BANDAI
NAMCO
Group

ANNUAL REPORT2016

DREAMS,FUN AND
INSPIRATIONOUR MISSIONSTATEMENT“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.

The BANDAI NAMCO Group develops entertainment-related products and services ina wide range of fields, including toys, network content, home video game software,
arcade game machines, amusement facilities, and visual and music content.
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.

THE LEADINGINNOVATORIN GLOBALENTERTAINMENTOUR VISIONAs 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 andwill earn their trust as “the Leading Innovator in Global Entertainment.”

CONTENTS

02
04
06
08
10
12
16
30
38
39
75
76

    TODAY’S BANDAI NAMCO Group    The BANDAI NAMCO Group—
1 YEAR of Results (FY2016.3)    The BANDAI NAMCO Group—
COURSE AND VISION    BOARD OF DIRECTORS AND AUDIT& SUPERVISORY BOARD MEMBERS   CHAIRMAN’S MESSAGE   PRESIDENT’S MESSAGE    SPECIAL FEATURE: Continually Taking On
Challenges with the IP Axis Strategy   CORPORATE GOVERNANCE

02
04
06
08
10
12
16
30
39

   CSR INITIATIVES   FINANCIAL SECTION   CORPORATE DATA    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 2016 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. FY2016.3 and the year under review represent the one-year period ended March 31, 2016.
3. Figures in this annual report are as of August 2016.

01

TODAY’SFY2016.3

BANDAI NAMCO Group

The BANDAI NAMCO Group comprises BANDAI NAMCO Holdings Inc., which is a pure holding company,
three strategic business units (SBUs), and affiliated business companies that support the work of the SBUs.
The SBUs, which encompass the operating companies in each field, formulate and implement businessstrategies and provide a diverse range of entertainment around the world.

BANDAI NAMCO Holdings
GROUP ORGANIZATIONNet Sales¥575.5

Shareholders’ Equity Ratio

70.6%

billionFree Cash Flows¥34.6 billion

Operating Income¥49.6

billionNumber of Employees

7,391

Return on Equity (ROE)

11.2%

Asia, excluding Japan
Overseas Sales Proportion

22.4%

Europe8.0%
Americas

R&D Investments¥54.6 billion

6.9%

7.5%

ReferenceContributions
to Net Sales byGeographic
Region

Japan

77.6%

Net Income Per Share (Basic)¥157.4302

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 CO., LTD.

Toys for boys

Vending machine
capsule toys, cards

Toys for girls

Plastic models

Confectionery, foods

Net Sales

Segment Income¥206.4 billion¥16.6 billion

Sales Ratio

Segment Income Ratio

ApparelSundries

34.0%

31.2%
TODAY’S BANDAI NAMCO Group

Stationery

Network Entertainment
Core Company: BANDAI NAMCO Entertainment Inc.

Network content

Arcade game machines

Home video game software

PrizesNet Sales

Segment Income¥320.9 billion¥23.9 billion

Sales Ratio

Segment Income Ratio

Amusement facilities

52.9%

44.8%

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

Motion pictures

Live eventsMusic

Net Sales

Segment Income¥52.0 billion¥11.7 billion

Sales Ratio

Segment Income Ratio

Goods related to live events
Live viewing

8.6%

21.9%

Distribution of video on
demand (VOD) content

Affiliated Business Companies (Supporting the Group)03

Return on Equity

Return on Assets

(ROE)

(ROA)

Debt/Equity Ratio*

11.2%

11.4%

0.01times

303.5
248.8

317.3

441.8 448.3

268.0

374.2

14.1

Total Assets

13.2(¥ billion)

ROA

9.7

9.1

14.0

11.4

12.2

10.7

9.2

Debt/Equity
Ratio*(Times)(%)(%)(¥ billion)

0.09 13.3

14.0(¥ billion)

11.2

ROE

Interest-bearing debt

342.2

213.1

Total Net Assets

19.8

405.1

0.05

4.4
0.03

1.9
0.01

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

2012

2013

2014

2015

0.01

2016

* Debt/equity ratio = Interest-bearing debt/
Total shareholders’ equity

Profit Attributable to Owners of Parent

Cash Dividends per Share¥34.6 billion

¥52

YOY

8.0%

YOY

¥10

Profit Attributable to Owners of Parent

Cash Dividends per Share(¥ billion)

(Yen)

37.6
32.4

34.6

62*

52
45

25.1

35

19.3
26

2012

2013

2014

2015

2012

2016

2013

2014

2015

THE BANDAI NAMCO Group1

FY2016.3

YEAR

2016

* FY2015.3 includes a special dividend of ¥10Free Cash Flows

Shareholders’ Equity Ratio

Net Income per Share (Basic)¥34.6 billion

70.6%¥157.43

13.1%

YOY

YOY

Free Cash Flows*
304.1

34.6

(¥ billion)
30.6

259.0

274.3

233.1

26.9
23.8

Total Shareholders’Equity

21.6

325.1
70.6

68.6
66.0 66.0(¥ billion)

Shareholders’Equity Ratio

61.8

(%)
2012

2013

2014

2015

2016

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

04

2012

2013

2014

2015

2016

¥13.67

Consolidated Dividend Payout Ratio

33.0%

Sales of Major IPs* (Group total)¥78.6 billion¥34.9 billion¥32.9 billion¥23.3 billion¥19.1 billion

Mobile Suit Gundam series

DRAGON BALL series

Yo-kai Watch series

ONE PIECE

Power Rangers series* IP: Characters and other intellectual property

THE BANDAI NAMCO Group—1 YEAR of Results (FY2016.3)

Network Entertainment Business:
Sales by Major Category

Network content

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

Home video game software¥103.9 billion¥95.7 billion

Arcade game machines

Amusement facilities

of Results¥57.9 billion
Home Video Game Software Sales¥58.6 billion(Group total)

Net Sales of Visual andMusic Production SBU

Visual and Music Production SBU:
Number of Copyrighted Products

26,686 thousand¥52.0 billion(As of 2016.3)

Europe13,272 thousand
49.7%

NUMBER OF COPYRIGHTED
PRODUCTSBANDAI VISUAL CO., LTD.

Sales ofpackaged
softwareJapan

4,698 thousand
17.6%

768

¥17.8 billion
34.3%

Sunrise Inc.,BANDAI NAMCO Pictures INC.

293

North America

8,716 thousand
32.7%

Manufacturing of animation,
licensing operations,distribution and events,and others¥34.1 billion
65.7%

NUMBER OF WORKS
WITH MASTER
LICENSE RECORDINGS
Lantis Co., Ltd.

Number of works published

Approx.

Approx.

67,50039,50005

THE BANDAI NAMCO GroupCOURSE AND
VISIONRESTART!

Implementing
the Restart Plan

Net Sales andOperating Income

2010.3 –2012.3 Mid-term Plan

For the Fiscal Years
Ended March 31

2007.3–2009.3 Mid-term Plan

2006

NET SALES¥450.8 billion

2007

2008

¥459.1 billion ¥460.5 billion
2009¥426.4 billion
2011
2010

¥378.5 billion¥394.2 billion

2007¥42.2 billion

OPERATING INCOME

2006¥35.7 billion

2008¥33.4 billion

2009¥22.3 billion
2011¥16.3 billion

2010¥1.9 billion
2006

2007

2008

2009

2010

2011

(Billions of yen)85.01

102.88

113.74

106.86

92.34

81.82

Operating Income Margin

(%)

7.9

9.2

7.3

5.2

0.5

4.1

Return on Equity (ROE)

(%)

5.8

9.4

11.7

4.3

–12.4

0.8

Cash Dividends per Share

(Yen)

12

28

24

24

24

24

Debt/Equity Ratio

(Times)

0.14

0.05

0.06

0.08

0.06

0.02

Free Cash Flows(Billions of yen)

6.6

27.3

20.5

9.9

1.0

15.2

Overseas Sales (sales after

elimination of internal transactions)

06

2016.3–2018.3 Mid-term Plan

NEX

AGE
T ST

2013.3–2015.3 Mid-term Plan
2015

¥565.5 billion

2016¥575.5 billion

2014
2013

¥507.7 billion¥487.2 billion

2015¥56.3 billion¥454.2 billion

2016¥49.6 billion

THE BANDAI NAMCO Group—COURSE AND VISION2012

We will build a stablefoundation for the
long-term future of
the Group and achieve
growth at theNEXT STAGE.

2013¥48.6 billion
2014¥44.7 billion

2012¥34.6 billion

2012

2013

2014

2015

2016

75.82

81.0680.98

94.62

129.03

7.6

10.0

8.8

10.0

8.6

9.1

14.1

9.7

13.2

11.2

26

45

35

62* 52

0.09

0.05

0.03

0.01

0.01

23.8

21.6

26.9

30.6

34.6
* FY2015.3 includes a special dividend of ¥10

07

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY BOARD MEMBERS
As of June 20, 2016

We will continue“NEXT STAGE —Gain Momentum,
Y UJ IA S A KOS HU K U O
I S H I K AWA

MITSUAKITAG U C H I

S HUJ IO HT S U

MASARUK AWAG U C H I

Board of Directors

08

Chairman and
Representative Director

President andRepresentative Director

Shukuo Ishikawa

Mitsuaki Taguchi

Director

Director

Director (Part-time)

Shuji Ohtsu

Yuji Asako

Masaru Kawaguchi
President andRepresentative Director of
BANDAI CO., LTD.

to aim for the
Empower,
Accelerate Evolution.”
YUZURUM AT S U DA

KAZUM IKAWASH IRO

S ATO KOK U WA B A R A

M I KI HA R U
NO M A

Director (Part-time)

Director (Part-time)

Director (Outside)

Director (Outside)

Director (Outside)

Satoshi Oshita

Kazumi Kawashiro

Yuzuru Matsuda

Satoko Kuwabara

Mikiharu Noma

President andRepresentative Director of
BANDAI NAMCO Entertainment Inc.

President andRepresentative Director of
BANDAI VISUAL CO., LTD.

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERSS ATO S H I
O S H I TA

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

With pride and a sense of responsibility in
our mission, we will continue to “Empower,
Gain Momentum, and Accelerate Evolution”
as we target the NEXT STAGE.
The BANDAI NAMCO Group is implementing a three-year Mid-term Plan under the system of two representative
directors, which has been in effect since June 2015. As explained by President Taguchi, in FY2016.3, the first yearof the plan, we recorded favorable progress, both numerically and strategically. I focus on management strategies over the medium to long term, while President Taguchi leads the implementation of the Mid-term Plan.
Moving forward, we will maintain close contact as we work together to help BANDAI NAMCO to become an evenstronger Group.

Shukuo Ishikawa
Chairman and Representative Director
BANDAI NAMCO Holdings Inc.

10

POSITIONING OF THE MID-TERM PLAN 

NAMCO had expanded their businesses while communicating

Targeting the realization of a path towardsustained growth and further increases incorporate value

with customers in accordance with their founding philoso-

In fall 2015, the BANDAI NAMCO Group reached the 10th year

the challenges of new IP, products, and businesses, without

since its management integration. I became president inbeing satisfied with the status quo.

2009, and we had our worst results immediately thereafter. In

phies of continuing to take on challenges without fearing
change. We still follow that philosophy today. We can achieve
stable growth when individual employees continue to take on

The Group is the amalgamation of the individual capabili-

2010, we implemented the Restart Plan, which called forties of its employees, and for the Group to become stronger, it

sweeping reforms. In addition to increasing speed in decision-is essential that individual employees become stronger. Whenmaking and implementation and strengthening our financial

I became president, one of my goals was to see the BANDAI

position, the plan had a special focus on shifting to the IP axis

NAMCO Group strive to be “a group centered on humanstrategy, which leverages IP as our business foundation, andresource management, particularly on entertainment andsubsequently the IP axis strategy became a major driving

imagination.” Under the Restart Plan that I mentioned, weforce behind the Group’s growth.

transferred authority to the front lines and transitioned to a

Under the previous Mid-term Plan, which started from April

system that facilitates rapid judgments under small organizational units. The IP axis approach has always included a

Accelerate Evolution.” Centered on the IP axis strategy, we

message encouraging employees to “take on the challenge

strengthened collaboration among businesses and imple-of change.” By basing business on IP rather than businessmented strategies aligned with the distinctive characteristics

fields, we fostered collaboration across internal Group orga-

of each overseas region. In consideration of these results,

nizational units and facilitated open concepts without theunder the current Mid-term Plan, which includes the mid-term

limits of preconceived ideas. Moving forward, we will continue

vision “NEXT STAGE—Empower, Gain Momentum, Accelerate

to focus on building an organization and corporate culture

Evolution,” our fundamental approach is to further reinforce

that supports the energetic efforts of employees and enables

our strengths. We are advancing the IP axis strategy fromthem to continue to take on new challenges in a free andthree aspects—business, region, and function—and we areopen atmosphere.

accelerating challenges to become a group that will continue
to record growth for the next 50 or 100 years.
Through these initiatives, we will bolster the Group’s

CHAIRMAN’S MESSAGE

2012, our mid-term vision was “Empower, Gain Momentum,This series of initiatives will also contribute to further
increases in general name recognition in Japan and overseas. Consumers expect interesting products and services

business foundation and continue to achieve sustained growthfrom the BANDAI NAMCO Group, and our brand power isin an industry marked by rapid change in the operating envi-

increasing in markets around the world. This should lead toronment. In this way, we will strive to record further growth

an enhanced presence for BANDAI NAMCO in business mar-in corporate value.

kets around the world and to higher corporate value over the
medium to long term.
In the future, we will move forward with pride and a sense

GROUP VISION 

of responsibility in our mission as an entertainment groupContinuing to Empower, Gain Momentum, and
Accelerate Evolution and Striving to Be a
Group that is Accepted Around the World

that provides “Dreams, Fun and Inspiration” to society

The entertainment industry is undergoing dramatic transfor-and Accelerate Evolution” in the years ahead.

through its business activities. I would like to ask for yourcontinued support and understanding of the BANDAI NAMCO
Group, which will continue to “Empower, Gain Momentum,

mation, and the BANDAI NAMCO Group must also continue tochange. Before the management integration, BANDAI and
August 2016

11

PRESIDENT’S MESSAGE

We will reinforce our stable businessfoundation and open up a new stage by
striving to create new customers andcontinually taking on challenges.
EVALUATION OF RESULTS 

the amusement facilities business and is starting to implement

Four consecutive years of record-high net
sales, and high level of operating income,second only to the previous fiscal year

initiatives for the provision of value that leverages BANDAI

In accordance with the IP axis strategy, the Group’s greatest

School idol project, including packaged visual and music con-strength, in FY2016.3 we achieved solid results due to thetent, a theatrical release, and live events. In addition, thepersistent efforts of everyone on the business front lines.

Mobile Suit Gundam series also maintained stable popularity.

NAMCO’s distinctive strengths in the amusement business.
In the Visual and Music Production Business, favorable
results were recorded by coordinated initiatives for Love Live!

Initially, we anticipated year-on-year declines in sales andprofits, but in the end we achieved consolidated net sales of¥575.5 billion and operating income of ¥49.6 billion. In thisMID-TERM PLAN (FY2016.3 TO FY2018.3) way, we were able to achieve a new record-high level of net

First year of the Mid-term Plan —Favorable progress with all strategies,
stronger business foundation

sales for the fourth consecutive year. In addition, we wereable to maintain a high level of operating income, with theresults in FY2016.3 second only to the record-high level
achieved in the previous fiscal year.
In the Toys and Hobby Business, established IP products,

April 2015, our mid-term vision is “NEXT STAGE—Empower,such as the Mobile Suit Gundam series and the DRAGON BALL

Gain Momentum, Accelerate Evolution.” In accordance withseries, were popular in Japan, as were products for older

this vision, our focus strategies call for accelerating evolution

customers. Overseas, strong growth was recorded due to thein the IP axis strategy and gaining momentum in global markets,

popularity of Gundam plastic models, especially in Asia. In

with an emphasis on Asia. Through the advancement

addition, we achieved a certain degree of results in Europe andof these strategies, we will establish and reinforce a foundation

the Americas, where we have migrated to a new system under

for the steady, continued achievement of record-high levels of

which planning and development is consolidated in Japan.

sales and profits—net sales of ¥500.0 billion and operating

In the Network Entertainment Business, network content

income of ¥50.0 billion. On that basis, we will strive to achievesales surpassed ¥100.0 billion. Furthermore, home video gamea cycle of continually taking on new challenges. In the first

software for Europe and the Americas recorded favorable results

year of the Mid-term Plan, we recorded progress that was

and made a substantial contribution to performance. In addition,

basically in line with our initial expectations, in both strategies

the Amusement Facility Business, which faced severe conditions

and results. We were able to steadily strengthen the Group’s

in the previous fiscal year, achieved a return to profitability bybusiness foundation. Moving forward, we will further reinforce

concentrating its resources on key facilities and rolling out initia-

the foundation and aim for the next stage to achieve growth

tives for new business formats. On the other hand, in the arcade

over the medium to long term.

game machines business we were slow to respond to changes in

12

Under the three-year Mid-term Plan that was launched in

In fiscal 2017.3, we are forecasting net sales of ¥580.0 billion

the market, and sales were sluggish. In response, we took steps

and operating income of ¥50.0 billion. In fiscal 2018.3, theto rigorously examine the product lineup and reform the organi-final year of the plan, our numerical targets are net sales ofzation. Currently the arcade business is working together with

¥600.0 billion and operating income of ¥60.0 billion.

Established the IP Strategy Division,
Implementing the IP axis strategy over the
medium to long term

visual products, product sales, and events, we expanded

Looking back at the first year of the Mid-term Plan, underways, we worked to nurture IP. Furthermore, to strengthen

the focus strategy of “Accelerate Evolution in the IP Axis

our IP lineup in Europe and the Americas, we acquired world-

Strategy,” we worked to grow new outlets for IP, including

wide commercialization rights for IP, and we made WiZ Co.,

network content and live events, and we took steps toLtd., a planning company, a subsidiary. In these ways, we

steadily expand our target markets, such as opening up thedecided on a variety of investments to strengthen the IP axis

new market for adult women 20 years and older. We also

strategy. Moving forward, we will continue to aggressively

made progress with the Mobile Suit Gundam series, aninvest in strengthening the IP axis strategy.

Mobile Suit Gundam’s popularity in Japan and Asia. In addition,
Love Live! School idol project, a new IP, recorded major growth
due to initiatives that extend across businesses. In theseestablished IP. Through simultaneous initiatives involving

PRESIDENT’S MESSAGE

Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

13

In working to “Gain Momentum in Global Markets,” the Toysand Hobby Business steadily expanded its IP lineup andthese initiatives, overseas sales in FY2016.3 recorded significant
growth, rising 36.4% year on year, to ¥129.0 billion.

regional scope in Asia. In addition, in Europe and theMoreover, to further strengthen the IP axis strategy, in

Americas, strong sales were recorded by in-house titles, such

April 2016 we established the IP Strategy Division as a new

as DRAGON BALL, as well as by titles from other companies

Company organizational unit. The work of the IP Strategy

that are handled through our sales network. Consequently,

Division will include further increasing the value of estab-overseas sales of home video game software increased.

lished IP on a Groupwide basis and creating and nurturing

Moreover, the overseas development of network content got

new IP. At this point, we are doing a good job of executing theoff to solid start, including the full-scale, worldwide roll out

IP axis strategy, but if we just continue to do the same thing,of game applications, centered on Asia. In particular, in Asia,

our efforts will become stale. To ensure that the IP axis strat-

where we are aiming to double sales from ¥30.0 billion to

egy remains strong in 5 years or 10 years, we will take steps¥60.0 billion during the period of the Mid-term Plan, we

to identify what needs to be done and implement aachieved sales of approximately ¥40.0 billion. As a result ofGroupwide, optimal approach.

Mid-Term Vision

Focus Strategies

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

Business Strategies

Region Strategies

Accelerate ­evolution 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 IP

Expand Target Markets

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 markets.

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%

SHAREHOLDER RETURN 

Targeting a consolidated dividend payout ratioof 30%, and implementing a base annual levelof ¥24 plus performance-based dividend
The BANDAI NAMCO group follows a basic policy of providing
a return to shareholders that targets a consolidated dividend

Per Share Dividends and Dividend Payout Ratio(Yen / %)62

52

payout ratio at a level of 30% based on stable annual dividend

45

payments of ¥24 per share. A certain level of funding is nec-

35

essary to continue to quickly implement initiatives in the
rapidly changing entertainment industry. After appropriationof dividends from the consolidated periodical net income, we

36.2

33.0

Per share dividends

will consider allocating a portion of the remaining balance tothe acquisition of our own shares, with comprehensive consideration of such factors as the level of cash held, performance

Consolidated
dividend payout ratio

30.5

30.7

2013

2014

2015

trends, share price trends, and plans for investment projects.
In FY2016.3, following consideration of our final results forthe year, we decided to pay annual dividends of ¥52 per share,including the stable dividend portion plus a performance-

R&D Investments and Capital Investments(¥ million)
55,761

51,815

based dividend of ¥28. As a result, our consolidated payout
ratio for FY2016.3 was 33.0%. For FY2017.3, there will be no43,194

41,193
R&D
investments

23,46018,535IN CLOSING 

Achieving sustained growth by continuing to takeon the challenge of creating new customers
A year has passed since I became president of BANDAI NAMCO

54,596

22,29821,321

12,808
Capitalinvestments
2012

2013

2014

2015

2016

For the Fiscal Years Ended March 31

In addition, the most important issue for BANDAI NAMCO is theHoldings, and during that period I have experienced the“creation of new customers.” Of course, it is important to imple-

meaning of “sustainability” for an entertainment company.

ment initiatives that maintain our ties with existing customer’s IP

In an industry marked by dramatic change, annual results areand markets. Furthermore, we will not be satisfied with the status

sometimes affected by the presence or absence of hit products. If

quo. Rather, we will always focus on our customers, identify their

we do not achieve stable results, we will not be able to implement

needs, and foster innovation in IP and markets, thereby taking

strategic investment from a medium- to long-term perspective,on the challenge of creating new customers. This process will be

and our results will then be even more susceptible to the influenceindispensable for the sustained growth of the BANDAI NAMCO

of hit products. Accordingly, over the three-year period covered byGroup. To that end, I believe that we should be a Group that is

the Mid-term Plan, we will focus our individual strengths and build

open to collaboration with a wide range of partners in markets

a business foundation for the steady achievement of net sales ofaround the world rather than trying to do everything in-house.

¥500.0 billion and operating income of ¥50.0 billion, without regard

PRESIDENT’S MESSAGE

change to the policy described above.

2016

For the Fiscal Years Ended March 31
FY2015.3 includes a special dividend of ¥10

IP, like music and sports, is a type of culture that can tran-

to hit products. On that basis, we will aim for the next stage as ascend national boundaries around the world and facilitate

Group so that we can continue to grow and develop for the next 10

communication among people. Moving forward, we will strive

years or 50 years. The key to the success of those endeavors will

to provide people around the world with products and services

be the IP axis strategy, which is the Group’s greatest strength. Inthat leverage the appeal of IP from Asia. Accordingly, while

recent years, the BANDAI NAMCO Group has achieved stable

continually maintaining a sense of crisis, we will continue togrowth through an approach of focusing on IP as an asset andtake on challenges and aim for growth and evolution. I would

working together with IP fans to nurture multiple IP lineups andlike to ask our shareholders and investors for their continued

develop content outlets in a large number of businesses. Moving

support and encouragement of the BANDAI NAMCO Group as

forward, we will work to maintain the vitality and sustainability of

we move forward to the next growth stage.

the IP axis strategy by fostering IP creation and nurturing,
innovating, and taking on the challenge of new business models.

August 201615

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Taking On Challenges
to the NEXT STAGE
The BANDAI NAMCO Group is leveraging the worlds of IP to provide the ideal products and services 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 current Mid-term Plan, we will continue to take on challenges to the NEXT STAGE byleveraging the IP axis strategy as the pivotal element of our business strategies.
This special feature section introduces messages from the leaders of each SBU and a variety of
initiatives being implemented by key players who continue to take on challenges on the front lines.
CAPSULETOYS

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-

PLASTICMODELS

how in the field of entertainment. The advancement of this strategy is

MOVIES

made possible by the know-how that the BANDAI NAMCO Group has
accumulated over many years.

TOYS

Technology
Human Resources
Planning and Development

NEW
IP

POWERFUL IP (CONTENT)The BANDAI NAMCO Group’s wide rangeof business fields makes it possible for the

Generating Growth from New IP on a Foundation ofGroup to rapidly expand to multiple prod-

Established IP

just a single product. Through multifaceted

IP is the starting point of the IP axis strategy, and the BANDAI NAMCO
Group can demonstrate its strengths by leveraging both established IP,
which enjoys stable popularity, and new IP. Established IP, which makes asteady contribution, provides a robust foundation on which the Group can

16

Rapid Uptake andExpansion throughMultifaceted Initiatives

realize further growth by taking on the challenge of new IP.

ucts and services, rather than focusing on
initiatives, we can achieve uptake andexpansion of the IP in a short period of time.

MAXIMIZINGTHE VALUE OF
POWERFUL IP

LIVEENTERTAINMENTNETWORKCONTENTNEW DEVICES

VIDEO ON
DEMAND (VOD)
CONTENTAPPARELCARDS
VISUAL PACKAGESOFTWARE
SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

HOME
VIDEO GAMESOFTWARE
ARCADEGAME
MACHINES
Note: This diagram shows one example of IP axis development.

One Example of Our Business Models

Responding Quickly toAddress Needs

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.

In the entertainment industry, which isundergoing dramatic change, the BANDAI
NAMCO Group collaborates with the

IP information

media, and as a result the Group can
respond quickly to customer needs with
the ideal timing and the ideal platform
for each IP.

IP needs

Customer

IP needs

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

Use of original
creations
Advertising and PR

Licensing agreement

Author /Copyright holder

17

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

MAJOR IP IN GROUP PRODUCTS 
IP plays the central role in BANDAI NAMCO’s efforts to advance the IP axis strategy.
This section introduces the major IP for which the Group is rolling out products

SBUs Implementing IP Business
Development Initiatives

and services.

Toys and Hobby
Network Entertainment
Visual and Music Production

Super Sentai (Power Rangers) Series

Super Sentai has been popularamong boys for more than 40
years in Japan. It has also
earned strong support overseas as Power Rangers.
The BANDAI NAMCO Group
provides a wide range ofSuper Sentai (Power Rangers)
products and services, suchas toys and games.

Ultraman Series

Ultraman has earned the
support of a wide range of age
groups, extending to two oreven three generations. The
BANDAI NAMCO Group
provides Ultraman products
and services, such as toys andpackaged visual products.

DRAGON BALLDRAGON BALL comics andanimations have earned the
support of customers formany years in Japan andoverseas. The BANDAI
NAMCO Group is providing awide range of DRAGON BALL
products and services, suchas home video game software,
network content, card
products, and figures.

18

KAMEN RIDER Series

The KAMEN RIDER series has
been popular among boys formore than 45 years and hasearned the support of a wide
range of age groups in Japanand overseas. The BANDAI
NAMCO Group provides awide range of KAMEN RIDER
products and services, suchas toys and games.

Yo-kai Watch

Created from LEVEL-5 Inc.
home video game software,
Yo-kai Watch is popular amonga wide range of age groups.
The BANDAI NAMCO Group
offers Yo-kai Watch products
in Japan and Asia, centered
on toys.

ONE PIECEONE PIECE comics andanimations have been popular
for many years in Japan andoverseas. The BANDAI
NAMCO Group is providing
a wide range of ONE PIECE
products and services, suchas home video game software,
network content, and figures.

PRETTY CURE! Series

The PRETTY CURE! series has
been popular among girls
for more than 10 years.
The BANDAI NAMCO Group
provides a wide range of
PRETTY CURE! products
and services, such as toysand games.

Mobile Suit Gundam Series

THE IDOLM@STER

This IP was created fromarcade game machines that
produce idols. The BANDAI
NAMCO Group provides a wide
range of THE IDOLM@STER
products and services, suchas home video game software,
network content, live events,
figures, shops, and cafes.

Anpanman has been popularamong parents and children
for many years. The BANDAI
NAMCO Group provides
Anpanman products andservices, centered on toys
for infants.

Tamagotchi Series
SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Since its launch in 1979,
Mobile Suit Gundam products
have earned support amonga wide range of age groups.
Centered on visual products,
these include plastic models,games, and network content.
The popularity of Mobile Suit
Gundam is currently increasing,
not only in Japan but also in
Asia and other regions.

Anpanman

This IP has been supported
for 20 years since it was
created as a mobile character
development game. Througha variety of products andservices, this has become anestablished IP that is popularwith two generations, parents
and their children.

Love Live! School idol project SeriesThis IP was created from a
project linking magazines,
visual products, and music.
In addition to magazine pages
and packaged visual andmusic products, live events
are also highly popular.

19

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Toys and Hobby
Initiatives in the Toys and Hobby SBU

Mid-Term Vision

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

Strengthen the IP-based business model
No. 1 in all Asia and in each business in each country
Europe and Americas Challenge
Strengthen the global foundation

Net Sales (¥ billion)
230.9

Masaru Kawaguchi

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

2015
ActualResultSegment Income (¥ billion)
250.0

206.4 210.0

2016
ActualResult

2017
Plan

2018
Plan

17.0

16.6

16.0

2015
ActualResult2016
ActualResult

2017
Plan

18.0

2018
Plan

For the Fiscal Years Ended March 31

The mid-term vision of the Toys and Hobby SBU isthings that we need to do. We must continue to take on chal-

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

lenges as a Group that continually faces expectations fromIn the first year of the mid-term plan, the Toys and Hobby

customers around the world. Becoming the No. 1 entertain-

SBU recorded declines in sales and profits in comparison withment company in the world will not be easy. Nonetheless,

FY2015.3. Nonetheless, established IP products, such as the

I believe that we should aim for growth without giving up.

Mobile Suit Gundam series and DRAGON BALL series, madeTo that end, we must achieve further strong expansion incontributions to the SBU’s results, and Yo-kai Watch products,

global markets. Moving forward, we will leverage synergies

a new IP, secured stable popularity. Overseas, the Mobile Suitamong the three portfolio strategies—IP axis, business axis,

Gundam series expanded its popularity in Asia, centered on

and regional axis—and expand overall earnings in Japan andplastic models, and consequently sales in Asia set a record

overseas. In addition, we will strengthen collaboration andhigh. In addition, in Europe and the Americas, we transitioned

cooperation within the Group, continue to take on the chal-

to a system under which planning and development are con-lenge of new initiatives around the world, and take antrolled in Japan, and as a result earnings improved.

aggressive approach to our business.

In these ways, we successfully expanded our presence inAsia, which has been positioned as a focus region, but interms of “Globalization,” I believe that there are still many20

Accelerating Initiatives
for Adult Women

Expanding
Our Customer
Target Groups

To expand our customer target groups, we are significantly increasing product initiatives
for adult women (women in their 20s and older), who comprise a segment of the market
with which we have had little contact. As a result, we can now roll out products forfemale customers in a wide range of age groups, from preschool children and elementary
school students to adults.
Naomi Tobita, Director of BANDAI, discussed the favorable roll out of products
and services for adult women.

L
L
A
CH

Director
Lifestyle Business Strategy
BANDAI CO., LTD.

Leveraging Established IP to Accelerate Initiatives for Adult Women
The Toys and Hobby SBU is expanding the roll out of products for adult women in their
20s and older. We have commercialized a wide range of products, such as sundries,
apparel, cosmetics, and accessories, with product motifs that feature a high level ofdesign sensibility. These IP products remind adult women of their aspirations when
they were young. We leveraged the 20th anniversary of the first TV broadcast of Pretty
Guardian Sailor Moon to launch commemorative products. At that time, we focused on
demand from adult women, who were a market segment that we had not focused on
up to that point. Cosmetics and accessories that were made available through subscription sales in June 2013 on Premium BANDAI, BANDAI’s official shopping site,
became a major topic of conversation on the Internet and SNS. At that point, we accelerated initiatives for adult women, making it possible to implement product initiatives
for a wide range of age groups.
In addition, in the planning and development of products for adult women, female
employees in the same age group were principally responsible for these planning anddevelopment activities. Commercialization initiatives were based on the concept of“products that I personally would like to use and carry.” In this way, we were able tolaunch products that were in line with consumer needs, and the employees in charge
were able to work with high levels of motivation.

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Naomi Tobita

S
R
E
ENG

es and tegy
g
n
e
l
l
a
On Ch IP Axis Stra
g
n
i
k
a
T
he
rting toppuSDeepening Collaboration Across the Group and Working Toward
Further GrowthTargeting the growing market for products for adult women, the Toys and Hobby SBU
is planning a variety of products and promotions that will foster devotion to IP among
adult women. In this way, we are aiming for further growth in sales. In 2014, we
opened an information site for adult women, and in June 2016, we opened a directly
operated store in an underground shopping mall at Tokyo Station. This store sells
selected, popular IP products in the categories of apparel and sundries, centered on
cosmetics. We will use this store as a point of contact with customers to collect information. We also anticipate inbound demand from tourists visiting Japan who use
Tokyo Station.
Moving forward, we will strengthen these initiatives on a Groupwide basis. In April
2016, we started the “Adult Women Customer Acquisition Project.” Through this project,
we will deepen Group-related collaboration
through the sharing of information and thefull utilization of our human resources.
We will strive to further increase the accuracy of product and service development
initiatives conducted by Group companies
and to foster the creation of new IP for
adult women.
Directly operated store targeting adult women21

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Global Roll Out of
Mobile Suit Gundam Plastic Models

Dedicated toMade in Japan

Plastic models in the Mobile Suit Gundam series have reached the 36th year
since their launch, and as of the end of March 2016 we had shipped acumulative total of 459.40 million units. Annual shipments in FY2016.3 totaled
14.40 million units, of which export shipments accounted for approximately
30%. Our presence in overseas markets is increasing.
BANDAI Executive Officer Takashi Fujiwara was asked to discuss
future initiatives for Mobile Suit Gundam plastic models,
which have made a significant contribution to growth inglobal markets.

CHA

S
R
E
G
LLEN

Nurturing Customers by Utilizing
GUNDAM.INFO and Sponsoring Eventsdges an ategy
n
e
l
l
a
On Ch
xis Str
Taking ing the IP A
rt
Suppo

Total shipments ofMobile Suit Gundam
Plastic Models (FY2016.3)

14.40 million

Of which, shipments tooverseas markets

Approx.

30 %Over the past few years, we have experienced considerable success in rolling out Mobile Suit Gundam plastic
Cumulative total shipments ofmodels in Asia. The Toys and Hobby SBU considers Japan
Mobile Suit Gundam plastic models overand Asia to be a single market because of the large
36 years (as of the end of March 2016)
number of points in common in regard to customer
preferences. We are following a strategy of conducting
Japan-originated business activities simultaneously in
Asia. Under this strategy, Japan has overall responsibility
from the development stage to the media strategy, whilesales activities are implemented by bases in each regionof Asia. In Mobile Suit Gundam business development
initiatives in Asia, we offer free distribution of visual
products at the same time as in Japan through the GUNDAM.INFO information site. In addition,
to communicate the quality of Mobile Suit Gundam plastic models to customers, we sponsor
many events at a wide range of locations that enable customers to actually see and touch Mobile
Suit Gundam plastic models, and we are also rolling out products at the same time in Japan andAsia. Furthermore, Mobile Suit Gundam plastic models are recognized as products that offer
Made in Japan high quality, and that recognition is also increasing the brand value. The increasein the popularity of Mobile Suit Gundam plastic models is due in part to our efforts to nurture thegroup of core users through the continued implementation of these initiatives over several years.
The popularity then spread to the group of general users, which has expanded significantly.
In the future, I think it will be necessary to take steps to solidify the base of core users and todevelop new users. Moreover, the various countries and regions in Asia have their own culturesand business practices, and accordingly it will be necessary to provide detailed responses while
focusing on the special characteristics of each market. We need to ensure that the popularity ofMobile Suit Gundam plastic models in Asia does not become a temporary trend. To that end, we
will work to achieve dramatic growth in the future through initiatives to build a foundation.

459.40 million

Steadily Establishing a Foothold in Europe and the Americas
In North America, broadcasts of Mobile Suit Gundam: Iron-Blooded Orphans began inJune 2016 on the Cartoon Network. Due to the broadcast on cable TV, in addition toonline distribution, we expect to see further growth in IP
recognition. Furthermore, in Europe, following Italy, we
Takashi Fujiwara
have also started to roll out Mobile Suit Gundam plastic
Executive Officer
models in France. Moving forward, we will strive to steadily
General Manager of
expand the regions in which we offer these products while
the Hobby Products Department
BANDAI CO., LTD.
maintaining a focus on the characteristics of each region.

22

Network Entertainment
Initiatives in the Network Entertainment SBU

Mid-Term Vision

Evolution to Network
Entertainment,
Breakthrough to the Next Stage,
Network x Entertainment x Global
Focus Strategies	Implement new business development in the real anddigital fields
Take steps to expand business in the 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 and user-generated content
Take on the challenge of creating new IP

296.4

320.9

340.0

Segment Income (¥ billion)
320.0

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Net Sales (¥ billion)

35.0
29.3

28.0
23.9

Satoshi Oshita

Director (Part-time)
President and Representative Director of
BANDAI NAMCO Entertainment Inc.

2015
ActualResult2016
ActualResult

2017
Plan

2018
Plan

2015
ActualResult2016
ActualResult

2017
Plan

2018
Plan

For the Fiscal Years Ended March 31

The Network Entertainment SBU aims to provide new forms

Through growth, we will make further progress in our busi-

of entertainment that transcend conventional games. In thenesses and generate profits, making it possible to reinvest in

first year of the Mid-term Plan, we recorded higher sales due

initiatives to tackle new challenges. I would like the second

to favorable results by home video game software in Europe

year of the Mid-term Plan to be a time in which we create

and the Americas as well as by network content in Japan andthis type of favorable cycle. In addition, globally, we willoverseas. On the other hand, sales of arcade game machines

strengthen business models that leverage the characteristics

were weak, and overall, the SBU’s profits declined. Theseof each region; enhance our presence in Japan, Europe andresults reflect the extent to which we were able to rapidly

the Americas, and Asia; and aim to be an SBU that records

respond to changes stemming from the diversification ofstrong growth around the world in the years ahead.

markets and customers.
Among the Group’s businesses, the network entertainment

In this regard, we will strive to be a group in which
individuals grow and continue to take on challenges. If webusiness changes at an especially rapid pace. Accordingly, we

simply maintain the status quo, we will have no future.

must break away from the maintenance of the status quo andI would like the Network Entertainment SBU to increase

increase the speed at which we take on challenges with athe speed at which it takes on challenges while always

sense of crisis. The speed of our future growth will bemaintaining a sense of crisis.

determined by our ability to accelerate these initiatives.

23

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Network Content Enhancing its
Presence in the Chinese Market

Strengthening
and Expanding
Operations ina Gigantic Market

Currently, the network content market in China has grown to ascale of approximately ¥2,500 billion. In this market, the world’s
largest, we are aiming to record full-scale growth in network content, such as smartphone game applications and PC online games.
To that end, in January 2015 we established BANDAI NAMCO(SHANGHAI) CO., LTD.
Daisuke Yamada, the COO of BANDAI NAMCO (SHANGHAI),
discussed initiatives in the Chinese market.

C
103.9
82.3
68.5

2014

2015

2016

For the Fiscal Years Ended March 31

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

G
N
E
L
L
A
H

Opening Up the Chinese Market by Launching High-Quality Services
Japanese IP has long been popular in China, and we wanted to offer local customers
high-quality services that leverage IP. On that basis, in 2015 we established the company and made a full-scale entry into the Chinese market. After obtaining the understanding of our local collaborative partners in regard to our basic policies, such as
implementing development and operations initiatives that draw on the worldview of
the IP, we launched our first title—NARUTO Online, a PC online game. Since then, we
have rolled out services step by step and worked to expand our business.
To achieve full-scale expansion and reinforcement of business in China, there
must be close cooperation between Japan and China. BANDAI NAMCO (SHANGHAI)
was established to cooperate closely with local partner companies and to rapidly andefficiently address changes in local needs and trends as the hub between Japan and
China. Currently, we offer approximately 10 titles of Japan-originated IP as smartphone game applications and PC online games. Recent titles include NARUTO, ONE
PIECE, DRAGON BALL, and Mobile Suit Gundam. Of these, NARUTO MOBILE, which waslaunched in January 2016, reached the No. 1 sales ranking on the App Store in
China; the DRAGON BALL app, which was launched in March 2016, reached No. 3,
and the SWORD ART ONLINE app, which has been available since May, reached No. 6.
Due to the establishment of a local company, we are now able to rapidly provide
services that meet needs.

Aiming to Leverage Our Presence in the Chinese Market
Game preferences differ in Japan and China, but the attachment of users to IP in Chinais the same as in Japan, or perhaps even higher. Users have waited to be able to enjoy
their favorite IP in the form of high-quality games, and there are growing expectations for the start of full-fledged services from the BANDAI NAMCO Group.
Our strengths are in planning and operation that incorporates the worldview
of IP in the most appropriate format, as well as sales and network capabilities that enable us to be a part of strong collaborative relationships withlocal partners that are well-versed in the needs of the Chinese market.
BANDAI NAMCO (SHANGHAI)’s key phrase for 2016 is “overwhelming
presence in the Chinese market.” To that end, we will strive totranscend culture and language by leveraging our strengths andto provide services
that foster customer
satisfaction.

Daisuke Yamada
COO
BANDAI NAMCO (SHANGHAI)
CO., LTD.
NARUTO MOBILE (distributed by Tencent Games)

24

nadnd gygy
a
s
s
e
e
g
g
n
llaelnle is iSstSratrtaete
a
h
h
C
C
n
n
xAx
og O e IePIA
g
P
n
n
i
i
k
k
a
a
h
h
T T rtirntg
ntg t
i
o
o
p
p
SuSpupHome video game software
DRAGON BALL XENOVERSEEERRSS

Unit Sales of Home Video Game
Software:
Overseas Ratio

Major Hit inEurope andthe Americas

82%
21,988 thousand
Overseas

Japan

2016
total

Home Video Game
Software’s Growing Presence inOverseas Markets

26,686 thousand

67%
14,608 thousand
Overseas

Since its launch in February 2015, DRAGON BALL XENOVERSE home video game software had sold a cumulative total of more than 4.0 million units as of the end of July
2016, centered on Europe and the Americas. It made a major contribution to our
results in FY2016.3. We have already decided to launch the next product, DRAGONBALL XENOVERSE 2, within 2016. In the future, this new product is expected to support the expansion of our home video game software business in overseas markets.
Masayuki Hirano, producer at BANDAI NAMCO Entertainment, discussed DRAGONBALL XENOVERSE, which is making a major contribution to growth in global markets.

Europe and the Americas, where the latest platforms have been adopted, are key
target markets for DRAGON BALL XENOVERSE. On that basis, we took on new challenges. With a development concept of a “new DRAGON BALL experience,” we areproposing new forms of entertainment in which the players themselves can compete
together with the main characters.
At the initial stages of development, to capture markets in Europe and the Americas,
we worked on marketing activities through local bases. As a result of our efforts tothoroughly gather and analyze local feedback, we concluded that it would be necessary
to develop a new type of starting concept. DRAGON BALL has fans around the worldand has recorded considerable results as a long-term, established IP. Accordingly, toincrease IP value, we thought that it would be necessary to propose to customers a
new experience that transcends the existing concepts of game software while respecting the world view of DRAGON BALL. Accordingly, we proposed new experiences. That
proposal was supported by customers around the world, centered on Europe and theAmericas, and our success in building a major hit exceeded our expectations.

2015
total

21,683 thousand

For the Fiscal Years Ended March 31

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Drawing Out the Appeal of DRAGON BALL, Centered on Markets in
Europe and the AmericasJapan

Masayuki Hirano
DRAGON BALL XENOVERSE Producer
BANDAI NAMCO Entertainment Inc.

Maximizing Value by Drawing Out New Appeal from IP
DRAGON BALL XENOVERSE was able to draw out new appeal of the DRAGON BALL
IP. Furthermore, we took on the challenge of a new starting point, and as a result
it became possible to pursue innovation in established IP, and this supported thedevelopment of new approaches in the Group. In the future, without being
limited by existing concepts, we will continue to promote our approach of
taking on the challenge of new starting points on a Groupwide basis. This will
represent a key objective of game development initiatives.
The strengths of the BANDAI NAMCO Group include the ability to roll out
a large number of appealing IP as products and services that are wellreceived around the world, as well as an environment that encourages
employees to take on challenges, with the front lines being given considerable discretion to take action. The Group has a strong commitment to taking
on challenges, and on that basis I would like to see a large number of initiatives
that draw out new appeal from a wide range of IP.

25

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Visual and Music Production
Initiatives in the Visual and Music Production SBU

Mid-Term Vision

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

Focus Strategies

Cultivate original Group IP assets
Strengthen IP production capabilities
Pursue overall optimization

Net Sales (¥ billion)

Segment Income (¥ billion)
11.7

52.0
43.8

Kazumi Kawashiro

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

2015
ActualResult43.0

2016
ActualResult

2017
Plan

45.0

2018
Plan

10.1

2015
ActualResult9.0

2016
ActualResult

2017
Plan

8.0

2018
Plan

For the Fiscal Years Ended March 31

Since its establishment as a new segment in FY 2016. 3, theIn the second year of the Mid-term Plan, we will continue to

Visual and Music Production SBU has had the mission of “con-take on the challenge of creating new IP. In addition, we will also

tributing to the happiness of people around the world throughpromote the wide-ranging use of IP through multidimensional

the production of visual and music IP.” In accordance with thisinitiatives that integrate real and virtual entertainment. Thesemission, we have worked with three focus strategies—cultivate

initiatives will include live events, online distribution of visual

original Group IP assets, strengthen IP production capabilities,

products, and sales of goods. In this way, we will focus on

and pursue overall optimization.

expanding new businesses that do not rely on packaged prod-

In the first year of the Mid-term Plan, the theatrical version

26

ucts. Furthermore, in global activities, through a joint ventureof Love Live! School idol project was a major hit. In addition,company in France that was established by Lantis Co., Ltd. andthere were also synergies in such areas as visual and pack-

AMUSE INC., we will implement public performances and takeaged music products and live events. Love Live! School idol

other steps to approach overseas anime fans and IP fans.

project was the focus of considerable attention throughout theMoving forward, the Visual and Music Production SBU will

year and supported growth in sales and profits. In addition, as

strive to achieve its mid-term vision of being the “No. 1 Groupnew challenges, we have launched sales of download visualin Animation, Visual, and Music Products.” On that basis, we

products and a fan club business that uses applications, andwill continue to take on the challenge of expanding and

we are gradually starting to see results from these initiatives.

advancing production-style businesses.

Continued Growth in IP Value for
the Mobile Suit Gundam Series

Established IP
that Generates theHighest Level ofSales in the Group

Mobile Suit Gundam is an established IP that has maintained strong popularity
over the 37 years since the TV broadcast in 1979. Ogawa Masakazu is the
producer of Mobile Suit Gundam: Iron-Blooded Orphans, the latest TV series,
which will commence the second stage of broadcasts from fall 2016. Mr. Ogawa
at Sunrise discussed the production of Mobile Suit Gundam: Iron-Blooded
Orphans, collaboration with the Group, and other topics.

A New-Generation Product that
Takes on the Challenge of Further Expanding the Base of Fans
The Mobile Suit Gundam series is supported by many fans. We worked to expand thetarget customers by providing new products and acquiring new groups of fans. That is
one reason why this IP has continued to receive the support of many fans for 37 years.
For Iron-Blooded Orphans, the latest product, we aimed to expand the customer range,
and in our product development initiatives we targeted younger customers between
the ages of 10 and 20. On the other hand, to maximize IP value, it is also important toaddress the expectations of existing fans. At Sunrise, we continue to simultaneously
create products for existing fans, such as movies and OVA. While addressing the
expectations of fans who have supported this IP throughout its history of 37 years,
we have simultaneously continued to take on the challenge of acquiring new fans. I
believe that this cycle is the mission of those of us working on Mobile Suit Gundam.

Expanding IP Value with Group Collaborative Initiatives for Visual
Product Creation

Producer
Mobile Suit Gundam: Iron-Blooded Orphans
Sunrise Inc.

CHA

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SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Masakazu Ogawa

My role as a producer is not limited to simply making visual products. In addition to the production of visual products development strategies, I am also involved in the establishment ofbusiness models, including packaged product sales as well as products and services such as
plastic models and game software. The producer’s role also includes ensuring success fromthe two perspectives of “creating visual products that are worth seeing” and “maximizing
sales of products and services through Group collaboration.” In particular, the Mobile Suit
Gundam series is the Group’s largest IP, and it is also the IP for which the Group’s collaborative initiatives have been the most successful. For example, with plastic models, it is necessary
to consider how to ensure that the frame that appears in visual products is faithfully reproduced in the plastic models. Through our work with previous visual products, we have established a cooperative relationship with BANDAI’s Hobby Products Department. In this case, weshared information about the concept from the conceptual stage and deepened our cooperation through multiple meetings. We were able to achieve a high-quality model that reproduces
the worldview of the visual product. Fans’ enjoyment of the visual product’s worldview has
been enriched through the synergies between the related products and the visual product,
which were achieved as a result of collaboration throughout the Group. In addition, these
activities are not limited to Japan. We are also working steadily in Asia to expand the base offans through simultaneous development of visual products and related products.
Moving forward, I will work to nurture people who take on the role of producer inboth creating visual products and simultaneously collaborating in the roll out of
products and services. In addition, I will strive to create and nurture IP
by working with a wide range of visual products inaddition to Mobile Suit Gundam.

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SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

Growing Presence in theLive Event Business

Establishing
New Content Outlets

The Love Live! School idol project was launched in 2010 as a project linking magazines, music, visual products, andlive events. For about five years, the Group has worked together with partner companies to nurture fans for this IP.
Live events are one facet of the popularity of Love Live! School idol project, and these events are enjoying a growing
presence as a new content outlet in the Group. Yohei Kisara, Chief Producer at Lantis, discussed these live events.

Live Events Growing Into New Content Outlet Under the IP Axis Strategy
I have front-line responsibility at Lantis, where I am in charge of the formulation of roll-out plans for music-related products, musicalcomposition, and production of live events. The reason why we made live events one of the pillars of our business development initiatives for Love Live! School idol project is that this is an animation product centered on music. We believed that we could create
extremely interesting synergies by combining two-dimensional animation with three-dimensional live events. At the live events, there
is an actual cast that is responsible for the song performed in the animation by the idol group μ’s. With the animation video playing in
the background, the performance of the cast reproduces the movements in the animation. In these ways, unprecedented, innovative
initiatives foster enthusiasm among viewers, and we were able to create events that have become a major topic of conservation.
Initially, we held events at small-scale live event venues, but as popularity grew, we moved up to larger facilities, such as concert
halls and stadiums. In addition to Japan, popularity has grown to overseas markets, and we have held live events and live viewings
in countries and regions throughout Asia, including China, South Korea, and Taiwan. These initiatives have enjoyed considerable
success and the IP has many fans throughout the region.
A major factor in the success of the live events has been the energetic incorporation of the opinions of fans, starting with the
product concept of “a story in which everyone realizes their dreams.” Furthermore, we have implemented multifaceted businessdevelopment initiatives that fuse real and virtual entertainment. To date, male fans have played the central role in these initiatives,
but Love Live! School idol project has also earned many female fans, and these fans have been a factor in the IP’s high popularity.

Working to Create New IP Centered on Music

Yohei Kisara
Chief Producer
Lantis Co., Ltd.

CHA

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Initiatives
Fusing Visualand Music
Products

Music products
Visual products

28

I had the opportunity to work on the Love Live! School idol project fromthe very beginning, and this has become an extremely valuable
experience. The major success of these initiatives is due in part to thedelegation of authority to the front lines and to continued axis-centeredinitiatives. Also, from IP creation to nurturing, the incorporation of
Lantis’ special strengths in the areas of music and live stage event
production, and our experience in creating world views, have generated
results that will lead to further success in the future. I believe that theability of Love Live! School idol project to achieve this success in theworld of animation is attributable to the close cooperation among Group
companies in the areas of visual products, music, and live events, aswell as to the fusion of our various strengths. Moving forward, we will
share throughout the Group the knowledge and know-how acquired
through this successful experience, and we will aggressively work tocreate new IP centered on music. In this way, we will
strive to create more
appealing products.

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Live events

TOPICS xpanding the IP Lineup in the Toys andE
Hobby Business in Europe and the Americas
In the Toys and Hobby Business in Europe and the Americas, we are aiming tobuild a stable IP portfolio and strengthen our business foundation by working tofollow up the Power Rangers series with an expanded IP lineup. From summer
2016, in conjunction with the opening of Disney-Pixar’s Finding Dory film, welaunched about 100 products in more than 100 countries around the world. We
will develop this array of products into an established IP that maintains its
popularity for many years. In addition, we also expanded our IP lineup with theintroduction of products based on Miraculous, a new IP for girls.

 aking On the Challenge ofT
Integrating Leading-Edge
Technologies and EntertainmentP roviding Spaces that Leverage
BANDAI NAMCO’s Distinct Strengths
In the Amusement Facility Business, we are working to operate
existing facilities efficiently. In addition, we are focusing on
new formats that provide spaces that leverage BANDAI
NAMCO’s distinct strengths, such as Nazo Tomo Cafe, where
customers can enjoy solving puzzles, and ANI ON STATION, acharacter lounge. In addition, we are moving ahead with theroll out of spaces and content that support the creation of new
customers, such as Indoor
Seaside Kid’s Beach which uses
the latest computer graphics and
3D audio effect technologies toreproduce the sea and sand.

SPECIAL FEATURE: Continually Taking On Challenges with the IP Axis Strategy

In the Network Entertainment Business, we are taking on thechallenge of providing new entertainment by integrating leadingedge technologies with the Group’s wide range of know-how. One
example is the launch of VR ZONE Project i Can, which will open up
new possibilities in entertainment with the use of virtual reality.
We are taking steps to pursue the possibilities of virtual reality while
verifying feedback from users. These steps include the limitedtime opening of a researchfacility that enables people
to experience a variety ofvirtual reality technologies.

Miraculous

ANI ON STATIONVR ZONE Project i Can
Note: Operation limited to the period
ending October 10, 2016.

Nazo Tomo Cafe
Indoor Seaside Kid’s Beach

Moving Forward with Multidimensional Activities
We are implementing a range of multidimensional activities linking animations
and live events and other initiatives, with IP as an axis. In addition to those targeting
male customers, such as Love Live! School idol project, we are also moving forwardwith IP initiatives for women, a new market. These include the stage version of
Kuroko’s Basketball as well as Dream Festival!, which includes a variety of the Group’s
products and services. In the future, we will utilize the approach of drawing on live
events and other multidimensional activities, including for animation and IP fansoverseas.

Dream Festival!
Stage version of Kuroko’s
Basketball, THE ENCOUNTER

Love Live! School idol project live events

29

CORPORATE GOVERNANCE

The Company and the Group sufficiently understand the importance of various stakeholders related to the Company
and have a basic management policy of maximizing the corporate value of the Company and its shareholders’common interests over the medium to long term. In addition, the Company believes that construction of a solidmanagement foundation (corporate governance) is absolutely essential in order to emerge victoriously in the global
competition of the fast-changing world of entertainment. In accordance with this philosophy, the Company has
established a Basic Philosophy on Corporate Governance.
Furthermore, we truly embrace the intent and spirit of Japan’s Corporate Governance Code, and our initiatives
on each principle of the Code are disclosed in “Initiatives Related to Japan’s Corporate Governance Code.*”* For more information, please see the Company’s website.
http://www.bandainamco.co.jp/en/ir/pdf/governance/code.pdf

CORPORATE GOVERNANCE SYSTEM Strengthen the Management Oversight Function

Clarify the Responsibilities of Directors

1Year or Less

Number of Outside Directors

3/10

The Term of Directors:

Number of Outside Audit &Supervisory Board Members

3/4

Number of Independent
Directors or Independent Audit& Supervisory Board Members

Organization Company with Company Auditors

6

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.

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.

General Meeting of Shareholders
Appointment /Dismissal

Account
Auditing /Reports on
Results

Appointment /Dismissal

Board of Directors

Audit & Supervisory Board

10 directors(of whom 3 are outside directors)

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

Auditing

Appointment /Dismissal /Supervision

Appointment /Dismissal

Independent Auditors
Dismissal

Independent Directors andAudit & Supervisory Board
Members Committee

Auditing

Personnel Committee

Representative Directors
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

Support

Auditing

Group Information Security Committee

Internal Control Committee
Policy Directions

Reports

BANDAI NAMCO Group Companies

As of June 20, 2016

30

MESSAGES FROM OUTSIDE DIRECTORS 
Meetings of the Board of Directors of BANDAI NAMCO Holdings feature high levels of transparency as well as
free and open-minded discussions in a positive atmosphere. I have a high evaluation of these meetings. Since
I became an outside director in June 2014, I have worked to utilize my experience to offer my frank opinions
about Group management from an objective viewpoint. In addition, from FY 2016. 3, the Company has taken aproactive approach to responding to the Corporate Governance Code. In particular, the Company conducted anevaluation of the effectiveness of the Board of Directors. This evaluation, which
was positioned as an extremely important initiative, utilized a third-party specialist organization, and theIndependent Directors and Audit & Supervisory Board Members Committee performed analysis and verification.
As a result of the evaluation, all of the officers have reinforced their awareness of the need to make further
efforts to improve the Board of Directors.
The Company plans to periodically implement these evaluations of the Board of Directors. To increase theeffectiveness of the Board of Directors, it will be necessary to enhance the functioning of the Independent
Directors and Audit & Supervisory Board Members Committee. That will be my mission as the lead independent
officer. Accordingly, moving forward I will strive to contribute to dynamic discussions and appropriate decisionmaking by working more proactively to acquire information about each business and to deepen my knowledge.

Yuzuru Matsuda
Director (Outside)
Lead Independent Officer

CORPORATE GOVERNANCE

I believe that the role of outside officers is to make a contribution to ensuring the effectiveness of corporate
governance in company management. To that end, outside officers utilize their knowledge and experience
and, from a position that is independent from management, consider the interests of shareholders and otherstakeholders, provide advice and suggestions, and fulfill the management oversight function. I think thatdynamic discussions from diverse viewpoints at meetings of the Board of Directors also lead to increases in
the Board’s transparency.
As an attorney, I have had experience with a wide range of cases in the field of corporate legal affairs, including M&As and other transactions, governance-related issues, and disputes. In addition to domestic cases inJapan, I have also participated in international cases, such as transactions and disputes involving companies in
Europe, North America, and Asia. Leveraging my knowledge and experience as an attorney in the field of corporate legal affairs, I will strive to contribute to the further development of the BANDAI NAMCO Group from theviewpoint of management decision-making that reflects consideration for strengthening compliance and forlegal risks.

Satoko Kuwabara
Director (Outside)
Independent Officer

The principal role of outside officers is to contribute to the achievement of sustained company growth andincreases in corporate value over the medium to long term, based on their experience, which is different fromthat of insiders. In particular, it is important that the opinions of customers, employees, shareholders, communities, and other stakeholders are appropriately and rapidly reflected in meetings of the Board of Directors.
For example, through the Personnel Committee and other means, the outside officers also have the important
duty of working to establish a highly sustainable incentive system.
The BANDAI NAMCO Group does not take the approach of simply passively implementing the principles of the
Corporate Governance Code. Rather, the Group takes an advanced approach in working to actively reform andstrengthen governance, with the objective of expressing its determination to achieve its management strategies.
As a business school professor, I conduct teaching and research, and at the same time I am engaged in
officer training, management training, and corporate reform at a variety of companies. In addition, as thechairperson of the Ministry of Economy, Trade and Industry (METI)’s Corporate Reporting Lab, I haveparticipated in repeated deliberations regarding the state of dialogues between companies and investors.
Leveraging this experience and knowledge, I will strive to contribute to sustained growth and increases incorporate value for the BANDAI NAMCO Group over the medium to long term.

Mikiharu Noma
Director (Outside)
Independent Officer

31

BOARD OF DIRECTORS 
The Company is a pure holding company, and most of the representative
directors of the major subsidiaries concurrently serve as directors of
the Company. Therefore, directors are able to deliberate on measures
to address issues which overlap among the multiple business domainsof Group companies, and quickly ascertain specific problems andaddress them.
The Company’s Board of Directors decides important mattersrelated to the Company and the Group, such as matters stipulated inlaws and regulations or in the articles of incorporation, M&As, organizational restructuring, the election of major subsidiaries’ directors andAudit & Supervisory Board members, and the acquisition and disposalof assets with large monetary value. Concerning matters resolved by
the Company’s Board of Directors and matters delegated the authority
as the business execution of subsidiaries, rules for criteria for matterson the Board of Directors’ meeting agenda, etc., have been preparedand clarified. The Chairman of the Board of Directors is Chairman and
Representative Director, Shukuo Ishikawa.

AUDIT & SUPERVISORY BOARD 
In regard to audits by the Audit & Supervisory Board, the four Audit &Supervisory Board members (of whom two are full-time Audit &Supervisory Board members and three are outside Audit & Supervisory
Board members) attend important meetings, such as meetings of theBoard of Directors. In addition, in conformance with the Audit &Supervisory Board regulations determined by the Audit & Supervisory
Board, the audit standards for the Audit & Supervisory Board, and theimplementation standards and auditing plans related to internal control systems, and in accordance with audit plans determined by the
Audit & Supervisory Board, the Audit & Supervisory Board members
conduct audits regarding the status of business execution by the
directors. In addition, Audit & Supervisory Board members work
together with Audit & Supervisory Board members of Group companies, and in this way the effectiveness of audits for the Group as awhole is heightened.
The Audit & Supervisory Board members, the independent auditors,
and the Internal Auditing Division continually exchange opinions andmaintain close ties. The status of the Group’s business operations ismonitored, issues are identified and understood, and recommendations for resolving those issues are provided.

PERSONNEL COMMITTEE 
The Company has established the Personnel Committee, which
objectively and neutrally considers personnel and compensation
issues regarding directors, as well as other matters about which
it has received inquiries, in particular from the representative
directors. The majority of the committee members are independent
outside directors.

INDEPENDENT DIRECTORS AND AUDIT &SUPERVISORY BOARD MEMBERS COMMITTEE 
The Company has formed an Independent Directors and Audit &Supervisory Board Members Committee with the objective of evaluating from an objective standpoint whether the Board of Directors isfunctioning appropriately. The Independent Directors and Audit &Supervisory Board Members Committee is comprised of just three
independent outside directors and three independent outside Audit &Supervisory Board members, and its secretariat function is also established within a third-party specialist organization. This arrangement
allows to preserve more effective oversight function in the Board of
Directors.

32

 VALUATION OF THE EFFECTIVENESS OF THE
E
BOARD OF DIRECTORS 
With the objectives of heightening the effectiveness of the Board of
Directors and increasing corporate value, evaluations of the effectivenessof the Board of Directors will be conducted periodically. Specifically,
after responses regarding the effectiveness of the Board of Directors
are obtained from all directors and Audit & Supervisory Board members, the Independent Directors and Audit & Supervisory Board
Members Committee will conduct analysis and verification based on
the results and provide their opinions to the Board of Directors. Basedon these opinions, the Board of Directors will share the results of theevaluation of present circumstances as well as issues, and will holdconstructive discussions regarding future action plans. An overview
of the results of the evaluation will be disclosed through information
disclosure on the Company’s website, etc.

 LECTING DIRECTORS AND AUDIT & SUPERVISORY
E
BOARD MEMBERS 
When electing candidates for director, the Company considers thenecessary abilities, experience, personality, and others according to
the role, and decisions are made by the Board of Directors following
discussions and recommendations by the Personnel Committee,
as well as following interviews by outside directors. When electing
candidates for Audit & Supervisory Board members, the Company
considers the necessary abilities, experience, personality, and others
according to the role, and decisions are made by the Board of Directors
after receiving consent from the Audit & Supervisory Board.
The election of directors is based on candidates possessing broad
knowledge and experience required for decision-making on company
management, as well as possessing the track record and insight in
the fields and businesses they have experience in which are requiredin order to provide management oversight. The Company also has abasic policy of electing at least two independent outside directors.
Specifically, the election of outside directors is made with consideration for an appropriate balance of individuals who possess a wealthof experience as corporate managers, individuals who possess deep
academic knowledge on corporate strategy, and attorneys-at-law andother individuals who have thorough knowledge regarding complianceand other aspects of internal control.

Chairman and Representative Director

Shukuo Ishikawa
Number of the Company’s Shares Owned: 49,300 Shares
Reasons for Appointment: Shukuo Ishikawa has worked as a representative
director of the Company since 2009 and possesses extensive experience,achievements, and knowledge as a business manager. He was proposed as a
candidate for director as the Company considers him capable of promoting Groupmanagement and strengthening corporate governance.

President and Representative Director

Mitsuaki Taguchi
Number of the Company’s Shares Owned: 58,500 Shares
Reasons for Appointment: Mitsuaki Taguchi has exhibited leadership skills basedon his extensive experience and broad knowledge gained through roles at
BANDAI CO., LTD., which is the core company of the Group’s Toys and Hobby
Business and where he was responsible for media policy and new business
policy. He supervised the business appropriately after his appointment as
President and Representative Director of the Company. He was proposed as a
candidate for director as the Company considers him capable of achieving the
Mid-term Plan and ensuring that the Group continues to grow.

Directors

Shuji Ohtsu

Yuji Asako

Masaru Kawaguchi

Division General Manager of the Group
Administrative Headquarters

Division General Manager of the Corporate
Planning Division

Director in charge of Toys and Hobby SBU

Number of the Company’s Shares Owned:
25,100 Shares

Number of the Company’s Shares Owned:
25,000 Shares

Reasons for Appointment: Shuji Ohtsu possesses
specialist expertise as a certified public accountant, as
well as extensive experience and achievements as
Division General Manager of the Group Administrative
Headquartersof the Company. He was proposed as a candidate fordirector as the Company considers him capable ofstrengthening Group management structures andensuring highly transparent management.

Reasons for Appointment: Yuji Asako possesses
extensive experience, achievements, and knowledge
relating to management and administration, including
business planning and accounting, and also has
experience in roles where he was responsible forinternal and external communications, such as IR, PR,
and SR. He was proposed as a candidate for director as
the Company considers him capable of implementing
the Group’s management strategies and seeking asustained increase in corporate value.

Satoshi Oshita

Kazumi Kawashiro

Director in charge of Network Entertainment SBU

Director in charge of Visual and Music
Production SBU

Number of the Company’s Shares Owned:
43,400 Shares
Reasons for Appointment: Satoshi Oshita possesses
extensive experience, achievements, and knowledge
from his wide-ranging involvement in the Group’s Toysand Hobby, Network Entertainment, and Visual andMusic Production Businesses. He has driven thebusiness forward as the President and Representative
Director of BANDAI NAMCO Entertainment Inc., which isthe core company of the Group’s Network Entertainment
Business, since 2012. He was proposed as a candidatefor director as the Company considers him capable ofbuilding closer ties between the Network Entertainment
Business and Group management.

Number of the Company’s Shares Owned:
30,600 Shares
Reasons for Appointment: Masaru Kawaguchi possesses extensive experience, achievements, andknowledge in the Toys and Hobby Business and has
driven the business forward as the President andRepresentative Director of BANDAI CO., LTD., which isthe core company of the Group’s Toys and Hobby
Business, since 2015. He was proposed as a candidatefor director as the Company considers him capable ofbuilding closer ties between the Toys and Hobby
Business and Group management.

Number of the Company’s Shares Owned:
13,700 Shares
Reasons for Appointment: Kazumi Kawashiro possesses extensive experience, achievements, andknowledge in the Visual and Music Production
Business. He has driven the business forward as the
President and Representative Director of BANDAIVISUAL CO., LTD, which is the core company of theGroup’s Visual and Music Production Business, since2012. He was proposed as a candidate for director as
the Company considers him capable of building closer
ties between the Visual and Music Production Businessand Group management.

* Number of shares held is as of the end of March 2016.

CORPORATE GOVERNANCE

MAIN TOP MANAGEMENT MEETINGS 
As shown in the table below, the Company holds a variety of top management meetings and has established a system that facilitates rapidly tracking and responding to Group management information.
Meeting Name

Schedule

Agenda / Purpose

Participants

Board of Directors

Monthly andotherwise asneededQuarterly

Decisions / 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 compliance
Consolidated numerical reports, SBU reports, other items to be reported

Directors, Audit & Supervisory Board members,
other designated employees

SBU Quarterly
Report MeetingGroup Management
Meeting
Content Business
Strategy Meeting

6 times a year Deliberations regarding issues extending across SBUs, other Groupmanagement issues, strategic deliberations
Quarterly
Sharing of information about SBU initiatives related to the Group’s
important IP

Asia Strategy
Meeting

Quarterly

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

Group CSR
Committee

Semiannually

Waigaya Meeting

WeeklyDeliberations and information sharing regarding the Group’s important
CSR strategies, consideration of resolutions, items to be reported, anddeliberations at meetings of the Board of Directors, overall supervision ofGroup CSR subcommittees, overall supervision of progress of important
items for each SBU and affiliated business company
Weekly reports regarding the departments for which directors are
responsible

 UTSIDE DIRECTORS AND OUTSIDE AUDIT &OSUPERVISORY BOARD MEMBERS 
Of the Company’s 10 directors, three meet the conditions for outside
directors. The Company is working to strengthen the management oversight function. In addition, of the four Audit & Supervisory Board members(including two full-time Audit & Supervisory Board members), three meetthe conditions for outside Audit & Supervisory Board members. They work
together and monitor the Company’s internal control situation on a daily
basis. As described on page 37, the Company has established standards
for the independence of outside directors and outside Audit & Supervisory
Board members, and outside directors and outside Audit & Supervisory
Board members are appointed in accordance with those standards. In the

Directors, Audit & Supervisory Board members,
other designated employees
Directors (excluding outside directors), otherdesignated employees
Directors with related responsibilities, directors
from major subsidiaries with related responsibilities, other designated employees
Directors with related responsibilities, directors
from major subsidiaries with related responsibilities, other designated employees
Directors (excluding outside directors), otherdesignated employees

Directors (excluding outside directors), otherdesignated employees

Company’s judgment, the outside directors and outside Audit &Supervisory Board members meet those standards, there is no concernthat they will have a conflict of interest with general shareholders, and they
possess high levels of independence. Accordingly, the Company has notified
the Tokyo Stock Exchange (TSE) that they are all independent directors or
independent Audit & Supervisory Board members in accordance with TSE
regulations. The status of audits by internal auditors, audits by the Audit &Supervisory Board members, and audits by the independent auditors arereported to the Board of Directors. By attending meetings of the Board of
Directors, the outside directors track the status of these audits and work
to maintain close ties. In addition to tracking the status of internal audits
reported at meetings of the Board of Directors, outside Audit & Supervisory33

Board members track the status of audits by the Audit & Supervisory Board
members at meetings of the Audit & Supervisory Board and maintaincooperative relationships with the internal auditors and the other Audit &Supervisory Board members. In addition, all members of the Audit &Supervisory Board, including outside Audit & Supervisory Board members, receive explanations from the independent auditors of the status ofaccount audits on a quarterly basis. In this way, they track the status ofthese audits and maintain cooperative relationships with the independent
auditors. Furthermore, through matters brought to the Board of Directors,
outside directors and outside Audit & Supervisory Board members track

the status of internal control departments (all of the Company’s departments).
In addition, they attend the SBU Quarterly Report Meeting, wherereports on the status of the Group’s operations are made; strengthensupervisory and other functions; and provide advice as needed.
Moreover, as an information access support system, the Corporate
Planning Division supports outside directors and outside Audit &Supervisory Board members. In regard to the communication of
information from the Corporate Planning Department, principally,materials are sent prior to meetings of the Board of Directors andexplanations are provided as needed.

Outside Directors

Yuzuru Matsuda

Satoko Kuwabara

Mikiharu Noma

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

Partner of Mori Hamada & Matsumoto

Associate Professor, Graduate School ofInternational Corporate Strategy (ICS)
Hitotsubashi University

Reasons for Appointment: Given his extensive
experience in corporate management and his
excellent character and insight, the Company
anticipates that he will be able to further strengthen
management oversight and checking functions, andintroduce a broader managerial perspective, andthus believes that he will be able to perform theduties of an outside director appropriately.

Reasons for Appointment: Although she has not been involvedin corporate management, the Company anticipates, given
her many years of experience as an attorney-at-law, that she
will be able to further strengthen management oversight andchecking functions, mainly from a legal risk perspective, andthus believes that she will be able to perform the duties of an
outside director appropriately.

Reasons for Appointment: Although he has not been
involved in corporate management, given his profoundscholarly knowledge accumulated throughout his study
and teaching activities in the field of corporate strategy,
the Company anticipates that he will be able to further
strengthen management oversight and checking
functions, and thus believes that he will be able toperform the duties of an outside director appropriately.

Outside Audit & Supervisory Board Members

Katsuhiko Kohtari

Osamu Sudoh

Katsuhiko Kamijo(Full-time)

Partner in Sudoh & Partners Law Offices
Outside Audit & Supervisory Board Member of
PRONEXUS INC.
Outside Audit & Supervisory Board Member of
Keikyu Corporation
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

Reasons for Appointment: Katsuhiko Kohtari was
appointed due to the Company’s expectation, basedon his career over many years as a 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.

Reasons 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 in legal matters tostrengthen the Company’s legal systems.

Reasons 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 and experience in taxation.

 OLICY REGARDING COMPENSATION OF DIRECTORSPAND AUDIT & SUPERVISORY BOARD MEMBERS 
The basic policy of the remuneration system for the Company’s directors,
excluding outside directors, is to create a remuneration framework that
promotes the Company’s continuous growth and improves the Company’s
corporate value over the medium to long term by promoting the sharing ofvalues with shareholders, ensuring objectivity and transparency so that theCompany can adequately fulfill its accountability obligations, and fosteringa healthy sense of entrepreneurship in the directors while taking into
account the level of remuneration that will enable the Company to secureand retain top-grade personnel. The same basic policy applies to thedirectors of the three core companies of the Group’s SBUs: BANDAI CO.,LTD., 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 remunerationand variable remuneration consisting of performance-based bonuses
and stock compensation-type stock options.
Each director contributes a fixed proportion of the base remuneration to the shareholding association for directors and officers to purchase the Company’s shares and continues to hold such shares during
his or her term of office.
Remuneration standards are determined by utilizing a management
remuneration database with which data on remunerations are

34

aggregated and analyzed by an external specialist organization, setting
objective benchmarks in light of the scales of the Company’s business
operations and other factors, and comprehensively taking into consideration the proportion of medium- and long- term performance-based
remuneration within annual total remuneration and the level of difficulty of achieving business performance targets. Where the standard
performance for the period of the Mid-term Plan has been achieved,
the ratio of fixed remuneration to variable remuneration within annual
total remuneration shall be about 50:50, and the ratio of share-type
remuneration shall be a little over 20%.
The policy for remuneration, the remuneration framework, and thestructure for performance-based remuneration for directors, excluding outside directors, shall be decided at Board of Directors’ meetings
after receiving opinions from the Personnel Committee, in order toelicit outside directors’ adequate participation and appropriate advice.
In the course of deliberations by the Committee, sufficient information
is provided to the outside directors so that they are able to performtheir analysis, including for instance by asking for advice from external
specialist organizations where necessary.
Remuneration for outside directors comprises base remuneration
only, to ensure their independence from the Company, and the amountof remuneration for each outside director is determined by Board of
Directors’ meetings.
Remuneration for Audit & Supervisory Board members comprises
base remuneration only, with the amount set in accordance with theirjob positions, considering that they bear the duty to audit the execution

of all businesses across the Group. The amount of remuneration foreach Audit & Supervisory Board member is determined by Audit &Supervisory Board Meetings.

Officer category

Directors(excluding outside directors)

Audit & Supervisory
Board members(excluding outside Audit &Supervisory Board members)

Outside officers

Total amount of compensation,etc., by type(Millions of yen)

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.

Total amount ofcompensation,
etc.
(Millions of yen)

Basiccompensation

Bonus

Number of
eligible officers(People)

423

243

179

5

I NITIATIVES RELATED TO RESPECT FOR THE
VIEWPOINTS OF STAKEHOLDERS 

24

24

—

1

Rules related to respect for the viewpoints of stakeholders through internal
regulations

88

88

—

6

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.

COMPLIANCE AND RISK MANAGEMENT 

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
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 power over
the Company’s financial and business policies.

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.

IR ACTIVITIES 
Aiming to enhance corporate value, BANDAI NAMCO Holdings is
implementing a variety of IR activities in accordance with the IR policy.
In addition, the status of IR activities and the reactions of investors andanalysts are continually communicated as feedback to the SBU corecompanies and throughout the Group.

CORPORATE GOVERNANCE

The BANDAI NAMCO Group has formulated standards for complianceand 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, thedirector in charge of compliance has overall responsibility for compliance 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 or
regulations, such information is immediately reported to the president.
The Group is working to minimize any influence on operations throughthe implementation of rapid and accurate responses.
In particular, positing the occurrence of a situation that could cause
drastic damage to the management of the Group through a major disaster or the like, the Group has defined the basic policy for a BusinessContinuity Plan (BCP) for the Group, and is drawing up a BCP for theGroup and organizing a Business Continuity Management (BCM)
system to achieve rapid recovery and restart of operations.
In addition, the Company has formulated the BANDAI NAMCO
Group Compliance Charter and has published the BANDAI NAMCO
Group Compliance Handbook to ensure thorough knowledge of compliance throughout the Group. The Group also implements training
activities, such as through an education system utilizing the Group’s
intranet. Furthermore, the presidents of Group operating companies
submit written oaths pledging strict compliance with the charter.

Implementation of environmental conservation activities and CSR activities

Results of Major IR Activities in FY2016.3
BANDAI NAMCO aims to be a highly transparent company that clearlycommunicates management strategies and business policies toshareholders and investors. Accordingly, the Company works toenhance opportunities for executives to speak directly to individual
investors, institutional investors, and securities analysts, such as
corporate presentations and results presentations.
Results presentations for investors and analysts

2 (196 people)

Results telephone conferences for investors
and analysts

2 (138 people)

Overseas IR

3

Separate meetings for investors and analysts

295 people

Presentations for individual investors in Japan

5 locations (630 people)

In presentations forinvestors and analysts,
explanations are provided
directly by presidents ofmajor Group companies
who work as directors of
BANDAI NAMCO Holdings

35

INTERNAL CONTROL SYSTEM 
1. ‌Internal Control System: Basic Approach(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
to ensure 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.
(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.
(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.

36(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 the social context surrounding the Group, and shall ensure that the contents of the Charter are made thoroughly
known to Directors, etc., and employees of the Company and its subsidiaries throughdistributing 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.
(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
to assist their duties. Where that employee simultaneously works for any othersection, 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 Auditing 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.

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.”

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 amount
CORPORATE GOVERNANCE

8.	‌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.”

37

CSR INITIATIVES

To realize the provision of “Dreams, Fun and Inspiration,” the BANDAI NAMCO
Group conducts CSR activities in accordance with the concept of “Fun For the
Future!” Themes that require special initiatives have been identified as the “BANDAI
NAMCO Group’s Important CSR Themes.”

CSR ACTION CONCEPT 
At BANDAI NAMCO, CSR activities are “Fun For the Future!”
Our work is to provide inspiration to customers by realizing individual ideas of “Dreams, Fun and Inspiration.” In turn, those “Dreams,
Fun and Inspiration” provide healing and encouragement as they
spread around the world. We believe that “Dreams, Fun andInspiration” can change the world, and even change the future.

As a company that provides “Dreams, Fun and Inspiration,” ourrelationship with the natural environment and society will be guided by
the concept “Fun For the Future!” We will implement CSR activities
that lead to happiness for stakeholders by featuring fun today while
also contributing to the creation of fun tomorrow.
We believe that entertainment can contribute to society by fostering
inspiration and creating a future of “Dreams, Fun and Inspiration.”

CSR TOPICS
 anufacture of safe, reliableM
products

Universal design initiatives

Dropping products to test quality

Moving toward low-environmental-impact packaging(using pulp molds)

Example of a package designed so that it is easy to open

In all our business fields, we follow all legal andindustry quality and safety standards. We havealso established our own more rigorous inhouse standards, and we pay careful attention
to safety.

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

From the viewpoint of universal design, which
focuses on easy use for as many people aspossible, we are taking steps to increase usability, such as improving packaging to make iteasier to open.

Social contribution activitiesI nitiatives to motivate andsupport human resourcesI nitiatives in the field of
eco-amusement featuring environmentally friendly design

Certified product “Tsuri Spirits (6ST)”

Eco-Label

We have formulated environmentally friendly
design guidelines for arcade game machines soldin Japan. Products that clear specific standards
established under the guidelines are certified as“Eco-Amusement” products. In addition, certified
products display the “Eco-Label.”38

 roduct raw materials and packP
aging and wrapping initiatives

Workshops in disaster-stricken areas

BANDAI NAMCO Awards

In cooperation with Save the Children Japan, theBANDAI NAMCO Group is implementing workshop activities and support activities for children in areas affected by the Great East Japan
Earthquake. In addition, we continue to implement support activities in conjunction withshareholders who have chosen to contribute
their shareholder benefits.

In regard to enhancing the utilization of humanresources, the BANDAI NAMCO Group is promoting
measures to advance dynamic corporate activities.
For example, the Group has established an award
system to recognize various initiatives that excel
in such areas as market success, creativity, anduniqueness. Other programs include aggressive
personnel exchange initiatives and developmenttraining for future management candidates.

FINANCIAL SECTIONCONTENTSCONSOLIDATED SIX-YEAR FINANCIAL SUMMARYFINANCIAL SECTION

40
41
44
46

FINANCIAL REVIEWCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATEDSTATEMENTS OF COMPREHENSIVE INCOME

47
48
49
74

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT

39

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

2011

2012

2013

2014

2015

2016

Net sales¥394,179¥454,211¥487,241¥507,679¥565,486¥575,505

Gross profit

139,415

167,503

183,079

190,829

213,112

202,601

Selling, general and administrative expenses

123,077

132,896

134,436

146,156

156,791

152,960

Operating income

16,33834,607

48,64344,67356,32149,641

16,39934,96049,97347,45759,38450,775

Profit attributable to owners of parent*2

1,848

19,30432,38325,05537,58934,584Comprehensive income(4,600)21,551

41,50532,63343,357

27,377

Capital expenditures

13,43923,75823,83628,97927,761

26,987

Depreciation and amortization

18,001

18,142

20,416

21,72623,712

21,626

Cash flows from operating activities

22,562

39,112

36,411

41,291

50,10358,050Total assets¥308,269¥342,172¥374,203¥405,093¥441,764¥448,336

Total current assets

210,934

240,920

264,804

284,398

317,516

322,177

Total current liabilities

86,105

107,946

108,391

120,135

123,136

114,334

Total net assets

213,693

213,126

248,770

267,951

303,513317,304

Net income per share (basic)¥ 7.71¥85.62¥147.40¥114.05¥171.10¥157.43

Cash dividends

24.00

26.00

45.00

35.00

62.00

52.00

Return on equity (ROE)*3 (%)

0.8

9.1

14.1

9.7

13.2

11.2

Return on assets (ROA)*4 (%)

5.2

10.7

14.0

12.2

14.0

11.4

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

31.2

29.3

27.6

28.8

27.7

26.6

Operating income margin (%)

4.1

7.6

10.0

8.8

10.0

8.6

Profit attributable to owners of parent margin (%)

0.5

4.3

6.6

4.9

6.6

6.0

Shareholders’ equity ratio (%)

68.8

61.8

66.0

66.0

68.6

70.6

Debt/equity ratio (times)

0.02

0.09

0.05

0.03

0.01

0.01

For the Year:

Recurring income*1

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

Main Financial Indicators:

Notes:*1 Recurring income is a Japanese accounting term denoting income before extraordinary items.
*2	As the Company has applied new standards including the Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013), “Net income” is now listed as“Profit attributable to owners of parent” from the period under review.
*3 ROE = Profit attributable to owners of parent / Average total shareholders’ equity (= Total net assets – Stock acquisition rights – Non-controlling interests)*4 ROA = Recurring income / Average total assets

40

FINANCIAL REVIEWOverview of Performance in the
Fiscal Year Ended March 31, 2016

SG&A Expenses

During this fiscal year, the Japanese economy continued to moderately

million (year-on-year decrease of 2.4%), and the ratio of SG&A

recover, supported by a recovery in personal consumption, improved

expenses to net sales declined to 26.6%, from 27.7% in the previous

corporate profitability, and growth in purchasing demand from overseas

fiscal year. Principal items included advertising expenses of ¥37,734

visitors. However, the outlook for the overall economy remained

million, directors’ remuneration and employees’ wages of ¥39,620

uncertain. Overseas, the global economy recovered at a moderate

million, employees’ retirement and severance benefits of ¥2,268

pace overall, despite signs of more subdued growth in some regions.

million, provision for directors’ bonuses of ¥1,403 million, and research

Selling, general and administrative (SG&A) expenses were ¥152,960

and development expenses of ¥18,195 million.

In this environment, the BANDAI NAMCO Group (“the Group”) istargeting medium- and long-term growth under the Vision of “NEXT
STAGE: Empower, Gain Momentum and Accelerate Evolution” in the

Operating Income

three-year Mid-term Plan that started in April 2015. The Group has

Operating income was ¥49,641 million (year-on-year decrease of

focused on creating and developing new IP (Intellectual Property:

11.9%), and the operating income margin decreased to 8.6%, from

intellectual property of characters), expanding targets, and growing

10.0% in the previous fiscal year.

new businesses as part of efforts to strengthen the “IP Axis Strategy”
that aims to maximize IP value through the provision of the best

Other Income (Loss)products and services at the best possible times. The Group has also

In other income (loss), gain on sales and disposal of fixed assets, net

initiated to make WiZ Co., Ltd. a wholly owned subsidiary through awas ¥805 million. However, gain on sales of investment securities, net

tender offer as part of plans to strengthen planning and development

was ¥1 million, compared with ¥500 million in the previous fiscal year;

capabilities for toys. The Group is also working to expand IP lineup,loss on impairment of fixed assets was ¥2,553 million; and other gains

business fields, and areas in the Asian region with high growth potential.

declined from ¥2,243 million in the previous fiscal year to ¥78 million.

On the business front, while there were favorable sales in the Toys andAs a result, there was a net other loss of ¥1,152 million.

Hobby Business, network content and overseas home video gamesoftware in the Network Entertainment Business, and the Visual andProfit Attributable to Owners of Parent

Music Production Business, sales of arcade game machines in the

The Group recorded profit attributable to owners of parent of ¥34,584

Network Entertainment Business struggled.

million (year-on-year decrease of 8.0%). The profit attributable toowners of parent margin was 6.0%, and basic earnings per share

Net Sales

decreased to ¥157.43, from ¥171.10 in the previous fiscal year.

On a consolidated basis, the Group’s net sales were ¥575,505 million

Effective from this fiscal year, the Company has applied the(year-on-year increase of 1.8%)

Accounting Standard for Business Combinations (ASBJ Statement
No. 21, September 13, 2013) and other standards, and “net income”

Cost of Sales

FINANCIAL SECTION

is now presented as “profit attributable to owners of parent.”

Cost of sales was ¥372,904 million, and the ratio of cost of sales to net
sales increased to 64.8%, from 62.3% in the previous fiscal year. As aresult, gross profit was ¥202,601 million, and the gross profit margin
declined to 35.2%, from 37.7% in the previous fiscal year.

Results by Segment

Millions of yen

Millions of yen

Net sales

Segment income

2016

2015

Year on year

2016

2015

Year on year

Toys and Hobby¥206,425¥230,919¥(24,494)¥16,639¥17,040¥   (401)

Network Entertainment

320,941

296,442

24,49923,932

29,291(5,359)Visual and Music Production

51,96843,774

8,194

10,077

1,588

Other

27,45627,007449

11,665
1,123

1,462

(339)

Note: As the Group changed the classification of business segments on April 1, 2015, the classification of business segments for the previous fiscal year has been restated accordingly.

Toys and Hobby Business

functions such as planning and development in Japan, and creates

In the Toys and Hobby Business, in Japan, sales performed satisfactorily

dedicated sales and marketing in North America and Europe.

thanks to long-established IP products such as Mobile Suit Gundam andAs a result, net sales in the Toys and Hobby Business were ¥206,425

Dragon Ball, while products of Yo-kai Watch became popular. Moreover,million (year-on-year decrease of 10.6%), and segment income wasalthough collectable toys for adults expected to contribute to broad-¥16,639 million (year-on-year decrease of 2.4%).

ening its base of target customers also became popular, there was a
decline in sales domestically in comparison with the previous fiscal year.
Overseas, in the Asian region, products of Mobile Suit Gundam andNetwork Entertainment BusinessIn the Network Entertainment Business, in home video game software,collectable toys for adults became popular. In North America andrepeat sales of products including DRAGONBALL XENOVERSE, which

Europe, products of the Power Rangers series sold steadily. In addition,

was launched in North America and Europe in the previous fiscal year,

certain results were realized by changing to a system that controls

and sales of new titles of the BANDAI NAMCO Group, such as NARUTO

41

SHIPPUDEN: Ultimate Ninja Storm 4, and new titles of local third-

As a result, the shareholders’ equity ratio increased to 70.6%, fromparties were strong. Moreover, in network content such as social

68.6% at the end of the previous fiscal year. The current ratio*1 wasgames, game applications for smartphones, and PC online games, key

281.8%, compared with 257.9% at the end of the previous fiscal year;

titles already existing in Japan retained stable popularity, and the new

the quick ratio*2 was 216.3%, compared with 196.1%; and the interest

title The iDOLM@STER Cinderella Girls: Starlight Stage performed favor-

coverage ratio*3 was 1,116.3 times, compared with 634.2 times.

ably and contributed to performance. The Group also started provision

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 paidof services overseas, including the Asian region. In addition, in amusement facilities, the Group started implementing a range of measures,
including targeting resources on key facilities and strengthening storesin new business formats, resulting in improved profitability. However,Cash Flowssales from arcade game machines struggled due to the effects of

As of the end of the fiscal year, cash and cash equivalents (“net cash”)

uncertainty in the market.

had increased by ¥15,778 million from the end of the previous fiscal year,

As a result, net sales in the Network Entertainment Business wereto ¥169,543 million. Below is an analysis of cash flows by activities.

¥320,941 million (year-on-year increase of 8.3%), and segment income
was ¥23,932 million (year-on-year decrease of 18.3%).

Cash Flows from Operating Activities
The amount of net cash provided by operating activities totaled ¥58,050

Visual and Music Production Businessmillion (year-on-year increase of 15.9%). Net cash used mainly

In the Visual and Music Production Business, LoveLive! School idolincluded income taxes paid of ¥18,902 million (compared with ¥19,532

project, which is IP for which visual content was developed in conjunc-

million in the previous fiscal year). However, overall, there was a nettion with music content and live events, became popular through theincrease in net cash due to profit (loss) before income taxes of ¥48,489

year due to synergies with a theatrical release, products and services,million (compared with ¥56,484 million in the previous fiscal year) andand live events. Moreover, visual package software of the Mobile Suitadjustment for depreciation and amortization of ¥21,626 million

Gundam series sold favorably and contributed to performance.

(compared with ¥23,712 million in the previous fiscal year).

As a result, net sales in the Visual and Music Production Businesswere ¥51,968 million (year-on-year increase of 18.7%), and segment

Cash Flows from Investing Activities

income was ¥11,665 million (year-on-year increase of 15.8%).

The amount of net cash used in investing activities totaled ¥23,426
million (year-on-year increase of 20.0%). The main item of net cash

Other Businesses

used was purchases of property, plant and equipment and intangible

Other Businesses consist of companies that conduct businesses such

assets totaling ¥19,207 million (compared with ¥16,771 million in theas logistics support, printing, and other kinds of administration andprevious fiscal year).

operational support for each of the Group’s strategic business units:
Toys and Hobby SBU, Network Entertainment SBU, and Visual and

Cash Flows from Financing Activities

Music Production SBU. We are making efforts to manage such opera-

The amount of net cash used in financing activities totaled ¥16,123

tions related to group support in an efficient manner.

million (year-on-year increase of 28.1%). The main factors for net cash

As a result, net sales in the Other Businesses were ¥27,456 million

used were cash dividends paid of ¥13,629 million (compared with(year-on-year increase of 1.7%), and segment income was ¥1,123¥7,691 million in the previous fiscal year) and repayment of long-term

million (year-on-year decrease of 23.2%).

borrowings of ¥2,262 million (compared with ¥4,878 million in theprevious fiscal year).

Financial Position
increase of ¥6,572 million from the end of the previous fiscal year.

Basic Policy on the Distribution of Profits and the
Payment of Dividends

The main factor was an increase of ¥21,216 million in cash and time

The Company positions the return of profits to stockholders as one

deposits while there was a decrease of ¥15,346 million in trade receivables.

of its highest management priorities. The fundamental policy is

As of March 31, 2016, total assets stood at ¥448,336 million, an

Total liabilities amounted to ¥131,032 million, a decrease of

becoming an even more competitive Group, and preserving a soundwas principally attributable to accrued income taxes of ¥4,316 million,

financial position. The Company is maintaining the consolidated

which are included in other current liabilities; to accrued employee

dividend payout ratio at a level of 30%, based on stable annual dividend

bonuses of ¥2,779 million, which are included in other current

payments of ¥24 per share. The Company added a performance-based

liabilities; and to accrued expenses of ¥4,838 million, which are

dividend of ¥28 per share to the stable annual dividend ofincluded in other current liabilities, despite an increase of ¥5,389 million¥24 per share, resulting in an annual dividend of ¥52 per share for thisin trade payables.

fiscal year. For the fiscal year ending March 31, 2017, the Company

Total net assets stood at ¥317,304 million, an increase of ¥13,791

plans to pay the stable dividend portion of ¥24 per share, and this will

million from the end of the previous fiscal year. The main factor was

be considered by the Company in light of the consolidated operating

an increases of ¥20,955 million in retained earnings due to the recording

results and other factors.

of profit attributable to owners of parent of ¥34,584 million, despite¥4,247 million in foreign currency translation adjustments due to foreignexchange fluctuations and cash dividends paid of ¥13,629 million.

42

to maintain a stable dividend and increase corporate value while¥7,219 million from the end of the previous fiscal year. This decreaseIn addition, after appropriation of dividends from profit attributabledeploy a new business that goes beyond the framework of the existing

to owners of parent for the period, the Company has resolved togame business and fuses networks and entertainment; and the Visual

attribute a portion of the remaining balance to the acquisition of its

and Music Production SBU, which will create IP and strengthen theown shares, with comprehensive consideration of aspects such as theGroup’s business deployment as it looks toward new outlets.

level of cash held, operating performance, share price trend, and plan
for large-scale investments.

In the fiscal year ended March 31, 2016, the first year of the new
Mid-term Plan, the Group made progress with Business Strategies to“Accelerate Evolution in the IP Axis Strategy.” Specifically, it createdTargets and Management Performance Indicatorsand developed new IP, extended its target markets to include adults

The Group has adopted return on equity (ROE) as its key management

and other groups, and expanded new businesses such as live events.

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

In Region Strategies to “Gain Momentum in Global Markets,” theto secure ROE of 10% or more, despite belonging to a sector subject

Group expanded the Toys and Hobby Business in Asia, increased theto severe environmental changes, by aiming to further expand profits

popularity of home video game software in North America and Europe,

through execution of strategies under the Mid-term Plan, as well as

and started the full-fledged development of network content for eachby effectively utilizing shareholders’ equity.

overseas regional market. In Functional Strategies to “Empower andInnovate Business Model,” the Group developed and provided products

Outlook for the Fiscal Year Ending March 31, 2017

and services that integrate real and virtual elements. Going forward,

Looking ahead, although there are some bright signs in Japanese and

the Group will continue to implement a range of measures to respondoverseas economic trends, the business environment is expected to

rapidly and flexibly to the fast-changing entertainment market based

remain beset by uncertainties, including the impact on personalon constant monitoring of conditions in the Group and the operating

consumption from uncertainty in the overall society and the overall

environment, and develop solid business foundations in order toeconomy, as well as economic trends in North America and Europe.

generate stable earnings in this industry that is characterized by rapid

Such factors are also expected to have an impact on the entertainmentchanges in operating climate and user preferences. The objective is toindustry, in which the Group is extensively involved, resulting in ongoingmove to the next stage as an entertainment corporate group.

uncertainty in this business environment.
Facing these circumstances, the Group started a new Mid-term Plan

In addition, the Group will push ahead with the various strategies in
the Mid-term Plan, and aims to achieve the following numerical targets

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

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

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

operating income of ¥60,000 million, and ROE of more from 10%.
In light of the above considerations, the consolidated projections

IPs through taking advantage of the worldview and unique characteristicsof the fiscal year ending March 31, 2017 are as follows: net sales ofof its IPs and providing the best products and services at the best

¥580,000 million (year-on-year increase of 0.8%), operating income ofpossible times. In addition, aiming towards growing in the global¥50,000 million (year-on-year increase of 0.7%), and profit attributable

market, the Group will further strengthen business development into owners of parent of ¥35,000 million (year-on-year increase of 1.2%).

FINANCIAL SECTION

will further strengthen the IP Axis Strategy to expand the value of its

Asia as an area with high growth potential.

region strategies to “Gain Momentum in Global Markets,” andConsolidated Plan for the Fiscal Year Ending March 31, 2017
Millions of yen
Net sales
Segment income
Segmentsfunctional strategies to “Empower and Innovate Business Model.” In its

Toys and Hobby¥210,000¥16,000

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

Network Entertainment

340,000

28,000

Visual and Music Production

43,000

9,000

Other

28,0001,000

For its main strategies in the Mid-term Plan, the Group will implementbusiness strategies to “Accelerate Evolution in the IP Axis Strategy,”

the Group will not only cultivate original Group IP by such means ascreating and obtaining IP but also expand new IP business such as live
events, expand its target markets, and strengthen collaboration amongits businesses. In its region strategies to “Gain Momentum in Global
Markets,” the Group will not only maintain its pursuit of becoming

Adjustments(41,000)(4,000)Consolidated¥580,000¥50,000

No. 1 in each of its markets in Japan but also proactively expand its
business in Asia, where there is a promising outlook for future growth.

Forward-Looking Statements

In the Americas and Europe, the Group will implement initiatives

Forecasts for the next fiscal year and other future projections in thisaimed at maintaining its business foundations and expanding its

annual report are based on information available to the Group at thebusinesses. Furthermore, in its function strategies to “Empower andtime they were made and are therefore subject to various risks andInnovate Business Model,” the Group will create and cultivate new IP

uncertainties. Actual results therefore may differ materially frombusiness for the next generation and push ahead with creating founda-

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

tions for the implementation of its IP Axis Strategy in global markets.

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

In order to carry out these initiatives, in April 2015 the Group changed

environment, market trends, and exchange rate fluctuations.

its organizational structure into one centered on three SBUs—the Toysand Hobby SBU, the Network Entertainment SBU, and the Visual andMusic Production SBU. The Group will push ahead with each of its
strategies with a focus on the three SBUs: the Toys and Hobby SBU,
which will aim to strengthen the IP Axis Strategy and gain momentum
in global markets; the Network Entertainment SBU, which will aim to

43

CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2015 and 2016

Millions of yen

Thousands of
U.S. dollars (note 3)

2015

2016

2016

¥ 153,542¥ 174,758$ 1,550,923

Trade receivables (notes 6 and 12)87,876

72,530643,681

Allowance for doubtful receivables

(455)

(607)

(5,387)

Inventories (note 7)

42,911

46,242

410,383

Deferred tax assets (note 13)

8,954

8,523

75,639Other current assets (notes 4, 5, 12 and 23)

24,68820,731

183,982

317,516

322,177

2,859,221

32,856

34,519306,345

144

71

630

Deferred tax assets (note 13)

11,652

12,545111,333

Other investments and assets (notes 8 and 23)

17,082

16,888

149,877

Allowance for doubtful receivables(1,023)(1,016)(9,017)

		 Total investments and other assets

60,711

63,007559,168

Buildings and structures (note 8)

29,46832,820291,267

Amusement facilities and machines (note 8)

57,07057,258508,147

Land

11,957

11,02697,852Other property, plant and equipment (note 8)

110,724

111,368

988,357

209,219

212,472

1,885,623(155,958)(158,769)(1,409,026)

53,26153,703

476,597

10,276

9,449

83,857¥ 441,764¥ 448,336$ 3,978,843

AssetsCurrent assets:
Cash and time deposits (notes 4, 12 and 23)

		 Total current assets

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

Property, plant and equipment:

		TotalLess accumulated depreciation
		 Net property, plant and equipment

Intangible assets:
Total intangible assets (note 8)
Total assets
See accompanying Notes to Consolidated Financial Statements.

44

Millions of yen

Thousands of
U.S. dollars (note 3)

2015

2016

2016

¥ 57,257¥ 62,646$  555,964

65,87951,688458,715

123,136

114,334

1,014,679

Net defined benefit liability (note 11)

7,999

9,920

88,037

Deferred tax liabilities (note 13)

1,360

978

8,679

Other long-term liabilities (note 9)

5,756

5,800

51,474

		 Total long-term liabilities

15,115

16,698148,190

		Total liabilities

138,251

131,032

1,162,869

		 Issued: 222,000,000 shares

10,00010,00088,747

Additional paid-in capital

52,24752,247

463,676

Retained earnings (note 17)244,276

265,2312,353,843(2,404)(2,411)(21,397)

304,119

325,0672,884,869

Unrealized gains or losses on other securities, net of tax (notes 5 and 15)

6,757

6,907

61,298Deferred gains or losses on hedges, net of tax (note 15)

1,300

(706)

(6,266)

Revaluation reserve for land, net of tax (notes 15 and 18)(5,695)(5,671)(50,328)

Foreign currency translation adjustments (note 15)(1,542)(5,789)(51,376)

Remeasurements of defined benefit plans, net of tax (notes 11 and 15)(2,045)(3,145)(27,911)(1,225)(8,404)(74,583)

Subscription rights to shares (note 20)

44

100

887

Non-controlling interests

575

541

4,801

		 Total net assets

303,513317,304

2,815,974

		 Total liabilities and net assets¥441,764¥448,336$3,978,843

Liabilities and net assets
Current liabilities:
Trade payables (notes 10 and 12)
Other current liabilities (notes 9 and 13)
		 Total current liabilities

Long-term liabilities:

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

		Subtotal

FINANCIAL SECTION

Treasury stock, at cost; 2,316,797 shares in 2015 and 2,321,565 shares in 2016 (note 19)

Accumulated other comprehensive income:		Subtotal

45

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2015 and 2016

Consolidated Statements of Income
Millions of yen

Thousands of
U.S. dollars (note 3)

2015

2016

2016

Net sales¥565,486¥575,505$5,107,428

Cost of sales

352,374

372,904

3,309,407

		Gross profit

213,112

202,601

1,798,021

Selling, general and administrative expenses (note 14)

156,791

152,960

1,357,473

		Operating income

56,32149,641

440,548

Interest and dividend income

641

568

5,041

Interest expense

(74)

(50)

(444)

Gain (loss) on sales of investment securities, net

500

1

9

Loss on valuation of investment securities

(137)

(1)

(9)

Other income (loss):

(142)

805

7,144

Loss on impairment of fixed assets (note 8)(2,868)(2,553)(22,657)

Other

2,243

78

693

163

(1,152)(10,223)

Profit (loss) before income taxes

56,48448,489430,325

Income taxes (note 13)

18,656

13,933

123,651

Profit37,82834,556306,674

239

(28)

(248)

¥ 37,589¥ 34,584$   306,922

Yen

U.S. dollars (note 3)

2015

2016

2016

¥1,378.77¥1,441.49$12.79
1.40

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

Profit (loss) attributable to non-controlling interests
		 Profit attributable to owners of parent

Data per common share (note 16):
Net assets at March 31
Net income:Basic

171.10157.43

Diluted171.08157.39

1.40

62.00

52.00

0.46

Millions of yen

Thousands of
U.S. dollars (note 3)

Cash dividends applicable to period (note 17)
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Profit

2015

2016

2016

¥37,828¥34,556$306,674

Other comprehensive income (note 15):
Unrealized gains or losses on other securities, net of tax (note 5)
Deferred gains or losses on hedges, net of tax
Revaluation reserve for land, net of tax (note 18)
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

458

171

1,518

1,093

(1,982)(17,590)

48

24

213

3,599

(4,222)(37,469)237(1,100)(9,762)

94

(70)

(622)

5,529

(7,179)(63,712)¥43,357¥27,377$242,962¥43,114¥27,405$243,210

243

(28)

(248)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See accompanying Notes to Consolidated Financial Statements.

46

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2015 and 2016

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

Commonstock(note 19)Balance at beginningof year¥10,000Cumulative effects ofchanges in accounting
policies
Restated balance
10,000Cash dividendsProfit attributable toowners of parentPurchase of treasury stockDisposal of treasury stockChange in treasury sharesof parent arising fromtransactions with noncontrolling shareholders
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is appliedNet changes of items
other than shareholders'equity¥10,000
Balance at end of year

Additional
paid-in
capitalRetainedearnings(note 17)

Accumulated other comprehensive income

Total
Treasury stock shareholders’(note 19)
equityUnrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 15 and 18)(notes 11 and 15) sive income(note 15)

Subscription
rights toNonshares
controlling(note 20)interests

Total net
assets atend of year

¥52,246¥214,415¥(2,391)¥274,270¥6,226¥   195¥(5,743)¥(5,145)¥(2,282)¥(6,749)

¥44

¥386

¥267,951

52,246(37)
214,378(7,691)(2,391)(37)
274,233(7,691)

6,226

195

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

44

386

(37)
267,914(7,691)

37,589¥52,247

37,589(14)
237,589
(14)
2

—

—

0

0

0

¥(2,404)¥304,119

(14)
1

1

¥244,276531¥6,7571,105¥1,30048¥(5,695)

3,603¥(1,542)237¥(2,045)5,524¥(1,225)

—
¥44

189
¥575

5,713
¥303,513

Year ended March 31, 2016
Millions of yen
Shareholders’ equity

Commonstock(note 19)

Total
Treasury stock shareholders’(note 19)
equityUnrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 15 and 18)(notes 11 and 15) sive income(note 15)

Subscription
rights toNonshares
controlling(note 20)interests

Total net
assets atend of year

Additional
paid-in
capitalRetainedearnings(note 17)¥52,247¥244,276¥(2,404)¥304,119¥6,757¥ 1,300¥(5,695)¥(1,542)¥(2,045)¥(1,225)

¥ 44

¥575

¥303,513

52,247244,276(13,629)(2,404)

304,119(13,629)

6,757

1,300

(5,695)(1,542)(2,045)(1,225)44575

303,513(13,629)

34,584

34,584(5)
0

34,584
(5)
0

0

0

(2)

(2)

(2)

¥(2,411)¥325,067

(5)
0

0

0

¥52,247¥265,231150¥6,907(2,006)¥   (706)24¥(5,671)(4,247)¥(5,789)(1,100)¥(3,145)(7,179)¥(8,404)

56
¥100

(34)
¥541

FINANCIAL SECTION

Balance at beginning¥10,000of yearCumulative effects ofchanges in accounting
policies
10,000
Restated balance
Cash dividendsProfit attributable toowners of parentPurchase of treasury stockDisposal of treasury stockChange in treasury sharesof parent arising fromtransactions with noncontrolling shareholders
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is appliedNet changes of items
other than shareholders'equityBalance at end of year
¥10,000

Accumulated other comprehensive income(7,157)¥317,304

Year ended March 31, 2016
Thousands of U.S. dollars (note 3)
Shareholders’ equity

Commonstock(note 19)Balance at beginning$88,747of yearCumulative effects ofchanges in accounting
policies
88,747
Restated balance
Cash dividendsProfit attributable toowners of parentPurchase of treasury stockDisposal of treasury stockChange in treasury sharesof parent arising fromtransactions with noncontrolling shareholders
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is appliedNet changes of items
other than shareholders'equityBalance at end of year
$88,747

Accumulated other comprehensive income
Unrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 11 and 15) sive income(notes 15 and 18)(note 15)

Subscription
rights toNonshares
controlling(note 20)interests

Total net
assets atend of year

Additional
paid-in
capitalRetainedearnings(note 17)

Total
Treasury stock shareholders’(note 19)
equity$463,676$2,167,874$(21,335) $2,698,962$59,966$11,537$(50,541)$(13,684)$(18,149)$(10,871)$390$5,103$2,693,584

463,676

2,167,874(120,953)(21,335)

2,698,962(120,953)

59,966

11,537(50,541)(13,684)(18,149)(10,871)

390

5,103

2,693,584(120,953)

306,922
(44)
0

0

0

(18)

$463,676$2,353,843

See accompanying Notes to Consolidated Financial Statements.

306,922(44)
0306,922
(44)
0

0

0

(18)

(18)

$(21,397) $2,884,869

1,332$61,298(17,803)$ (6,266)

213$(50,328)(37,692)$(51,376)(9,762)$(27,911)(63,712)$(74,583)

497
$887

(302)
(63,517)$4,801 $2,815,974

47

CONSOLIDATED STATEMENTS OF CASH FLOWSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2015 and 2016

Millions of yen

Thousands of
U.S. dollars (note 3)

2015

2016

2016

Profit (loss) before income taxes¥ 56,484¥ 48,489$   430,325

Depreciation and amortization

23,712

21,626

191,924

Loss on impairment of fixed assets

2,868

2,553

22,657

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

142

(805)

(7,144)

Loss on disposal of amusement facilities and machines

576

468

4,153

Loss (gain) on sales of investment securities, net

(500)

(1)

(9)

Loss on valuation of investment securities

137

1

9

Decrease (increase) in trade receivables(9,681)

14,526

128,914237(4,578)(40,628)(5,233)(3,533)(31,354)

Cash flows from operating activities:

Decrease (increase) in inventories
Acquisition of amusement facilities and machines
Increase (decrease) in trade payables

4,290

6,737

59,789Other(3,958)(9,042)(80,247)

		Subtotal

69,07476,441

678,389

Interest and dividends received

640

563

4,996

Interest paid

(79)

(52)

(461)

(19,532)(18,902)(167,749)

50,10358,050515,175

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(722)(4,284)(38,019)(11,792)(13,608)(120,767)

84

2,224

19,737(4,979)(5,599)(49,689)

Purchases of investment securities

(332)

(105)

(932)

Sales of investment securities

633

34

302

(2,370)(234)(2,077)

Payments of loans receivable

(796)

(539)

(4,783)

Collection of loans receivable

238

273

2,423

Payments of guarantee money deposited(829)(2,080)(18,459)

Collection of guarantee money deposited

1,618

701

6,221

Other

(268)

(209)

(1,855)(19,515)(23,426)(207,898)

Increase (decrease) in short-term borrowings, net

74

(357)

(3,169)Proceeds from long-term borrowings

—

200

1,775

Repayment of long-term borrowings(4,878)(2,262)(20,075)

Payments of lease obligations

(83)

(65)

(577)

Decrease (increase) in treasury stock, net

(12)

(4)

(35)

(7,691)(13,629)(120,953)

—

(6)

(53)

Sales of property, plant and equipment
Purchases of intangible assets

Purchases of investments in subsidiaries and associates

		 Net cash used in investing activities
Cash flows from financing activities:

Cash dividends paid
Payments from changes in ownership interests in subsidiaries that do not resultin change in scope of consolidation
Cash dividends paid to non-controlling interests
		 Net cash used in financing activities

(0)

(0)

(16,123)(143,087)

Effect of exchange rate changes on cash and cash equivalents

1,101(2,723)(24,166)

Net increase (decrease) in cash and cash equivalents

19,09815,778140,024

Cash and cash equivalents at beginning of year

134,667

153,765

1,364,617

Cash and cash equivalents at end of year (note 4)¥153,765¥169,543$1,504,641

See accompanying Notes to Consolidated Financial Statements.

48(1)(12,591)

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 principally in conformity with IFRSs or account­ing

statements issued in Japan in order to present them in a form that isprinciples 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, 2016.

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 inter-company accounts and transactions have been

be separated into identifiable components.
The content is considered to be an important component of each

FINANCIAL SECTION

eliminated in consolidation.

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
Foreign currency transactions are translated into yen at rates in effect at(e) Marketable Securities 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

excluded from the consolidated statements of income and are included

partnership agreement.

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 in49

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 transactionin 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 date enacted by the Diet.

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, the benefit formulabasis is principally used to attribute expected benefit payments to theperiod extending up to the end of the current fiscal year. Prior service
costs are amortized from the time they accrue by the straight-line
method for a certain number of years (10 years) within employees’

50average remaining years of service. Actuarial gains or losses are

In the consolidated statements of cash flows for this consolidated

amortized from the consolidated fiscal year following the year in whichfiscal year, cash flows related to the acquisition or sale of shares in

the gain or loss is incurred by the straight-line method for a certain

subsidiaries not resulting in change in scope of consolidation have been

number of years (9–19 years) not longer than employees’ average

included under “Cash flows from financing activities,” and cash flows

remaining years of service. The Company and certain consolidated

related to costs arising from acquisition of shares in subsidiaries

subsidiaries use a simplified method in calculating net defined benefit

resulting in change in scope of consolidation or costs associated withasset, net defined benefit liability, and periodic pension cost under which

acquisition or sale of shares in subsidiaries not resulting in change inretirement benefit obligations are principally based on accrued benefits

scope of consolidation have been included under “Cash flows fromat the end of the year.

operating activities.”(o) Provision for Sales Returns

the per-share data for this consolidated fiscal year is immaterial.

The effect of this change on the consolidated financial statements andTo prepare for future losses on returned goods, the Company and its
consolidated subsidiaries record provision for sales returns using(s) Accounting Standards Issued But Not Yet Adopted

projected amounts of losses on returned goods based on historic rates“Implementation Guidance on Recoverability of Deferredof goods returned.

Tax Assets” (ASBJ Guidance No. 26, March 28, 2016)
The “Implementation Guidance on Recoverability of Deferred Tax(p) Appropriation of Retained Earnings

Assets” (“the Guidance”) groups companies into five categories for

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

assessing the recoverability of deferred tax assets, principally thoseated by resolution of the shareholders at a general meeting to be held

provided in the Japanese Institute of Certified Public Accountants

subsequent to the close of such financial period. The accounts for that

Auditing Committee Report No. 66 “Audit Treatment for Judgment of

period do not, therefore, reflect such appropriations.

Recoverability of Deferred Assets”. The Guidance applies the framework
for estimation of the amount of deferred tax assets according to these(q) Data per Common Sharefive categories, making some necessary revisions to category conditions

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

and the amount of deferred tax assets to be recorded thereby providingof shares outstanding during each year has been used. Diluted net

guidelines for the application of the “Accounting Standards for Tax-Effectincome per common share assumes the dilution that could occur if

Accounting” (Business Accounting Council) for the recoverability of

securities or other contracts to issue common stock were exercised ordeferred tax assets. These revisions will be applied from beginning of

converted into common stock, or resulted in issuance of common stock.

the consolidated fiscal year ending March 31, 2017. The effect on the

Cash dividends per common share are computed based on dividends

consolidated financial statements from adoption of the Guidance iscurrently under assessment.

(r) Changes in Accounting Policy(t) Changes in Presentation(Application of Accounting Standard for Business Combinations)

Consolidated Balance Sheets

Effective from this consolidated fiscal year, the Company has applied the

As of March 31, 2015, “accrued expenses” and “accrued income taxes”

Accounting Standard for Business Combinations (ASBJ Statement No. 21,

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

September 13, 2013), the Accounting Standard for Consolidated

decline in significance as of March 31, 2016 these are included in “other

Financial Statements (ASBJ Statement No. 22, September 13, 2013),

current liabilities” under “current liabilities.” To reflect this change inand the Accounting Standard for Business Divestitures (ASBJ Statement

presentation, the consolidated financial statements as of March 31, 2015

No. 7, September 13, 2013). Accordingly, the method of recording thehave been reclassified.

amount of difference caused by changes in the Company’s ownership

FINANCIAL SECTION

declared with respect to the income for the year.

As a result, in the consolidated financial statements as of Marchinterests in subsidiaries in the case of subsidiaries under ongoing

31, 2015 “accrued expenses” of ¥41,492 million, “accrued income

control of the Company was changed to one in which it is recorded as

taxes” of ¥7,064 million, and “other current liabilities” of ¥17,323 million

additional paid-in capital, and the method of recording acquisition-related

that were presented in “current liabilities” have been reclassified ascosts was changed to one in which they are recognized as expenses for“other current liabilities” of ¥65,879 million.

the fiscal year in which they are incurred. Furthermore, for businesscombinations carried out on or after the beginning of this consolidated
fiscal year, the accounting method was changed to one in which thereviewed acquisition cost allocation resulting from the finalization of theprovisional accounting treatment is reflected in the consolidated financial
statements for the consolidated fiscal year to which the date of businesscombination belongs. In addition, the presentation method for “netincome” and other related items was changed, and the presentation of“minority interests” was changed to “non-controlling interests.” To reflect
these changes, the Company has reclassified its consolidated fiscal year.
Application of the Accounting Standard for Business Combinations is
in line with the transitional measures provided for in paragraph 58-2 (4)of the Accounting Standard for Business Combinations, paragraph 44-5
(4) of the Accounting Standard for Consolidated Financial Statements,
and paragraph 57-4 (4) of the Accounting Standard for Business
Divestitures. The Company is applying the said standard prospectively
from the beginning of this consolidated fiscal year.

51

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, 2016 have been translated into U.S. dollars at the rate of ¥112.68=U.S.$1, the approximate exchange rate on
the Tokyo Foreign Exchange Market on March 31, 2016.
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, 2015 and 2016 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

2015

2016

2016

¥153,542¥174,758$1,550,923

Marketable securities included in other current assets under current assets

2,164

704

6,248

Time deposits with maturities in excess of three months(1,941)(5,919)(52,530)¥153,765¥169,543$1,504,641

Millions of yen

Thousands of
U.S. dollars

Cash and cash equivalents

5 Marketable Securities and Investment Securities
Marketable securities and investment securities as of March 31, 2015 and 2016 are summarized as follows:

Other securities with market value

2015

2016

2016

¥18,745¥17,423$154,624

Other securities without market value

2,420

2,511

22,284

Investments in non-consolidated subsidiaries and affiliated companies

13,443

14,687130,343

Contributions to investment partnerships
Total of marketable securities and investment securities

411

602

5,343

¥35,019¥35,223$312,594

The original cost, carrying amount (market value), and gross unrealized holding gain (loss) for other securities with market value as of March 31,
2015 and 2016 are summarized as follows:
Millions of yen

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

Other securities with market value:
Equity securities¥7,659¥8,923

¥(1)

Other

2,164

—

—

2,164

		Total¥9,823¥8,923¥(1)¥18,745¥16,581Millions of yen

2016
Gross unrealized Gross unrealized Carrying amount
Original cost
holding gain
holding loss
(market value)

Other securities with market value:¥7,653¥9,066

¥(0)

Other

704

—

—

704

		Total¥8,357¥9,066¥(0)¥17,423

Equity securities

52¥16,719

Thousands of U.S. dollars

2016
Gross unrealized Gross unrealized Carrying amount
Original cost
holding gain
holding loss
(market value)

Other securities with market value:$67,918$80,458

$(0)

Other

6,248

—

—

6,248

		Total$74,166$80,458$(0)$154,624

Equity securities$148,376

The following is a summary of the carrying amount of other securities without market value as of March 31, 2015 and 2016:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Carrying amount

Carrying amount

Carrying amount¥2,420¥2,511$22,284¥2,420¥2,511$22,284

Other securities without market value:
Unlisted securities
		TotalProceeds and gross realized gains and losses from the sales of other securities in the fiscal years ended March 31, 2015 and 2016 are as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥582

¥ 7

$ 62

51

28

248

Proceeds from the sales of other securities

¥633

¥35

$310

Gross realized gains from the sales of other securities

511

1

9

Gross realized losses from the sales of other securities

11

—

—

Millions of yen

Thousands of
U.S. dollars

Equity securities
Other

6 Trade Receivables

2015

2016

2016

Notes receivable¥ 5,190¥ 6,143$ 54,517

Accounts receivable–trade82,672

66,383589,129

Lease receivables and investment assets
		Total14

4

35¥87,876¥72,530$643,681

Millions of yen

Thousands of
U.S. dollars

FINANCIAL SECTION

Trade receivables as of March 31, 2015 and 2016 are summarized as follows:

7 Inventories
Inventories as of March 31, 2015 and 2016 are summarized as follows:

2015

2016

2016

Finished goods and merchandise¥14,563¥16,744$148,598

Work in process

23,18325,605

227,236

Raw materials and supplies

5,165

3,893

34,549¥42,911¥46,242$410,383

		Total53

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 operations of the Network
Entertainment Business, the individual facility is the smallest unit used in management accounting and is the basic unit for evaluating impairment.
The carrying amounts of the following assets, which exclude reusable assets, were reduced to the recoverable amount. The amounts of reduction
recorded as an impairment loss in “Other income (loss)” for the fiscal years ended March 31, 2015 and 2016 are as follows:
To reflect a change in the classifications of strategic business units instituted in the fiscal year ended March 31, 2016, figures for the fiscal year ended
March 31, 2015 have been restated to reflect the new strategic business unit classifications.
Millions of yen

Thousands of
U.S. dollars

Strategic business unit

Location

Items

Classification

2015

2016

2016

Toys and Hobby

Osaka City, Osaka (note 1)
Chiba City, Chiba and others(note 4)

Business assets
Assets scheduled for
disposal

Intangible assets
Buildings and structures¥    185¥    ——$     ——

Network
Entertainment

Toshima-ku, Tokyo andothers (note 1)

Amusement facilities

Other property, plant and equipment
Amusement facilities and machines

13
1,027

—
—

—
—

Shinagawa-ku, Tokyo (note 2)
Chiba City, Chiba andothers (note 3)

Business assets
Amusement facilities

Intangible assets
Other investments and assets
Other property, plant and equipment
Amusement facilities and machines

0
28
181
37

—
—
—
—

—
—
—
—

Fujimi City, Saitama (note 4)
Shinagawa-ku, Tokyo andothers (note 4)

Amusement facilities
Assets scheduled for
disposal

Other investments and assets
Amusement facilities and machines
Buildings and structures

0
19
1,160

—
—
—

—
—
—

Visual andMusic Production

Shinagawa-ku, Tokyo (note 4)

Assets scheduled for
disposal

Other property, plant and equipment
Buildings and structures

76
7

—
—

—
—

Corporate(Common)Shinagawa-ku, Tokyo (note 4)

Operational facilities

Toys and Hobby

Shenzhen, China andothers (note 1)
Seoul, Korea (note 1)
Chiyoda-ku, Tokyo (note 3)

Business assets

Other property, plant and equipment
Buildings and structures
Other property, plant and equipment
Other property, plant and equipment

5
126
103
—

—
—
—
332

—
—
—
2,946

Network
Entertainment

Koto-ku, Tokyo andothers (note 1)

Minato-ku, Tokyo (note 2)
Shinjuku-ku, Tokyo andothers (note 3)

OthersCorporate(Common)Business assets
Assets scheduled for
disposalAmusement facilities

Intangible assets
Buildings and structures

—
—

1,524
2

13,525
18

Amusement facilities and machines

—

227

2,015

Business assets
Amusement facilities
Amusement facilities

Other property, plant and equipment
Intangible assets
Other investments and assets
Other property, plant and equipment
Amusement facilities and machines
Amusement facilities and machines

—
—
—
—
—
—

5
5
3
277
4
25

44
44
27
2,458
35
222

Other investments and assets
Buildings and structures

—
—

2
26

18
231

Other property, plant and equipment
Buildings and structures

—
—

85
1

754
9

Other property, plant and equipment
Buildings and structures

—
—

5
2

44
18

Other property, plant and equipment
Buildings and structures

—
—

1
14

9
124

Other property, plant and equipment
Other property, plant and equipment

—
—

1
9

9
80

—
¥2,8683¥2,553

27$22,657

Shinagawa-ku, Tokyo andothers (note 4)

Assets scheduled for
disposal

Yokosuka City, Kanagawa andothers (note 1)

Business assets

Ibaraki City, Osaka (note 3)

Assets scheduled for
disposal

Shinagawa-ku, Tokyo (note 4)

Assets scheduled for
disposal
Operational facilities
Operational facilities

Suita City, Osaka (note 3)
Shinagawa-ku, Tokyo andothers (note 4)

Intangible assets
		TotalNotes: 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 forecasted future cash flows, but these cash flows were not discounted because the expected period of use was short.
		
3. 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.
		
4. 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.

54

9 Borrowings and Lease Obligations
Borrowings and lease obligations as of March 31, 2015 and 2016 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2016

2016

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountShort-term borrowings¥  7620.93¥   4020.38$ 3,568

Long-term borrowings due within one year

2,245

0.66

1,296

0.62

11,502

47

10.73

38

11.32

337

1,268

0.64

154

0.49

1,367

48

6.19

40

6.12

355

¥4,370—¥1,930—$17,129

2015

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, 2016 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2017¥1,334$11,839

2018

111

985

2019

80

710

2020

3

27

2021

0

0

¥1,528$13,561

Millions of yen

Thousands of
U.S. dollars

Total

10 Trade Payables
Trade payables as of March 31, 2015 and 2016 are summarized as follows:

2016

2016

¥13,921¥14,416$127,938

Accounts payable–trade43,33648,230428,026¥57,257¥62,646$555,964

Total

FINANCIAL SECTION

2015

Notes payable55

11 Retirement and Severance Benefits
1. Defined benefit plans(a) For the fiscal years ended March 31, 2015 and 2016, 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

2015

2016

2016

¥17,730¥17,934$159,159

47——

Restated balance

17,777

17,934

159,159

Service cost

1,136

1,162

10,312

Interest cost

181

169

1,500

Actuarial gains or losses incurred

(244)

1,490

13,223Retirement benefits paid

(926)

(528)

(4,686)

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

Prior service costs incurredEnding balance of retirement benefit obligations

10

—

—

¥17,934¥20,227$179,508(b) For the fiscal years ended March 31, 2015 and 2016, 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

Beginning balance of plan assets

Thousands of
U.S. dollars

2015

2016

2016

¥10,582¥11,024$ 97,835

Expected rate of return on assets

241

238

2,112

Actuarial gains or losses incurred

(70)

(399)

(3,541)

Contributions to plan from employer

1,105

1,119

9,931

Retirement benefits paid

(834)

(496)

(4,402)¥11,024¥11,486$101,935

Ending balance of plan assets(c) For the fiscal years ended March 31, 2015 and 2016, 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

2015

2016

2016

¥ 868

¥  946$ 8,395

Retirement benefit expenses

285

454

4,029

Retirement benefits paid

(61)

(75)

(666)

Contributions to plan from employer

(152)

(199)

(1,766)

5

(18)

(158)

¥ 945

¥1,108$ 9,834

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

56

Thousands of
U.S. dollars

(d) As of March 31, 2015 and 2016, 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 in the consolidated balance sheets is as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Retirement benefit obligations of funded plans¥ 19,274¥ 21,882$ 194,196

Plan assets(12,567)(13,276)(117,820)

6,707

8,606

76,376Retirement benefit obligations of non-funded plans

1,148

1,243

11,031

Net amount of liabilities and assets recorded on consolidated balance sheets

7,855

9,849

87,407

Net defined benefit liability

7,999

9,920

88,037

Net defined benefit asset

(144)

(71)

(630)

¥   7,855¥   9,849$   87,407

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

$10,312

Net amount of liabilities and assets recorded on consolidated balance sheets(e) For the fiscal years ended March 31, 2015 and 2016, the breakdown of retirement benefit expenses is as follows:

Service cost

¥1,136¥1,162

Interest cost

181

169

1,500

Expected rate of return on assets

(241)

(238)

(2,112)

Amortization of actuarial gains or losses

338

414

3,674

Amortization of prior service costs

(22)

(29)

(257)

Retirement benefit expenses calculated using the simplified method

285

454

4,029

1,677

1,932

17,146

418

686

6,088

¥2,095¥2,618$23,234

Retirement benefit expenses related to defined benefit plans
Other (note)
Total retirement benefit expenses

Note: In the fiscal year ended March 31, 2015, the following extra retirement payments were recorded: ¥369 million in “Selling, general and administrative expenses” and ¥49 million in “Other income(loss).” In the fiscal year ended March 31, 2016, the following extra retirement payments were recorded: ¥398 million ($3,532 thousand) in “Selling, general and administrative expenses” and¥288 million ($2,556 thousand) in “Other income (loss).”
FINANCIAL SECTION(f) For the fiscal years ended March 31, 2015 and 2016, 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

2015

2016

2016

Prior service costs¥ (32)¥    (29)$    (257)Actuarial gains or losses

512(1,474)(13,081)¥480¥(1,503)$(13,338)

Total(g) As of March 31, 2015 and 2016, the breakdown of items recorded in cumulative remeasurements of defined benefit plans (before tax effect)
is as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Unrecognized prior service costs¥   (86)¥  (115)$ (1,021)

Unrecognized actuarial gains or losses(2,900)(4,375)(38,826)¥(2,986)¥(4,490)$(39,847)

Total

57

(h) As of March 31, 2015 and 2016, the major categories of plan assets as a percentage of total plan assets are as follows:
2015

2016

Bonds

33%

29%

Equities

24

22Life insurance general account

34

33

Other

9

16

100%

100%

Total
(i) For the fiscal years ended March 31, 2015 and 2016, the principal actuarial assumptions are as follows:

2016

2015

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

0.50%~1.30%

0.10%~0.80%

2.26%~2.50%

2.14%~2.50%

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, 2015 and 2016, the required contributions to defined contributions plans for the Company and its consolidated
subsidiaries was as follows:
Millions of yen

Required contributions to defined contribution plans

Thousands of
U.S. dollars

2015

2016

2016

¥484

¥525

$4,6593. Multi-employer plans
For the fiscal years ended March 31, 2015 and 2016, 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

58

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥5

¥3

$27

12 Financial Instruments
1. Financial instruments(1) Policy for financial instruments

Trade payables are exposed to liquidity risk. The Company and its
consolidated subsidiaries manage this risk through the formulation

The Company and its consolidated subsidiaries manage funds by means

and revision of monthly funding plans for the Company and itsof highly secure financial instruments only and procures funds throughconsolidated 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, 2015 and 2016, designated large customers were(3) Supplementary explanation on the market value offinancial instruments
The market value of financial instruments includes, in addition tocounterparties for 13.0% and 13.6% 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.

Marketable securities and investment securities are principally theshares of companies with which the Company has a business relationship.
These investments are exposed to the risk of fluctuations in market
FINANCIAL SECTION

prices. The market price is confirmed at least once per quarter, and theholdings are reevaluated once 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
option contracts for hedging.

59

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, 2015 and 2016,
and the differences 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

Difference

Carrying
amountMarket value¥153,542¥   —¥174,758

87,876—

72,53027,94135,074

7,133

		Total assets¥269,359¥276,492

Trade payables

57,25757,257¥ 57,257¥  2,075(1) Cash and time
deposits(2) Trade receivables(3) Marketable securities
and investment
securities

		Total liabilities
Derivative financial
instruments*

Carrying
amountMarket value¥153,542
87,876

Thousands of U.S. dollars

2016

2015

2016

Difference

Carrying
amountMarket value

Difference¥174,758¥    —$1,550,923$1,550,923$     —

72,530—643,681643,681—

28,162

32,481

4,319

249,929

288,258

38,329¥7,133¥275,450¥279,769¥4,319$2,444,533$2,482,862$38,329—

62,646

62,646—555,964

555,964—¥ 57,257¥   —¥ 62,646¥ 62,646¥    —$   555,964$   555,964$     —¥  2,075¥   —¥   (1,588)¥  (1,588)¥    —$    (14,093)$    (14,093)$     —* 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 matters related to securities and derivative transactions
		
Assets		(1) Cash and time deposits
			 Since these are readily convertible into cash, their market value is almost identical with the book value, and thus these are stated at the book value.
		(2) Trade receivables
			Since trade receivables that are settled in a short period of time are readily convertible into cash, their market value is almost identical with the book value, and thus these are stated at thebook value. For trade receivables that are settled after a long period of time, the market values are measured based on the present values calculated by discounting receivable amounts
classified by certain periods of time at a rate for which time to maturity and credit risk has been taken into account.
		(3) Marketable securities and investment securities
			Since Money Management Fund is readily convertible into cash, their market value is almost identical with the book value; and these are stated at the book value. Stocks and others arestated at the price on the stock exchange or the price as presented by counterparty financial institutions and others. With regard to marketable securities and investment securities byholding purpose, please refer to Note “5 Marketable Securities and Investment Securities.”		Liabilities
		 Trade payables
		 Since these are readily convertible into cash, their market value is almost identical with the book value; and thus these are stated at the book value.
		
Derivative financial instruments
		 Please refer to Note “22 Foreign Exchange Risk Management and Interest Rate Risk Management.”
2. Financial instruments for which market value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2015

2016

2016

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥2,420¥2,511$22,284

Stocks of affiliated companies (unlisted stocks)

4,246

3,949

35,046

411

602

5,343

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) Marketable securities andinvestment securities” in the table above.
3. Maturity analysis of financial assets
Millions of yen

Cash and time
deposits
Trade receivables
Total

60

Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥151,537¥   102¥—86,4491,427—¥237,986¥1,529¥—Thousands of U.S. dollars

2016

2015
Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥—¥172,893¥    —¥——

71,219

1,311

—

¥—

¥244,112¥1,311¥—

2016
Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥—$1,534,372$     —$—$——

632,046

11,635——¥—$2,166,418$11,635$—$—

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 35.6% for the fiscal year ended March 31, 2015 and 33.1% for the fiscal year ended March 31, 2016.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2015 and 2016 consist of
the following:
Millions of yen

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

2015

2016

2016

¥18,813¥13,747$122,000

(157)

186

1,651

¥18,656¥13,933$123,651

Reconciliation of the normal tax rate and the effective tax rate as a percentage of profit before income taxes for the fiscal years ended March 31, 2015
and 2016 is as follows:
2015

2016

Normal tax rate

35.6%

33.1%

Entertainment expenses not deductible for tax purposes

0.5

0.6

Corporate inhabitant tax on per capita basis

0.4

0.5

Directors’ bonuses

0.7

0.9

Effect of changes in tax rates on net deferred tax assets

2.7

1.7

Amortization of goodwill

0.1

0.1

Change in valuation allowance for deferred tax assets

(0.1)

(2.0)

Differences of tax rates of foreign consolidated subsidiaries

(0.2)

(0.9)

Differences due to correction of transfer pricing

(1.5)

—

Tax credit for research and development expenses

(5.0)

(5.3)

Other

(0.2)

0.0

Effective tax rate

33.0%

28.7%
FINANCIAL SECTION

61

Significant components of deferred tax assets and liabilities as of March 31, 2015 and 2016 are as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Deferred tax assets:¥ 17,787¥ 16,563$ 146,992

Excess depreciation of fixed assets

9,481

9,630

85,463

Accrued employee bonuses

4,023

2,746

24,370Inventory valuation losses

2,571

2,821

25,035Net defined benefit liability

2,533

2,990

26,535

Loss on valuation of advance payments

1,753

1,348

11,963

Loss on impairment of fixed assets

1,215

879

7,801

Accrued enterprise taxes and others

988

584

5,183

Research and development expenses

380

354

3,142

Allowance for doubtful receivables

76

260

2,307

Revaluation reserve for land

2,157

2,043

18,131

Other

6,733

7,508

66,631

Losses carried forward

49,69747,726

423,553

Valuation allowance(26,937)(24,098)(213,862)

Total deferred tax assets

22,76023,628

209,691

(77)

(69)

(612)

		 Total gross deferred tax assets

Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets

(439)

(387)

(3,435)(2,246)(2,257)(20,030)

Revaluation reserve for land

(469)

(444)

(3,940)

Other

(299)

(393)

(3,488)(3,530)(3,550)(31,505)¥ 19,230¥ 20,078$ 178,186

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Current assets–Deferred tax assets¥ 8,954¥ 8,523$ 75,639

Investments and other assets–Deferred tax assets

11,652

12,545111,333

(16)

(12)

(107)

(1,360)(978)(8,679)¥19,230¥20,078$178,186

Retained earnings of foreign consolidated subsidiaries
Unrealized gains or losses on other securities

Total deferred tax liabilities
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. 15
of 2016) and the Bill for Partial Amendment of the Local Tax Act (Law
No. 13 of 2016) were approved by Japan’s National Diet on March 29, 2016.

62¥799 million ($7,091 thousand) and unrealized gains or losses on othersecurities increased by ¥122 million ($1,083 thousand).
In addition, deferred tax assets related to revaluation declined by

These bills stipulated that corporate tax rates will be reduced for fiscal¥24 million ($213 thousand), and the revaluation reserve for land

years starting on or after April 1, 2016. As a result, the normal tax rateincreased by the same amount.

used in the calculation of deferred tax assets and deferred tax liabilities

The tax loss carryforward deduction system has been revised, andwas changed from the previous 32.3% to 30.9% for temporary differences

under the revised system for the fiscal years starting on or after April 1,that are expected to be recovered or settled in the fiscal years beginning

2016, the deductible amount of the loss carryforward will be limitedon April 1, 2016 and 2017, and 30.6% for temporary differences that are

to 60% of income before the carryforward deduction; for fiscal years

expected to be recovered or settled in fiscal years beginning on or

starting on or after April 1, 2017, the deductible amount of the loss

after April 1, 2018.

carryforward will be limited to 55% of income before the carryforward

As a result of these changes in tax rates, deferred tax assets (netdeduction; and for fiscal years starting on or after April 1, 2018, theof deferred tax liabilities) decreased by ¥740 million ($6,567 thousand),deductible amount of the loss carryforward will be limited to 50% of

remeasurements of defined benefit plans decreased by ¥62 million

income before the carryforward deduction. The impact of these revisions($550 thousand), and deferred gains or losses on hedges decreased byon the amounts of deferred tax assets and income taxes-deferred is¥1 million ($9 thousand), while income taxes–deferred increased by

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, 2015 and 2016 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2016

2016

¥ 41,311¥ 37,734$   334,878

Directors’ remuneration and employees’ wages

39,20039,620351,615

Employees’ retirement and severance benefits

1,984

2,268

20,128Provision for directors’ bonuses

1,242

1,403

12,451

Research and development expenses

18,75918,195

161,475

(111)

17

151

Advertising expenses

Provision of allowance for doubtful accounts

54,40653,723476,775¥156,791¥152,960$1,357,473

Other
		Total

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2015 and 2016 are as follows:
Millions of yen

2015

Unrealized gains orlosses on othersecurities, net of tax
Deferred gains or losses
on hedges, net of tax
Revaluation reserve
for land, net of tax

		TotalBeforetax effectTax effect

Net oftax effect¥1,668¥   (489)¥1,179¥   (721)¥   458

3,564(2,127)

1,437

(344)

1,093

—

—

—

48

48

3,622

(23)

3,599

—

3,599

165

315

480

(243)

237

91

3

94

—

94

¥9,110¥(2,321)¥6,789¥(1,260)¥5,529FINANCIAL SECTION

Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method

Amounts Reclassification
arising
adjustments

Millions of yen

Thousands of U.S. dollars

2016
Amounts Reclassification
arising
adjustments

Beforetax effect2016

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effectUnrealized gains orlosses on othersecurities, net of tax¥   229¥   0¥   229¥   (58)¥   171$  2,032$    0$   2,032$ (514)$   1,518

Deferred gains or losses
on hedges, net of tax(2,249)(376)(2,625)643(1,982)(19,959)(3,337)(23,296)

5,706(17,590)

Revaluation reserve forland, net of tax

—

—

—

24

24

—

—

—

213

213

(4,248)26(4,222)—(4,222)(37,700)

231(37,469)—(37,469)(1,888)385(1,503)403(1,100)(16,755)

3,417(13,338)

3,576(9,762)Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

(35)

(35)

(70)

—

(70)

(311)

(311)

(622)

—

(622)

¥(8,191)¥   0¥(8,191)¥1,012¥(7,179)$(72,693)$    0$(72,693)$8,981$(63,712)

63

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, 2015 and2016 is as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

Profit attributable to owners of parent¥37,589¥34,584$306,922

Profit attributable to owners of parent available to common stockholders

37,58934,584306,922

Profit attributable to owners of parent for diluted EPS calculation

37,58934,584306,922

Average number of common shares outstanding

219,686

Thousands of shares

219,679

Effect of dilutive securities:
Stock options
Average number of common shares for diluted EPS calculation

36

57

219,722219,736

Yen

U.S. dollars

Net income per common share:
Basic¥171.10¥157.43$1.40

Diluted171.08157.391.40

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,

1.	On August 5, 2011, the Company raised funds from financial institu-

of 25% of common stock over the total of additional paid-in capital andtions as long-term loans payable. These loans payable have thelegal earnings reserve must be set aside as a legal reserve until thefollowing restrictive financial covenants:

aggregate amount of capital surplus and the legal reserve equals 25%(1)	The Company shall maintain the amount of net assets in the
consolidated balance sheet as of the closing dates of the interimof stated capital.
Certain foreign consolidated subsidiaries are also required toand end of each fiscal year (the “Interim or End of Fiscal Year”)

appropriate their earnings to legal reserves under the laws of theat 75% or above of whichever is greater: (i) the amount of net

respective countries.

assets in the consolidated balance sheet as of the closing date of

The Company’s retained earnings includes legal reserves of ¥1,645

the immediately preceding Interim or End of Fiscal Year, or (ii) the

million and ¥1,645 million ($14,599 thousand) at March 31, 2015 andamount of the net assets in the consolidated balance sheet as ofMarch 31, 2011.

2016, respectively. Proposed appro­priations of retained earnings havenot been reflected in the consolidated financial statements at the end(2)	With respect to the recurring income and loss* in the consolidatedof the fiscal year. The Company’s approved appropriations of retained

statement of income for each fiscal year, the Company shall notearnings for the fiscal year ended March 31, 2016 were cash dividends ofrecord recurring loss for two consecutive fiscal years.

¥8,792 million ($78,026 thousand). In addition, a mid-year dividend may

2.	On March 23, 2016, the Company concluded global credit facility

be paid based on approval by the Board of Directors, which is subject toagreements with financial institutions. These agreements have thelimitations. The mid-year dividend for the fiscal year ended March 31,

following restrictive financial covenants:

2016 was ¥2,638 million ($23,411 thousand).

(1)	The Company shall maintain the amount of net assets in the
consolidated balance sheet as of the closing dates of the second
quarter and the end of each fiscal year (the “Second Quarter or
End of Fiscal Year”) at 75% or above of whichever is greater: (i) theamount of net assets in the consolidated balance sheet as of theclosing date of the immediately preceding Second Quarter or End
of Fiscal Year, or (ii) the amount of net assets in the consolidatedbalance sheet as of March 31, 2015.
(2)	With respect to the recurring income and loss* in the consolidated
statement of income for each fiscal year, the Company shall notrecord recurring losses for two consecutive fiscal years.
		64* Recurring income and loss is a Japanese accounting term denoting income before
extraordinary items.

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

notice prices.
Unrealized losses for land of ¥1,018 million ($9,034 thousand) werethat 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, 2016.

19 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2015 and 2016 are as follows:
Share

Common stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2015

2016

222,000,000
222,000,000

222,000,000
222,000,000
Share

Treasury stock (number of shares)
Number of shares at beginning of year
Purchases and other
Number of shares at end of year

2015

2016

2,312,098
4,699
2,316,797

2,316,797
4,768
2,321,565

20 Stock Option Plan
Stock option plan as of March 31, 2016 is summarized as follows:

Class (number of shares) (note)
Amount to be paid upon exercise of stock acquisition rights
Grant date
Vesting conditions for stock acquisition rights
Required service
Exercise period for the stock acquisition rights
Fair value of each stock option (yen)May 21, 2013
Directors of the Company (5)Directors of subsidiaries (6)Common stock (36,100)¥1 per share
June 5, 2013
None
Not specified
From June 5, 2013 to June 4, 2033
¥1,219.63

FINANCIAL SECTION

Resolution date of the meeting of the Company’s Board of Directors
Position (number of beneficiaries)

Note: With respect 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.

Resolution date of the meeting of the Company’s Board of Directors
Position (number of beneficiaries)
Class (number of shares) (note 1)
Amount to be paid upon exercise of stock acquisition rights
Grant date
Vesting conditions for stock acquisition rights
Required service
Exercise period for the stock acquisition rights
Fair value of each stock option (yen) (note 2)

May 21, 2015
Directors of the Company (5)Directors of subsidiaries (7)Common stock (27,100)¥1 per share
June 5, 2015
None
Not specified
From June 5, 2015 to June 4, 2035
¥2,049.78

Notes: 1. With respect 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 are no vesting conditions.
2. The method used to estimate the market price per unit for stock options granted in the current fiscal year was as follows:		(1) Valuation method applied: Black-Scholes method
		(2) Principal assumptions and method of estimation		Volatility of stock price (note 1)
27.20%
		
Estimated remaining outstanding period (note 2) 10 years
			 Estimated dividend (note 3)
2.16%
			 Risk-free interest rate (note 4)
0.486%
		 Notes: 1. Volatility of stock price is calculated based on the actual stock prices over the period from September 29, 2005 to June 4, 2015.
		 		
2. The available data is not sufficient and accordingly, estimates are based on the assumption that exercise takes place at the midpoint of the exercise period.
		 		
3. Estimated dividend is based on actual dividends over the period from September 29, 2005 to June 4, 2015.
		 		
4. Risk-free interest rate is based on the yield of Japanese government bonds with a period corresponding to the estimated remaining outstanding period.

65

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, 2015 and 2016 are as follows:
Thousands of
U.S. dollars

Millions of yen

Within one year

2015

2016

2016

¥1,533¥1,696$15,052

Over one year

4,582

6,932

61,519		Total¥6,115¥8,628$76,571

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, 2015
and 2016 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

2016

2015
Contract
Estimatedamount market value

Unrealized
gain (loss)

2016
Contract
Estimatedamount market value

Unrealized
gain (loss)

Forward foreign exchange contracts
Sold:¥2,043¥247¥247¥ 8,113¥(611)¥(611)$ 72,000$(5,422)

U.S. dollars

629

(7)

(7)

1,180

55

55

10,472

488

488

Euro

290

6

6

395

14

14

3,506

124

124

U.S. dollars

1,081

122

122

1,037

(7)

(7)

9,203

(62)

(62)

H.K. dollars

72

3

3

86

2

2

763

18

18

Chinese yuan

—

—

—

79

(1)

(1)

701

(9)

(9)

(994)

Yen

$(5,422)

Purchased:

Currency option contracts
Sold/Purchased:
U.S. dollars

—

—

—

2,072

(112)

(112)

18,388(994)

H.K. dollars

—

—

—

115

(7)

(7)

1,021

(62)

(62)

¥4,115¥371¥371¥13,077¥(667)¥(667)$116,054$(5,919)$(5,919)

		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. As a result, these transactions are not treated as effective hedges of the hedged assets
and/or liabilities in the consolidated financial statements.
3.	Currency option contracts are zero cost options, and option premiums are not paid or received. In addition, call options and put options are contained within a single integrated contract andare therefore listed as a single amount.

66

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

Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2016

2015

2016

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value

Forward foreign exchange contracts
Sold:
Yen

Other current assets¥19,528¥   745¥     —¥   —

$      —

$    —

U.S. dollars

Accounts receivable–trade

1,204

4

508

3

4,508

27

Euro

Accounts receivable-trade

90

2

—

—

—

—

Purchased:

Deferred

U.S. dollars

Accounts payable–trade10,463866

16,398(833)

145,527(7,393)Chinese yuan

Other current liabilities

1,298

27

—

—

—

—

Yen

Accounts payable–trade

116

9

24

(0)

213

(0)

H.K. dollars
Currency option
contracts
Sold put option:

Accounts payable–trade

267

30

316

(13)

2,804

(115)

U.S. dollars
Purchased call
option:U.S. dollars

Accounts payable–trade

1,410

25

1,398

(81)

12,407(719)

Accounts payable–trade

1,410

(5)

1,398

3

12,40727442(note 3)453

(note 3)

4,020

(note 3)¥36,228¥1,703¥20,495¥(921)$181,886$(8,173)

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

67

23 Commitments and Contingent Liabilities
1. Pledged assets
As of March 31, 2015 and 2016, the detail of pledged assets is as follows:
Millions of yen

Cash and time deposits

Thousands of
U.S. dollars

2015

2016

2016

¥102

¥96

$852

As of March 31, 2016, there were no obligations corresponding to pledged assets.
In addition to the above, the assets deposited as a security deposit for issuance under the Payment Services Act are ¥200 million in “Other current
assets” and ¥433 million ($3,843 thousand) in “Other investments and assets” at March 31, 2015 and 2016, respectively.

2. Commitments
Commitments as of March 31, 2015 and 2016 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

68

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥214

¥210

$1,864

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥79

¥60

$532

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 Network
Entertainment SBU, and the Visual and Music Production SBU, and the affiliated business companies that mainly serve a supporting role for these
SBUs. The core 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, Network Entertainment Business, and Visual andMusic Production Business.
The Toys and Hobby Business conducts manufacturing and sales of toys, candy toys, and products for vending machines. The Network Entertainment
Business conducts planning, development and distribution services for network content, planning, development and sales of video game software andarcade game machines, and planning and operation of amusement facilities. The Visual and Music Production Business conducts production and salesof visual and music-related products and live entertainment operations.
The Group reviewed its organizational structure with the aim of implementing a range of initiatives defined as main strategies in its Mid-term Plan,
which was started in April 2015. In line with this review, effective from this consolidated fiscal year the Group changed the classification of its reportablesegments from the previous classifications of the “Toys and Hobby Business,” the “Content Business,” and the “Amusement Facility Business” to the“Toys and Hobby Business,” the “Network Entertainment Business,” and the “Visual and Music Production Business.”
Segment information of the previous fiscal year is prepared and disclosed based on the reportable segment classifications after the organizational change.
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 ofinter-segment transactions are based on the prevailing market prices.
Millions of yen

2015
Reportable Segment
Toys and
Network
Hobby Entertainment

Visual andMusic
Production

Subtotal Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers¥292,558¥40,759¥555,612¥ 9,874¥565,486¥     —

¥565,486

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¥ 14,941¥  7,440¥   632¥ 23,013¥   369¥ 23,382¥    330¥ 23,712

	Amortization of goodwill

83

14

62

159

—

159

—

159

	Loss on impairment of fixed
assets

99

2,528

12

2,639

—

2,639

229

2,868

	Investments 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

27,761FINANCIAL SECTION

Total¥222,295

Other items:
Depreciation and amortization

	Increase in property, plant andequipment and intangible assets

69

Millions of yen

2016
Reportable Segment
Toys and
Network
Hobby Entertainment

Visual andMusic
Production

Subtotal Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total¥199,410¥317,995¥48,268¥565,673¥ 9,832¥575,505¥     —

¥575,505

7,015

2,946

3,700

13,661

17,62431,285(31,285)—¥206,425¥320,941¥51,968¥579,334¥27,456¥606,790¥(31,285)¥575,505

Segment income

16,63923,932

11,66552,236

1,123

53,359(3,718)49,641

Segment assets

99,462

166,245

38,687304,394

27,040331,434

116,902448,336

Other items:
Depreciation and amortization¥ 11,782¥  7,965¥   593¥ 20,340¥   439¥ 20,779¥    847¥ 21,626	Amortization of goodwill

83

17

68

168

—

168

—

168

	Loss on impairment of
fixed assets

1,857

659

—

2,516

24

2,540

13

2,553

756

—

—

756

12,051

12,807—

12,807

11,142

11,614653

23,409497

23,906

3,081

26,987

	Investments in associates
accounted for using equity
method	Increase in property, plant andequipment and intangible assets

Thousands of U.S. dollars

2016
Reportable Segment
Toys and
Network
Hobby Entertainment

Visual andMusic
Production

Subtotal Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)$5,107,428$       —

$5,107,428(277,645)—

Net sales:
To external customers
Inter-segment sales
and transfers
Total$1,769,702$2,822,106$428,364$5,020,172$ 87,256

62,25626,14532,836

121,237

156,408

277,645$1,831,958$2,848,251$461,200$5,141,409$243,664$5,385,073$ (277,645) $5,107,428

Segment income

147,666

212,389

103,523

463,578

9,967

473,545(32,997)

440,548

Segment assets

882,694

1,475,373

343,335

2,701,402

239,972

2,941,374

1,037,469

3,978,843$ 104,561$   70,687$  5,263$   180,511$  3,896$ 184,407$   7,517$ 191,924

737

151

603

1,491

—

1,491

—

1,491

	Loss on impairment of fixed
assets

16,481

5,848—

22,329213

22,542

115

22,657

	Investments in associates
accounted for using equity
method

6,709

—

—

6,709

106,949

113,658—

113,658	Increase in property, plant andequipment and intangible assets

98,882103,071

5,795

207,748

4,410

212,158

27,343

239,501

Other items:
Depreciation and amortization
	Amortization of goodwill

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 -¥1,549 million for the fiscal year ended March 31, 2015 includes elimination of inter-segment transactions of ¥678 million and corporate expenses
not allocated to reportable segments of -¥2,227 million. The adjustment to segment income of -¥3,718 million (-$32,997 thousand) for the fiscal year ended March 31, 2016 includes
elimination of inter-segment transactions of ¥292 million ($2,591 thousand) and corporate expenses not allocated to reportable segments of -¥4,010 million (-$35,588 thousand).
Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
			(2) The adjustment to segment assets of ¥94,505 million as of March 31, 2015 includes elimination of inter-segment transactions of -¥20,722 million and corporate assets not allocated toreportable segments of ¥115,227 million. The adjustment to segment assets of ¥116,902 million ($1,037,469 thousand) as of March 31, 2016 includes elimination of inter-segment
transactions of -¥17,654 million (-$156,674 thousand) and corporate assets not allocated to reportable segments of ¥134,556 million ($1,194,143 thousand). Principal corporate assets
are cash and deposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
			(3) The adjustment to depreciation and amortization expense of ¥330 million for the fiscal year ended March 31, 2015 includes elimination of inter-segment transactions of -¥793 million
and depreciation and amortization expense not allocated to reportable segments of ¥1,123 million. The adjustment to depreciation and amortization expense of ¥847 million($7,517 thousand) for the fiscal year ended March 31, 2016 includes elimination of inter-segment transactions of -¥320 million (-$2,840 thousand) and depreciation and amortization
expense not allocated to reportable segments of ¥1,167 million ($10,357 thousand).
			(4) The adjustment to loss on impairment of fixed assets of ¥229 million and ¥13 million ($115 thousand) for the fiscal year’s ended March 31, 2015 and 2016, respectively, are related tocorporate assets not allocated to reportable segments.
			(5) The adjustment to increase in property, plant and equipment and intangible assets of ¥2,599 million and ¥3,081 million ($27,343 thousand) as of March 31, 2015 and 2016, respectively, arerelated to corporate assets not allocated to reportable segments.
		
3. Segment income is reconciled to operating income in the consolidated statements of income.

70Additional segment information as of and for the fiscal years ended March 31, 2015 and 2016 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

2015

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total¥459,777¥38,632¥32,432¥34,645¥565,486

39,155

3,453

4,646

6,007

53,261Millions of yen

2016

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total¥430,369¥51,642¥47,286¥46,208¥575,505

41,200

2,878

4,305

5,320

53,703Thousands of U.S. dollars

2016

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total$3,819,390$458,307$419,649$410,082$5,107,428

365,637

25,541

38,20647,213

476,597

3. Information by major customer
Fiscal year ended March 31, 2015

Net sales(Millions of yen)Name

Related segment

Toys and Hobby Business,
Happinet Corporation¥77,445

Network Entertainment Business,
Visual and Music Production BusinessNet sales(Millions of yen)Name

Net sales(Thousands of U.S. dollars)

FINANCIAL SECTION

Fiscal year ended March 31, 2016

Related segment

Toys and Hobby Business,
Happinet Corporation¥62,096$551,083

Network Entertainment Business,
Visual and Music Production Business

4.	By reportable segment, information regarding the amount of amortization of goodwill and negative goodwill for the fiscal years ended
March 31, 2015 and 2016, and the unamortized balance of goodwill and negative goodwill as of March 31, 2015 and 2016, is as follows:
Millions of yen

2015
Toys and Hobby

Network
Entertainment

Visual and Music
Production

Other

Corporate andeliminations

Amortization of goodwill

¥ 83

¥14

¥ 62

¥—

¥—

¥159

Unamortized balance of goodwill

330

71

187

—

—

588

Amortization of negative goodwill

—

—

0

—

—

0

Unamortized balance of negative goodwill

—

—

—

—

—

—

Total

71

Millions of yen

2016
Toys and Hobby

Network
Entertainment

Visual and Music
Production

Other

Corporate andeliminations

Amortization of goodwill

¥ 83

¥17

¥ 68

¥—

¥—

¥168

Unamortized balance of goodwill

247

55

152

—

—

454

Total

Amortization of negative goodwill

—

—

—

—

—

—

Unamortized balance of negative goodwill

—

—

—

—

—

—

Thousands of U.S. dollars

2016
Toys and Hobby

Network
Entertainment

Visual and Music
Production

Amortization of goodwill$   737$151$   603

Other

Corporate andeliminations

Total

$—

$—

$1,491
4,029

Unamortized balance of goodwill

2,192

488

1,349

—

—

Amortization of negative goodwill

—

—

—

—

—

—

Unamortized balance of negative goodwill

—

—

—

—

—

—

25 Related-Party Disclosures
Transactions with Related Parties
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 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¥77,445 million(note 2)

Account items
Accounts
receivable–
trade

Balance asof March 31,
2015¥11,404 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.

Fiscal year ended March 31, 2016
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Affiliatedcompany

Happinet
Corporation

Address
Taito-ku,
Tokyo

Capital orcontribution
to capitalContent of business

Ratio of voting rights
ownership¥2,751 million($24,414
thousand)

Wholesaler of toys,
video games, andamusement products

Holding
directly 26.0%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales of products, ¥62,096 million
and others($551,083(note 2)
thousand)Account items

Balance asof March 31,
2016

Accounts
receivable–
trade¥9,878 million($87,664
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 Business Combinations(Transactions conducted by commonly controlled entities)
1.	Name and nature of combined business, date of business combination,(4) Outline of transaction
		Previously, subsidiary BNHA managed operations in Asia as alegal form of business combination, and outline of transaction

hybrid operating-holding company with the functions of both a(1) Name and nature of combined businessholding company and a Toys and Hobby business company. This		Asian Toys and Hobby Business of BANDAI NAMCO ASIA CO., LTD.

		 (currently BANDAI NAMCO Holdings ASIA CO., LTD. (“BNHA”))(2) Date of business combination
		March 29, 2016

(3) Legal form of business combination
		Business transfer with BNHA as the transferring company and atransaction was conducted to clearly separate the holding
company and operating company functions in order to promoteenhanced intra-Group coordination and expand operations in Asia.
2. Accounting standards applied
	The transaction is treated as a transaction under common control
in accordance with the Accounting Standard for Business

newly established company BANDAI NAMCO ASIA CO., LTD.,

Combinations (ASBJ Statement No. 21, September 13, 2013), theas the receiving company

Accounting Standard for Business Divestitures (ASBJ Statement
No. 7, September 13, 2013), and the Guidance on AccountingStandard for Business Combinations and Business Divestitures(ASBJ Guidance No. 10, September 13, 2013).

72

27 Significant Subsequent Events(Acquisition of Shares Through Tender Offers)
The Company adopted a resolution at a Board of Directors’ meeting on(3) Date of business combination
		Share acquisition date

March 9, 2016 to acquire common shares in WiZ Co., Ltd. (“Target Commencement date of settlement for

Company” and “Target Company’s Shares”) through a tender offer under
the Financial Instruments and Exchange Act (Act No. 25 of 1948,

First Tender Offer

including subsequent amendments).
The First Tender Offer, which commenced on March 10, 2016, wascompleted on April 7, 2016 and the Second Tender Offer, which
commenced on April 15, 2016, was completed on May 24, 2016.

April 14, 2016		 Commencement date of settlement for		

Second Tender Offer

May 31, 2016

Deemed acquisition date

May 31, 2016(4) Legal format for the business combination		

Acquisition of shares in consideration for cash(5) Company name after combination
1. Outline of the business combination(1) Name and business of the target company
		

Name

		

Business	Planning, developing, producing, and selling of toys,

WiZ Co., Ltd.
sundries, and animation films

				 1) Percentage of voting rights owned immediately before
combination
First Tender Offer
Second Tender Offer

centered on key IPs, which is a core strength of the Group, it

32.35%

		 4) Percentage of voting rights after theTender Offer

to strengthen planning and development capabilities for toys.
			 While the Company has grown through business operations

55.02%

		 3) Percentage of voting rights acquired throughJASDAQ Standard section. The Company decided to make theTarget Company a wholly owned subsidiary through a tender offer

0.00%

		 2) Percentage of voting rights acquired through(2) Main reasons for the business combination
		The Target Company is listed on the Tokyo Stock Exchange

No change(6) Percentages of voting rights acquired

87.38%(7) Main basis on which acquiring company was chosen		In order for the Company to acquire the shares inconsideration for cash

believes having the Target Company in the Group should enable
the strengthening of its source of growth, the planning and development function for IPs and products, with the Target Company’s
strengths and know-how in digital toys planning and development

2. Matters relating to calculation of acquisition price(1)	Purchase price of acquired company and breakdown by
type of consideration

integrated into the Group. More specifically, the Company believes
that deepening the collaboration between BANDAI CO., LTD.,

		 Aquisition pricewhich has capabilities in boys’ and girls’ basic (classic) toys		ties in digital toys planning and development, should improve the¥804 million(2) Details and amount of main acquisition-related costs

FINANCIAL SECTION

planning and design, and the Target Company, which has capabili-

Cash and time deposits

Aquisition cost		  804

		Remuneration, commissions, and other fees to advisors and otherparties (estimated amounts) ¥98 million

planning capability of the overall Group including the Target
Company and enable the planning, development, and operationsof new products leveraging the strengths of both companies with
their planning capabilities as a pillar.

3. Matters relating to acquisition cost allocation(1)	Amounts and breakdowns for assets received, and debts

			 In addition, the Company recognizes the Target Company as an

assumed, on date of business combination

important business partner of the Group in jointly holding and		 Current assets

operating the rights of original IPs such as Tamagotchi, Primopuel,		 Property, plant and equipment

15

and Digital Monsters. The Target Company believes that the alliance		 Total assets

760

with the Group will allow it to establish a stable revenue base by

		

450

strengthening the licensing-out function for these original IPs.

		 Long-term liabilities

38		 Total liabilities488			 To realize the synergies described above, the Company has
decided it is imperative to establish management structures
to allow decisions to be made promptly and flexibly based on¥745 million

Current liabilities(2)	Goodwill amounts incurred, reason for being incurred,amortization method and period

medium- and long-term strategic judgments, including the		 1) Goodwill amounts incurred

restructuring of the Target Company’s business management,			 ¥566 million

through the acquisition of all of the Target Company’s Shares.

			Because the allocation of the acquisition cost has not been

It has also been determined that the Target Company should

completed, the amount of goodwill has been provisionallybecome a wholly owned subsidiary of the Company and both

calculated.

companies should be integrated as a group to conduct business		 2) Reason for being incurred

operations, which will eventually serve to enhance the corporate			Since the acquisition cost exceeds the net amount of assets

value of the Target Company.

acquired and liabilities assumed, the excess amount has beenrecognized as goodwill.
		 3) Amortization method and period
			 Amortized over five years by the straight-line method73

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, 2016 and2015, 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 accordancewith auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including 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 preparationand fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances,while the objective of the financial statement audit is not for the purpose of expressing an opinion on 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 madeby 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. and its consolidated subsidiaries as at March 31, 2016 and 2015, and their financial performance and cash flows for the years then endedin accordance with accounting 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, 2016 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 3 to the consolidated financial statements.

August 10, 2016
Tokyo, Japan74

CORPORATE DATA
As of March 31, 2016

Corporate Name:BANDAI NAMCO Holdings Inc.

Head Office:

BANDAI NAMCO Mirai Kenkyusho
5-37-8, Shiba, Minato-ku, Tokyo 108-0014, 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:

41,902

Number of Shares per Trading Unit:

Major Shareholders:

100 shares

Number of shares(Thousand)% of total

Japan Trustee Services Bank, Ltd. (Trust account)

11,352

5.17

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

10,947

4.98

XIL, LTD.

6,000

2.73

Name

Masaya Nakamura

5,960

2.71

THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT

4,885

2.22

The Nomura Trust and Banking Co., Ltd. (Retirement and severance benefits trust. The Bank of Tokyo-Mitsubishi UFJ account)

4,586

2.09

MAL Ltd.

4,400

2.00

STATE STREET BANK AND TRUST COMPANY 505225

4,280

1.95

Nintendo Co., Ltd.

3,845

1.75

NORTHERN TRUST CO. (AVFC) RE U.S. TAX EXEMPTED PENSION
FUNDS

3,389

1.54

(Note) The shareholding ratio is calculated after reduction of the number of treasury stocks.

Number of shares (Thousand)Ownership Breakdown:

Public entities
Financial institutions

0
59,546

Brokerage

4,128

Other corporate entities

26,706

Foreign corporate entities and others

99,566

Individuals, etc.

29,847

Treasury stocks

2,204©2015 石森プロ・テレビ朝日・ADK・東映 ©2016 テレビ朝日・東映 AG・東映 ©ABC・東映アニメーション ©BANDAI/TV TOKYO・ここたま製作委員会 © 創通・サンライズ © 創通・サンライズ・MBS © 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©BNP/BANDAI,DF PROJECT © 武内直子・PNP・東映アニメーション © 池田理代子プロダクション© バードスタジオ／集英社・フジテレビ・東映アニメーション © 尾田栄一郎／集英社・フジテレビ・東映アニメーション © やなせたかし／フレーベル館・ＴＭＳ・ＮＴＶ © 円谷プロ © ウルトラマンオーブ製作委員会・テレビ東京 ©BANDAI,WiZ ©BANDAI NAMCO Entertainment Inc. © 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 NAMCO Entertainment Inc. © 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. © 岸本斉史 スコット／集英社・テレビ東京・ぴえろ © 劇場版 NARUTO 製作委員会 2014 ©BANDAI NAMCO Entertainment Inc. ©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 TEKKENTM＆©BANDAI NAMCO Entertainment Inc. ©BANDAI

NAMCO Entertainment Inc. ©2002 MASASHI KISHIMOTO / 2007 SHIPPUDEN All Rights Reserved. ©BANDAI NAMCO Entertainment Inc. © 窪岡俊之 ©BANDAI NAMCO Entertainment Inc. ©BNEI ／ PROJECT iM@S © 創通・サンライズ ©2016 プロジェクトラブライブ！サンシャイン！！ ©2013 プロジェクトラブライブ！ ©2015 プロジェクトラブライブ！ムービー © 藤巻忠俊／集英社・舞台「黒子のバスケ」
製作委員会© 創通・サンライズ・MBS

75

OVERVIEW OF MAIN GROUP COMPANIESAs of June 30, 2016

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.

Advancing regional strategies in the U.S., providing support for the implementationof strategies by operating companies in the U.S.

BANDAI NAMCO Holdings UK Ltd.

Advancing regional strategies in Europe, providing support for the implementationof strategies by operating companies in Europe

BANDAI NAMCO Holdings ASIA CO., LTD.

Advancing regional strategies in Asia, providing support for the implementation ofstrategies by operating companies in Asia

Toys and Hobby Strategic Business Unit
BANDAI CO., LTD.

 lanning, manufacturing, and marketing of toys, plastic models, confectionery,P
and foods, capsule toys, cards, apparel, sundries, and products

MegaHouse Corporation

Planning, development, production, and sales of toys, candy toys, figures,
communications equipment, peripheral equipment, etc.

CCP Co., Ltd.

Planning, development, production, and sales of RC toys, toys,
consumer electronics, and sundries

Sun-Star Stationery Co., Ltd.

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

Plex Co., Ltd.

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

WiZ Co., Ltd.

Planning, design, development, and manufacturing of toys and character-based
products

Seeds Co., Ltd.

 lanning, development, and manufacturing of toys, pachinko and pachislotPmachines, medical equipment, electronic-related equipment, etc.; contract
operations for various types of inspecting and testing; ISO17025-accredited
testing organization

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. etc.

BANDAI AMERICA INC.

Oversight responsibilities for Toys and Hobby Business in the U.S. and Europe;sales company for toy-related products in the U.S.

BANDAI S.A.S.

Holding company in Europe, sales of toys and other products

BANDAI U.K. LTD.

Sales of toy-related products

BANDAI ESPAÑA S.A.

Sales of toy-related products

BANDAI NAMCO ASIA CO., LTD.

Manufacturing, sales, importing, and exporting of toy-related products;
responsibility for production and sales in the Toys and Hobby Businessin Asia–Pacific (excluding Japan)

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 distribution of network content; planning, development,Pand sales of home video game software and arcade game machines

BANDAI NAMCO Studios Inc.

Planning and development of network content, home video game software, andarcade game machines, etc.

D3 PUBLISHER INC.

Planning, development, and sales of home video game software; planning,development, and distribution of network content

B.B.STUDIO Co., Ltd.

Planning and development of home video game software

VIBE Inc.

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

BANDAI NAMCO Online Inc.

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

Banpresto Co., Ltd.

Planning, development, and sales of amusement prizes, etc.

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, development, and sales of home video game software; planning,development and distribution of network content

BANDAI NAMCO Entertainment Europe S.A.S.

Planning, development, and sales of home video game software; planning, development, and distribution of network content, holding company, shared services company

BANDAI NAMCO Amusement America Inc.

Sales of arcade game machines

BANDAI NAMCO Amusement Europe Ltd.

Sales of arcade game machines

BANDAI NAMCO (SHANGHAI) CO., LTD.

Planning, operation, and production of network content

D3 Publisher of America, Inc.

Planning, development, and distribution of network content

BANPRESTO (H.K.) LTD.

Manufacturing and production management of prizes, etc.

NAMCO USA INC.

Planning and operation of amusement facilities

NAMCO UK LTD.

Planning and operation of amusement facilities

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of amusement facilities

Visual and Music Production Strategic Business Unit
BANDAI VISUAL CO., LTD.

Planning, production, and sales of visual content and visual package software

Lantis Co., Ltd.

Planning, production, sales, and management, etc., of music masters andmusical works

Sunrise Inc.

Planning and production of animation, management, and administrationof copyrights

SUNRISE MUSIC Publishing Co., Ltd.

Production of music and planning and use of music and masters related toanimation of Sunrise and BANDAI NAMCO Pictures

BANDAI NAMCO Pictures INC.

Planning and production of animation; management and administration of
copyrights and other rights

BANDAI NAMCO Rights Marketing Inc.

On-demand delivery of content, such as animation

BANDAI NAMCO Live Creative Inc.

 lanning and production of events and live performances; production of visualP
products related to events and live performances; planning and production of
goods, ticket sales, etc.

Grand-Slam Ltd.

Production of live performances and events

Highway Star Inc.

Management of affiliated artists, production of music and operation of fan clubs;
audio engineering operations

Affiliated Business Companies
BANDAI LOGIPAL INC.

International distribution, customs brokerage, amusement-related business,
product inspection, product manufacturing support, etc.

LOGIPAL EXPRESS INC.

Truck freight, industrial waste collection and transportation, logistics management,
warehouse operations, vehicle maintenance, etc.

BANDAI NAMCO Business Arc Inc.

Entrusted with operations related to general affairs, personnel, accounting, andinformation systems

Artpresto Co., Ltd.

Planning, design, and printing, website production, event planning, andadministration

Happinet Corporation*

 istribution of toys, visual and music software, video games, and amusement
D
products (Tokyo Stock Exchange, First Section)

Sotsu Co., Ltd.*

Planning and production of animation for TV programs and copyright business, etc.
(JASDAQ)

Italian Tomato Ltd.*Management of restaurants; franchise operations; production, sales, and provisionof production guidance for pastries

Anime Consortium Japan Inc.*

Distribution of animation, media business, and copyright business* Companies accounted for by the equity method77

www.bandainamco.co.jp

BANDAI NAMCO Group ANNUAL REPORT 2016

Printed in Japan