANDAI NAMCO Group’s wide rangeof business fields makes it possible for theGroup to rapidly expand to multiple products
and services, rather than focusing on just asingle product. Through multifaceted initiatives, we can achieve uptake and expansionof the IP in a short period of time.

MAXIMIZINGTHE VALUE OF
POWERFUL IP

LIVEENTERTAINMENTNEW DEVICESNETWORKCONTENTVIDEO ON
DEMAND (VOD)
CONTENTAPPARELCAPSULETOYS

CARDS
VISUAL PACKAGESOFTWAREHOME
VIDEO GAMESOFTWARE

ARCADEGAME
MACHINES
Note: This‌
diagram shows one example of
IP axis development.

Responding Quickly toAddress Needs
In the entertainment industry, whichis undergoing dramatic change, theBANDAI NAMCO Group can respondquickly to customer needs with theideal timing and the ideal platform
for each IP.

IP needs

CustomerIP information

IP needs

Products andservicesMediaTV, movie, publishing, Internet,
mobile, merchandise,sales areas, events

SPECIAL FEATURE: The Evolving IP Axis Strategy

One Example of our Business Models
The BANDAI NAMCO Group has built strong relationships with a wide range of partners.
Today, the Group is developing its business operations through cooperative initiatives based on
those deep relationships of trust.

Use of original
creations
Advertising and PR

Licensing agreement

Author or
Copyright holder

19

SPECIAL FEATURE: The Evolving IP Axis Strategy

One Example of the Successes of the IP Axis Strategy

Mobile Suit Gundam
SeriesThe Mobile Suit Gundam series is a representative example of the Group’s nurturing of IP overthe long term. Mobile Suit Gundam series, which has the highest sales in the Group, is an establishedIP that has maintained strong popularity over the 36 years since its TV broadcast in 1979. Throughclose cooperation within the Group, we conduct integrated operations fromthe creation of Mobile Suit Gundam IP to the roll out of products and services.

Meeting the Needs of the Era with
Integrated, Simultaneous Roll Outs ofVisual Products andOther Products and Services
on a Groupwide Basis

Visual products

Over 36 years, more than 40 visual products have been launched

Mobile Suit Gundam series

in the Mobile Suit Gundam series. These products have beendelivered in forms that meet the needs of each era and eachcustomer age group, such as TV, films, packaged media, andInternet distribution, and they have been earning the strong
support of fans. For each product, we have simultaneously

IP creation

conducted rapid business development initiatives for the optimal outlet for the Group’s wide range of products and services.
In this way, we have expanded our business fields in each era.

80.2(¥ billion)

FY2015.3

Groupwide net sales:

65.2¥76.7billion

54.5
51.8

50.9

Share of consolidated
net sales:

44.7

42.8

13.6%

38.2
34.6

2006

20

2007

2008

2009

2010

2011

2012

2013

2014

2015

For the Fiscal Years Ended March 31

Expanding Customers to
Include a Wide Range of
Age Groups
The reason why the Mobile Suit Gundam
series is popular with a wide range ofage groups is that we have continuallydeveloped visual products over a spanof many years. As an IP that can beenjoyed by two generations, Mobile
Suit Gundam has steadily expanded
the range of its customer groups,
centered on men aged 30 to 60 but
also including women aged 10 to 30
and, recently, elementary school boys
who enjoy Gundam Build Fighters.

Leading the Way by Taking on the Challenge of New Content Outlets and Business Models
One distinctive characteristic of the Mobile Suit Gundam series is thatit has a world and a fan base that are highly suited to leading-edge
platforms and new business models.
Recently, with Mobile Suit Gundam UC (Unicorn), we have been
taking on the challenge of establishing a new business model, withsimultaneous global development initiatives, including sales of visualpackaged software and on-demand distribution, conducted at about
the same time as special event screenings at movie theaters. The
Mobile Suit Gundam series is an IP with depth that enables the Groupto implement these types of initiatives and lead the way by taking on
the challenge of new content outlets and business models.

Visual products
Package sales
Simultaneous
worldwideroll out

Event screenings
Distribution of video
on-demand (VOD) content

Arcade game machines

Network content
Card games
Visual software

Rolling out products and services
on a Groupwide basis
Plastic models

Facilities

Distribution ofvideo on-demand(VOD) content

Groupwide Information Sharing Framework
It is the Gundam Project Committee that makes rapidbusiness development initiatives possible. The committee
meets on a regular basis, and a variety of informationis shared at these meetings, such as Groupwide comprehensive policies, facilitating the effective roll outof products and services. The know-how needed tofoster synergies in this way is a distinctive characteristicof the BANDAI NAMCO Group.

Strengthening Business Development Initiatives in Asia
Japan-originated IP is very popular in Asia. With the Mobile Suit Gundam
series, new animations are distributed in Asia at nearly the same time
as in Japan, and synergies with events and other initiatives are promoting progress in IP uptake.
Sales of plastic models
and other goods are also
recording favorable results.
In this way, the BANDAI
NAMCO Group is taking on
the challenge of new business development initiatives not only in Japan but
also in Asia.

SPECIAL FEATURE: The Evolving IP Axis Strategy

Home video
game software

21

SPECIAL FEATURE: The Evolving IP Axis Strategy

1

Supporting the Evolving IP Axis Atrategy

Aiming to Be the No. 1 Entertainment
Group in Asia from the Starting Point of
the Toys and Hobby Business
The BANDAI NAMCO Group is aiming to double sales in Asia in three years under
the Mid-term Plan that started in April 2015. Targeting the achievement of thisobjective, BANDAI NAMCO ASIA, which has responsibility for the Asia region,
will serve as the base for the implementation of the Asia strategy. Mr. Taro Tsuji
Business. In this section, he discusses the distinctive challenges of business in

Unique Characteristics of
the Asia Market

Asia and the Group’s future direction in the region.

The markets in Asia are subdivided by

is a director of BANDAI NAMCO ASIA, with responsibility for the Toys and Hobby

country, each of which has its own uniqueculture and business practices. Asia is aregion with growth potential, and the toy
market is still in the development phasein comparison with Japan, Europe, and
the Americas.
TV is the most influential media, but it
is difficult to implement large promotions
like those in Japan. On the other hand, newmedia are recording significant expansion,and the Internet is highly popular, centeredon SNS and video distribution. In particular,
the uptake of mobile handsets has advanced
beyond that in Japan, including not only
adults but also children. There are restrictions on the length of time that films can bescreened, but nonetheless films have thepower to foster the rapid uptake of IP in a
way that transcends national boundaries.
In this environment, the Toys and Hobby
SBU, which until now has been the centerof the Company’s sales in Asia, is engaged
in intense competition for market share

Taro Tsuji
Director, BANDAI NAMCO ASIA CO., LTD.

Large-scale Mobile Suit Gundam series event

22

Yo-kai Watch

with the world’s largest toy manufacturers.

South Korea, our established IP has built

In these activities, the Toys and Hobby

In comparison with these companies froman especially solid market presence and is

SBU, which was the first SBU to advance

Europe and the Americas, the BANDAI

the foundation of our operations. Moreover,

operations in Asia, will fill the role of

NAMCO Group is engaged in a wide range

future growth markets include Southeast

advance team for ALL BANDAI NAMCO.

of businesses and has diverse customer

Asian countries that are recording rapid

Network content has recently started

touchpoints in fields other than toys. This

growth, such as Indonesia, Malaysia,

full-scale business initiatives in Asia, andis one of BANDAI NAMCO’s greatest

and Thailand. Mainland China also has

the Amusement Facility Business has

strengths.

substantial latent potential, and we havecommenced verification initiatives. The

positioned China as an important strategic

Toys and Hobby Business will strive to

Region strategies to achieve No. 1
positions in each Asian country

market. On that basis, we will implement

serve as a mediator for other SBUs as

initiatives from a medium to long term

they work to open up new markets and

The products offered by the Toys and Hobby

perspective.

establish business foundations.

business include plastic models, collect-

From the viewpoint of the IP axis strat-

Over the medium to long term, we willible figures, and cards. For these products,

egy, we will pursue large-scale media

also consider measures to maximize IP

we have established a system of conduct-

initiatives, such as with local media, andvalue as each business works acrossing Japan-originated business activities

at the same time we will strive to concen-

organizational boundaries and leverages

simultaneously in Asia. Japan has overall

trate the Group’s strengths to foster thesynergies, as in Japan.

responsibility from the development stage

uptake of IP, as with the Mobile Suit Gundam

to media strategy, while sales activities

series. In content outlet development, we

For the Children of Asia

are implemented in the overseas markets.

will take steps to expand the integrated

The reason why the Mobile Suit Gundam

For example, with the Mobile Suit Gundam

operations model. In addition, we will

IP recorded significant growth in Japan

series, we implement video distribution

focus on the development of products

and established a market for products

at the same time as in Japan and holdoriginating in Asia. As new initiatives,

for adults was that consumers had thelarge-scale IP-themed events. In this way,

we are introducing Indonesia-originatedexperience of being devoted to Mobile Suit

we increase the value of the IP while

IP to Thailand and Vietnam, and we are

Gundam animations and plastic models

broadly rolling out Mobile Suit Gundam

testing new methods of global business

when they were children. In Asia, I believe

plastic models and other IP products.

development.

that through children’s enjoyment of IP

We are recording success in each country

and a variety of toys we are starting to

Establishing the ALL BANDAI
NAMCO Systemestablish a business comprising products

In particular, Mobile Suit Gundam plastic
models that are offered in the same price

The BANDAI NAMCO Group plans tofor our business if we do not attract therange as in Japan have become hit prod-

increase sales in Asia to ¥60.0 billion inattention of children.

ucts and recorded growth in sales. On the

FY2018.3, double the level in FY2015.3.

Actually, I directly experience this daily.

other hand, for toys and other products,

This goal is based on the realization of

It is more common to see children playing

we are implementing flexible businessthe “ALL BANDAI NAMCO System.” To

with smartphones here than in Japan, anddevelopment initiatives through closethat end, in April 2015 we standardized

when I see children at events rushing up

collaboration among divisions in local

the names of major bases to “BANDAI

to people in character suits, I feel thatmarkets and in Japan.

NAMCO + region name.” The former

I have to work even harder. I believe that

BANDAI Hong Kong, which has been

this is both the starting point of my own

operations in South Korea, Hong Kong,

renamed BANDAI NAMCO Asia, will con-work and, at the same time, perhaps theand Taiwan, which are driving sales intinue to have responsibility for the entire

most essential element of the future of

Asia for the Toys and Hobby business. In

Asia region.

the BANDAI NAMCO Group.

with this approach.

SPECIAL FEATURE: The Evolving IP Axis Strategy

By country, we have large-scale

for tomorrow’s adults. There is no future

Sales in Asia :Aiming for

Sales in Asia :¥30.0 billion(including exports)

FY2015.3¥60.0 billion(including exports)

FY2018.3

Aikatsu! card game23

SPECIAL FEATURE: The Evolving IP Axis Strategy

2

Supporting the Evolving IP Axis Atrategy

Full-Scale, Network-Based
Roll Out of IP Axis Strategy
The Network Entertainment SBU pursues new forms of entertainment that transcend the frameworks of games and are
integrated with networks. Moving forward, the SBU will advance the IP axis strategy by targeting the content outlets
demanded by customers through a variety of measures, such as the fusion of real and digital entertainment, the reinforcement of global initiatives, and the opening up of the Company’s own IP. In April 2015, Ms. Nao Udagawa became thefirst female director at the SBU’s core operating company, BANDAI NAMCO Entertainment (formerly BANDAI NAMCO
Games). In this section, she discusses the goals of the SBU’s network content business.

Strong Competitive Edge
that Facilitates the Use ofAbundant IP

circumstances at each point in time.

ability to anticipate a certain degree ofCurrently, game applications fordemand from IP fans. Major strengths

smartphones are playing the lead role,

include close cooperative relationships

The network content business covers a

and Japan has the largest market in thewith each platform company, under which

wide range of entertainment fields in theworld for these applications. In this growtheach partner’s characteristics are lever-mobile and Internet areas. A key charac-

market, the BANDAI NAMCO Group deter-aged, as well as the demonstration ofteristic of these fields is significant trans-mines the optimal lineup for each IP andstrengths in each field.

formation, both in popular devices, suchrapidly launches titles, with considerationas PCs, smartphones, and other mobile

for such factors as IP characteristics,

phones, and in the ways these devices aregame content and platforms, and market

Expanding IP Axis Strategy
Beyond Mobile and Games

used. Moreover, even with the same mobile

area. Our ability to leverage abundant IP

Based on this unique position, we are

device, the form of the services used on

is a strength that fosters competitive

combining our strengths with those ofthat device change in accordance with theadvantages for the Group, such as theIP rights holders and working together

Nao Udagawa
Director, BANDAI NAMCO Entertainment Inc.
Division Director, NE Business Unit

The BANDAI NAMCO Group’s
Network Content Business Sales(¥ billion)

88.0
82.3
68.4
59.2

2013

2014

2015

2016
（Plan）For the Fiscal Years Ended March 31

24

Rapid Implementation of
Global Strategies for Each IP

Network as Group Infrastructure

uptake through networks, and rolling out
titles that leverage the worlds of IP at

The presence of an IP environment like thatentertainment business is changing rap-

the optimum timing for IP fans. In particu-

in Japan will not be a requirement for our

idly, and I believe that a single businesslar, we are aiming to achieve gains for theoverseas business development initiatives.

model will not continue to be effective for

entire business by expanding the IP axis

With a global strategy for each IP, we willa long period of time. To respond to thesestrategy beyond the mobile and game fields.

work with a sense of speed to launch thechanges, it is necessary to continually

The first step in these trials was taken in

optimal title for the market area. Also,

improve not only the business model but

April 2015, when we started the IP Opening

in product launches we will focus on

also ourselves.

Project, under which 17 of the Group’s origi-

coordination with real-life entertainment

On the other hand, I think that theto nurture IP. We are working to foster

The operating environment in the network

nal classic IP (catalog IP) were opened up

initiatives and on approaches to specificimportance of the network as businessto creators in Japan. In this project, rather

customers. In these ways, we will imple-

infrastructure will not change even overthan conducting character supervision,

ment detailed promotions for each area.

a period of several decades. Moving for-such as with conventional rights permis-

China is one of our most promisingward, we will strive not only to open up

sions, we approve content provision withmarkets, and BANDAI NAMCO (SHANGHAI)

new content outlets but also to create

just a simple plan screening. In this way,CO., LTD., which started operations in

network-based IP through the network.

we are boldly introducing the approach ofspring 2015, will be our base in China as

We will create an entirely new businessuser-generated content, thereby acceler-

we take steps to accelerate the planningmodel that is appropriate for an era inating the expansion of our business fields.

and management of network content.

which a wide range of items are connected

The Internet of Things (IoT), in which

The popularity of Japan-originated IP

through the network, and real-life andnetworks link not only devices but also allis extremely high. In collaboration withdigital information are integrated. I am

types of other things, is currently taking

powerful local partners, we are alreadyconfident that the network content busi-

concrete shape in the world of IT. Moreover,

implementing business initiatives, andness that we are currently advancing will

progress is also being made with thethose efforts have been well received.

be a cornerstone that supports the future

establishment of the Online-to-Offline

Furthermore, we are working togetherof the BANDAI NAMCO Group.

environment, in which Internet information

with Group companies and local partners

is linked to real services. I believe thatto capture demand in other regions, such

expansion in the device and network fields

as ASEAN and other Asian markets; thethrough these types of activities will have

North America, which has a market scalea favorable influence on the IP axis strategy.

on a par with that in Japan; and Europe.

Game Application* Market Scale (Japan)(¥ billion)
715.4
606.9

THE IDOLM@STER
CINDERELLA GIRLS

385.6

DRAGON BALL Z
Dokkan Battle

ONE PIECE Treasure
CruiseSPECIAL FEATURE: The Evolving IP Axis Strategy

Providing a variety of content in line with diversifying customer needs

Drift Spirits

224.9
*G
‌ ame application
Games provided for smartphones and tablets (including games operated on SNS platforms for feature phones)
Source: KADOKAWA DWANGO CORPORATION, Famitsu Game White Paper 2015
Note: Prepared based on information as of April 2015

118.7

2010

2011

2012

2013

2014

25

SPECIAL FEATURE: The Evolving IP Axis Strategy

3

Supporting the Evolving IP Axis Atrategy

Production-Related Business:
Past, Present, and Future
Targeting the evolution of IP production capabilities, the Visual and Music Production SBU is taking steps to fostera transition to production-related business, such as live event, fan club, and merchandise initiatives. Lantis, whichhandles the music business, was an early mover in opening up the market for animation songs and has recorded
substantial growth in its results. Mr. Shunji Inoue, the president of Lantis, has a unique background as a former
musician. He also serves concurrently as president of BANDAI NAMCO Live Creative, which is in charge of theGroup’s events business. In this section, he discusses the BANDAI NAMCO Group’s production-related business.

Establishing the Genre of
Animation Songs

packaged animation songs have surpassed

No Borders for Animation Songs

those of Western music. Previously, anima-

Live events are one of the major strengths

Sales of CDs and other packaged musiction songs were simply the theme songsof Lantis, which has been working with

continue to decline steadily, but nonethe-of animated TV shows, but from the second

these events since 2004. Currently, Lantis

less Japan’s music industry remains

half of the 1990s, character songs using theis implementing about 200 events a year

strong. The domestic music market isnames of characters and musical perfor-

through a variety of approaches, such as

the world’s second largest overall, and it

mances by the voice actors themselves

collaborations with magazines and nation-is the No. 1 market in terms of packaged

became a full-scale trend, and animation

wide solo tours.

product sales. In the live music business,songs became established as a genre.

Lantis has accelerated overseas businessdoubled over the past 10 years. The

vide these new types of animation songs.

development initiatives. In 2014 and 2015,

amount of usage fees collected by the

Although we initially operated on a small

the Lantis Festival had 9 shows in 4 cities

Japanese Society for Rights of Authors,scale, Lantis joined the BANDAI NAMCO

in Japan as well as 11 shows in 6 cities in

Composers and Publishers (JASRAC) isGroup in 2006, making it possible for us to

the Americas and Asia. With the assis-

basically flat, but this is

implement multifaceted business devel-tance of staff from Japan, these overseas

considered to be a sign of the diversifica-

opment initiatives in collaboration withperformances were on a par with those intion of the ways in which consumers

the Group’s various businesses. Today,

Japan. In the future, we are considering

enjoy music.

Lantis has about 70 affiliated groups ofworking jointly with overseas staff toartists, and their works are frequently

create Japanese animation songs. At thistinues to post rapid growth, and sales ofon the hit charts.

point, there are no borders in the world ofScale of Music-related Market

Scale of Market for Live Entertainment(¥ billion)(¥ billion)

Animation songs are a genre that con-1,602.4

1,520.2

1,470.4 1,491.5 1,461.1

274.9
231.8

159.6

170.1

128.0

2010

26

From the second half of the 2000s,

Lantis was established in 1999 to pro-sales and attendance have approximately

2011

2012

2013

2014

2010

2011

2012

2013

2014

Source: ‌Dentsu Communication Institute Inc.,
Information Media White Paper

Sources: All‌ Japan Concert & Live Entertainment
Promoters Conference

For the Fiscal Years Ended March 31

For the Fiscal Years Ended March 31

animation songs, and we are ready to lead

distribution of music, and we then moved

creation of great music, for the first time it

the way in the animation song market andinto the field of real-life entertainment

will be possible to establish a full-fledged

open up new paths forward.

with the establishment of the third outlet,

production-style business.

live events.

Live Events: A New Content Outlet

The BANDAI NAMCO Group has a

For example, through synergies amongcorporate culture that supports the nur-

BANDAI NAMCO Live Creative, which wasanimations, music, and live events, Loveturing of IP from a long-term perspective.

established in 2010 as a company special-

Live! School Idol project has been nurtured

At Lantis, we approach our work withized in event production, creates ways tointo a major IP in four years. In the future,

free ideas, and we also benefit from thelink the Group’s IP and events and strives

we will work to enhance new production-

Group’s culture in which operating com-to increase the quality of performances.

related business initiatives, such as fanpanies engage in autonomous collabora-

BANDAI NAMCO Live Creative holds nearlyclubs, while delivering these types oftion. For example, young employees at

400 events a year, accounting for about

outstanding products. With the circles ofSunrise, BANDAI VISUAL, and Lantis

one-third of domestic events related tofans growing around the world, we will

collaborated and went through a process

animations and games.

also explore the possibilities of new outlets.

of trial and error to gradually develop the

Our traditional outlet for the Group’s IP
was the sales of packaged animation songs.
We added a new outlet in the online

Love Live! School Idol project IP. I believe

Roots of Production-Related
Businesses

that this free and open-minded culture is

The basis of this outlet strategy is dedica-

the future, Lantis will also take on thetion to the creation of quality products. To

challenge of creating IP.

one of the Group’s greatest strengths. In

that end, we establish environments that

My dream is to see the appearance ofgenerate better products, nurture artists

IP created by the BANDAI NAMCO Group,and creators around the world, and buildwith a Lantis animation song playing inhonest relationships of trust with custom-

the background, at a global event such asers. With support from fans and thethe opening ceremony of the Olympic Games.
Aiming for the day when content from Japanis enjoyed around the world as art, we willcontinue working to make steady progress
while tracking global trends.

Shunji Inoue
President and Representative Director,
Lantis Co., Ltd.
President and CEO,BANDAI NAMCO Live Creative Inc.

Visual products

Live events

MoviesSPECIAL FEATURE: The Evolving IP Axis Strategy

Initiatives that integrate visual and music products

Music

Merchandise related to live events27

SPECIAL FEATURE: The Evolving IP Axis Strategy

TOPICS	
Yo-kai Watch
The popularity of Yo-kai Watch is increasing due to cross-media business development initiatives,
such as TV animations and comics, centered on home video game software from LEVEL-5 Inc. We arerolling out an array of Yo-kai Watch products that leverage the BANDAI NAMCO Group’s wide range ofbusiness fields, such as toys, cards, plastic models, candy toys, and apparel. We have expanded thetouchpoints, centered on the key item—Yo-kai Medals—and in FY2015.3 related sales surpassed¥55.0 billion. Moving forward, we will strive to continue to roll out products and services and nurture
Yo-kai Watch products into a long-established IP, based on cross-media initiatives. We have also
started merchandise sales in Asian markets, including South Korea, Taiwan, and Hong Kong, and in
the future we will continue to take steps to expand to new regions in Asia and build Yo-kai Watch

DX Yo-kai Watch

products into an established IP in Asia.

Love Live! School Idol projectLove Live! School Idol project, which was launched in 2010, has grown into a powerful IP
through collaborative projects, such as initiatives with magazines, music, and visual products. In addition to packaged visual and music products, live events with themes based on
the world of this IP have become popular and are contributing to the growth of the Group’s
new businesses, such as live events, live viewings, and merchandise sales. In addition, thetheatrical-release animation that opened in 2015 has been popular, with showings in 14
countries and regions around the world, including Japan, North America, and Asia. In the
future, we will continue to provide a high-quality world that earns the approval of fans.

Movie of Love Live! School Idol project	‌Worldwide Roll Out ofHome Video Game Software
In February 2015, we launched DRAGONBALL XENOVERSE
home video game software for the PS4, and sales havesurpassed 2.5 million units, due in part to the effect of theuptake overseas of the newest platforms, such as the PS4.
In Japan, we will quickly launch IP-themed titles while
tracking changes in the market environment. Overseas,
we will roll out products for multiple platforms worldwide,such as popular series titles. Moving forward, we will
implement finely tuned roll outs in line with customer
characteristics in Japan and overseas, such as launching
new DARK SOULS products overseas.

Cafe & Bar CHARACRO feat. THE IDOLM@STER

	IP-Themed Amusement
Facilities
Facilities that leverage the BANDAI NAMCO Group’s distinctive IP, such as facilities combining IP, merchandise
sales, and eating and drinking, have earned solid popularity. The Amusement Facility Business has become a partof the Network Entertainment SBU, which handles arcade
game machines and prizes. In this way, we have enhanced
our value chain, and moving forward we will strive to achievea recovery in the sales and profits of the Amusement Facility
Business and to record further growth in facilities leverag-DRAGON BALL XENOVERSE

28

ing the BANDAI NAMCO Group’s distinctive IP as themes.

CORPORATE GOVERNANCE

BANDAI NAMCO Holdings’ highest management priority is the provision of benefits to all of its stakeholders,
who support its business activities. We believe that to achieve ongoing growth in enterprise value over the long term,
the continuous 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
Strengthen the Management Oversight Function

Clarify the Responsibilities of Directors

Number of Outside Directors

3 / 10The Term of Directors:

Number of Independent Directors or
Independent Audit & Supervisory Board Members

Number of Outside Audit &Supervisory Board Members

Year or Less

Organization

6

3/4

1

Company with Company Auditors
The Company believes that the auditing system based on the Audit &Supervisory Board, including outside Audit & Supervisory Board
members, is an effective means of implementing the management
oversight function.

General Meeting of Shareholders
Appointment /Dismissal

Board of Directors
10 directors(of whom 3 are outside directors)

Account
Auditing /Reports on
Results

Appointment /Dismissal

Audit & Supervisory Board
Auditing

Appointment /Dismissal /Supervision

4 Audit & Supervisory Board members(of whom 3 are outside Audit & Supervisory Board members)

Appointment /Dismissal

Independent Auditors
Dismissal

Auditing

Representative Directors

Personnel Committee
CORPORATE GOVERNANCE

Reports
Directions
Directions

Reports

Reports

Cooperation

Internal Auditing Division
Committees

SBU Quarterly Report MeetingGroup CSR Committee

Group Management MeetingGroup Risk Compliance Committee

Content Business Strategy
Meeting
Asia Strategy Meeting
Policy Directions

SPECIAL FEATURE: The Evolving IP Axis Strategy

All outside directors and outside Audit & Supervisory Board members meet the “Standards for
the Independence of Outside Directors and Outside Audit & Supervisory Board Members”
established by the Company.

Support

Auditing

Group Information Security Committee

Internal Control Committee
Policy Directions

Reports

BANDAI NAMCO Group Companies

As of June 23, 201529

Messages from Outside Director

The primary role of outside officers is to identify problem areas that are not noticed by those inside
the Company, to point them out, and to act as a restraint against any activities by executives that are
not in the interests of shareholders and other stakeholders. For example, executive compensation isessentially decided by the executives, but through the Personnel Committee and other means, theoutside officers have the important duty of working to prevent “self-dealing” and to foster the provision of appropriate incentives.
Competition is currently intensifying, and we are entering an era in which it might not be possible
for companies to achieve substantial growth without M&A transactions. I am working to provide
opinions regarding corporate valuations and acquisition contracts for various M&A transactions,and to actively make suggestions so that M&A transactions can be utilized appropriately in company
management. Moving forward, I would like to draw on my 28 years of experience in M&A to support
the Group’s business development initiatives. Moreover, as a specialist in buyout investments, I will
strive to make a contribution by leveraging my experience in the management of many companies
and by actively making suggestions to support the dynamic vitality of the BANDAI NAMCO Group.

Nobuo Sayama
Director (Outside)

It is my understanding that the roles of outside officers are to draw on their own knowledge to help
the Company to achieve growth and gains in corporate value by providing advice from a medium- tolong-term viewpoint; to supervise management, including conflicts of interest between the Company
and executives; and to appropriately communicate to the Board of Directors the opinions of minority
shareholders and other stakeholders from a perspective that is independent of management. The
BANDAI NAMCO Group’s free and open culture is reflected in the meetings of the Board of Directors.
The outside officers freely offer their opinions, and the executives respect the opinions of the outside
officers. Accordingly, I believe that the Company has established an environment in which it is easy forthe outside officers to fulfill their responsibilities.
Moving forward, based on the experience and knowledge acquired from more than 30 years ofwork as an attorney, I will continue striving to contribute to the growth of the BANDAI NAMCO Group
from the viewpoint of legal risks in compliance and management decision-making.

Tomohisa Tabuchi
Director (Outside)

I believe that the ultimate aims of outside officers are not only to supervise executives but also to takepart in management from an objective perspective, and thereby contribute to increases in corporate
value itself. I think that the important elements of management are transparency, fairness, and speed,
and the BANDAI NAMCO Group is working to implement management decisions and execution withconsideration for these three perspectives. Moving forward, the development of overseas operations
will be an urgent challenge for the Group. Overseas, the Group has the opportunity to record significant growth by combining its existing strengths, such as its abundant IP and high-potential businesses, and by working to build value.
My experience is in the pharmaceutical industry, and I have not been directly involved with theentertainment industry for an extended period of time, but the essential nature of management does
not change. Leveraging my experience and knowledge as a manager, such as in overseas expansion
initiatives and M&A transactions, I will strive to provide advice and suggestions for the managementof the BANDAI NAMCO Group and to contribute to increases in corporate value.

Yuzuru Matsuda
Director (Outside)30

Messages from Outside Audit & Supervisory Board Members

Corporate governance is said to consist of both proactive governance and defensive governance.
The fundamental role of Audit & Supervisory Board members entails more work of a defensive
nature, but I believe that Audit & Supervisory Board members also play a role in the system thatmakes proactive governance measures possible.
Many corporate activities are closely related to accounting figures. Leveraging my knowledge
as a CPA, I am focusing on how management decision-making is linked to accounting figures,
the nature of the related risks and if they are being considered adequately, and if information
disclosure is appropriate.
I believe that appropriate corporate governance contributes to increases in corporate value.
Moving forward, as a full-time outside Audit & Supervisory Board member, I will strive to fulfill
my duties from an objective viewpoint with consideration for effectively supporting proactive
corporate governance.

Katsuhiko Kohtari
Audit & Supervisory Board Member (Full-time, Outside)

With the establishment of the Corporate Governance Code by the Tokyo Stock Exchange (TSE), the reinforcement of governance is the focus of attention. However, no matter how much people talk about
this issue there is no practical benefit without the true spirit of corporate governance. I believe that
this true spirit comprises two points: the establishment of an environment in which outside officers
can offer opinions in a free and open-minded manner at meetings of the Board of Directors, and theefforts by executives to sincerely do their utmost in providing explanations in response to the questions of outside officers. At BANDAI NAMCO, these two points have been solidly established as traditions since the Company was founded. The outside officers are not deeply versed in the Company’s
daily business operations. However, in my case, based on the knowledge and experience in corporate
matters that I have acquired over many years as an attorney, I believe that I am contributing to governance by keeping a close watch on business execution from the perspectives of appropriateness.

Osamu Sudoh
Audit & Supervisory Board Member (Outside)

the Audit & Supervisory Board, as well as other meetings. Through the discussions at these meetings,
I strive to understand the actual conditions of the Company’s operations. My field of specialty is taxes,
which are connected to a wide range of human activity. In addition, accompanying the globalization of
the Japanese economy, international taxation has also become relevant. Accordingly, I believe that an
approach based on the perspective of taxation will be effective in auditing operations.

CORPORATE GOVERNANCE

As an outside Audit & Supervisory Board member, I attend meetings of the Board of Directors andFurthermore, the duties of an outside Audit & Supervisory Board member are to verify the soundness and legality of operations, not just from the viewpoint of a specialist but also from a third-party
perspective, that is, from the perspective of someone who is not a company insider. With societychanging on a daily basis, the Company faces strict checks in regard to its commitment and ongoing
contributions. Accordingly, the Company needs to work to further enhance its internal systems and toearn the trust of shareholders and other stakeholders.
The Company’s corporate governance system is functioning effectively and compliance has been
secured, and in the future I will do my utmost to further enhance these systems.

Katsuhiko Kamijo
Audit & Supervisory Board Member (Outside)31

Main Top Management Meetings

control systems in the Group, shares information, and conducts inter-

As shown in the table below, the Company holds a variety of top man-nal Group monitoring. The committee also presents internal control

agement meetings and has established a system that facilitates rapidly

system reports, and the Board of Directors makes decisions on funda-

tracking and responding to Group management information.

mental issues.

The Board of Directors has decided fundamental policies regarding

In addition, the Group Information Security Committee has beeninternal control systems as stipulated by the Companies Act. In regard to

established with the objective of decision-making, implementation

the internal control reporting system under the Financial Instruments

reporting, and information sharing in regard to the Group’s informa-and Exchange Act, the Company’s Internal Control Committee formu-tion security activities overall.

lates policies regarding the establishment and evaluation of internal
Meeting Name

Schedule

Agenda / Purpose

Participants

Board of Directors

Monthly andotherwise asneededDecisions / reports on matters stipulated by law, items to be resolved inaccordance with authority standards, reports on the status of operational
execution, reports regarding CSR, crisis management, and complianceDirectors, Audit & Supervisory Board
members, other designatedemployees

SBU Quarterly
Report Meeting

Quarterly

Consolidated numerical reports, SBU reports, other items to be reported

Directors, Audit & Supervisory Board
members, other designatedemployees

Group Management
Meeting

6 times a year

Deliberations regarding issues extending across SBUs, other Groupmanagement issues, strategic deliberations

Directors (excluding outside directors),
other designated employees

Content Business
Strategy Meeting

Quarterly

Sharing of information about SBU initiatives related to the Group’s
important IP

Directors with related responsibilities,
directors from major subsidiaries withrelated responsibilities, other designated employees

Asia Strategy
Meeting

Quarterly

Deliberations regarding issues in executing business strategies, risk
management and medium- to long-term Group regional strategies in Asia

Directors with related responsibilities,
directors from major subsidiaries withrelated responsibilities, other designated employees

Group CSR
Committee

Semiannually

Deliberations and information sharing regarding the Group’s important CSR
strategies, consideration of resolutions, items to be reported, and deliberations
at meetings of the Board of Directors, overall supervision of Group CSR subcommittees, overall supervision of progress of important items for each SBU
and affiliated business company

Directors (excluding outside directors),
other designated employees

Waigaya Meeting

WeeklyWeekly reports regarding the departments for which directors are responsible

Directors (excluding outside directors),
other designated employees

Waigaya Meeting

The Waigaiya Meeting, which convenes once per week, is a meeting of Company leaders where
market and industry trends are shared in a straightforward manner, centered on the Company’s
directors (excluding outside directors). The Company’s part-time directors serve concurrently as
directors of SBU core companies. Accordingly, through the Waigaiya Meeting, the holding company and operating companies can exchange information and BANDAI NAMCO can move quickly
in the rapidly changing entertainment industry.

Outside Directors and Outside Audit & Supervisory
Board Members
Of the Company’s ten directors, three meet the conditions for outsidependent directors or independent Audit & Supervisory Board membersin accordance with TSE regulations.

directors. The Company is working to strengthen the management

The status of audits by internal auditors, audits by the Audit &oversight function. In addition, of the four Audit & Supervisory Board

Supervisory Board members, and audits by the independent auditors

members (including two full-time Audit & Supervisory Board members),

are reported to the Board of Directors. By attending meetings of thethree meet the conditions for outside Audit & Supervisory Board mem-

Board of Directors, the outside directors track the status of these

bers. They work together and monitor the Company’s internal control

audits and work to maintain close ties.

situation on a daily basis.
As described on page 36, the Company has established standards

32

Accordingly, the Company has notified the TSE that they are all inde-

In addition to tracking the status of internal audits reported atmeetings of the Board of Directors, outside Audit & Supervisory Boardfor the independence of outside directors and outside Audit &members track the status of audits by the Audit & Supervisory Board

Supervisory Board members, and outside directors and outside Audit

members at meetings of the Audit & Supervisory Board and maintain& Supervisory Board members are appointed in accordance withcooperative relationships with the internal auditors and the other

those standards. In the Company’s judgment, the outside directors

Audit & Supervisory Board members. In addition, all members of theand outside Audit & Supervisory Board members meet those stan-

Audit & Supervisory Board, including outside Audit & Supervisory

dards, there is no concern that they will have a conflict of interest with

Board members, receive explanations from the independent auditors

general shareholders, and they possess high levels of independence.

of the status of account audits on a quarterly basis. In this way, theytrack the status of these audits and maintain cooperative relation-

departments). In addition, they attend the SBU Quarterly Report

ships with the independent auditors.

Meeting, where reports on the status of the Group’s operations are

Furthermore, through matters brought to the Board of Directors,
outside directors and outside Audit & Supervisory Board members

made; strengthen supervisory and other functions; and provide advice
as needed.

track the status of internal control departments (all of the Company’s

Outside Directors

Nobuo Sayama

Tomohisa Tabuchi

Yuzuru Matsuda

Professor, Graduate School of International
Corporate Strategy (ICS), Hitotsubashi University
Representative Director of Integral Corporation

Partner of STW & Partners
Outside Audit & Supervisory Board Member of
Rakuten Bank, Ltd.
Outside Director of Accordia Golf Co., Ltd.

Head of Kato Memorial Bioscience Foundation
Outside Director of KUBOTA Corporation
Outside Director of JSR Corporation

Reason for appointment: Nobuo Sayama was
appointed due to the Company’s expectation,
based on his extensive experience in corporate management and his profound scholarly
knowledge via his teaching activities in thefield of corporate strategy, that he would
perform the management oversight andcheck functions.

Reason for appointment: Tomohisa Tabuchi
was appointed due to the Company’s expectation,
based on his career over many years as an
attorney-at-law, that he would perform the
management oversight and check functions,principally from the perspective of legal risk.

Reason for appointment: Yuzuru Matsuda
was appointed due to the Company’s expectation, based on his extensive experience incorporate management and his excellent
character and acumen, that he would
strengthen the management oversightand check functions and introduce a broad
managerial perspective.

Katsuhiko Kohtari

Osamu Sudoh

Katsuhiko Kamijo(Full time)

Partner in Sudoh & Takai Law Offices
Outside Director of Rakuten Bank, Ltd.
Outside Director of Accordia Golf Co., Ltd.
Outside Audit & Supervisory Board Member of
MITSUI-SOKO HOLDINGS Co., Ltd.

Professor at Faculty of Law of Teikyo University
Outside Audit & Supervisory Board Member of
HASEKO Corporation

Reason for appointment: Katsuhiko Kohtari
was appointed due to the Company’s expectation, based on his career over many years asa certified public accountant, that he would
utilize in the Company’s auditing systems his
extensive knowledge and experience in areas
related to finance and accounting.

Reason for appointment: Osamu Sudoh wasappointed due to the Company’s expectation,
based on his career over many years as an
attorney-at-law, that he would utilize his
extensive knowledge and experience inlegal matters to strengthen the Company’s
legal systems.

Reason for appointment: Katsuhiko Kamijo
was appointed due to the Company’s expectation, based on his thorough knowledge of tax
affairs, gained over many years, and his
certification as a licensed tax accountant,that he would utilize in the Company’s auditing systems his extensive knowledge andexperience in taxation.

Outside Audit & Supervisory Board Members

Policy Regarding Compensation of Directors and Audit& Supervisory Board Members

framework, and performance-based structure are decided at meet-

The basic policy of the remuneration system for the Company’s direc-

Personnel Committee, of which a majority of the members are outside

tors, excluding outside directors, is to create a remuneration frame-

directors. For the committee’s deliberations, the outside directors arework that promotes the Company’s continuous growth and improves

provided with sufficient information for their judgments, including thethe Company’s corporate value over the medium to long term byreceipt of advice from external specialist organizations when necessary.
To secure the independence of outside directors, the compensa-

ity and transparency so that the Company can adequately fulfill its

tion of outside directors is composed solely of basic compensation.

accountability obligations, and fostering a healthy sense of entrepre-

Audit & Supervisory Board members have the responsibility for auditingneurship in the directors while taking into account the level of remu-business execution for the entire Group, and accordingly the compen-

neration that will enable the Company to secure and retain top-gradesation of Audit & Supervisory Board members is composed solely of

personnel. The same basic policy applies to the directors of the threebasic compensation, with amounts determined in accordance with rank.

CORPORATE GOVERNANCE

promoting the sharing of values with shareholders, ensuring objectiv-

ings of the Board of Directors after the receipt of reports from thecore companies of the Group’s SBUs: Bandai Co., Ltd., BANDAI
NAMCO Games Inc. (currently, BANDAI NAMCO Entertainment Inc.),and BANDAI VISUAL CO., LTD.
From the viewpoint of promoting the sharing of values with shareholders, steadily improving results each fiscal year, and supporting anappropriate level of risk-taking to enhance the Company’s corporate
value over the medium to long term, the specific remuneration framework comprises fixed remuneration consisting of base remuneration

Officer category

Total
Total amount of compensation, etc.,
amount ofby type (Millions of yen)compensation,etc. (Millions
Basic
Stock
of yen)compensation options*
Bonus

Numberof eligible
officers(People)Directors(excluding outside
directors)

391

172

37

181

5

Audit & Supervisory
Board members

and variable remuneration consisting of performance-based bonuses(excluding outside
Audit & Supervisory
Board members)

24

24

−

−

2

and stock compensation-type stock options.

Outside officers

88

88

−

−

8

From the viewpoint of eliciting appropriate participation and advice
from outside directors, the remuneration policy, remuneration* Amount of the stock compensation-type stock options granted on June 5, 2015, thatare expected to be issued as of the end of FY2016.3

33

Compliance and Risk Management
The BANDAI NAMCO Group has formulated standards for compliance

Initiatives Related to Respect for the Viewpoints of
Stakeholders

and instituted a system that appropriately ensures the strict observance of laws and regulations, ethical standards, and internal regulations on a Groupwide basis. Under the Group’s compliance system,
the director in charge of compliance has overall responsibility forcompliance throughout the Group and leads 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 a wide range of risk events, strives to ensure prompt responses
if a risk 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 theevent of the occurrence of a risk event, the Group establishes an
emergency contact network, and in the event of the emergence of risk
event information, including information about violations of laws orRules related to respect for the viewpoints of stakeholders through internal
regulations
To meet the expectations of the Company’s various stakeholders and maximize
corporate value, we have formulated the BANDAI NAMCO Group Compliance
Charter, which stipulates that the Company will respect the viewpoints ofstakeholders.
Implementation of environmental conservation activities and CSR activities
In regard to CSR, we have opened the Groupwide “CSR Initiatives” section on
the Company website. We also hold meetings of the Group CSR Committee(chairperson: president) and the Group CSR Subcommittee, which is a subcommittee of the Group CSR Committee. In these ways, we are implementing
initiatives to strengthen CSR on a Groupwide basis. In addition, we prepare the
BANDAI NAMCO Group’s CSR Report, which is distributed in printed form andis also available on the Company website.
Formulation of policies related to the provision of information to stakeholders
We have formulated an IR policy that is available on our website. This policy
covers such matters as benchmarks for disclosure of information and thestrengthening of IR opportunities.

regulations, such information is immediately reported to the president.The Group is working to minimize any influence on operations
through the implementation of rapid and accurate responses.
In particular, positing the occurrence of a situation that could cause

IR Activities
Aiming to enhance corporate value, BANDAI NAMCO Holdings isdrastic damage to the management of the Group through a major disas-

implementing a variety of IR activities in accordance with the IR policy.

ter or the like, the Group has defined the basic policy for a BusinessIn addition, the status of IR activities and the reactions of investors

Continuity Plan (BCP) for the Group, and is drawing up a BCP for theand analysts are continually communicated as feedback from theGroup and organizing a Business Continuity Management (BCM)

holding company to the SBU core companies and throughout the Group.

system to achieve rapid recovery and restart of operations.
In addition, the Company has formulated the BANDAI NAMCO

Results of Major IR Activities in FY2015.3

Group Compliance Charter and has published the BANDAI NAMCO

BANDAI NAMCO aims to be a highly transparent company that clearlyGroup Compliance Handbook to ensure thorough knowledge of com-

communicates management strategies and business policies topliance throughout the Group. The Group also implements training

shareholders and investors. Accordingly, the Company works toactivities, such as through an education system utilizing the Group’s

enhance opportunities for executives to speak directly to individual

intranet. Furthermore, the presidents of Group operating companies

investors, institutional investors, and securities analysts, such as

submit written oaths pledging strict compliance with the charter.

corporate presentations and results presentations.

Takeover Defenses
At present, the Company has taken no specific measures as takeover
defenses. The Group regards implementing its management andbusiness strategies in accordance with the measures to increase thecorporate value of the Group and aiming to increase the corporate
value of the Group as a whole as a substantial defense against inappropriate takeovers.
That said, since the Group is entrusted by shareholders as the

Results presentations for investors and analysts

2 (219 people)

Mid-term Plan presentations for investors
and analysts

1 (120 people)

Results telephone conferences for investors
and analysts

1 (75 people)

Overseas IR

2

Separate meetings for investors and analysts

297 people(domestic / overseas)

Presentations for individual investors in Japan

6 locations (575 people)

management of the Group, we will study and develop a system of
takeover defenses in anticipation of situations in which an inappropriate entity or person might emerge to have decision-making powerover the Company’s financial and business policies.
In concrete terms, in the event an inappropriate bidder emerges,
the management team will not take steps to guard its own interests
against the takeover offer by the bidder, but will construct a systemthat enables the Company to judge from the perspective of improving
corporate value first. The Company will continue to study takeover
defenses by utilizing stock subscription rights, etc., with a close eyeon legal and social trends.

34

In presentations for investors andanalysts, explanations are provided
directly by presidents of majorGroup companies

Internal Control System
1. ‌Internal Control System: Basic Approach and Status of Implementation(i)	‌Systems to Ensure that the Execution of the Duties by Directors, etc., and Employeesof the Company and Its Subsidiaries Is in Compliance with the Laws and Regulations
and the Articles of Incorporationa.	‌The Company shall set in place the Group’s Corporate Philosophy and the BANDAI
NAMCO Group Compliance Charter, ensure that Directors and employees of theCompany and its subsidiaries are familiar with them, and always pay due attention toensure they carry out their duties lawfully and fairly.
b.	‌Directors of the Company shall report periodically to the Board of Directors on the
structure and operating status of internal control systems.
c.	‌The Company shall install a Director in charge of compliance who is responsible forsupervision of compliance overall based on its compliance regulations, and establish
a structure ensuring that the Company and the entire Group abides by the law,
behaves ethically, and complies with internal regulations.
d.	‌Should violations of compliance or suspicions thereof occur within the Group, theCompany shall immediately convene the Group Risk Compliance Committee with
the Company’s President and Representative Director as its chair to discuss anddecide how the issue should be handled.
e.	‌Overseas, an overseas regional headquarters shall be determined for each region to
manage risk and support compliance.
f.	‌Internal reporting systems including an internal consultation point, an external
consultation point comprising external legal advisors, and the Audit & Supervisory
Board Members hotline, which enables reporting directly delivered to the Audit &Supervisory Board Members, shall be put in place in the Company and its major
subsidiaries.
g.	‌The Internal Auditing Division shall be established independently of the executive
sections in the Company and its major subsidiaries to work towards maintaining theproperness of execution of operations through internal audits.
(ii)	‌Systems for Preserving and Managing Information Related to Directors’ Execution of
Their Dutiesa.	‌The Company shall establish regulations concerning document management andensure (i) the centralized collection and management of minutes of several kindsof meetings, contracts, and other documents, and (ii) appropriate safekeeping andmanagement of important documents including documents circulated for approvalin each department. The Company shall have a system to ensure that Directors andAudit & Supervisory Board Members may peruse those documents at any time.
b.	‌The Company shall establish regulations concerning information security as a partof Group management. These regulations will provide for a system to ensure
appropriate safekeeping and preservation of information.

(iv)	‌Systems to Ensure that Directors, etc., of the Company and Its Subsidiaries Execute
Their Duties Efficientlya.	‌The Company shall assign each subsidiary into strategic business units (SBUs)
categorized by business segment, and appoint a Director and lead company in chargeof each SBU in order to improve efficiency of business operations based on the divisionof duties, chain of command structure, authorities and competencies, decisionmaking frameworks and other regulations regarding structure within the Group.
b.	The Company shall formulate a Mid-term Plan with a period of three business years
for the entire Group and each SBU, and determine the budget for each business year
based on those Mid-term Plans.
(v)	‌Systems Concerning Reporting Matters Regarding Execution of Duties of Directors,
etc., of Subsidiaries to the Companya.	‌The Company shall establish meetings such as the SBU Quarterly Report Meetingand the Group Management Meeting, and put in place a system for reporting inside
the Group and decision-making.

(vii)	‌Matters Regarding Employees Required by Audit & Supervisory Board Members toAssist Their Duties, and Matters Regarding the Independence of such Employees
from the Board of Directorsa.	‌The Company shall provide a speedy response when Audit & Supervisory Board
Members ask the President and Representative Director to provide employees toassist their duties. Where that employee simultaneously works for any other section,
his or her business duties pertaining to the Audit & Supervisory Board Members
shall take priority.
b.	‌The Company shall provide an opportunity for Directors and Audit & Supervisory
Board Members to consult in advance regarding personnel matters relating to such
employees, so as to ensure independence from the Board of Directors.
(viii)	‌Matters Concerning Ensuring the Effectiveness of Instructions to Employees who
Assist the Audit & Supervisory Board Membersa.	‌The Company shall keep Directors and employees thoroughly informed that employees who assist the Audit & Supervisory Board Members in their duties are under thecommand of the Audit & Supervisory Board Members.
(ix)	‌System for Directors, etc., and Employees of the Company and Its Subsidiaries toReport to the Company’s Audit & Supervisory Board Membersa.	‌Directors, etc., and employees of the Company and its subsidiaries shall report to
the Audit & Supervisory Board promptly with regard to matters prescribed by laws
and regulations, other matters likely to have a major impact on the Company and theGroup, and matters related to the current status of internal audits and compliance.
b.	‌Directors, etc., and employees of the Company and its subsidiaries shall report
promptly and appropriately when requested to do so by an Audit & Supervisory
Board Member of the Company regarding the performance of their duties.
c.	‌The Company shall put in place an Audit & Supervisory Board Members Hotline
to allow reports to be made directly to the Company’s Audit & Supervisory Board
Members as an internal reporting system.
(x)	‌System for Ensuring that Persons Making Reports to Audit & Supervisory Board
Members shall not be Treated Disadvantageouslya.	‌The Company shall prohibit the disadvantageous treatment of persons who havereported or consulted with Audit & Supervisory Board Members, and shall state thatclearly in the Group Risk Compliance Regulations and make it thoroughly known to
Directors, etc., and employees of the Company and its subsidiaries.
(xi)	‌Matters Regarding Policies Pertaining to Procedures for Advance Payments or
Reimbursement of Expenses Arising in the Performance of Duties by Audit &Supervisory Board Members and Other Payment of Expenses and Liabilities Arisingin the Performance of Said Dutiesa.	‌The Company shall immediately pay expenses or liabilities where an Audit &Supervisory Board Member has requested advance payments or reimbursement ofexpenses arising in the performance of his or her duties, excluding cases where they
were not considered necessary for the performance of said duties.
(xii)	‌Other Systems to Ensure the Effectiveness of Audits Conducted by the Audit &Supervisory Board Membersa.	‌Directors of the Company shall formulate a system whereby Audit & Supervisory
Board Members can attend important meetings, and ensure that a system exists
whereby they can meet periodically or on an ad hoc basis with Directors and employees, and cooperate with the Internal Audit Division and Accounting Auditors.
b.	‌Subsidiaries of the Company shall install an appropriate number of Audit & Supervisory
Board Members according to their scale, business category, etc., and ensure that
there are systems in place wherein Audit & Supervisory Board Members of subsidiaries report periodically to the Audit & Supervisory Board Members of the Company.

CORPORATE GOVERNANCE(iii)	‌Regulations Concerning Management for Risk of Loss of the Company and Its
Subsidiaries and Other Systemsa.	‌The Company shall establish regulations concerning risk management and compliance as a part of Group management. Throughout the Group, we will work to prevent
risk and to discover risk factors as rapidly as possible.
b.‌	‌When risk arises, the Company shall convene the Group Risk Compliance Committee
without delay to minimize the impact of risk on our business by responding to risk
quickly and in an appropriate manner.
c.	‌Anticipating the occurrence of situations that could cause drastic damage to the
management of the Group through a major disaster or the like, the Group shalldefine the basic policy for a Business Continuity Plan (BCP) for the Group, andformulate a BCP for the Group and organize a Business Continuity Management(BCM) system to achieve rapid recovery and restart of operations. Directors andemployees of the Company and its subsidiaries shall be made aware of this.

(vi)	‌Other Systems to Ensure Proper Business Behavior by the Company and Its Subsidiariesa.	‌The Company shall revise the BANDAI NAMCO Group Compliance Charter as
appropriate in response to revisions to laws and regulations and changes in thesocial context surrounding the Group, and shall ensure that the contents of theCharter are made thoroughly known to Directors, etc., and employees of theCompany and its subsidiaries through distributing the BANDAI NAMCO Group
Compliance Handbook and through training.
b.	‌The Company and its subsidiaries shall endeavour to improve and standardize
business processes considering the importance of effectiveness and efficiency inbusiness operations, and shall evaluate and operate internal controls on financial
reporting based on related laws and regulations, etc.

2. ‌Elimination of Anti-Society Groups: Basic Approach and Status of
Implementation
To meet the expectations of the Company’s various stakeholders and maximize corporate
value, we have formulated the BANDAI NAMCO Group Compliance Charter, which provides
standards for the Group’s activities.
In regard to the rejection of anti-society groups, our approach is as follows: “We will
maintain no ties with and will firmly reject any and all forces and groups that threaten thesafety and order of society.”35

Standards for the Independence of Outside Directors andOutside Audit & Supervisory Board Members

In order for the Outside Directors and Outside Audit & Supervisory Board Members of the Company to be judged
as being independent, such Outside Directors and Outside Audit & Supervisory Board Members must not fallunder any of the following items.
1.	‌Any person who purports to be a major business partner of the Company (including group companies of
the Company; the same applies hereinafter)
2.	‌Any Executive Director, Executive Officer, Manager, or other employee of a company that purports to bea major business partner of the Company
3.	‌Any person who is a major business partner of the Company
4.	‌Any Executive Director, Executive Officer, Manager, or other employee of a company that is a major business
partner of the Company
5.	‌Any attorney-at-law, certified public accountant, certified public tax accountant, consultant, or other expert
who receives monies or other economic benefits above a certain amount from the Company, in addition tohis or her remuneration as a Director or Audit & Supervisory Board Member
6.	‌Any person belonging to a company, association, or other organization such as a law firm, auditing firm, tax
accountant corporation, and consultancy which receives monies or other economic benefits above a certain
amount from the Company
7.	Any person receiving donations or subsidies from the Company above a certain amount8.	‌Any person who is a Board member or other Executive Officer in a company, association, or other organization which receives donations or subsidies from the Company above a certain amount9.	‌If an Executive Director or full-time Audit & Supervisory Board Member for the Company concurrently holds
a position as an Outside Director or Outside Audit & Supervisory Board Member at another company, any
person who is an Executive Director, Executive Officer, Manager, or other employee of that company
10.	‌Any person who has come under one of the categories listed in items 1 through 9 above in the past 5 years
11.	‌If a person coming under one of the categories listed in items 1 through 9 above is an important person, that
person’s spouse or relative within the second degree of kinship12.	‌The spouse or relative within the second degree of kinship of any person who is a Director, Executive Officer,
Manager, or other important employee of the Company or its subsidiaries(Notes) 1. In‌ items 1 and 2, where it reads “any person who purports to be a major business partner of the Company,” this means “any person (orcompany) who has received a payment from the Company 2% or more of its annual consolidated net sales for the most recent business year.”
2. In‌ items 3 and 4, where it reads “any person who is a major business partner of the Company,” this means “any person (or company) who
has paid to the Company an amount 2% or more of the Company’s annual consolidated net sales for the most recent business year, or any
person (or company) who has provided the Company with a loan of an amount 2% or greater of the value of the Company’s consolidated
total assets as of the end of the most recent business year.”
3. In‌ items 5, 7, and 8, where it reads “a certain amount,” this means “¥10 million a year.”
4. In‌ item 6, where it reads “a certain amount,” this means “2% or more of the total net sales for that company, association, or organization
for the most recent business year, or ¥100 million; whichever is greater.”

36

FINANCIAL SECTIONCONTENTS
38 Consolidated Six-Year Financial Summary
39 Financial Review
42 Consolidated Balance Sheets
44 Consolidated Statements of Income andConsolidated Statements of Comprehensive Income

45 Consolidated Statements of Changes in Net Assets
47 Notes to Consolidated Financial Statements
74 Independent Auditors’ Report

FINANCIAL SECTION

46 Consolidated Statements of Cash Flows37

CONSOLIDATED SIX-YEAR FINANCIAL SUMMARYBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

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

2010

2011

2012

2013

2014

2015

Net sales¥378,547¥394,179¥454,211¥487,241¥507,679¥565,486

Gross profit

128,753

139,415

167,503

183,079

190,829

213,112Selling, general and administrative expenses

126,869

123,077

132,896

134,436

146,156

156,791

1,884

16,33834,607

48,64344,67356,321

1,908

16,39934,96049,97347,45759,384(29,929)

1,848

19,30432,38325,05537,589—(4,600)21,551

41,50532,63343,357

Capital expenditures

14,41813,43923,75823,83628,97927,761

Depreciation and amortization

18,98918,001

18,142

20,416

21,72623,712

Cash flows from operating activities

10,582

22,562

39,112

36,411

41,291

50,103

Total assets¥325,936¥308,269¥342,172¥374,203¥405,093¥441,764

Total current assets

217,763

210,934

240,920

264,804

284,398

317,516

Total current liabilities

86,605

86,105

107,946

108,391

120,135

123,136

Total net assets

229,012

213,693

213,126

248,770

267,951

303,513¥(123.98)¥ 7.71¥85.62¥147.40¥114.05¥171.10

24.00

24.00

26.00

45.00

35.00

62.00

Return on equity (ROE)*2 (%)

–12.4

0.8

9.1

14.1

9.7

13.2

Return on assets (ROA)*3 (%)

0.6

5.2

10.7

14.0

12.2

14.0

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

33.5

31.2

29.3

27.6

28.8

27.7

Operating income margin (%)

0.5

4.1

7.6

10.0

8.8

10.0

Net income margin (%)

–7.9

0.5

4.3

6.6

4.9

6.6

Shareholders’ equity ratio (%)

69.5

68.8

61.8

66.0

66.0

68.6

Debt/equity ratio (times)

0.06

0.02

0.09

0.05

0.03

0.01

For the Year:

Operating income
Recurring income*1

Net income (loss)
Comprehensive income

At Year-End:Per Share Data (Yen):
Net income (loss) per share (basic)
Cash dividends

Main Financial Indicators:

Notes:*1 Recurring income is a Japanese accounting term denoting income before extraordinary items.
*2 ROE = Net income (loss) / Average total shareholders’ equity (= Total net assets – Stock acquisition rights – Minority interests)*3 ROA = Recurring income / Average total assets

38

FINANCIAL REVIEWOverview of Performance in the
Fiscal Year Ended March 31, 2015

sales was 62.3%, almost the same as in the previous fiscal year. As a

During this fiscal year, business conditions in Japan followed a course

was 37.7%, almost the same as in the previous fiscal year.

result, gross profit was ¥213,112 million, and the gross profit marginof moderate recovery. However, there was a pullback from theincrease in demand due to the consumption sales tax increase in April

SG&A Expenses

2014. In addition, the yen continued to depreciate and oil prices were

Selling, general and administrative (SG&A) expenses were ¥156,791

marked by ongoing declines. As a result, the outlook for the overall

million (year-on-year increase of 7.3%). However, the ratio of SG&A

economy remained uncertain, which had an impact on personal

expenses to net sales declined to 27.7%, from 28.8% in the previous

consumption. Overseas, in Asia the ASEAN region continued market

fiscal year. Principal items included advertising expenses of ¥41,311

expansion in line with growth in incomes, while conditions in othermillion, directors’ remuneration and employees’ wages of ¥39,200

regions were influenced by sluggish economic growth. In North

million, employees’ retirement and severance benefits of ¥1,984

America, economic conditions and domestic demand showed signs

million, provision for directors’ bonuses of ¥1,242 million, andof a moderate recovery, but in Europe domestic demand was sluggish

research and development expenses of ¥18,759 million.

in certain regions.

Operating Income

In this environment, the BANDAI NAMCO Group (“the Group”) implemented various measures aimed at medium- to long-term growth,

Operating income was ¥56,321 million (year-on-year increase of

focusing on its IP (intellectual property; including intellectual property

26.1%), and the operating income margin increased to 10.0%, fromof characters) strategy, under the concept of “Empower, Gain Momentum,

8.8% in the previous fiscal year.

Accelerate Evolution,” which is the vision of the Group’s three-year
Mid-term Plan, started in April 2012. On the business front, the Toys

Other Income (Loss)and Hobby Business recorded favorable results in Japan with both new

In other income (loss), loss on impairment of fixed assets increased to

IP products and long-established IP products. The Content Business¥2,868 million, from ¥2,003 million in the previous fiscal year. However,registered strong sales of network content and visual and music

gain on sales of investment securities, net increased to ¥500 million,

content, and in Europe and the Americas sales of game softwarefrom ¥11 million in the previous fiscal year, and there were otherwere favorable.

gains of ¥2,243 million. As a result, there was a net other gain of¥163 million.

Net Sales
On a consolidated basis, the Group’s net sales were ¥565,486 million

Net Income(year-on-year increase of 11.4%).

Due primarily to higher profits stemming from increased sales, theGroup recorded net income of ¥37,589 million (year-on-year increase

Cost of Salesof 50.0%). The net income margin was 6.6%, and net income per share

Cost of sales was ¥352,374 million, and the ratio of cost of sales to net

increased to ¥171.10, from ¥114.05 in the previous fiscal year.

Results by Segment

Millions of yen

Millions of yen

Net sales

Segment income (loss)

2015

2014

Year on year

2015

2014

Year on year

Toys and Hobby¥230,919¥186,391¥44,528¥17,040¥10,510¥ 6,530

Content

288,009278,408

9,601

40,92937,2493,680

Amusement Facility

55,53958,200(2,661)(2,288)(898)(1,390)Other

27,00727,351

(344)

1,462

1,646

(184)

As a result, net sales in the Toys and Hobby Business were ¥230,919

In the Toys and Hobby Business, in Japan favorable sales weremillion (year-on-year increase of 23.9%), and segment income wasrecorded by new IP such as Yo-kai Watch, as well as by long-established¥17,040 million (year-on-year increase of 62.1%).

IP, such as Mobile Suit Gundam. In addition, due to cross-functional
efforts implemented across all businesses, favorable sales were regis-

Content Business

tered by long-established IP, such as the KAMEN RIDER series and theIn the Content Business, in Japan key titles in social games andSuper Sentai (Power Rangers) series, as well as by the Aikatsu! IP for

application games for smartphones registered stable sales. In addition,

girls. In addition, the Group strived to broaden the variety of its target

new titles, such as ONE PIECE Treasure Cruise and DRAGON BALL Z

customers by such means as stepping up development of products for

Dokkan Battle, recorded favorable sales. In home video game software,babies and pre-school children, and also for adults, thereby steadilysales declined from the previous fiscal year, when several large titles

moving toward achieving our objective of becoming No. 1 for eachwere launched. In visual and music content, favorable sales weretarget customer and market in Japan by an overwhelming margin.

registered by LoveLive! School idol project, an IP asset for which visual

Overseas, in North America and Europe products in the Power

content and music content were developed in coordination, and Mobile

Rangers series sold steadily, and the newly launched movie IP Big Hero

Suit Gundam UC (Unicorn) episode 7: Over the Rainbow. These products

6 recorded favorable product sales. Nevertheless, results in North

made solid contributions to the Group’s performance. In addition, as aAmerica and Europe were weak overall. In Asia, toys, plastic models,

new outlet for the IP axis strategy the Group aggressively held concerts

and collectible toys for adults enjoyed growing popularity due toand other live events.

FINANCIAL SECTION

Toys and Hobby Businessbusiness developments in conjunction with Japan.

39However, in arcade game machines, despite steady sales of popular

As a result, the shareholders’ equity ratio increased to 68.6%, fromseries titles, the business struggled overall due in large part to the

66.0% at the end of the previous fiscal year. The current ratio*1 was

effects of changes in the market environment.

257.9%, compared with 236.7% at the end of the previous fiscal year;

Overseas, in Europe and the Americas favorable sales were recorded

the quick ratio*2 was 196.1%, compared with 173.1%; and the interest

by DRAGONBALL XENOVERSE, a newly launched game software product,

coverage ratio*3 was 634.2 times, compared with 308.1 times.

and repeat sales of DARK SOULS II, which was released in the previous

Notes:*1 Current ratio: Total current assets / Total current liabilities*2	Quick ratio: (Cash and time deposits + Trade receivables) / Total current liabilities*3 Interest coverage ratio: Cash flows from operating activities / Interest paid

fiscal year, were also favorable.
As a result, net sales in the Content Business were ¥288,009 million(year-on-year increase of 3.4%), and segment income was ¥40,929
million (year-on-year rise of 9.9%).

Amusement Facility BusinessIn the Amusement Facility Business, the Group pushed forward with arange of measures aimed at rebuilding the business, such as strengthening the allocation of store personnel and initiatives to attract
customers. In addition, the Group advanced other measures, such as
developing differentiated facilities that offer the experience of itsdistinctive worldview of specific IPs and concentrating resources onlarge stores. Nonetheless, sales at existing facilities in Japan declined
to 91.2% of the previous fiscal year. Overseas, sales were steady due toefficient operations.
As a result, net sales in the Amusement Facility Business were¥55,539 million (year-on-year decrease of 4.6%), and segment loss
was ¥2,288 million (compared with segment loss of ¥898 million in theprevious fiscal year).

Other Businesses
Other Businesses consist of companies that conduct businesses suchas logistics support, printing, and other kinds of administration andoperational support for each of the Group’s strategic business units:
Toys and Hobby SBU, Content SBU, and Amusement Facility SBU. We
are making efforts to manage such operations related to Groupsupport in an efficient manner.
As a result, net sales in Other Businesses were ¥27,007 million(year-on-year decrease of 1.3%), and segment income was ¥1,462
million (year-on-year decline of 11.2%).

Financial Position
As of March 31, 2015, total assets stood at ¥441,764 million, an
increase of ¥36,671 million from the end of the previous fiscal year.
The main factors were increases of ¥22,138 million in cash and time
deposits and ¥11,288 million in trade receivables.
Total liabilities amounted to ¥138,251 million, an increase of¥1,109 million from the end of the previous fiscal year. This rise wasprincipally attributable to an increase of ¥5,632 million in trade
payables, despite declines, due to repayment, of ¥2,494 million in
short-term borrowings, which are included in other current liabilities,
and of ¥2,321 million in long-term borrowings, which are included inother long-term liabilities.
Total net assets stood at ¥303,513 million, an increase of ¥35,562
million from the end of the previous fiscal year. The main factors wereincreases of ¥29,861 million in retained earnings due to the recordingof net income of ¥37,589 million, ¥1,105 million in deferred gains onhedges, and ¥3,603 million in foreign currency translation adjustments
due to foreign exchange fluctuations, despite cash dividends paid of¥7,691 million.

Cash Flows
As of the end of the fiscal year, cash and cash equivalents (“net cash”)
had increased by ¥19,098 million from the end of the previous fiscal year,to ¥153,765 million. Below is an analysis of cash flows by activities.

Cash Flows from Operating Activities
The amount of net cash provided by operating activities totaled ¥50,103
million (year-on-year increase of 21.3%). Net cash used mainly
included income taxes paid of ¥19,532 million (compared with ¥18,220
million in the previous fiscal year). However, overall, there was a netincrease in net cash due to income before income taxes and minority
interests of ¥56,484 million (compared with ¥42,759 million in theprevious fiscal year) and depreciation and amortization of ¥23,712
million (compared with ¥21,726 million in the previous fiscal year).

Cash Flows from Investing Activities
The amount of net cash used in investing activities totaled ¥19,515
million (year-on-year increase of 35.3%). The main item of net cashused was purchases of property, plant and equipment and intangible
assets totaling ¥16,771 million (compared with ¥15,603 million in theprevious fiscal year).

Cash Flows from Financing Activities
The amount of net cash used in financing activities amounted to¥12,591 million (year-on-year decrease of 16.4%). The main factors fornet cash used were cash dividends paid of ¥7,691 million (comparedwith ¥9,892 million in the previous fiscal year) and repayment of longterm borrowings of ¥4,878 million (compared with ¥6,052 million in theprevious fiscal year).

Basic Policy on the Distribution of Profits and the
Payment of Dividends
The Company positions the return of profits to stockholders as oneof its highest management priorities. The fundamental policy is
to maintain a stable dividend and increase corporate value while
becoming an even more competitive Group, and preserving a soundfinancial position. The Company is maintaining the consolidated
dividend payout ratio at a level of 30%, based on stable annual dividend
payments of ¥24 per share. The Company will add a performancebased dividend of ¥28 per share to the stable annual dividend of ¥24
per share, and will also pay an additional special dividend of ¥10 per
share due to achieving targets of the previous Mid-term Plan (April
2012—March 2015) and because 10 years have passed since theGroup’s establishment, resulting in an annual dividend of ¥62 pershare for this fiscal year. For the fiscal year ending March 31, 2016, theCompany plans to pay the stable dividend portion of ¥24 per share, andthis will be considered by the Company in light of the consolidated
operating results and other factors.

40

In addition, after appropriation of dividends from the consolidated

the Network Entertainment SBU, which will aim to deploy a new

net income for the period, the Company has resolved to attribute abusiness that goes beyond the framework of the existing game

portion of the remaining balance to the acquisition of its own shares,

business and fuses networks and entertainment; and the Visual andwith comprehensive consideration of aspects such as the level of cash

Music Production SBU, which will create IP and strengthen the Group’s

held, operating performance, share price trend, and plan for large-

business deployment as it looks toward new outlets. The former

scale investments.

Amusement Facility SBU will be included in the Network
Entertainment SBU. The SBU does not only develop its value chain soTargets and Management Performance Indicators

as to deploy a unified business; it also aims to create a new business

The Group has adopted return on equity (ROE) as its key managementby combining real-life, face-to-face communications and digital

performance indicator. Looking ahead, the Group will strive to continue

technology.

to secure ROE of 10% or more, despite belonging to a sector subject to

The Group will push ahead with the various strategies in thesevere environmental changes, by aiming to further expand profits

Mid-term Plan, and aims to achieve the following numerical targets forthrough execution of strategies under the Mid-term Plan, as well as

the fiscal year ending March 31, 2018: net sales of ¥600,000 million,

by effectively utilizing shareholders’ equity.

operating income of ¥60,000 million, and ROE of more from 10%.

Outlook for the Fiscal Year Ending March 31, 2016of the fiscal year ending March 31, 2016 are as follows: net sales of

Looking ahead, although there are some bright signs in Japanese¥530,000 million (year-on-year decrease of 6.3%), operating income

economic trends, the business environment is expected to remainof ¥45,000 million (year-on-year decrease of 20.1%), and profit attrib-

beset by uncertainties, including the impact on personal consumption

utable to owners of parent of ¥30,000 million (year-on-year decrease

from uncertainty in the overall economy as well as economic trends inof 20.2%).

In light of the above considerations, the consolidated projections

North America and Europe. Such factors are also expected to have an
impact on the entertainment industry, in which the Group is extensively
involved, resulting in ongoing uncertainty in this business environment.
Facing these circumstances, the Group started a new Mid-term Plan

Consolidated Plan for the Fiscal Year Ending March 31, 2016
Segments
Millions of yen
Net sales

Segment income

Evolution” in April 2015. In the Mid-term Plan, the Group will further

Toys and Hobby¥210,000¥15,000

strengthen the IP axis strategy to expand the value of its IPs throughNetwork Entertainment

300,000

25,000taking advantage of the worldview and unique characteristics of its IPs

Visual and Music Production

35,000

7,000

Other

28,0001,000

with the vision “NEXT STAGE—Empower, Gain Momentum, Accelerate

and providing the best products and services at the best possible
times. In addition, aiming towards growing in the global market, theGroup will further strengthen business development in Asia as an areawith high growth potential.
For its main strategies in the Mid-term Plan, the Group will imple-

Adjustments(43,000)(3,000)Consolidated¥530,000¥45,000

ment business strategies to “Accelerate Evolution in IP Axis Strategy,”

Forward-Looking Statements

region strategies to “Gain Momentum in Global Markets,” andForecasts for the next fiscal year and other future projections in thisfunctional strategies to “Empower and Innovate Business Model.”annual report are based on information available to the Group at the

In its business strategies to “Accelerate Evolution in IP Axis Strategy,”time they were made and are therefore subject to various risks andthe Group will not only cultivate original Group IP by such means as

uncertainties. Actual results therefore may differ materially fromcreating and obtaining IP but also expand new IP business such as live

projections due to a variety of factors. Major factors that could

events, expand its target markets, and strengthen collaboration among

influence results include changes in the Company and the Group’s

its businesses. In its region strategies to “Gain Momentum in Global

operating environment, market trends, and exchange rate fluctuations.

Markets,” the Group will not only maintain its pursuit of becoming No.
business in Asia, where there is a promising outlook for future growth.
In the Americas and Europe, the Group will implement initiatives
aimed at maintaining its business foundations and expanding its
businesses. Furthermore, in its function strategies to “Empower andInnovate Business Model,” the Group will create and cultivate new IP

FINANCIAL SECTION

1 in each of its markets in Japan but also proactively expand its

business for the next generation and push ahead with creating foundations for the implementation of its IP axis strategy in global markets.
In order to carry out these initiatives, the Group changed its organizational structure in April 2015, under which it previously implemented
business strategies with a focus on its array of three businesses: theToys and Hobby SBU, the Content SBU, and the Amusement Facility
SBU. The Group will push ahead with its strategies with a focus on thefollowing three SBUs: the Toys and Hobby SBU, which will aim tostrengthen the IP axis strategy and gain momentum in global markets;

41

CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2014 and 2015

Millions of yen

Thousands of
U.S. dollars (note 3)

2014

2015

2015

¥ 131,404¥ 153,542$ 1,277,707

76,58887,876731,264

AssetsCurrent assets:
Cash and time deposits (notes 4, 12 and 23)
Trade receivables (notes 6 and 12)
Allowance for doubtful receivables
Inventories (note 7)

(595)

(455)

(3,786)45,01442,911

357,086

Deferred tax assets (note 13)

9,914

8,954

74,511Other current assets (notes 4, 5 and 12)

22,073

24,688205,442284,398

317,516

2,642,224

28,56832,856

273,413

47

144

1,198

Deferred tax assets (note 13)

11,351

11,652

96,963

Other investments and assets

19,626

17,082

142,148

		 Total current assets

Investments and other assets:
Investment securities (notes 5 and 12)
Net defined benefit asset (note 11)

Allowance for doubtful receivables(1,015)(1,023)(8,513)

		 Total investments and other assets

58,57760,711

505,209

Buildings and structures

26,76429,468245,219

Amusement facilities and machines

59,88657,070474,911Land

11,63011,95799,501

Property, plant and equipment:

Other property, plant and equipment
		TotalLess accumulated depreciation
		 Net property, plant and equipment

99,419110,724

921,394

197,699

209,219

1,741,025(145,726)(155,958)(1,297,811)

51,97353,261

443,214

10,145

10,27685,512¥ 405,093¥ 441,764$ 3,676,159

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

42

Millions of yen

Thousands of
U.S. dollars (note 3)

2014

2015

2015

¥ 51,625¥ 57,257$  476,467

44,56941,492345,278

Liabilities and net assets
Current liabilities:
Trade payables (notes 10 and 12)
Accrued expenses
Accrued income taxes (notes 12 and 13)

8,828

7,064

58,783

Other current liabilities (notes 9, 12 and 13)

15,113

17,323

144,154

120,135

123,136

1,024,682

Net defined benefit liability (note 11)

8,062

7,999

66,564

Deferred tax liabilities (note 13)

1,044

1,360

11,317

Other long-term liabilities (note 9)

7,901

5,756

47,899

		 Total long-term liabilities

17,007

15,115

125,780

		Total liabilities

137,142

138,251

1,150,462

		 Issued: 222,000,000 shares

10,00010,00083,215Additional paid-in capital

52,24652,247434,776

Retained earnings (note 17)

214,415

244,276

2,032,754(2,391)(2,404)(20,005)

274,270

304,1192,530,740

6,226

6,757

56,229

		 Total current liabilities

Long-term liabilities:

Net assets:
Shareholders’ equity:
Common stock (note 19)
		 Authorized: 1,000,000,000 shares

Treasury stock, at cost; 2,312,098 shares in 2014 and 2,316,797 shares in 2015 (note 19)
		Subtotal
Accumulated other comprehensive income:Unrealized gains or losses on other securities, net of tax (note 5)
Deferred gains or losses on hedges, net of tax

195

1,300

10,818

Revaluation reserve for land, net of tax (note 18)(5,743)(5,695)(47,391)

Foreign currency translation adjustments(5,145)(1,542)(12,832)

Remeasurements of defined benefit plans, net of tax (note 11)(2,282)(2,045)(17,018)(6,749)(1,225)(10,194)

44

44

366

		Subtotal
Subscription rights to shares (note 20)

575

4,785

267,951

303,513

2,525,697

		 Total liabilities and net assets¥405,093¥441,764$3,676,159

FINANCIAL SECTION

386

		 Total net assets

Minority interests

43

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2015

Consolidated Statements of Income
Millions of yen

Net sales

Thousands of
U.S. dollars (note 3)

2014

2015

2015

¥507,679¥565,486$4,705,717

Cost of sales

316,850

352,374

2,932,296

		Gross profit

190,829

213,112

1,773,421

Selling, general and administrative expenses (note 14)

146,156

156,791

1,304,743

		Operating income

44,67356,321

468,678

Interest and dividend income

715

641

5,334

Interest expense

(125)

(74)

(616)

11

500

4,161

Loss on valuation of investment securities

(262)

(137)

(1,140)Gain (loss) on sales and disposal of fixed assets, net

(131)

(142)

(1,182)(2,003)(2,868)(23,866)

Other income (loss):

Gain (loss) on sales of investment securities, net

Loss on impairment of fixed assets (note 8)

(119)

2,243

18,665(1,914)

163

1,356

Income before income taxes and minority interests

42,75956,484470,034

Income taxes (note 13)

17,872

18,656

155,247

Income before minority interests

24,88737,828314,787

Minority interests in income (loss)

(168)

239

1,988

¥ 25,055¥ 37,589$  312,799

Yen

U.S. dollars (note 3)

2014

2015

2015

¥1,217.74¥1,378.77$11.47Basic

114.05171.101.42

Diluted114.03171.08

1.42

35.00

62.00

0.52

Millions of yen

Thousands of
U.S. dollars (note 3)

Other

		Net income

Data per common share (note 16):
Net assets at March 31
Net income:Cash dividends applicable to period (note 17)
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Income before minority interests

2014

2015

2015

¥24,887¥37,828$314,787

Other comprehensive income (note 15):
Unrealized gains or losses on other securities, net of tax (note 5)

987

458

3,811

Deferred gains or losses on hedges, net of tax

(450)

1,093

9,095

Revaluation reserve for land, net of tax (note 18)

—

48

399

7,159

3,599

29,949

—

237

1,972

50

94

784

Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax (note 11)
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income
Comprehensive income

7,746

5,529

46,010¥32,633¥43,357$360,797¥32,670¥43,114$358,775

(37)

243

2,022

Comprehensive income attributable to:
Owners of the parent
Minority interests
See accompanying Notes to Consolidated Financial Statements.

44

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2015

Year ended March 31, 2014
Millions of yen
Shareholders’ equity

Balance at beginningof year

Retainedearnings(note 17)

Accumulated other comprehensive income

Total
Treasury stock shareholders’(note 19)
equityUnrealized
gains orlosses onothersecurities,
net of tax(note 5)

Deferred
gains orlosses onhedges,net of tax

Revaluation
reserve forland,
net of tax(note 18)

Total
Remeasurements accumulated
Foreignothercurrency of defined benefit
translation plans, net of tax comprehensive income(note 11)adjustments

Subscription
rights to
Minoritysharesinterests

Total net
assets atend of year

Commonstock(note 19)

Additional
paid-in
capital¥10,000¥52,246¥199,118¥(2,385)¥258,979¥5,212¥ 642¥(5,609)¥(12,193)¥    —¥(11,948)¥   —¥ 1,739¥248,770

10,00052,246

199,118(2,385)258,979

5,212

642

(5,609)(12,193)—(11,948)—

1,739

248,770Cumulative effects ofchanges in accounting
policies
Restated balance
Cash dividends(9,892)

Net income

25,055Purchase of treasury stockDisposal of treasury stock

0Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is appliedReversal of revaluation
reserve for land

(9,892)(9,892)

25,05525,055

(6)

(6)

(6)

0

0

0

0

0

0

134

134

Net changes of items
other than shareholders'equityBalance at end of year

¥10,000¥52,246¥214,415¥(2,391)¥274,270

(134)

—

(134)

1,014

(447)

—

7,048

(2,282)5,333

44(1,353)

4,024¥6,226¥ 195¥(5,743)¥ (5,145)¥(2,282)¥ (6,749)¥44¥   386¥267,951

Year ended March 31, 2015
Millions of yen
Shareholders’ equity

Balance at beginningof yearCommonstock(note 19)

Additional
paid-in
capitalRetainedearnings(note 17)

¥10,000¥52,246¥214,415

10,00052,246Cumulative effects ofchanges in accounting
policies
Restated balance
Cash dividends
Net income

Total
Treasury stock shareholders’(note 19)
equity¥(2,391)(37)
214,378(7,691)
37,5891Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied¥274,270¥52,247¥244,276

Revaluation
reserve forland,
net of tax(note 18)

¥6,226¥  195¥(5,743)¥(5,145)¥(2,282)¥(6,749)

¥44

¥386

6,226

195

(5,743)(5,145)(2,282)(6,749)

44

386

Total
Remeasurements accumulated
Foreignothercurrency of defined benefit
translation plans, net of tax comprehensive income(note 11)adjustments

Subscription
rights to
Minoritysharesinterests

Total net
assets atend of year

¥267,951

0

0

0

—

—

Net changes of items
other than shareholders'equity¥10,000

Deferred
gains orlosses onhedges,net of tax(13)
1

Reversal of revaluation
reserve for landBalance at end of year

Unrealized
gains orlosses onothersecurities,
net of tax(note 5)(37)274,233(7,691)
37,589(13)
2(2,391)

Purchase of treasury stockDisposal of treasury stock

Accumulated other comprehensive income¥(2,404)¥304,119531¥6,7571,105¥1,30048¥(5,695)

3,603¥(1,542)237¥(2,045)5,524¥(1,225)

—
¥44

189
¥575

(37)
267,914(7,691)
37,589
(13)
2

5,713
¥303,513

Year ended March 31, 2015
Thousands of U.S. dollars (note 3)
Shareholders’ equity

Commonstock(note 19)

Additional
paid-in
capitalRetainedearnings(note 17)

Total
Treasury stock shareholders’(note 19)
equityUnrealized
gains orlosses onothersecurities,
net of tax(note 5)$83,215$434,768$1,784,264$(19,897) $2,282,350$51,810$ 1,623$(47,791)$(42,814)$(18,990)$(56,162)$366$3,212

83,215434,768

51,8101,623(47,791)(42,814)(18,990)(56,162)

366

3,212

Cumulative effects ofchanges in accounting
policies
Restated balance
Cash dividends
Net income(308)
1,783,956(64,001)
312,799(108)
8

Purchase of treasury stock

8

Disposal of treasury stock(19,897)

Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied

0Reversal of revaluation
reserve for land(308)
2,282,042(64,001)
312,799(108)
16$83,215$434,776$2,032,754

Revaluation
reserve forland,
net of tax(note 18)

Total
Remeasurements accumulated
Foreignothercurrency of defined benefit
translation plans, net of tax comprehensive income(note 11)adjustments

Subscription
rights to
Minoritysharesinterests

Total net
assets atend of year

$2,229,766(308)
2,229,458(64,001)
312,799
(108)
16

0

0

—

—

Net changes of items
other than shareholders'equityBalance at end of year

Deferred
gains orlosses onhedges,net of tax$(20,005) $2,530,740

4,419$56,229

9,195$10,818

400$(47,391)

29,982$(12,832)

1,972$(17,018)

45,968$(10,194)

—
$366

1,573
$4,785FINANCIAL SECTION

Balance at beginningof yearAccumulated other comprehensive income

47,541$2,525,697

See accompanying Notes to Consolidated Financial Statements.

45

CONSOLIDATED STATEMENTS OF CASH FLOWSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2015

Millions of yen

Thousands of
U.S. dollars (note 3)

2014

2015

2015

¥   42,759¥56,484$  470,034

Depreciation and amortization

21,72623,712

197,320

Loss on impairment of fixed assets

2,003

2,868

23,866

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

131

142

1,182

Loss on disposal of amusement facilities and machines

579

576

4,793

Loss (gain) on sales of investment securities, net

(11)

(500)

(4,161)

Cash flows from operating activities:
Income before income taxes and minority interests

Loss on valuation of investment securities

262

137

1,140

Decrease (increase) in trade receivables

5,105(9,681)(80,561)

Decrease (increase) in inventories(7,167)

237

1,972

Acquisition of amusement facilities and machines(5,132)(5,233)(43,547)

812

4,290

35,699Other(2,157)(3,958)(32,935)

		Subtotal

Increase (decrease) in trade payables

58,91069,074574,802

Interest and dividends received

735

640

5,326

Interest paid

(134)

(79)

(657)

(18,220)(19,532)(162,536)

41,291

50,103416,935

Income taxes paid
		 Net cash provided by operating activities
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

3,519

(722)

(6,008)(10,415)(11,792)(98,128)

99

84

699

(5,188)(4,979)(41,433)

Purchases of investment securities

(504)

(332)

(2,763)

Sales of investment securities

144

633

5,268

Proceeds from liquidation of subsidiaries

576

—

—

(2,743)(620)(5,159)9——Purchases of shares of subsidiaries
Proceeds from sales of shares of subsidiaries and affiliates
Purchases of investments in subsidiaries and associates—(1,750)(14,563)

Payments for investments in capital of subsidiaries and affiliatesProceeds from purchases of shares of subsidiaries resulting in change in scopeof consolidation
Payments of loans receivable

(300)

—

—

328

—

—

(328)

(796)

(6,624)

Collection of loans receivable

834

238

1,981

Payments of guarantee money deposited

(919)

(829)

(6,899)Collection of guarantee money deposited

689

1,618

13,464

Other

(222)

(268)

(2,230)(14,421)(19,515)(162,395)

315

74

616

		 Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings, net
Proceeds from long-term borrowings

710

—

—

Repayment of long-term borrowings(6,052)(4,878)(40,592)

(129)

(83)

(692)

(6)

(12)

(100)

(9,892)(7,691)(64,001)

Payments of lease obligations
Decrease (increase) in treasury stock, net
Cash dividends paid
Cash dividends paid to minority interests
		 Net cash used in financing activities

(1)

(8)

(12,591)(104,777)

Effect of exchange rate changes on cash and cash equivalents

3,825

1,101

9,162

Net increase (decrease) in cash and cash equivalents

15,62519,098

158,925

Cash and cash equivalents at beginning of year

119,042

134,667

1,120,637

Cash and cash equivalents at end of year (note 4)¥ 134,667¥153,765$1,279,562

See accompanying Notes to Consolidated Financial Statements.

46

(16)
(15,070)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries

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

Ministry of Finance as required by the Financial Instruments andsubsidiaries have prepared their financial statements in accordance

Exchange Act.

with the provisions set forth in the Japanese Financial Instruments andSome supplementary information included in the statutory Japanese-

Exchange Act and its related accounting regulations, and in conformity

language consolidated financial statements that is not required for fairwith accounting principles generally accepted in Japan (Japanese GAAP),

presentation is not presented in the accompanying consolidated finan-

which are different in certain respects as to application and disclo­surecial statements.

requirements of International Financial Reporting Standards (IFRSs).

In preparing the accompanying consolidated financial state­ments,

The accounts of foreign subsidiaries are based on their accounting

certain reclassifications have been made to the con­solidated financial

records maintained in conformity with IFRSs or account­ing principles

statements issued in Japan in order to present them in a form that is

generally accepted in the United States (U.S. GAAP).

more useful to readers outside Japan.

The accompanying consolidated financial statements have been

Certain reclassifications have been made to the prior year’s

prepared and translated into English from the consolidated financial

con­solidated financial statements to conform to the presen­tation usedstatements of the Company prepared in accordance with Japanese

for the fiscal year ended March 31, 2015.

GAAP and filed with the appropriate Local Finance Bureau of the

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

revenue in accordance with “Software Revenue Recognition” of Financial

The accompanying consolidated financial statements include the

Accounting Standards Board (FASB) Accounting Standards Codificationaccounts of the Company and its significant subsidiaries. Consolidation

No. 985-605, treating video game software with online functions asof the remaining subsidiaries would have had no material effect on thesoftware products with multiple-element arrangements. Unless theaccompanying consolidated financial statements. Investments in signifi-

vendor can objectively and reasonably identify the market value of undeliv-

cant affiliates are accounted for using the equity method.

ered elements specified by the vendor, recording of any revenue attribut-

Investments in unconsolidated subsidiaries and certain affiliates

able to video game software is deferred until all the elements are delivered.

other than those accounted for using the equity method are stated atcost. If the equity method had been applied to the investments in these

Accounting for Video Game Software Production Expenses:

companies, there would have been no material effect on the accompa-

A distinctive characteristic of video game software is the process

nying consolidated financial statements.

through which the software is highly integrated with content that cannot

All significant intercompany accounts and transactions have been
eliminated in consolidation.

be separated into identifiable components.
The content is considered to be an important component of each
video game title, which includes the game content and visual/music(b) Cash and Cash Equivalents

data. Once management makes a decision to go forward in distributing

In reporting cash flows, the Company considers cash on hand, demanda title, the Company records the software and content development costs

deposits, and all highly liquid investments with original maturities ofas inventories.

three months or less to be cash and cash equivalents.

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

(c) Foreign Currency Translation(e) Short-Term Investments and Investment Securities

the dates they are transacted, and the gains or losses arising from the

Other securities with market value are principally carried at market

settlement of the related receivables or payables are included in “Other

value. The difference, net of tax, between the acquisition cost and theincome (loss)” in the consolidated statements of income.

carrying amount of other securities with market value is recognizedReceivables and payables denominated in foreign currencies at thein “Unrealized gains or losses on other securities, net of tax” in “Netbalance sheet date are translated at the rates in effect as of the balance

assets” in the consolidated balance sheets until realized. Other securi-

sheet date and the unrealized gains or losses are included in “Other

ties without market value are principally carried at cost. The cost ofincome (loss)” in the consolidated statements of income.

other securities sold is principally computed based on the moving-

The assets and liabilities of foreign consolidated subsidiaries andaverage method. Investments in investment limited partnerships oraffiliates are translated into yen at the rates of exchange in effect atsimilar associations (investments that are deemed to be securities

the balance sheet date. Revenue and expenses of foreign consolidated

under the Financial Instruments and Exchange Act, Article 2, Clause 2)

subsidiaries and affiliates are translated into yen at the average rates

are carried at the net amount proportionate to the Company’s ownershipof exchange during the fiscal year. Gains and losses, resulting from theinterests, based on the most recent financial statements available

translation of foreign currency financial statements are generally

in accordance with the financial reporting date specified in the partner-

excluded from the consolidated statements of income and are included

ship agreement.

FINANCIAL SECTION

Foreign currency transactions are translated into yen at rates in effect at

in “Foreign currency translation adjustments” in “Net assets” in the
consolidated balance sheets.

(f) Allowance for Doubtful Receivables
The allowance for doubtful receivables is provided for possible losses on(d) Accounting Standards for Income and Expenses

unrecoverable receivables. For ordinary receivables, the amount of theVideo Game Software Revenue Recognition:

allowance is based on the historical rate of loss. For receivables from

Consolidated subsidiaries operating in the United States recognize

debtors at risk of bankruptcy and receivables from debtors in47

bankruptcy or under reorganiza­tion, the amount of the allowance is(l) Derivatives and Hedging Activities

based on individually estimated unrecoverable amounts.

The Company and its consolidated subsidiaries use derivative instruments, such as forward foreign exchange contracts and currency option(g) Inventories

contracts, to reduce market risks arising from fluctua­tions in foreign

Domestic Consolidated Subsidiaries:

exchange rates and interest rates. The Company and its consolidated

Inventories are stated at cost determined by the average-cost method.

subsidiaries use these deriva­tive instru­ments solely for the purpose of

The value stated on the balance sheet is calculated by writing down the

reducing the risks resulting from such fluctua­tions to which they arecarrying amount based on declining profitability.

exposed in the course of their ordinary business activi­ties. Accordingly,
the Company and its consolidated subsidiaries do not use derivative

Foreign Consolidated Subsidiaries:
Inventories are stated at the lower of cost, determined prin­cipally by theaverage-cost method, or net realizable value.

instru­ments or other financial instruments for speculative purposes.
The Company and its consolidated subsidiaries’ counterparties forderivative instruments are all highly creditworthy financial institutions
and, therefore, the Company believes that it is exposed to almost no

Both domestic and foreign consolidated subsidiaries state gamecounterparty risk. Derivative transactions are conducted in accordance

software work in process by the specific-cost method. The value statedwith internal rules that specify transaction authority and transaction

on the consolidated balance sheets is calculated by writing down theamount limits.

carrying amount based on declining profitability.

As a general rule, derivative instruments are stated at market value.
For derivative instruments that meet the criteria for hedge accounting,(h) Income Taxes

recognition of unrealized gains or losses is deferred. In cases where

Current income taxes are accounted for based on income. Deferredforward foreign exchange contracts meet certain hedging criteria, theincome taxes are accounted for under the asset and liability method.

hedged receivables and payables are translated at the corresponding

Deferred tax assets and liabilities are recog­nized for future tax conse-

forward foreign exchange contract rate (the “Allocation Method”).

quences attributable to dif­ferences between the financial statement

The Company and its consolidated subsidiaries assess the effective-

carrying amounts of existing assets and liabilities and their respective

ness of hedging transactions from the start of the transaction to thetax bases and operat­ing loss and tax credit carryforwards. Deferred tax

point at which effectiveness is assessed by comparing the cumulative

assets and liabilities are measured using enacted tax rates expected tochanges in the market value or the cumulative changes in the cash

apply to taxable income in the years in which those temporary differ-

flows of the hedged item with the cumulative changes in the market

ences are expected to be recovered or settled. The effect on deferred tax

value or the cumulative changes in the cash flows of the hedging instru-

assets and liabilities of a change in the tax rate is recog­nized in income

ment. In the event that critical terms are the same for the hedging

in the period that includes the enactment date.

instrument and the hedged assets, liabilities, or scheduled transaction,

The Company and some of its domestic consolidated subsidiaries

it is assumed that the hedge is 100% effective, so the assessment of

have been applying the consolidated taxation system.

effectiveness is not performed.

(i) Property, Plant and Equipment

longer applied and the recognition of the gains or losses on the hedge

The Company and Its Domestic Consolidated Subsidiaries:

transaction is no longer deferred.

In the event that a hedge becomes ineffective, hedge accounting is no

Depreciation of property, plant and equipment is principally computedby the declining-balance method based on estimated useful lives. The(m) Provision for Directors’ Bonusesstraight-line method is used for buildings (except for building fixtures)

Accrued bonuses for directors are provided for based on the estimatedacquired since April 1, 1998. The estimated useful lives for Buildings andamounts to be paid in respect of the fiscal year.

structures and Amusement facilities and machines are 3–50 years and
3–15 years, respectively.

(n) Retirement and Severance Benefits
The Company and certain domestic consolidated subsidiaries have

Foreign Consolidated Subsidiaries:

established a defined benefit corporate pension plan, a defined

Depreciation of property, plant and equipment is principally computed

benefit retirement lump-sum benefit system plan, and a definedby the straight-line method based on estimated useful lives. The

contribution pension plan. Other domestic consolidated subsidiaries

estimated useful lives for Buildings and structures and Amusement(excluding domestic consolidated subsidiaries with no retirement

facilities and machines are 5–50 years and 3–7 years, respectively.

benefit system) have established a defined benefit corporate pension
plan, a defined benefit retirement lump-sum benefit system, and(j) Intangible Assets

defined benefit comprehensive employee pension funds. Certain

Amortization of intangible assets is computed by the straight-line

consolidated subsidiaries have established a defined contribution

method based on estimated useful lives. Software for internal use ispension plan and a defined contribution smaller corporate retirement

amortized over 1–5 years.

allowance mutual aid system. Certain foreign consolidated subsidiaries

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

have established defined benefit pension plans, retirement lump-sum
benefit systems, and defined contribution pension plans. Moreover,(k) Leased Assets
Depreciation of leased assets is computed by the straight-line method
over the period of the lease with a residual value of zero.

additional benefits may be paid at retirement.
In calculating the retirement benefit obligations of certain consolidated subsidiaries, the benefit formula basis is used to attributeexpected benefit payments to the period extending up to the end of thecurrent fiscal year. Prior service costs are amortized from the time theyaccrue by the straight-line method for a certain number of years (1048years) within employees’ average remaining years of service. Actuarial(s) Accounting Standards Issued But Not Yet Adopted

gains or losses are amortized from the consolidated fiscal year following

Revised Accounting Standard for Business Combinations

the year in which the gain or loss is incurred by the straight-line method
for a certain number of years (9–19 years) not longer than employees’
average remaining years of service. The Company and certain consolidated subsidiaries use a simplified method in calculating net defined(ASBJ Statement No. 21, September 13, 2013)
Revised Accounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22, September 13, 2013)
Revised Accounting Standard for Business Divestitures

benefit asset, net defined benefit liability, and periodic pension cost

(ASBJ Statement No. 7, September 13, 2013)

under which retirement benefit obligations are principally based on

Revised Accounting Standard for Earnings Per Shareaccrued benefits at the end of the year.
The Company and its consolidated domestic subsidiaries adopted
article 35 of the “Accounting Standard for Retirement Benefits” (ASBJ
Statement No. 26, May 17, 2012 (hereinafter, “Statement No. 26”)) andarticle 67 of the “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, May 17, 2012 (hereinafter, “Guidance(ASBJ Statement No. 2, September 13, 2013)
Revised Guidance on Accounting Standard for Business Combinations
and Business Divestitures(ASBJ Guidance No. 10, September 13, 2013)
Revised Guidance on Accounting Standard for Earnings Per Share(ASBJ Guidance No. 4, September 13, 2013)

No. 25”)) from the current fiscal year, and have changed the determination of retirement benefit obligations and current service costs. In

In accordance with the above revised accounting standards, from theaddition, the Company and its domestic consolidated subsidiaries have

beginning of the fiscal year ending March 31, 2016, the Company ischanged the method of attributing expected benefit to periods from theapplying the revisions for the accounting treatment for changes instraight-line basis to a benefit formula basis and determining theparent company’s ownership of a subsidiary in cases where the parent

discount rates from that determined based on bonds with a maturity

company retains control of the subsidiary through an additional purchaseperiod approximate to the expected average remaining working lives ofof shares of the subsidiary, accounting treatment of acquisition-related

employees to one that uses a single weighted average discount ratecosts, change in presentation of net income and change from minority

reflecting the estimated timing of retirement benefit payment and theinterests to non-controlling interests, and approach to confirmation of

estimated amount of each retirement benefit payment.

the provisional accounting treatment. The Company plans to apply the

In accordance with article 37 of Statement No.26, the effect ofrevised approach to confirmation of the provisional accounting treatmentchanging the determination of retirement benefit obligations andfor business combinations occurring at or after the beginning of thecurrent service costs has been recognized in retained earnings at the

fiscal year ending March 31, 2016. The impact of the application of these

beginning of the current fiscal year.

accounting standards is being evaluated at the time of preparation of

As a result of this application, as of the beginning of this consolidated

these consolidated financial statements.

fiscal year, net defined benefit liability increased by ¥47 million ($391
thousand) and retained earnings decreased by ¥37 million ($308(t) Notes to Changes in Method of Presentation

thousand). The effect of this application on operating income, recurring

Consolidated Balance Sheets:

income, and income before income taxes and minority interests during

In the fiscal year ended March 31, 2014, “short-term investments” hadthis consolidated fiscal year is immaterial.

been presented separately under “current assets,” but due to a decline

There has also been an immaterial effect on net income per shareand net income per share (diluted).

in importance, in the fiscal year ended March 31, 2015 short-term
investments are included in “other current assets” under “current
assets.” To reflect this change in the method of presentation, the consol-(o) Provision for Losses from Business Restructuringidated financial statements for the fiscal year ended March 31, 2014

Provision for losses from business restructuring is provided based on

have been reclassified.

the estimated losses to be incurred on restructuring of operations.

As a result, in the consolidated financial statements for the fiscal year
ended March 31, 2014 “short-term investments” of ¥4,423 million and“other current assets” of ¥17,650 million that had been presented in

The Company and its consolidated subsidiaries provide for losses on“current assets” have been reclassified as “other current assets”

returned goods after the end of the fiscal year based on historicof ¥22,073 million.

experience.
In the fiscal year ended March 31, 2014, “short-term borrowings” had(q) Appropriation of Retained Earnings

been presented separately under “current liabilities,” but due to a

Retained earnings with respect to a given financial period are appropri-

decline in importance, in the fiscal year ended March 31, 2015 short-

ated by resolution of the shareholders at a general meeting to be heldterm borrowings are included in “other current liabilities” undersubsequent to the close of such financial period. The accounts for that“current liabilities.” To reflect this change in the method of presentation,

period do not, therefore, reflect such appropriations.

the consolidated financial statements for the fiscal year ended March 31,

FINANCIAL SECTION(p) Provision for Sales Returns

2014 have been reclassified.
(r) Data per Common Share

As a result, in the consolidated financial statements for the fiscal year

In computing basic net income per common share, the average number

ended March 31, 2014 “short-term borrowings” of ¥5,502 million andof shares outstanding during each year has been used. Diluted net“other current liabilities” of ¥9,611 million that had been presented inincome per common share assumes the dilution that could occur if“current liabilities” have been reclassified as “other current liabilities”

securities or other contracts to issue common stock were exercised orof ¥15,113 million.

converted into common stock, or resulted in issuance of common stock.
Cash dividends per common share are computed based on dividends
declared with respect to the income for the year.

49

3 Financial Statement Translation
The consolidated financial statements are expressed in yen. However, solely for the convenience of the reader, the consolidated financial statements asof and for the fiscal year ended March 31, 2015 have been translated into U.S. dollars at the rate of ¥120.17=U.S.$1, the approximate exchange rate on
the Tokyo Foreign Exchange Market on March 31, 2015.
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, 2014 and 2015 between the amounts shown in the consolidated balance sheets andthe consolidated statements of cash flows are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits

2014

2015

2015

¥131,404¥153,542$1,277,707

Short-term investments included in other current assets under current assets

4,423

2,164

18,008Time deposits with maturities in excess of three months(1,160)(1,941)(16,153)¥134,667¥153,765$1,279,562

Millions of yen

Thousands of
U.S. dollars

Cash and cash equivalents

5 Short-Term Investments and Investment Securities
Short-term investments and investment securities as of March 31, 2014 and 2015 are summarized as follows:

Other securities with market value

2014

2015

2015

¥19,983¥18,745$155,987

Other securities without market value

2,466

2,420

20,138Investments in non-consolidated subsidiaries and affiliated companies

10,46913,443111,867

Contributions to investment partnerships
Total of short-term investments and investment securities

73

411

3,420

¥32,991¥35,019$291,412

The original cost, carrying amount (market value), and gross unrealized holding gain (loss) for other securities with market value as of March 31, 2014
and 2015 are summarized as follows:
Millions of yen

2014
Gross unrealized Gross unrealized Carrying amount
Original cost
holding gain
holding loss
(market value)

Other securities with market value:
Equity securities¥ 7,740¥7,821¥ (1)¥15,560

Other

4,423

—

—

4,423

		Total¥12,163¥7,821¥ (1)¥19,983

Millions of yen

2015
Gross unrealized Gross unrealized Carrying amount
Original cost
holding gain
holding loss
(market value)

Other securities with market value:50

Equity securities¥7,659¥8,923

¥ (1)

Other

2,164

—

—

¥16,5812,164

		Total¥9,823¥8,923¥ (1)¥18,745

Thousands of U.S. dollars

2015
Gross unrealized Gross unrealized Carrying amount
Original cost
holding gain
holding loss
(market value)

Other securities with market value:
Equity securities$63,735$74,253

$ (8)

Other

18,008——$137,980
18,008

		Total$81,743$74,253$ (8)$155,988

The following is a summary of the carrying amount of other securities without market value as of March 31, 2014 and 2015:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Carrying amount

Carrying amount

Carrying amount

Other securities without market value:
Unlisted securities
		Total¥2,466¥2,420$20,138¥2,466¥2,420$20,138

Proceeds and gross realized gains and losses from the sales of other securities in the fiscal years ended March 31, 2014 and 2015 are as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥121

¥582

$4,844

23

51

424

¥144

¥633

$5,268Gross realized gains from the sales of other securities

11

511

4,252

Gross realized losses from the sales of other securities

—

10

83

Millions of yen

Thousands of
U.S. dollars

Equity securities
Other
Proceeds from the sales of other securities

6 Trade Receivables
Trade receivables as of March 31, 2014 and 2015 are summarized as follows:

2014

2015

2015

Notes receivable¥ 5,641¥ 5,190$ 43,189

Accounts receivable–trade70,924

82,672687,958

Lease receivables and investment assets
		Total

23

14

117

¥76,588¥87,876$731,264

Millions of yen

Thousands of
U.S. dollars

7 Inventories

2014

2015

2015

Finished goods and merchandise¥15,277¥14,563$121,187

Work in process

23,27423,183

192,918

Raw materials and supplies

6,463

5,165

42,981¥45,014¥42,911$357,086

		Total

FINANCIAL SECTION

Inventories as of March 31, 2014 and 2015 are summarized as follows:51

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 thesmallest 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 of reduction
recorded as an impairment loss in “Other income (loss)” for the fiscal years ended March 31, 2014 and 2015 are as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥  208¥   —$     —

Strategic business unit

Location

Items

Classification

Toys and Hobby

Fukuoka City, Fukuoka (note 5)

Business assets

Land
Buildings and structures

14

—

—

Osaka City, Osaka and others(note 1)Business assets

Buildings and structures

51

—

—

Other property, plant and equipment

4

—

—

Intangible assets

2

—

—

Buildings and structures

18

—

—

Intangible assets

2

—

—

Other property, plant and equipment

0

—

—

Amusement facilities and machines

619

—

—

Fukuoka City, Fukuoka andothers (note 4)

560

—

—

Kawasaki City, Kanagawa andothers (note 3)

518

—

—

Buildings and structures

1

—

—

Other property, plant and equipment

1

—

—

Other property, plant and equipment

5

—

—

Content

Shibuya-ku, Tokyo (note 4)

Amusement Facility Osaka City, Osaka and others(note 1)

Other
Corporate(Common)Toys and
Hobby

Content

Amusement
Facility

Corporate(Common)		TotalSendai City, Miyagi (note 1)
Yokohama City, Kanagawa andothers (note 3)

Assets scheduled for
disposalAmusement facilities

Business assets
Operational facilities

Osaka City, Osaka (note 1)

Business assets

Intangible assets

—

1

8

Chiba City, Chiba and others(note 3)

Assets scheduled for
disposal

Buildings and structures

—

85

707

Other property, plant and equipment

—

13

108

Shinagawa-ku, Tokyo andothers (note 3)

Assets scheduled for
disposal

Buildings and structures

—

1,157

9,628

Other property, plant and equipment

—

78

649

Shinagawa-ku, Tokyo (note 2)

Business assets

Other property, plant and equipment

—

181

1,506

Toshima-ku, Tokyo and others(note 1)

Amusement facilities

Amusement facilities and machines

—

1,027

8,546

Intangible assets

—

0

2

Other investments and assets

—

28

232

Chiba City, Chiba and others(note 4)

Amusement facilities and machines

—

37

308

Other investments and assets

—

0

1

Fujimi City, Saitama (note 3)

Amusement facilities and machines

—

19

158

Buildings and structures

—

10

83

Other property, plant and equipment

—

3

25

Buildings and structures

—

126

1,048

Ota-ku, Tokyo (note 3)

Assets scheduled for
disposal

Shinagawa-ku, Tokyo (note 3)

Operational facilities

Other property, plant and equipment

—

103

857

¥2,003¥2,868$23,866

Notes: 1. Impairment loss was recorded because it was forecast that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. In addition, theseassets were determined to have no market value.
		
2. Impairment loss was recorded because it was forecast 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, but these cash flows were not discounted because the expected period of use is short.
		
3. Impairment loss was recorded on these fixed assets, for which no future use is anticipated. In addition, these assets were determined to have no market value.
		
4. Impairment loss was recorded because it was judged that the recoverable amount of these fixed assets had decreased substantially due to the decision to close the facility. In addition, theseassets were determined to have no market value.
		
5. Impairment loss was recorded due to the continuous decline of land price. The recoverable amount was measured based on the estimated net selling price, which was assessed based on its
officially published land price.

52

9 Borrowings and Lease Obligations
Borrowings and lease obligations as of March 31, 2014 and 2015 are summarized as follows:
Millions of yen

2014
Carrying
amountWeighted averageinterest rate (%)

Carrying
amountThousands of
U.S. dollars

2015

2015

Weighted averageinterest rate (%)

Carrying
amountShort-term borrowings¥  7001.18¥  762

0.93$ 6,341

Long-term borrowings due within one year

4,802

0.65

2,245

0.66

18,682

51

8.33

47

10.73

391

3,588

0.68

1,268

0.64

10,552

44

8.39

48

6.19

399

¥9,185—¥4,370—$36,365

Lease obligations due within one year
Long-term borrowings (Less current portion)
Lease obligations (Less current portion)
Total

Note: The terms of the Company’s major borrowings include restrictive financial covenants. In regard to the details of these financial covenants, see Note “17 Retained Earnings and Dividends.”

The aggregate annual maturities of long-term borrowings and lease obligations outstanding as of March 31, 2015 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2016¥2,292$19,073

2017

1,258

10,468

2018

33

275

2019

24

200

2020

1

8

¥3,608$30,024

Millions of yen

Thousands of
U.S. dollars

Total

10 Trade Payables
Trade payables as of March 31, 2014 and 2015 are summarized as follows:

2014

2015

2015

Notes payable¥ 9,160¥13,921$115,845

Accounts payable–trade42,46543,336360,622¥51,625¥57,257$476,467

Total

FINANCIAL SECTION

53

11 Retirement and Severance Benefits
1. Defined benefit plans(a) For the fiscal years ended March 31, 2014 and 2015, the reconciliation of the beginning and ending balances of retirement benefit obligations is asfollows (excluding plans for which the simplified method is applied):
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥17,041¥17,730$147,541

—

47

391

Restated balance

17,041

17,777

147,932

Service cost

1,159

1,136

9,454

Interest cost

189

181

1,506

2

(244)

(2,030)Retirement benefits paid

(722)

(926)

(7,706)

Prior service costs incurred

61

10

83

¥17,730¥17,934$149,239

Beginning balance of retirement benefit obligations
Cumulative effects of changes in accounting policies

Actuarial gains or losses incurredEnding balance of retirement benefit obligations(b) For the fiscal years ended March 31, 2014 and 2015, the reconciliation of the beginning and ending balances of plan assets is as follows (excluding
plans for which the simplified method is applied):
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥10,031¥10,582$88,059

Expected rate of return on assets

170

241

2,005

Actuarial gains or losses incurred

96

(70)

(583)

Contributions to plan from employer

970

1,105

9,196

Retirement benefits paid

(685)

(834)

(6,940)¥10,582¥11,024$91,737

Beginning balance of plan assets

Ending balance of plan assets(c) For the fiscal years ended March 31, 2014 and 2015, the reconciliation of the beginning and ending balances of net defined benefit liability and net
defined benefit asset for plans using the simplified method is as follows:
Millions of yen

2014

2015

2015

¥718

¥ 868

$ 7,223

Retirement benefit expenses

171

285

2,372

Retirement benefits paid

(70)

(61)

(508)

Contributions to plan from employer

(98)

(152)

(1,265)

Beginning balance of net defined benefit liability and net defined benefit asset

Other
Ending balance of net defined benefit liability and net defined benefit asset

54

Thousands of
U.S. dollars

147

6

50

¥868

¥ 946

$ 7,872

(d) As of March 31, 2014 and 2015, the reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined benefit
liability and net defined benefit asset recorded on the consolidated balance sheets is as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Retirement benefit obligations of funded plans¥ 18,604¥ 19,274$ 160,390

Plan assets(11,702)(12,567)(104,577)

6,902

6,707

55,813Retirement benefit obligations of non-funded plans

1,113

1,148

9,553

Net amount of liabilities and assets recorded on consolidated balance sheet

8,015

7,855

65,366

Net defined benefit liability

8,062

7,999

66,564

Net defined benefit asset

(47)

(144)

(1,198)¥   8,015¥   7,855$   65,366

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

$ 9,454

Net amount of liabilities and assets recorded on consolidated balance sheet(e) For the fiscal years ended March 31, 2014 and 2015, the breakdown of retirement benefit expenses is as follows:

Service cost

¥1,159¥1,136

Interest cost

189

181

1,506

Expected rate of return on assets

(170)

(241)

(2,005)

Amortization of actuarial gains/losses

440

338

2,812

Amortization of prior service cost(36)  (22)  (184)Retirement benefit expenses calculated using the simplified method

171

285

2,372

Retirement benefit expenses related to defined benefit plans

1,753

1,677

13,955

Other (note)

1,116

418

3,479

Total retirement benefit expenses¥2,869¥2,095$17,434

Note: In the fiscal year ended March 31, 2014, the following extra retirement payments were recorded: ¥642 million in “Selling, general and administrative expenses” and ¥474 million in “Other income(loss).” In the fiscal year ended March 31, 2015, the following extra retirement payments were recorded: ¥369 million ($3,071 thousand) in “Selling, general and administrative expenses” and ¥49
million ($408 thousand) in “Other income (loss).”(f) For the fiscal years ended March 31, 2014 and 2015, the breakdown of items recorded in remeasurements of defined benefit plans (before tax effect) is
as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Prior service costs¥—¥ (32)$ (266)

Actuarial gains or losses

—

512

4,260

¥—

¥480

$3,994Total

is as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Unrecognized prior service costs¥    (54)¥   (86)$   (716)

Unrecognized actuarial gains or losses(3,412)(2,900)(24,132)¥(3,466)¥(2,986)$(24,848)

Total

FINANCIAL SECTION(g) As of March 31, 2014 and 2015, the breakdown of items recorded in cumulative amount of remeasurements of defined benefit plans (before tax effect)55

(h) As of March 31, 2014 and 2015, the major categories of plan assets as a percentage of total plan assets are as follows:
2014

2015

Bonds

30%

33%

Equities

24

24Life insurance general account

36

34

Other

10

9

100%

100%

Total
(i) For the fiscal years ended March 31, 2014 and 2015, the principal actuarial assumptions are as follows:

2015

2014

Discount rate

0.60%~1.40%

0.50%~1.30%

Long-term expected rate of return on assets

1.65%~2.50%

2.26%~2.50%

Method of determining long-term expected rate of return on assets

To determine the long-term expected rate of returnon plan assets, reference was made to the current andexpected future allocations of plan assets and to thecurrent and expected future long-term rate of returns
on the various assets that make up plan assets.

Salary increase rate

2.61%~5.12%

2.61%~5.12%

2. Defined contribution plans
For the fiscal years ended March 31, 2014 and 2015, the required contributions to defined contributions plans for the Company and consolidated subsidiaries was as follows:

Required contributions to defined contribution plans

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥469

¥484

$4,028

3. Multi-employer plans
For the fiscal years ended March 31, 2014 and 2015, the required contributions of certain subsidiaries to multi-employer plans, for which the accounting
treatment is the same as defined contribution plans, are as follows:

Required contributions to multi-employer plans

56

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥6

¥5

$42

12 Financial Instruments
1. Financial instruments

Trade payables and accrued income taxes are exposed to liquidity(1) Policy for financial instrumentsrisk. The Company and its consolidated subsidiaries manage this risk

The Company and its consolidated subsidiaries manage funds by means

through the formulation and revision of monthly funding plans for theof highly secure financial instruments only and procures funds throughCompany and its consolidated subsidiaries.

borrowing from banks and other methods, such as issuing corporate bonds.

Derivative transactions are used for hedging purposes. With regards

The Company and its consolidated subsidiaries utilize derivatives toto hedging methods and hedged items, hedging policies, and methods

hedge the risks noted below and do not engage in speculative transactions.

of assessing the effectiveness of hedging transactions, for which hedge
accounting is applied, please refer to Note “2 Summary of Significant(2) Types of financial instruments and related risks

Accounting Policies—(l) Derivatives and Hedging Activities.”

With regard to credit risk posed by customers with respect to trade

Derivative transactions are executed and managed according toreceivables, the Company and its consolidated subsidiaries manageinternal rules that determine trading authority and limits on amounts

balance by counterparty and due date, and credit information on major

traded. Derivatives are used in ways that minimize credit risk,

customers is updated at least once a year to minimize such credit risk.

and thus transactions are carried out only with highly creditworthy

The Company and its consolidated subsidiaries have a system forfinancial institutions.

immediately sharing within the Company and its consolidated subsidiaries adverse credit and other information regarding counterparties inthe event that such information is received.
As of March 31, 2014 and 2015, designated large customers were(3) Supplementary explanation on the market value offinancial instruments
The market value of financial instruments includes, in addition tocounterparties for 14.7% and 13.0% of trade receivables, respectively.

the value determined based on market prices, valuations calculated on

Receivables denominated in foreign currencies arising as a result ofa reasonable basis if no market price is available. However, as certain

the fact that the Company and its consolidated subsidiaries conductvariables are used for these calculations, the result of such calculations

business on a global basis are subject to foreign exchange rate fluctua-

may vary if different assumptions are used.

tion risk. The Company and its consolidated subsidiaries manage

The contract amounts of derivative transactions in Note “22 Foreignbalances by counterparty and currency, and in addition the Company

Exchange Risk Management and Interest Rate Risk Management”

and its consolidated subsidiaries track market trends and, as necessary,

should not be considered indicative of the market risk associated withutilize forward foreign exchange contracts for hedging.

the derivative financial instruments.

Short-term investments and investment securities are principallymoney market funds and the shares of companies with which theCompany has a business relationship. These investments are exposedto the risk of fluctuations in market prices. The market price isconfirmed at least once per quarter, and the holdings are reevaluatedonce per year with consideration of market conditions and relationships
with counterparties.
All trade payables substantially 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 samemanner 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 and currency
FINANCIAL SECTION

option contracts for hedging.

57

2. Market value of financial instruments
The carrying amounts of financial instruments as stated in the consolidated balance sheets, their market values as of March 31, 2014 and 2015, and thedifferences between carrying amounts and market values are as stated below. This table does not include assets for which it was judged extremely difficult to assess the market value (Note 2 below).
Millions of yen(1) Cash and time
deposits(2) Trade receivables(3) Short-term
investments andinvestment securities

Carrying
amountMarket value¥131,404
76,588

Thousands of U.S. dollars

2015

2014
Difference

Carrying
amountMarket value¥131,404¥   —¥153,542

76,588—87,8762015

Difference

Carrying
amountMarket value

Difference¥153,542¥     —

$1,277,707$1,277,707$    —

87,876—731,264

731,264—

28,38230,363

1,981

27,94135,074

7,133

232,512291,869

59,357

		Total assets¥236,374¥238,355¥1,981¥269,359¥276,492¥7,133$2,241,483$2,300,840$59,357(1) Trade payables¥ 51,625¥ 51,625¥     —

¥ 57,257¥ 57,257¥     —$  476,467$  476,467$    —

8,828

8,828

—

7,064

7,064

—

58,78358,783—¥ 60,453¥ 60,453¥     —

¥ 64,321¥ 64,321¥     —$  535,250$  535,250$    —¥    351¥    351¥     —¥  2,075¥  2,075¥     —$   17,267$   17,267$    —(2) Accrued income taxes
		Total liabilities
Derivative financial
instruments** 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 market value of financial instruments and derivative transactions
		
Assets		(1) Cash and time deposits, and (2) Trade receivables
			 Since these assets will be settled within a short period of time, their market values are almost identical with the carrying amount.
		(3) Short-term investments and investment securities
			Money Management Funds are settled on a short-term basis, and accordingly the market value is nearly equivalent to the carrying amount, so the carrying amount is used as the market
value. With regard to short-term investments and investment securities by holding purpose, please refer to Note “5 Short-Term Investments and Investment Securities” in the Notes toConsolidated Financial Statements.
		Liabilities
		(1) Trade payables, and (2) Accrued income taxes
			 Since these assets are readily convertible into cash, their market values are almost identical with the carrying amount.
		
Derivative financial instruments
		 Please refer to Note “22 Foreign Exchange Risk Management and Interest Rate Risk Management” in the Notes to Consolidated Financial Statements.
2. Financial instruments for which market value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2014

2015

2015

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥2,466¥2,420$20,138

Stocks of affiliated companies (unlisted stocks)

2,070

4,246

35,333

73

411

3,420

Contributions to investment partnerships

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

Cash and time
deposits
Trade receivables
Total

58

Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥131,404

¥  —

¥—

¥—

Thousands of U.S. dollars

2015

2014
Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥153,440¥   102

¥—

¥—

2015
Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years$1,276,858$   849$—$—

76,044544——

86,449

1,427

—

—

719,389

11,875——¥207,448

¥544

¥—

¥—

¥239,889¥1,529¥—¥—$1,996,247$12,724$—$—

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 38.0% for the fiscal year ended March 31, 2014 and 35.6% for the fiscal year ended
March 31, 2015.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2014 and 2015 consist of
the following:
Millions of yen

Income taxes–current
Income taxes–deferred		TotalThousands of
U.S. dollars

2014

2015

2015

¥19,194¥18,813$156,553(1,322)(157)(1,306)¥17,872¥18,656$155,247

Reconciliation of the normal tax rate and the effective tax rate as a percentage of income before income taxes and minority interests for the fiscal
years ended March 31, 2014 and 2015 is as follows:
Normal tax rate

2014

2015

38.0%

35.6%

Entertainment expenses not deductible for tax purposes

0.9

0.5

Corporate inhabitant tax on per capita basis

0.4

0.4

Directors’ bonuses

1.1

0.7

Effect of changes in tax rates on net deferred tax assets

1.9

2.7

Change in valuation allowance for deferred tax assets

5.9

(0.1)

Differences of tax rates of foreign consolidated subsidiaries

(1.0)

(0.2)

Differences due to correction of transfer pricing

—

(1.5)

Tax credit for research and development expenses

(4.7)

(5.0)

Amortization of goodwill

0.2

0.1

Tax credits for salary growth

(0.9)

—

Other

0.0

(0.2)

Effective tax rate

41.8%

33.0%

FINANCIAL SECTION

59

Significant components of deferred tax assets and liabilities as of March 31, 2014 and 2015 are as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Deferred tax assets:¥ 17,058¥ 17,787$ 148,015

Excess depreciation of fixed assets

8,688

9,481

78,896

Accrued employee bonuses

4,557

4,023

33,478Inventory valuation losses

2,661

2,571

21,395Net defined benefit liability

2,773

2,533

21,078Loss on valuation of advance payments

1,630

1,753

14,588Loss on impairment of fixed assets

853

1,215

10,111

Accrued enterprise taxes and others

1,049

988

8,222

Research and development expenses

414

380

3,162

Allowance for doubtful receivables

318

76

632

Revaluation reserve for land

2,377

2,157

17,950

Other

7,470

6,733

56,029Losses carried forward

49,84849,697

413,556

Valuation allowance(27,075)(26,937)(224,157)

Total deferred tax assets

22,774

22,760189,399

(88)

(77)

(641)

		 Total gross deferred tax assets

Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets
Retained earnings of foreign consolidated subsidiaries
Unrealized gains or losses on other securities

(372)

(439)

(3,653)(1,504)(2,246)(18,690)

Revaluation reserve for land

(516)

(469)

(3,903)

Other

(77)

(299)

(2,488)

Total deferred tax liabilities(2,557)(3,530)(29,375)¥ 20,216¥ 19,230$ 160,023

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Current assets–Deferred tax assets¥ 9,914¥ 8,954$ 74,511

Investments and other assets–Deferred tax assets

11,351

11,652

96,963

(5)

(16)

(134)

(1,044)(1,360)(11,317)¥20,216¥19,230$160,023

Net deferred tax assets
Net deferred tax assets are included in the following line items in the consolidated balance sheets:

Current liabilities–Other (deferred tax liabilities)
Long-term liabilities–Deferred tax liabilities
		TotalThe Bill for Partial Amendment of the Income Tax Act (Law No. 9 of

thousand), the amount of unrealized gains or losses on other securities

2015) and the Bill for Partial Amendment of the Local Tax Act (Law No. 2

increased by ¥230 million ($1,914 thousand), and the amount of deferredof 2015) were promulgated on March 31, 2015. These bills stipulated thatgains or losses on hedges increased by ¥17 million ($141 thousand).

corporate tax rates will be reduced for fiscal years starting on or after

In addition, deferred tax assets related to revaluation declined by ¥48

April 1, 2015. As a result, the normal tax rate used in the calculation of

million ($399 thousand), and the revaluation reserve for land increaseddeferred tax assets and deferred tax liabilities was changed from theby the same amount.

previous 35.6% to 33.1% for temporary differences that are expected to

The tax loss carryforward deduction system has been revised, andbe recovered or settled in the fiscal year beginning on April 1, 2015, andunder the revised system for the consolidated fiscal years starting on or

32.3% for temporary differences that are expected to be recovered orafter April 1, 2015, the deductible amount of the loss carryforward will

settled in fiscal years beginning on or after April 1, 2016.

be limited to 65% of income before the carryforward deduction, and for

As a result of these changes in tax rates, the amount of deferred tax

60

the consolidated fiscal years starting on or after April 1, 2017, theassets (net of deferred tax liabilities) decreased by ¥1,361 million

deductible amount of the loss carryforward will be limited to 50% of($11,326 thousand) and the amount of remeasurements of definedincome before the carryforward deduction. The impact of these revisions

benefit plans decreased by ¥93 million ($774 thousand), while theon the amounts of deferred tax assets and deferred income tax isamount of income taxes–deferred increased by ¥1,514 million ($12,599

expected to be minimal.

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2014

2015

2015

¥ 38,083¥ 41,311$    343,771

Directors’ remuneration and employees’ wages

38,00539,200326,205

Employees’ retirement and severance benefits

2,291

1,984

16,510

Provision for directors’ bonuses

1,084

1,242

10,335

Research and development expenses

16,43718,759156,104

56

(111)

(924)

Advertising expenses

Provision of allowance for doubtful accounts
Other		Total50,20054,406452,742¥146,156¥156,791$1,304,743

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2014 and 2015 are as follows:
Millions of yen

2014
Amounts Reclassification
arising
adjustmentsUnrealized gains orlosses on othersecurities

Beforetax effectTax effect

Net oftax effect¥ 1,016¥     0¥1,016¥(29)¥  987Deferred gains or losses
on hedges

2,171(2,698)

(527)

77

(450)

Foreign currencytranslation adjustments

6,876

283

7,159

—

7,159

Share of othercomprehensive incomeof associates accounted
for using equity method
		Total

52

(2)

50

—

50

¥10,115¥(2,417)¥7,698¥ 48¥7,746

Millions of yen

Thousands of U.S. dollars

2015
Beforetax effectUnrealized gains or losses on other securities¥1,668¥ (489)Deferred gains or losses
on hedges

3,564

Revaluation reserve for
land

2015

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effect¥1,179¥  (721)¥  458$13,880$ (4,069)$ 9,811$ (6,000)$ 3,811(2,127)

1,437

(344)

1,093

29,658(17,700)

11,958(2,863)

9,095

—

—

—

48

48

—

—

—

399

399

Foreign currencytranslation adjustments

3,622

(23)

3,599

—

3,599

30,140(191)

29,949—29,949Remeasurements ofdefined benefit plans

165

315

480

(243)

237

1,373

2,621

3,994

(2,022)

1,972

Share of other comprehensive income ofassociates accounted forusing equity method
		Total

91

3

94

—

94

759

25

784

—

784

¥9,110¥(2,321)¥6,789¥(1,260)¥5,529$75,810$(19,314)$56,496$(10,486)$46,010FINANCIAL SECTION

Amounts Reclassification
arising
adjustments

61

16 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 fiscal years ended March 31, 2014 and2015 is as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Net income¥25,055¥37,589$312,799

Net income available to common stockholders

25,05537,589312,799

Net income for diluted EPS calculation

25,05537,589312,799

Average number of common shares outstanding

219,689

Thousands of shares

219,686

Effect of dilutive securities:
Stock options
Average number of common shares for diluted EPS calculation

28

36

219,717

219,722

Yen

U.S. dollars

Net income per common share:
Basic¥114.05¥171.10$1.42

Diluted114.03171.08

1.42

17 Retained Earnings and Dividends
In Japan, in the event a dividend distribution of surplus is made, theDividend limitation

lesser of an amount equal to 10% of the dividend or the excess, if any,

On August 5, 2011, the Company raised funds from financial institutionsof 25% of common stock over the total of additional paid-in capital andas long-term loans payable. These loans payable have the following

legal earnings reserve must be set aside as a legal reserve until the

restrictive financial covenants:

aggregate amount of capital surplus and the legal reserve equals 25%(1)	The Company shall maintain the amount of net assets on the consoli-of stated capital.

dated balance sheet as of the closing dates of the interim and end

Certain foreign consolidated subsidiaries are also required toof each fiscal year (the “Interim or End of Fiscal Year”) at 75% orappropriate their earnings to legal reserves under the laws of theabove of whichever is greater: (i) the amount of net assets on therespective countries.

consolidated balance sheet as of the closing date of the immediately

The Company’s retained earnings includes legal reserves of ¥1,645

preceding Interim or End of Fiscal Year, or (ii) the amount of the net

million and ¥1,645 million ($13,689 thousand) at March 31, 2014 andassets on the consolidated balance sheet as of March 31, 2011.

2015, respectively. Proposed appro­priations of retained earnings have(2)	With respect to the recurring income and loss* on the consolidated

not been reflected in the consolidated financial statements at the end

statement of income for each fiscal year, the Company shall notof the fiscal year. The Company’s approved appropriations of retained

record recurring loss for two consecutive fiscal years.

earnings for the fiscal year ended March 31, 2015 were cash dividends of*R ecurring income and loss is a Japanese accounting term denoting income before
extraordinary items.

¥10,990 million ($91,454 thousand). In addition, a mid-year dividend may
be paid based on approval by the Board of Directors, which is subject tolimitations. The mid-year dividend for the fiscal year ended March 31,
2015 was ¥2,638 million ($21,952 thousand).

(3)	From the date of the loan agreement and until all obligations to thelender and its agents under the terms of the agreement have been
fulfilled, the Company shall maintain the ownership ratio (direct orindirect) at 100% with respect to BANDAI Co., Ltd., BANDAI NAMCO
Games Inc., and NAMCO LIMITED.

62

18 Revaluation Reserve for Land
In accordance with the Law Concerning Land Revaluation (Law No. 34,

foundation for calculating taxable value for land value tax prescribed inpromulgated on March 31, 1998), the land used for business purposes

Article 16 of the Land Value Tax Law (Law No. 69, promulgated on May 2,

was revalued and “Revaluation reserve for land, net of tax” was reported

1991), as stipulated in Article 2-4 of the Ordinance Implementing thein “Net assets” in the consolidated balance sheets.

Law Con­cerning Land Revaluation (Cabinet Order No. 119, promulgatedon March 31, 1998). Reasonable adjustments are made to the official

Revaluation method

notice prices.
Unrealized losses for land of ¥960 million ($7,989 thousand) were

The market value of land is determined based on official notice pricesthat are calculated by the method assessed and published by therecognized based on the difference between the land carrying amount,

Commissioner of the National Tax Agency. The Com­missioner assesses

which was revalued as of March 31, 2002, and the market value of theand publishes the method to calculate land value that forms theland as of March 31, 2015.

19 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2014 and 2015 are as follows:
Thousands of shares

Common stock (number of shares)

2014

2015

Number of shares at beginning of year

222,000,000

222,000,000

Number of shares at end of year

222,000,000

222,000,000

Treasury stock (number of shares)

2014

2015

2,309,342

2,312,098

Thousands of shares

Number of shares at beginning of year
Other
Number of shares at end of year

2,756

4,699

2,312,098

2,316,797

20 Stock Option Plan
Stock option plan as of March 31, 2015 is summarized as follows:
May 21, 2013

Position (number of beneficiaries)

Directors of the Company (4)Directors of subsidiaries (7)Class (number of shares) (note)

Common stock (36,100)

Amount to be paid upon exercise of stock acquisition rights¥1 per share

Grant dateJune 5, 2013

Vesting conditions for stock acquisition rights

None

Required service

Not specified

Exercise period for the stock acquisition rights

From June 5, 2013 to June 4, 2033

Fair value of each stock option (yen)¥1,219.63

Note: In regard to the method used to estimate the number of stock options vested, the number of stock options granted is used as the number of stock options vested because there areno vesting conditions.

FINANCIAL SECTION

Resolution date of the meeting of the Company’s Board of Directors

63

21 Leases
As lessee
The Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under operating lease arrangements.
Operating leases
Future minimum payments required under operating leases as of March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Within one year

2014

2015

2015

¥2,436¥1,533$12,757

Over one year

5,088

4,582

38,129		Total¥7,524¥6,115$50,886

22 Foreign Exchange Risk Management and Interest Rate Risk Management
Derivative financial instruments are comprised principally of forward foreign exchange contracts and currency option contracts. These instruments areused to reduce the risk of changes in foreign exchange 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 and currency option
contracts, but the Company does not expect any instances of nonperformance due to the high credit ratings of the counterparties.
Contract amounts, market values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2014
and 2015 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivative
financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

Contract
Estimatedamount market value

Unrealized
gain (loss)

Thousands of U.S. dollars

2015

2014
Contract
Estimatedamount market value

Unrealized
gain (loss)

2015
Contract
Estimatedamount market value

Unrealized
gain (loss)

Forward foreign exchange contracts
Sold:¥1,955¥75¥75¥2,043¥247¥247$17,001$2,055$2,055

U.S. dollars

389

(2)

(2)

629

(7)

(7)

5,234

(58)

(58)

Euro

351

(2)

(2)

290

6

6

2,413

50

50

U.S. dollars

850

14

14

1,081

122

122

8,996

1,015

1,015

H.K. dollars

22

(0)

(0)

72

3

3

599

25

25

¥3,567¥85¥85¥4,115¥371¥371$34,243$3,087$3,087

Yen

Purchased:		TotalNotes: 1.	Method of calculating market value
			 Calculated based on prices provided by counterparty financial institutions.
		
2.	For certain of the above forward foreign exchange contracts, hedge accounting is applied mainly 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 the hedged assets
and/or liabilities in the consolidated financial statements.

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

Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2015

2014

2015

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value¥ 4,992¥259¥19,528¥  745$162,503$ 6,200

Forward foreign exchange contracts
Sold:
Yen

Other current assets

Yen

Accounts receivable –trade

U.S. dollars

Accounts receivable–trade

494
488

4
(2)

—
1,204

—
4

—
10,019—33

Euro

Account receivable-trade

—

—

90

2

749

17

U.S. dollars

Accounts payable–trade

9,464

41

10,463866

87,068

7,206

Chinese yuan

Accrued expenses

1,678

(21)

1,298

27

10,801

225

Yen

Accounts payable–trade

48

(5)

116

9

965

75

H.K. dollars
Currency option
contracts
Sold put option:

Accounts payable–trade

—

—

267

30

2,222

250

U.S. dollars
Purchased call
option:U.S. dollars

Accounts payable–trade

1,943

(16)

1,410

25

11,733208

Accounts payable–trade

1,967

6

1,410

(5)

11,733(42)

333(note 3)442

(note 3)

3,678

(note 3)

¥21,407¥266¥36,228¥1,703$301,471$14,172

Purchased:
Deferred

Forward foreign exchange contracts

Foreign exchange
Purchased:
allocation method
U.S. dollars
		Total

Accounts payable–trade

Notes: 1. Method of calculating market value
			 Calculated based on prices provided by counterparty financial institutions.
		
2. Currency option contracts are zero cost options, and option premiums are not paid or received.
		
3.	Forward foreign exchange contracts and other contracts for which the designation method is applied are accounted for together with the accounts payable–trade that are the hedged items,
and as a result the market values of those contracts are included in the market values of the accounts payable–trade.

FINANCIAL SECTION

65

23 Commitments and Contingent Liabilities
1. Pledged assets and secured liabilities
As of March 31, 2014 and 2015, the details of pledged assets and secured liabilities are as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Cash and time deposits

¥—

¥102

$849

Trade receivables

30

—

—

Short-term borrowings

¥17

¥   —

$   —

Long-term borrowings

33

—

—

¥50

¥   —

$   —

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥256

¥214

$1,781Millions of yen

Thousands of
U.S. dollars

Pledged assets:

Secured liabilities:

		Total
As of March 31, 2015, there were no obligations corresponding to pledged assets.

2. Commitments
Commitments as of March 31, 2014 and 2015 are summarized as follows:

Guarantees for loans payable from financial institutions to companies other thanconsolidated subsidiaries

Guarantee of obligation resulting from rental contracts of unconsolidated subsidiary

66

2014

2015

2015

¥68

¥79

$657

24 Segment Information
The reportable segments are components of the Group whose separate financial information is available and which 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 (“SBUs”), one for each business domain, namely the Toys and Hobby SBU, the Content SBU,
and the Amusement Facility SBU, and the affiliated business companies that mainly serve a supporting role for these SBUs.
The major company of each SBU leads the planning and promotion of the business strategies of the SBU 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
distributes network content, manufactures and sells arcade game machines, and produces home video game software and video-related products.
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.”
Segment income in the segment information below is based on operating income, and segment assets are based on total assets. Amounts of intersegment transactions are based on the prevailing market prices.
Millions of yen

2014
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility

Total

Adjustments(note 2)

Consolidated
total (note 3)¥177,826¥261,563¥58,138¥497,527¥10,152¥507,679¥     —

¥507,679

8,565

16,84562

25,472

17,19942,671(42,671)—

Subtotal Other (note 1)

Net sales:
To external customers
Inter-segment sales
and transfers¥186,391¥278,408¥58,200¥522,999¥27,351¥550,350¥(42,671)¥507,679

Segment income (loss)

Total

10,51037,249(898)

46,861

1,646

48,507(3,834)

44,673

Segment assets

117,773

158,925

36,817

313,515

23,958337,473

67,620405,093¥ 11,758¥  4,139¥ 5,664¥ 21,561¥   450¥ 22,011¥   (285)¥ 21,726

	Amortization of goodwill

—

66

—

66

—

66

57

123

	Loss on impairment of fixed
assets

280

20

1,697

1,997

1

1,998

5

2,003

439

—

28

467

8,579

9,046

—

9,046

16,712

3,383

7,367

27,462441

27,903

1,076

28,979Other items:
Depreciation and amortization

	Investments in associates
accounted for using equity
method	Increase in property, plant andequipment and intangible assets

FINANCIAL SECTION

67

Millions of yen

2015
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility

Total

Adjustments(note 2)

Consolidated
total (note 3)¥222,295¥277,848¥55,469¥555,612¥ 9,874¥565,486¥        —¥565,486

8,624

10,16170

18,855

17,13335,988(35,988)—

Subtotal Other (note 1)

Net sales:
To external customers
Inter-segment sales
and transfers¥230,919¥288,009¥55,539¥574,467¥27,007¥601,474¥(35,988)¥565,486

Segment income (loss)

17,04040,929(2,288)55,681

1,462

57,143(822)

56,321

Segment assets

119,894

165,931

36,532

322,357

26,297

348,654

93,110441,764

Total

Other items:¥ 14,941¥  3,331¥ 5,554¥ 23,826¥   369¥ 24,195¥   (483)¥ 23,712

	Amortization of goodwill

83

62

14

159

—

159

—

159

	Loss on impairment of
fixed assets

99

1,416

1,124

2,639

—

2,639

229

2,868

613

—

32

645

11,086

11,731—

11,731

12,042

5,731

6,495

24,268934

25,202

2,559

27,761

Depreciation and amortization

	Investments in associates
accounted for using equity
method	Increase in property, plant andequipment and intangible assets

Thousands of U.S. dollars

2015
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility$1,849,838$2,312,125$461,587

Subtotal Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)$4,705,717$        —$4,705,717(299,476)—

Net sales:
To external customers
Inter-segment sales
and transfers$4,623,550$ 82,167

71,76584,555583

156,903

142,573

299,476$1,921,603$2,396,680$462,170$4,780,453$224,740$5,005,193

Segment income (loss)

141,799

340,593(19,040)

463,352

12,166475,518(6,840)468,678

Segment assets

997,703

1,380,802

304,0032,682,508

218,832

2,901,340

774,819

3,676,159

Total$(299,476) $4,705,717

Other items:$  124,332$   27,719$ 46,218$  198,269$  3,071$  201,340

	Amortization of goodwill

690

516

117

1,323

—

1,323

—

1,323

	Loss on impairment of fixed
assets824

11,784

9,353

21,961—

21,961

1,905

23,866

5,101

—

266

5,367

92,253

97,620—97,620100,208

47,69154,048201,947

7,773

209,720

21,294

231,014

Depreciation and amortization

	Investments in associates
accounted for using equity
method	Increase in property, plant andequipment and intangible assets$  (4,020) $  197,320

Notes: 1.	The “Other” business segment is not a reportable segment and includes logistics services and printing services for the Group’s SBUs.
		
2. Details of “Adjustments” are as follows:			(1) The adjustment to segment income of –¥3,834 million for the fiscal year ended March 31, 2014 includes elimination of inter–segment transactions of –¥626 million and corporate
expenses not allocated to reportable segments of –¥3,208 million. The adjustment to segment income of –¥822 million (–$6,840 thousand) for the fiscal year ended March 31, 2015
includes elimination of inter–segment transactions of ¥1,406 million ($11,700 thousand) and corporate expenses not allocated to reportable segments of –¥2,228 million (–$18,540
thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
			(2) The adjustment to segment assets of ¥67,620 million as of March 31, 2014 includes elimination of inter–segment transactions of –¥25,208 million and corporate assets not allocated toreportable segments of ¥92,828 million. The adjustment to segment assets of ¥93,110 million ($774,819 thousand) as of March 31, 2015 includes elimination of inter–segment transactions of –¥22,118 million (–$184,056 thousand) and corporate assets not allocated to reportable segments of ¥115,228 million ($958,875 thousand). Principal corporate assets are cash anddeposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
			(3) The adjustment to depreciation and amortization expense of –¥285 million for the fiscal year ended March 31, 2014 includes elimination of inter–segment transactions of –¥1,391 million
and depreciation and amortization expense not allocated to reportable segments of ¥1,106 million. The adjustment to depreciation and amortization expense of –¥483 million (–$4,020
thousand) for the fiscal year ended March 31, 2015 includes elimination of inter–segment transactions of –¥1,607 million (–$13,373 thousand) and depreciation and amortization expense
not allocated to reportable segments of ¥1,124 million ($9,353 thousand).
			(4) The adjustment to amortization of goodwill of ¥57 million for the fiscal year ended March 31, 2014 is related to goodwill not allocated to reportable segments.
			(5) The adjustment to loss on impairment of fixed assets of ¥5 million and ¥229 million ($1,905 thousand) for the fiscal years ended March 31, 2014 and 2015, respectively, are related tocorporate assets not allocated to reportable segments.
			(6) The adjustment to property, plant and equipment and intangible assets of ¥1,076 million and ¥2,559 million ($21,294 thousand) as of March 31, 2014 and 2015, respectively, are related tocorporate assets not allocated to reportable segments.
		
3. Segment income is reconciled to operating income on the consolidated statements of income.

68Additional segment information as of and for the fiscal years ended March 31, 2014 and 2015 is as follows:
1. Information by product and service
This information is included in the segment information above.
2. Information by geographic region
Net sales and property, plant and equipment
Millions of yen

2014

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥419,804¥30,832¥28,226¥28,817¥507,679

41,753

2,229

2,565

5,426

51,973

Property, plant and equipment

Millions of yen

2015

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥459,777¥38,632¥32,432¥34,645¥565,486

39,155

3,453

4,646

6,007

53,261

Property, plant and equipment

Thousands of U.S. dollars

2015

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total$3,826,055$321,478$269,884$288,300$4,705,717

325,830

28,734

38,662

49,988443,214

3. Information by major customerName

Net sales(Millions of yen)

Name of related segment

Happinet Corporation¥54,954

Toys and Hobby, Content

Fiscal year ended March 31, 2014

Fiscal year ended March 31, 2015

Name

Net sales(Millions of yen)

Net sales(Thousands of U.S. dollars)Name of related segment

Happinet Corporation¥77,445$644,462

Toys and Hobby, Content

FINANCIAL SECTION

69

4.	By reportable segment, information regarding the amount of amortization of goodwill and negative goodwill for the fiscal years ended March
31, 2014 and 2015, and the unamortized balance of goodwill and negative goodwill as of March 31, 2014 and 2015, is as follows:
Millions of yen

2014

Toys and Hobby

Content

Amusement
Facility

Other

Corporate andeliminations(note)

Amortization of goodwill

¥—

¥ 66

¥—

¥—

¥57

¥123

Total

Unamortized balance of goodwill

412

249

—

—

—

661

Amortization of negative goodwill

—

2

—

—

—

2

Unamortized balance of negative goodwill

—

0

—

—

—

0

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 businesscombination.

Millions of yen

2015
Toys and Hobby

Content

Amusement
Facility

Other

Corporate andeliminations

Amortization of goodwill

¥ 83

¥ 62

¥14

Total

¥—

¥—

¥159

Unamortized balance of goodwill

330

187

71

—

—

Amortization of negative goodwill

—

0

—

—

—

588
0

Unamortized balance of negative goodwill

—

—

—

—

—

—

Thousands of U.S. dollars

2015

70

Toys and Hobby

Content

Amusement
Facility

Other

Corporate andeliminations

Amortization of goodwill$  690$  516

$117

Total

$—

$—

$1,323

Unamortized balance of goodwill

2,746

1,556

591

—

—

Amortization of negative goodwill

—

0

—

—

—

4,893
0

Unamortized balance of negative goodwill

—

—

—

—

—

—

25 Related-Party Disclosures
Transactions with Related Parties
Fiscal year ended March 31, 2014
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type
Affiliatedcompany

Company
Happinet
Corporation

Address
Taito-ku,
Tokyo

Capital orcontribution
to capital¥2,751 million

Content of business

Ratio of voting rights
ownership

Wholesaler of toys,
video games, andamusement products

Holding
directly 26.1%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales of products,
and others¥54,954 million(note 2)

Account items
Accounts
receivable–
trade

Balance asof March 31,
2014¥11,296 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.

(2) Transactions by consolidated subsidiaries of the Company with directors, Audit & Supervisory Board members, and principal stockholders (limited toindividual stockholders) of the Company

Type

Name

Audit &
Supervisory Kouji Yanase
Board member

Address

Capital orcontribution
to capital——Content of business
Audit & Supervisory
Board member
LawyerRatio of voting rights
ownership

Relationshipwith relatedparty
Corporate
lawyer of theCompany

Held directly 0.0%

Content

Transaction
amountLegal fees

¥11 million

Account items

Balance asof March 31,
2014

Other current
assets¥0 million

Accruedexpenses¥1 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
			Attorney compensation is based on advisory agreements with the Company’s subsidiaries and is determined after deliberations with reference to the compensation standards of the Japan
Federation of Bar Associations.

Fiscal year ended March 31, 2015
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku,
Tokyo

Capital orcontribution
to capitalContent of business

Ratio of voting rights
ownership¥2,751 million($22,893
thousand)

Wholesaler of toys,
video games, andamusement products

Holding
directly 26.1%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales of products, ¥77,445 million
and others($644,462(note 2)
thousand)Account items

Balance asof March 31,
2015

Accounts
receivable–
trade¥11,404 million($94,899
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.

26 Significant Subsequent Events(Change to segments categories)

Group’s business deployment as it looks toward new outlets. The former

The Group previously implemented business strategies with a focus on

Amusement Facility SBU will be included in the Network Entertainment

three businesses, categorized by domain: the Toys and Hobby SBU, theSBU. The SBU does not only develop its value chain so as to deploy aContent SBU, and the Amusement Facility SBU.

unified business; it also aims to create a new business by combining

However, the Group has decided to revise its organizational structure
in order to implement the following main strategies under its Mid-term

real-life, face-to-face communications and digital technology.
In line with this revision to the organizational structure, the Company
will change the previous reportable segments of the “Toys and Hobby

strategy,” “Gain momentum in global markets,” and “Empower andBusiness,” the “Content Business,” and the “Amusement Facility Business”

innovate business model.”to the “Toys and Hobby Business,” the “Network Entertainment Business,”

Under the Mid-term Plan, the Group will push ahead with its strategies with a focus on the following three SBUs: the Toys and Hobby SBU,
which will aim to strengthen the IP axis strategy and gain momentum

and the “Visual and Music Production Business” effective from the fiscal
year ending March 31, 2016.
Information regarding the amounts of net sales, income/loss, assets,in global markets; the Network Entertainment SBU, which will aim toliabilities, and other items by reportable segment for the consolidated

deploy a new business that goes beyond the framework of the existing

fiscal year ended March 31, 2015, based on the segments after thegame business and fuses networks and entertainment; and the Visualorganizational change is as follows:

FINANCIAL SECTION

Plan, which started from April 2015: “Accelerate evolution in IP axis

and Music Production SBU, which will create IP and strengthen the

71Millions of yen

2015
Reportable Segment
Toys and Hobby
Business

Network Visual and MusicEntertainment
Production
Business
Business

Subtotal

Other(note 1)

Total

Adjustments(note 2)

Consolidated
Total(note 3)¥555,612¥ 9,874¥565,486¥       —

¥565,486

Net sales:
To external customers
Inter-segment sales and transfers
		Total¥222,295¥292,558¥40,759

8,624

3,884

3,015

15,523

17,13332,656(32,656)—¥230,919¥296,442¥43,774¥571,135¥27,007¥598,142¥(32,656)¥565,486

Segment income

17,04029,291

10,07756,408

1,462

57,870(1,549)56,321

Segment assets

119,894

169,634

31,434

320,962

26,297347,259

94,505

441,764¥ 23,712

Others:¥ 14,941¥  7,440¥   632¥ 23,013¥   369¥ 23,382¥   (330)

Amortization of goodwill

83

14

62

159

—

159

—

159

Impairment loss

99

2,528

12

2,639

—

2,639

229

2,868

Investment in associates accounted for using equity method

613

32

—

645

11,086

11,731—

11,731

12,042

11,312914

24,268934

25,202

2,559

27,761

Depreciation and amortizationIncrease in property, plant andequipment and intangible assets

Thousands of U.S. dollars

2015
Reportable Segment
Toys and Hobby
Business

Network Visual and MusicEntertainment
Production
Business
Business$1,849,838$2,434,534

71,76532,321

Subtotal

Other(note 1)

Total

Adjustments(note 2)

Consolidated
Total(note 3)$339,178$4,623,550$ 82,167$4,705,717$          —$4,705,717

25,089129,175

142,573271,740(271,740)—

Net sales:
To external customers
Inter-segment sales and transfers$1,921,603$2,466,855$364,267$4,752,725$224,740$4,977,457

Segment income

141,799

243,746

83,856

469,402

12,166

481,576(12,898)

468,678

Segment assets

997,703

1,411,617

261,579

2,670,900

218,832

2,889,731

786,428

3,676,159$  197,320

		Total$(271,740) $4,705,717

Others:$  124,332$   61,912$  5,259$  191,504$  3,071$  194,574$     2,746

Amortization of goodwill

691

117

516

1,323

—

1,323

—

1,323

Impairment loss

824

21,037100

21,961—

21,961

1,906

23,866

5,101

266

—

5,367

92,253

97,620—97,620100,208

94,1337,606

201,947

7,772

209,720

21,295231,014

Depreciation and amortizationInvestment in associates accounted for using equity method
Increase in property, plant andequipment and intangible assets

Notes: 1.	The “Other” category is a business segment not included in reportable segments under which operations such as logistics services and printing for each of the Group’s SBUs are classified.
		
2.	The details of adjustment amounts are as follows:(1) ‌Included in the ¥1,549 million ($12,898 thousand) deducted from segment income as an adjustment are an addition of ¥677 million ($5,634 thousand) in inter-segment eliminations and adeduction of ¥2,228 million ($18,540 thousand) in corporate expenses that cannot be allocated to any reportable segment. The corporate expenses are mainly costs related to the administration divisions that have not been attributed to a reportable segments.
			(2) ‌Included in the ¥94,505 million ($786,428 thousand) added to segment assets as an adjustment are a deduction of ¥20,722 million ($172,439 thousand) in inter-segment eliminations andan addition of ¥115,227 million ($958,867 thousand) in corporate assets that cannot be allocated to any reportable segment. The corporate assets are mainly cash and time deposits,
investment securities, and assets related to the administration divisions that have not been attributed to a reportable segments.
			(3) ‌Included in the ¥330 million ($2,746 thousand) added to depreciation and amortization as an adjustment are a deduction of ¥793 million ($6,599 thousand) in inter-segment eliminations
and an addition of ¥1,123 million ($9,345 thousand) in depreciation and amortization related to the administration division that have not been attributed to a reportable segment.
			(4)‌‌Included in the ¥229 million ($1,906 thousand) added to impairment loss as an adjustment is related to corporate assets that cannot be allocated to any reportable segment.
			(5) ‌Included in the ¥2,559 million ($21,295 thousand) added to increase in property, plant and equipment and intangible assets as an adjustment is the amount of corporate assets that cannot
be allocated to any reportable segment.
		
3. Segment income is adjusted with operating income in the consolidated statements of income.

72

(Issuance of Stock Acquisition Rights)
At a Board of Directors’ meeting held on May 21, 2015, the Board decided to offer stock acquisition rights (stock options as stock-linked compensation)
to five members of the Board of Directors of the Company as well as to seven members of the Board of Directors of BANDAI NAMCO Games Inc.
(currently, BANDAI NAMCO Entertainment Inc.) as of March 31, 2015.
Resolution date of the meeting of the Company’s
Board of Directors

May 21, 2015

Position (number of beneficiaries)

Directors of the Company (4)Directors of subsidiaries (7)Class

Common stock

Number of shares

27,100 (note 2)

Amount to be paid upon exercise of stockacquisition rights¥1 per share

Exercise period for the stock acquisition rights

From June 5, 2015 to June 4, 2035

Conditions for exercising stock acquisition rights(note 3)Matters related to the transfer of thestock acquisition rights

Approval of the Board of Directors of the Company shall be required for the acquisition of stockacquisition rights offered by transfer.

Matters related to substitute payment—

Matters related to issue of stock acquisitionrights in connection with reorganization(note 4)

Notes: 1. The grant date for the stock acquisition rights shall be June 5, 2015.
2.	In the event that the Company carries out a share split (including allotments of shares without receipt of monetary consideration) or share consolidation, the number of shares to be delivered
upon exercise of stock acquisition rights shall be adjusted in accordance with the following formula; provided, however, that such adjustment shall only be carried out with respect to thenumber of shares to be delivered upon exercise of stock acquisition rights that are not yet to be exercised at the time of the share split or share consolidation, and any fraction of less than one
share resulting from such adjustment shall be rounded down.
		 Number of shares granted after adjustment = Number of shares granted before adjustment × Stock split or reverse stock split ratio
3.	i)	A stock acquisition rights holder may, within the exercise period for the stock acquisition rights, exercise those stock acquisition rights between one and 10 days after the date on whichthat person loses his or her position as a director, auditor, or employee of the Company or of a subsidiary of the Company.
		ii) If a stock acquisition rights holder has renounced his or her stock acquisition rights, he or she may not exercise the said stock acquisition rights offered.
4.	Policy for determining details of cancellation of the stock acquisition rights offered in an organizational restructuring and granting of stock acquisition rights of a company subject torestructuring If the Company conducts a merger (only if the Company is to be dissolved as a result of the merger), an absorption-type corporate divestiture or an establishment-type
corporate divestiture (only if the Company is to become a split company), or a share exchange or share transfer (only if the Company is to become a wholly owned subsidiary) (the above are
hereinafter collectively referred to as “organizational restructuring”), the Company shall grant stock acquisition rights of the Company listed in Article 236, Paragraph 1-8 of the Companies
Act of Japan (“the restructured company”), in each respective case, to stock acquisition rights holders with stock acquisition rights remaining immediately prior to the day the organizational
restructuring takes effect (the date the absorption-type merger takes effect for an absorption-type merger, the date of establishment of the newly established company for an establishmenttype merger, the date the absorption-type divestiture takes effect for an absorption-type corporate divestiture, the date the establishment-type corporate divestiture takes effect for an
establishment-type corporate divestiture, the date the share exchange takes effect for a share exchange, or the date of establishment of the wholly owning parent company for a sharetransfer). However, this shall apply only to cases in which the granting of stock acquisition rights of the restructured company is provided for in the absorption-type merger agreement,
establishment- type merger agreement, absorption-type corporate divestiture agreement, establishment-type corporate divestiture agreement, share exchange agreement, or sharetransfer plan.

FINANCIAL SECTION

73

INDEPENDENT AUDITORS’ REPORTTo the Board of Directors of BANDAI NAMCO Holdings Inc.:

We have audited the accompanying consolidated financial statements of BANDAI NAMCO Holdings Inc. and its consolidated subsidiaries, which
comprise the consolidated balance sheets as at March 31, 2015 and 2014, and the consolidated statements of income, statements of comprehensive
income, statements of changes in net assets and statements of cash flows for the years then ended, and the notes to consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance withauditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fairpresentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objectiveof the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of BANDAI NAMCO Holdings Inc. andits consolidated subsidiaries as at March 31, 2015 and 2014, and their financial performance and cash flows for the years then ended in accordance withaccounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2015 are presented solely forconvenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on thebasis described in Note 3 to the consolidated financial statements.

August 10, 2015
Tokyo, Japan74

CORPORATE DATA
As of March 31, 2015

Corporate Name:BANDAI NAMCO Holdings Inc.

Head Office:

BANDAI NAMCO Mirai Kenkyusho
4-5-15, Higashi-Shinagawa, Shinagawa-ku, Tokyo 140-8590, Japan
URL: www.bandainamco.co.jp/

Capital:¥10 billion

Stock Exchange Listing: Tokyo Stock Exchange, First Section (Code number: 7832)
Main Business:

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 andmanagement of business activities

Stock Information:

Number of Shares Authorized:

1,000,000,000 shares

Number of Shares Issued:

222,000,000 shares

Number of Shareholders:

60,942

Number of Shares per Trading Unit:

Major Shareholders:

100 shares

Number of shares(Thousand)% of total

Japan Trustee Services Bank, Ltd. (Trust account)

11,297

5.14

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

10,685

4.86

XIL, LTD.

6,000

2.73

Masaya Nakamura

5,960

2.71

4,586

2.09

Name

The Nomura Trust and Banking Co., Ltd. (Retirement and severance benefits trust. The Bank of Tokyo-Mitsubishi UFJ account)
MAL Ltd.

4,400

2.00

State Street Bank and Trust Company 505225

4,035

1.84

Nintendo Co., Ltd.

3,845

1.75

Goldman, Sachs & Co. Reg

3,844

1.75

MSCO Customer Securities

3,241

1.47

(Note) The shareholding ratio is calculated after reduction of the number of treasury stocks.

Number of shares (Thousand)Ownership Breakdown:

Financial institutions

60,421

Brokerage

10,115

Other corporate entities

27,348Foreign corporate entities and others

82,048

Individuals, etc.

39,862

Treasury stocks

2,203©2015 石森プロ・テレビ朝日・ADK・東映 ©2015 テレビ朝日・東映 AG・東映 ©ABC・東映アニメーション © バードスタジオ／集英社・フジテレビ・東映アニメーション ©BANDAI © 創通・サンライズ © やなせたかし／フレーベル館・TMS・NTV ©L5/YWP・TX ©BNP/BANDAI, DENTSU, TV TOKYO ©BNEI ／ PROJECT CINDERELLA ©BANDAI NAMCO Entertainment Inc. ©BIRD STUDIO / SHUEISHA,TOEI ANIMATION Game ©BANDAI NAMCO Entertainment Inc. Developed by Akatsuki Inc. ©EIICHIRO ODA/SHUEISHA, TOEI ANIMATION Game ©BANDAI NAMCO Entertainment Inc. ©BANDAI NAMCO Entertainment Inc. All trademarks and copyrights associated with the manufacturers, vehicles, models, trade names, brands, and visual images depicted in this game are theproperty of their respective owners, and used with such permissions. © バードスタジオ／集英社・フジテレビ・東映アニメーション © バードスタジオ／集英社 ©「２０１３ドラゴンボールＺ」製作委員会 ©BANDAI NAMCO Entertainment Inc. © 尾田栄一郎／集英社・フジテレビ・東映アニメーション © 創通・サンライズ © 創通・サンライズ・テレビ東京 © 創通・サンライズ・MBS ©2013 プロジェクトラブライブ！
© 士郎正宗・Production I.G. ／講談社・「攻殻機動隊 ARISE」製作委員会 ©Lantis ©2015 プロジェクトラブライブ！ムービー75

OVERVIEW OF MAIN GROUP COMPANIESAs of June 1, 2015

BANDAI NAMCO Holdings Inc.

 lanning and execution of medium- and long-term management strategies;
P
provision of support for business strategy implementation by Group companies(Tokyo Stock Exchange, First Section)

BANDAI NAMCO Holdings USA Inc.

Execution of North American regional strategy; management support for North
American operating companies

BANDAI NAMCO Holdings UK Ltd.

Execution of European regional strategy; management support for European
operating companies

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

 lanning, production, and sales of toys, plastic models, confectionery, food,Pcapsule toys, cards, apparel, and sundries, etc.

MegaHouse Corporation

Planning, development, production, and sales of toys, candy toys, figures,
general games, and other products

CCP Co., Ltd.

Planning, development, manufacturing, and sales of RC toys, toys,
home electric appliances, sundry products

Sun-Star Stationery Co., Ltd.

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

Plex Co., Ltd.

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

Seeds Co., Ltd.

 lanning, development, and manufacturing of toys; contract operationsPfor various types of inspecting and testing

People Co., Ltd.*

Planning, development, and sales of toys for young children, etc. (JASDAQ)TSUBURAYA PRODUCTION CO., LTD.*

Planning, production, and distribution of visual products

BANDAI AMERICA INC.

Sales 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 NAMCO ASIA CO., LTD.

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

BANDAI NAMCO KOREA CO., LTD.

Planning and sales of toy-related products; planning, development andservices of online games

BANDAI NAMCO (THAILAND) CO., LTD.

Manufacturing of toy-related products

BANDAI (SHENZHEN) CO., LTD.

Quality assurance and quality control operations; factory inspections of trading partners

BANDAI NAMCO PHILIPPINES INC.

Manufacturing of toy-related products

Network Entertainment Strategic Business Unit76

BANDAI NAMCO Entertainment Inc.

 lanning, development, and distributing of network content; planning, development,Pand sales of game software and arcade game machines, etc.

BANDAI NAMCO Studios Inc.

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

D3 PUBLISHER INC.

Planning, development, and sales of game software, etc.

B.B.STUDIO Co., Ltd.

Planning and development of game software

VIBE Inc.

Provision and advertisement of network content

BANDAI NAMCO Online Inc.

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

Banpresto Co., Ltd.

Planning, development, and sales of amusement prizes

Banpresto Sales Co., Ltd.

Sales of amusement prizes, etc.

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

BANDAI NAMCO Entertainment America Inc.

Planning and sales of game software

BANDAI NAMCO Entertainment Europe S.A.S.

Sales of game software

BANDAI NAMCO Amusement America Inc.

Manufacturing and sales of arcade game machines

BANDAI NAMCO Amusement Europe Ltd.

Manufacturing and sales of arcade game machines

D3 Publisher of America, Inc.

Planning, development, and distribution of mobile content

BANDAI NAMCO (SHANGHAI) CO., LTD.

Planning, operation, and production of network content

BANDAI NAMCO Studios Singapore Pte. Ltd.

Planning and development of game software and arcade game machines

BANDAI NAMCO Studios Vancouver Inc.

Planning and development of game software and arcade game machines

BANPRESTO (H.K.) LTD.

Manufacturing and production management of arcade game machines and prizes

NAMCO USA INC.

Planning and operation of amusement facilities in North America

NAMCO UK LTD.

Planning and operation of amusement facilities in the United Kingdom

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of amusement facilities in Hong Kong

Visual and Music Production Strategic Business Unit
BANDAI VISUAL CO., LTD.

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

Lantis Co., Ltd.

Planning, manufacturing, sales, and management of musical master licenses
and content

Sunrise Inc.

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

SUNRISE MUSIC Publishing Co., Ltd.

 roduction of music for animation;Poverall management of music publishing and master recording rights

BANDAI NAMCO Pictures INC.

Animation planning and production; copyright management and use

BANDAI NAMCO Rights Marketing Inc.

On-demand delivery of content, such as animation

BANDAI NAMCO Live Creative Inc.

Planning and production of events and live performances, etc.

I WILL Co., Ltd.

Identifying, training, and managing artists

Grand-Slam Ltd.

Production of events and live performances

Affiliated Business Companies
BANDAI LOGIPAL INC.

International logistics, customs clearing, commodity inspections, etc.

LOGIPAL EXPRESS INC.

Transportation, distribution, warehousing, etc.

BANDAI NAMCO Business Arc Inc.

Support for Group administrative operations

Artpresto Co., Ltd.

Various printings, design and production, etc.

Happinet Corporation*

 istribution of toys, visual and music software, video games,Dand amusement products (Tokyo Stock Exchange, First Section)

Sotsu Co., Ltd.*

Planning and production of animation for TV programs and copyright business(JASDAQ)

Italian Tomato Ltd.*Management of restaurants, franchise operations, etc.

Anime Consortium Japan Inc.*

On-demand distribution of animation and other products to customers overseas* Companies accounted for by the equity method77

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