Financial Summary
Consolidated Financial Results for the Interim Period Ended
September 30, 2006

November 10, 2006

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

1

Stock Listing: Tokyo Stock Exchange
Code Number: 7832
Registered Business Location: Tokyo(URL: http://www.bandainamco.co.jp)
November 10, 2006

Consolidated Financial Report for the Interim Period
Ended September 30, 2006
Representative: Takeo Takasu, President and Representative Director
Contact:
Keiji Tanaka, Director
Date of the Meeting of the Board of Directors: November 10, 2006
U.S. GAAP Applied: No

1. Consolidated Results for the Interim Period Ended September 30, 2006
(April 1, 2005 ~ September 30, 2006)(1) Consolidated Operating Results
Net salesInterim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Operating income¥ million%¥ million%¥ million%

206,636(5.6)

17,263(1.6)

18,561

1.7

218,873－

17,546－

18,244－450,829

35,669Net income

Interim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Recurring income

37,122

Net income per share

Net income per share(diluted)¥ million%¥¥

11,011

40.6

43.53

43.51

7,834

－

30.98

30.97

54.39

54.37

14,149Notes:

1. Equity in earnings (losses) of affiliates:
Interim period ended September 30, 2006
1 million yen
Interim period ended September 30, 2005(25) million yen
Fiscal year ended March 31, 2006
27 million yen
2. Average number of shares outstanding during interim period (fiscal year) (Consolidated):
Interim period ended September 30, 2006
252,957,362
Interim period ended September 30, 2005
252,916,758
Fiscal year ended March 31, 2006
252,487,961
3. Changes in accounting method: Yes
4. Percentage figures accompanying net sales, operating income, recurring income and net income
represent changes compared to the same period of the prior year.

2(2) Consolidated Financial Position
Total assets

Net assets¥ million

Equity ratio¥ million

Net asset per
share
%

¥

Interim Period Ended
381,452
260,33765.8
992.26
September 30, 2006
Interim Period Ended
376,280
230,53561.3
918.42September 30, 2005
(Ref.) FYE March 31, 2006
386,651
243,60763.0
961.36Note:
1. Number of shares outstanding at the end of the interim period (fiscal year) (Consolidated):
Interim period ended September 30, 2006
252,952,465 sharesInterim period ended September 30, 2005
251,014,315 sharesFiscal year ended March 31, 2006
252,963,299 shares
2. Previous figures of “Stockholders’ equity”, “Stockholders’ equity ratio”, and “Stockholders’ equity
per share” are used for figures from interim period ended September 30, 2005 and fiscal year
ended March 31, 2006

(3) Consolidated Statement of Cash Flows
Operatingactivities

Interim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Investingactivities

Financing
activities¥ million¥ million¥ million

Cash and cash
equivalents at
year-end¥ million

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

16,338(3,551)(16,327)

120,933

31,808(24,406)(19,965)

113,186(4) Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries: 55
Non-consolidated subsidiaries accounted for by the equity method: 1
Affiliates accounted for by the equity method: 4(5) Changes in Scope of Consolidation and Application of Equity Method
Consolidated:
Equity method:

New 4; Excluded 1
New —; Excluded 1

2. Consolidated Projections for Fiscal Year ending March 2007
(April 1, 2006 ~ March 31, 2007)
Net sales

Recurring income¥ million

Fiscal Year Ending
March 31, 2007
470,000(Reference)
Projected net income per share (full year): 92.90 yen

Net income¥ million¥ million

40,50023,500Notes:*Figures are in millions of yen, rounded down, except where noted.
*Qualitative information regarding forward-looking statements:
Forward-looking statements that are stated in this document are based on management’s estimates, assumptions,projections and information available at the time of its publications. A number of factors could cause actual results todiffer materially from expectations. Please refer to page 17 for more details.
3

1. The BANDAI NAMCO Group
The BANDAI NAMCO Group (the Group) comprises NAMCO BANDAI Holdings Inc. (The Company),
80 subsidiaries and 7 affiliates. Operations primarily encompass the manufacture and sale of toys andplastic models, the core activity of the character merchandising business; amusement facility operations;coin-operated game machines and other related products; the production and sale of home videogame
software; mobile content; and the production and sale of video-related products.
The Group is also engaged in distribution, planning, development and the provision of other services
related to the above areas of business.
The Group’s businesses and the relationships among NAMCO BANDAI Holdings Inc. and its
subsidiaries and affiliates with business segments are outlined below. Business classifications
correspond directly to the classifications for business segment information.
Business
Business Outline

RegionMajor Companies

Segment
Bandai Co., Ltd., Megahouse Corp., Popy Co., Ltd.,

Domestic

Seika Co., Ltd., Seeds Co., Ltd., Plex Co., Ltd.,
Sunlink Co., Ltd., CCP Co. Ltd., People Co., Ltd., and5 other companies

Toys and

Toys, candy toys, products for vending

Hobbymachines, cards, plastic models, apparel,

Businesssundries, stationery and other products

BANDAI AMERICA INC., BANDAI S. A.,
BANDAI U.K. LTD., BANDAI ESPANA S.A.,BANDAI (H.K.) CO., LTD., BANDAI ASIA CO. LTD.

Overseas(formerly BHK Trading Ltd.),
BANDAI INDUSTRIAL CO., LTD.,BANDAI KOREA CO., LTD.,
CREATIVE B WORKS CO. LTD.,and 5 other companies
NAMCO LIMITED, Pleasure Cast Co., Ltd.,

Domestic

Hanayashiki Co. Ltd., St. Tropez Ltd.,NAMCO SPA RESORT LTD.,
Yunokawa Kanko Hotel Co., Ltd.

Amusement
Amusement facility operations, andNAMCO CYBERTAINMENT INC.,

other operations

XS ENTERTAINMENT INC. *1,

Facility
Business
Overseas

NAMCO OPERATIONS EUROPE LTD.,
NAMCO OPERATIONS SPAIN S.L.,
NAMCO ENTERPRISES ASIA LTD.,
SHANGHAI NAMCO LTD.
NAMCO BANDAI Games Inc., Banpresto Co., Ltd.,
Banpresto Sales Co., Ltd., Bec Co., Ltd.,

Domestic

Banpresoft Co., Ltd., Monolith Software Inc.,
NAMCO TALES STUDIO LTD.,

Software for home videogames,and 1 other company

Gamecoin-operated game machines, prizes

NAMCO BANDAI GAMES America Inc.,

for amusement machines, and other

NAMCO AMERICA INC.,

Contents
Business
products

NAMCO NETWORKS AMERICA INC.,

Overseas

NAMCO EUROPE LTD.,
NAMCO IRELAND LTD. *2,
BANPRESTO (H.K.) LTD.,and 1 other company

4

Business
Business Outline

RegionMajor Companies

Domestic

Bandai Networks Co., Ltd., VIBE Inc.

Segment
Network
Mobile content and other services
Business
Visual andVisual works, visual software,Music Content

on-demand video distribution and other

Business

products and services

Bandai Visual Co., Ltd., Sunrise Inc.,

Domestic

Overseas

Businessand sale of environmental equipment,

and 3 other companies
Artpresto Co., Ltd., NAMCO ECOLOTECH LTD.,

products, leasing, real estate
management, printing, development

BANDAI ENTERTAINMENT INC.,
Bandai Logipal Inc., Banalex Corp.,

Transportation and warehousing of

Other

Bandai Channel Co., Ltd., Lantis Co., Ltd.,and 3 other companies

Domestic

NAMCO SUPPORTERS LTD.,
NAMCO TRADING LTD., Happinet Corp.,
Sotsu Agency Co.,Ltd., Italian Tomato Ltd.
and 6 other companies

licensing, restaurant management, andOverseas

other activities*1: Not operational as of September 30, 2006.
*2: In liquidation proceedings as of September 30, 2006.

5

3 companies (includes 1 company *2)

Chart of business system is as follows:
END USERJAPANOVERSEAS

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

Megahouse Corp.
Popy Co., Ltd.

Seeds Co., Ltd.

Bandai Co., Ltd.

Plex Co., Ltd.

Plan
and
Work

Production
Seika Co., Ltd.
C.C.P. Co., Ltd.
People Co., Ltd. *Toys and Hobby Business

Sunlink Co., Ltd.

Product Sale

CREATIVE B WORKS
CO., LTD.

BANDAI KOREA
CO., LTD.

BANDAI ASIA
CO., LTD.

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

Product Sale

Product Sale

SHANGHAI NAMCO LTD.*

NAMCO LIMITED
Product Sale

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

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

Amusement Facility Business

Product Parts Sale

NAMCO OPERATIONSEUROPE LTD.
NAMCO OPERATIONSSPAIN S.L.

NAMCO ENTERPRISESASIA LTD.
NAMCO CYBERTAINMENT INC.

Licenses

Licenses, Product sale
Production

BANPRESTO (H.K.) LTD.

Product Sale

Product Sale

Plan andWork

NAMCO BANDAI Games Inc.

Banpresto Co., Ltd.

NAMCO TALES STUDIO LTD.
Monolith Software Inc.
Bec Co., Ltd.
Banpresoft Co., Ltd.

Banpresto Sales
Co., Ltd.

Product Sale

Game Contents Business

Plan andWork

Intellectual properties license
NAMCO BANDAI Games
America Inc.
(Mobile)distribution license
NAMCO NETWORKSAMERICA INC.
Production license,
selling license

NAMCO AMERICA INC.
NAMCO EUROPE LTD.

NetworkBusiness

Bandai Networks Co., Ltd.

VIBE Inc.

Sunrise Inc.

Visual and Music
Content Business

Lantis Co., Ltd.
Bandai Channel Co., Ltd.
Provide content

Plan and WorkBANDAI ENTERTAINMENT INC.

Bandai Visual Co., Ltd.
Plan and Work
Bandai Logipal Inc.
Banalex Corp.
Artpresto Co., Ltd.
Happinet Corp.*
Sotsu Agency Co., Ltd.*NAMCO SUPPORTERS LTD.
NAMCO ECOLOTECH LTD.
NAMCO TRADING LTD.
Italian Tomato Ltd.*

Other BusinessOpening of amusement facilities, Product sale
NAMCO BANDAI Holdings (USA) Inc.

NAMCO BANDAI Holdings Inc.
*Affiliated companies accounted for by the equity method.

6

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

2. Fundamental Policy on Profit Sharing
The Company positions the return of profits to stockholders as one of its highest
management priorities. The fundamental policy is to maintain a stable dividend and increase
corporate value while becoming an even more competitive Group, and preserving a soundfinancial position. In concrete terms, the Company plans to maintain the consolidated
dividend payout ratio at a level of 30%, based on stable annual dividend payments of ¥24 pershare.
The Company plans to use retained earnings to actively invest in areas that will boost
corporate value going forward, including the development of new business fields and M&A.

3. Policy on Reducing the Investment Unit
The Company recognizes that widening the stockholder base and promoting share liquidity
are important aspects of its capital policy. The Company will therefore examine measures
such as reducing its investment unit while taking into account future market trends andoperating results.

4. Targets and Management Performance Indicators
The Group has adopted return on assets (ROA) and return on equity (ROE) as medium-term
management performance indicators. The Group’s aim is to create a robust and stable
management base over the medium term by ensuring all assets are always utilized tomaximum efficiency and by effectively using our equity.
The Group aims to attain consolidated ROA of 13.5% and consolidated ROE of 10.0% in thefiscal year ending March 2009, which is the last fiscal year of the Medium-Term Management
Plan launched in April 2006, and will work to enhance management efficiency in parallel withbusiness expansion.

16.0%
12.0%
12.0%

9.6%

8.0%
4.0%

13.5%

10.0%
9.5%

8.5%

10.0%
ROA
ROE

5.8%

0.0%
FY06.3

FY 07.3(Forecast)

FY 08.3(Plan)

7

FY 09.3(Plan)

5. Medium- to Long-term Management Strategy
The Group aims to achieve maximum enterprise value through “strengthening,enhancement, and expansion” of its portfolio-management, while implementing the 3-year
Medium-Term Management Plan initiated in April 2006.
In order to promote attainment of the Medium-Term Management Plan, the Company, as thegroup holding company, implements management strategies spanning across the entire
Group, while the promotion of business strategies is centered on the five Strategic Business
Units (Toys and Hobby, Amusement Facility, Game Contents, Network, and Visual and Music
Content) formed by agglomerations of the Group’s business operating companies.
(1) Portfolio Management of the GroupIn order to generate stable earnings, the Group has combined three portfolios comprising a“business portfolio” engulfing multiple areas of business initiatives, a “content portfolio”
encompassing initiatives based on various content including character-based content
offerings, and a “geographic portfolio” comprising business initiatives in locations worldwide,with portfolio management implemented through a three-dimensional and multi-layered
administration. Under the Medium-Term Management Plan, together with reinforcing theseportfolios and through creating new businesses going forward; the company will generate
growth from inter-portfolio synergy effects, and work to strengthen, enrich, and expand overall
portfolio management.
(2) Management Strategies(i) Strengthening Corporate Governance
Aiming to become a Group that features heightened management transparency, trusted bysociety, and capable of sustained contributions to society, we will promote brand strategies,
enhance CSR and compliance arrangements, and advance appropriate corporate disclosure,and in this way work to reinforce governance systems.
(ii) Effectively Utilizing Human Resources
In order to realize the maximum potential of human resources, the foremost among
management resources, the Group will provide employees with opportunities and venues forself realization by introducing efficient and flexible systems such as personnel exchange
within the Group, reinforcement of personnel training programs, and adoption of new hiringrules.
(iii) Building Optimal Management System
While aiming to enhance the efficiency of group management through organizational
integration, etc. in the case of mature markets and markets that need to be approached with
the Group’s comprehensive strength, in growth markets we will implement initiatives throughmultiple organizations in order to mobilize the principles of competition. Moreover, we will
implement measures towards continued dynamic change to organizational structures such as
consolidation of back office functions with a view to enhanced efficiency.
(3) Business Strategies(i) Entertainment Hub Concept
The entertainment hub function, which forms the Group’s business model, is equipped withcomprehensive capabilities reaching from content creation to product development and sales,
capable of providing products and services across a wide range of businesses. Together with
our partner companies and creators in and outside Japan, we will make active mutual use of
the entertainment hub function to create new businesses as well as products and services,and provide further strengthening in the process.
(ii) Strengthening Overseas BusinessIn overseas business initiatives, we will establish companies with controlling functions in theAmericas, Europe, and Asia, allocate appropriate management resources to each region, andwork to expand operations though optimized business portfolios and content portfolios.
8As numeric targets, through the pursuit of these management and business strategies, theGroup aims to reach net sales of 550 billion yen and operating income of 58 billion yen for the
fiscal year ending March 2009.
(billion yen)
Fiscal Year Ended Fiscal Year 2007 Fiscal Year 2008 Fiscal Year 2009
March 2006
(Forecast)(Plan)(Plan)Net Sales
Operating Income

450.8
35.6

470.0
40.0

500.0
50.0

550.0
58.0

6. Issues to be Addressed
The Group and this industry must address many important, long-term issues, including “theincreasing diversification of consumer preferences” and “changes in the market and theenvironment”. In response, the Group is working to reinforce its portfolio management further,based on the “Entertainment Hub Concept” laid out in its medium-term management plan.
Operationally, the Group placed “Strategic Business Units (SBUs)”, which grouped all thebusiness the Group is engaged in, at the core, and is working to enrich its cross functional
capabilities across each of the SBUs.
(1) Common issues faced by all SBUs
Domestic business expansion
The Group will maximize utilization of the managerial resources it owns—contents,
technologies, and locations—to create markets and attract new customer segments inorder to expand its domestic operations. The implementation of strategies spanning
across the Group, the use of alliances with outside partners and M&A will further
contribute to expanding its operations. In addition, in response to the changing
environment for the entertainment industry, the Group will also engage in building new
business models free from the constraints imposed by existing business practices andmodels.
Overseas business expansion
The Group is strengthening cooperation among regions and examining concepts
towards building the optimal business model for expanding operations overseas.
Reorganization within the Group in each region—the Americas, Europe, and Asia--hasbeen conducted establishing regional integration functions and allocating managerial
resources appropriately in each region. Expanding operations by the SBUs andoptimizing management suitable for the characteristics of each region through theseregional integration will permit the Group to reinforce its portfolio management in eachregion.
Corporate Social Responsibility
The Group’s stated mission is to provide “Dreams, Fun and Inspiration” to people
around the world through entertainment. To continue to achieve that goal, it is committed
to addressing the following three areas of responsibility:• Legal and ethical responsibilities (compliance)• Environmental and social responsibilities (safety/quality, environmental
conservation, social support activities)• Economic initiatives
Under the “CSR Committee” chaired by the president and representative director of
the Company, issues are being undertaken across the Group, specifically throughcommittees as “Environmental Project Committee” and “Social Contribution Committee,”both being a central role in the implementation of CSR activities.

9(2) Issues specific to each SBU
Toys and Hobby SBU
This unit’s industry is facing a “shrinking domestic market due to the falling birthrate”
and “diversifying consumer needs”. It is addressing those challenges by expanding its
target population segment and creating new businesses in Japan as well as actively
expanding operations in overseas markets. For speedy implementation of its plans, thisunit will also actively build cooperative relationships with external partners.
Amusement Facility SBU“Changes in business revenue structures” and “diversifying consumer needs” areamong the issues for this unit’s industry. To address them, the Amusement Facility SBU is
working to enhance profitability by improving its cost structure as well as working in
conjunction with other SBUs to develop and provide highly valued-added, distinctive
facilities that target a broad range of customer segments. The Amusement Facility SBU is
also working proactively to build new major revenue sources, develop overseas
operations, and pioneer new business formats.
Game Contents SBU
Due to the launch of new game platforms is anticipated to be soon, the industry is facing
issues such as “diversifying consumer needs” and “soaring content development costs”. In
response, this business unit is reviewing and reviseing the content development process
through sharing know-how and technologies between the amusement machines, home
video game software, and mobile content businesses, to build a flexible development
system. Those initiatives will enable the Game Contents SBU to develop the optimal
number of titles across each platform and to respond swiftly to changing customer
preferences.
Network SBU
The issues for this industry include “responding to the rapid generational transition in
mobile phone handsets” as well as “responding to a broader and more highly evolved
network environment”. In the mobile content business, which is the foundation of thisbusiness unit’s income, the Network SBU will work aggressively to plan and develop
captivating content as well as to reinforce its capacity to propose and develop the newtechnologies that will lead the industry. With ever increasing fierce competition in theindustry, the Network SBU is working proactively with the development of new businessdomains with growth potential going forward, such as net-based advertising businesses
along with the creation of a solid foundation for income through enhanced efficiency.
Visual and Music Content SBU
This industry’s issues include the “emergence of next-generation media” as well as“adapting to new high-performance hardware”. This business unit will work to build abusiness model for the new media, including distribution of visual and music content andelectronic publishing, while also fully utilizing content the Group already owns, in a swift
response to new hardware developments. Furthermore, the SBU is making efforts tocreate high quality content to further strengthen the above mentioned developments.

7. Notes Regarding the Parent Company, etc.
None.

10

3. Results of Operations and Financial Position
I. Results of Operations
1. Summary for the Interim Period Ended September 30, 2006

(April 1, 2006 to September 30, 2006)
Overview of Operating Results
In the period under review (April 1, 2006 – September 30, 2006), Japan’s economy
overall continued to recover due to improved corporate earnings, rising private-sector
capital expenditure, and growing personal consumption, despite strong headwinds fromfactors such as rising crude oil prices.
In the entertainment industry, the popularity of home video game software focuseson handheld platforms. In addition, consumer trends in the network and visual sectors
are changing rapidly as evidenced by factors including the commencement of the 1seg
terrestrial digital TV broadcasting service for mobile devices and further media
diversification.
In this environment, the Group is implementing its “strengthening, enhancement, andexpansion” of its portfolio-management, based on its 3-year Medium-Term
Management plan initiated this fiscal year.
By business segment, in the Toys and Hobby Business, good performance of theTamagotchi Plus series in terms of both unit and peripheral products was achieved, andthe introduction of the new Tamagotchi Cup for DATA CARDDASS expanded theconsumer target base. Conditions were sluggish for the Game Contents Business,wherein certain product releases were pushed back to the second half, as well as for
the Network Business which faced a continuing decline in the number of subscribers.
However, the Visual and Music Content Business, demonstrating the effectiveness ofgroup synergy with the Mobile Suit GUNDAM series, contributed to profits.
As a result, the Company’s consolidated operational results for the interim period
ended with net sales of ¥206,636 million, a decrease of 5.6% compared to the priorinterim period, operating income of ¥17,263 million, a decrease of 1.6% compared tothe prior interim period, recurring income of ¥18,561 million, an increase of 1.7%
compared to the prior interim period. Also, net income was ¥11,011 million, an increaseof 40.6%, due to the proceedings from the sale of shares of Tohato, Inc. and a loss on
impairment of property, plant and equipment in regards to NAMCO NAMJA TOWN
(Toshima-ku, Tokyo).

11

An overview of each business is presented as follows.
Results by Business Segment(¥ million)
First Half of
FY07.3Toys & Hobby
Amusement
Facility
Game
Contents

Net SalesFirst Half of
FY06.3

ChangeOperating Income
First Half ofFirst Half of
FY07.3
FY06.3

Change85,78482,539

3,245

8,186

8,397

(210)

43,21642,001

1,215

1,883

1,983

(99)

57,007

63,990(6,982)

1,853

7,162

(5,309)

Network

6,266

5,950

316

540

857

(316)

Visual & Music
Content

19,282

23,053(3,771)

4,516

3,095

1,421

Other

10,943

11,220

928

899

543

356

* The proportion of overhead cost borne by the Toys and Hobby, Amusement Facility, and Game Contents segments
has increased compared to the same period last year due to organizational restructuring accompanying
management integration.
* Figures following rearrangement have been used for the prior interim period. Details of the rearrangement are givenin the segment information.

Toys and Hobby BusinessIn the Toys and Hobby Business, the popularity of the Tamagotchi Plus seriescontinued worldwide, while accessories and other related products of Tamagotchi
characters performed very well in Japan. Also, in DATA CARDDASS, which has gained
great popularity in Japan, Tamagotchi Cup was newly introduced, resulting in expanding
customer target into girls. Furthermore, Treasure Gaust, which introduced a new playexperience, and plastic models of the Mobile Suit GUNDAM series, which link withvarious media, gained popularity. In addition, boys’ toys featuring long-establishedcharacters such as Boukenjar (Power Rangers) showed solid performance.
Overseas, along with the popularity of the above mentioned Tamagotchi, in theAmericas and Europe, boys’ toys featuring characters, based on the Power Rangers
series performed well. Also, plastic models based on the Mobile Suit GUNDAM series
were popular in Asia.
As a result, the Toys and Hobby Business booked net sales of ¥85,784 million, an
increase of 3.9% compared to the prior interim period and operating income of ¥8,186
million, a decrease of 2.5% compared to the prior interim period.

12

Amusement Facility BusinessWith respect to the Amusement Facility Business, domestically, the popularity ofcard game machines such as DATA CARDDASS attracted family-oriented visitors, andgun shooting games such as TIME CRISIS 4 attracted core users. As a result, net sales
at existing directly-managed locations and amusement facilities increased 2.2%
compared to the previous year’s interim period. Also, along with the launch oflarge-scale facilities such as NAMCO WONDERPARK HERO’S BASE (Kawasaki,
Kanagawa Prefecture) in pursuit of group synergy, we also focused on acquiring newcustomers by expanding on new business concepts, such as our full-fledged entry into
the “healing entertainment” business.
Responding to regional characteristics, we pushed forward with our overseas
expansion effort. Starting with the U.K. in Europe, we worked on hybrid facility launcheswith entertainment offerings such as bowling alleys. In the Americas, we worked toincrease profitability, expanding revenue-sharing locations, and implementing various
measures aimed at reducing cost.
As a result, the Amusement Facility Business reported net sales of ¥43,216 million,
an increase of 2.9% compared to the prior interim period and operating income of¥1,883 million, a decrease of 5.0% compared to the prior interim period.

Facilities as of September 30, 2006
Directly-managed

Revenue-sharing

facilities

facilities

466

1,216

Theme parks

Spa Resort

Total

5

2

1,689

Game Contents BusinessIn the Game Contents Business, as for home video game software, we released
Tamagotchi Connection: Corner Shop 2 for the Nintendo DS on the domestic market
which was particularly successful with girls in the elementary school age group, like its
predecessor of the previous year. For the Playstation Portable, we started theworldwide sales of Tekken DARK RESURRECTION in domestic market. In addition, SD
GUNDAM G GENERATION PORTABLE performed well in Japan. Moreover, Dragon
Ball Z Sparking! NEO for Playstation2 met with favourable reception. Overseas, theAmerican releases of ACE COMBAT ZERO:THE BELKAN WAR and NARUTO:ULTIMATE NINJA, both for Playstation2, were well received.
In sales of coin-operated game machines, strong sales were recorded by TIMECRISIS 4 in Japan and overseas. Also, measures were taken for the expansion of newcontents for game contents for mobile devices such as mobile phones.
However, certain product releases were pushed back to the latter half of the fiscal
period. Given that the same period of the previous year saw major releases of home
video game software, overall performance did not measure up to the same period lastyear.
As a result, the Game Contents Business recorded net sales of ¥57,007 million, adecrease of 10.9% compared to the prior interim period and operating income of ¥1,853
million, a decrease of 74.1.% compared to the prior interim period.

13

Network BusinessIn the Network Business, new mobile phone technology offerings including a "3Dengine” and solutions aimed at companies handling businesses such as mobile site
systems development have performed well, contributing to the sales growth of the
Solution Business. However, with respect to profits, the Mobile Content Businessstruggled from the effects of a decrease in the overall number of subscribers forstand-by screens and ring tones.
As a result, the Network Business reported net sales of ¥6,266 million, an increaseof 5.3% compared to the prior interim period and operating income of ¥540 million, adecrease of 36.9% compared to the prior interim period.

Visual and Music Content Business
The Visual and Music Content Business performed well thanks to the theatricalrelease and sales from packaged software such as compilation versions of the TV
animation of the Mobile Suit GUNDAM series. Moreover, sales to rental-use DVD video,
an area of market growth since last year, contributed to the performance. Also, withrespect to music package software from Lantis Co., Ltd, which became a consolidated
subsidiary in May of this year, CDs and products related to the TV animation series,
Suzumiya Haruhi No Yuutsu, were well received.
As a result, the Visual and Music Content Business recorded net sales of ¥19,282
million, a decrease of 16.4% compared to the prior interim period and operating incomeof ¥4,516 million, an increase of 45.9% compared to the prior interim period.
In addition, Nikkatsu Corporation is no longer a subsidiary following the sale of its
shares at the end of the same period of the prior fiscal year.

Other Business
Other Business consists of companies that provide support to the Group’s strategic
business units through operations that include logistics, leasing, and building
management. During the interim under review, the business remained focused in its
efforts at efficient operations of these group support services.
As a result of the foregoing, the Other Business booked net sales of ¥10,943 million,
an increase of 9.3% compared to the prior interim period, and operating income of ¥899
million, an increase of 65.6% compared to the prior interim period.

14

Operating Results By Geographic Segment(¥ million)
Net Sales

Operating Income (Loss)

First Half of
FY07.3First Half of
FY06.3

ChangeFirst Half of
FY07.3First Half of
FY06.3

ChangeJapan

171,103

184,728(13,625)

16,59822,377(5,779)Americas20,793

20,629163(867)(3,226)2,359

Europe13,99812,659

1,339

1,405

1,791

(386)

Asia

16,414

13,829

2,584

1,373

1,202

170

* The proportion of overhead cost borne by the Japan segment has increased compared to the same period last year due
to organizational restructuring accompanying management integration.

Japan
In Japan, the Toys and Hobby Business performed well thanks to good
performances from the Tamagotchi Plus series and DATA CARDDASS. As for the
Amusement Facility Business, card game machines and TIME CRISIS 4, among others,
proved popular and net sales for existing facilities are on the path to recovery, up 2.2%
compared with the same period last year.
In the Game Contents Business, as for home video game software, Tamagotchi
Connection: Corner Shop 2 for Nintendo DS proved popular, while in coin-operated
game machine sales, TIME CRISIS 4 was well received. However, certain productreleases were pushed back to the second half of the fiscal year. Taking into account thatthe same period of the previous year saw major releases of home video game software,
overall performance fell short of the same period last year.
Although the mobile content business struggled with the effects of a decline in thenumber of subscribers for mobile phone content in the Network Business, the Visualand Music Content Business performed favourably with solid content centered on the
Mobile Suit GUNDAM series of visual package software.
As a result, net sales in Japan totaled ¥171,103 million, a decrease of 7.4%
compared to the prior interim period and operating income totaled ¥16,598 million, adecrease of 25.8% compared to the prior interim period.

Americas
In the Americas, the Tamagotchi Plus series and boys’ toys featuring characters of
the Power Rangers series performed well in the Toys and Hobby Business. Furthermore,
the continuing expansion of revenue-sharing locations in the Amusement Facility
Business and implemented cost reductions, together with efforts to improve profitability
through a review of marketing activities in the Visual and Music Content Business havecontributed to improvements in the profit structure. However, with home video gamesoftware titles being concentrated in the second half, overall performance remained
steady.
As a result, in the Americas, net sales totaled ¥20,793 million, an increase of 0.8%
compared to the prior interim period and an operating loss of ¥867 million.

15

Europe
In Europe, in the Toys and Hobby Business, Tamagotchi Plus series and boys’ toys
featuring characters of the Power Rangers series were popular items for the period
under review. The Amusement Facility Business worked on hybrid facility launches withentertainment offerings such as bowling alleys. Also, the popular TIME CRISIS 4
coin-operated game machine performed well. However, with strong home video gamesoftware titles releases scheduled in the second half, profits were lower than in thesame period last year.
As a result, net sales in Europe totaled ¥13,998 million, an increase of 10.6%
compared to the prior interim period and operating income totaled ¥1,405 million, adecrease of 21.6% compared to the prior interim period.

Asia
In Asia, the Toys and Hobby Business performed well, focusing on the Tamagotchi
Plus series and plastic models from the Mobile Suit GUNDAM series, while theAmusement Facility Business reinforced initiatives involving prize games and Group
products.
As a result, net sales in Asia totaled ¥16,414 million, an increase of 18.7% comparedto the prior interim period and operating income totaled ¥1,373 million, an increase of
14.2% compared to the prior interim period.

2. Full-Year Outlook
Looking at economic conditions going forward, while the economy is expected toremain on a recovery track with moderate signs of improved corporate profits andincreased capital expenditure, rises in the price of oil and increased interest rates arealso anticipated. Regarding the entertainment business environment surrounding theGroup, as consumer trends continue to diversify further, the game industry in particularis expected to change significantly with the release of new consoles and thus
uncertainty regarding outlook is expected to continue.
In this context, we will push to “strengthen, enrich, and expand the Group’s portfolio
management” based on the 3-year medium-term management plan implemented from
April 2006.
In the second half we will work to reinforce the positioning of popular products suchas Boukenjar (Power Rangers), the Tamagotchi Plus series and others in the Toys andHobby Business in preparation for the year-end sales season. Also, we are creating andfostering new characters in further strengthening merchandising activities targeted at awide range of customers.
In the Amusement Facility Business, we will utilize our group synergy created bylarge-scale facilities such as the NAMCO WONDERPARK HERO’S BASE (Kawasaki,
Kanagawa Prefecture) which opened in September 2006. Moreover, we will work toincrease the scale of our revenues by actively launching large-scale amusement
facilities and developing hybrid facilities overseas, as we take steps to increase income
by sharing our expertise in low-cost business operations.

16

In the Game Contents Business, we will focus our efforts on the balanced
development of key home video game software titles for various platforms in domestic
and overseas markets, and enhance the efficiency of product sales and development.
Through “Mobile Suit GUNDAM: Senjo no Kizuna” – released in October 2006 – andother coin-operated game machines that take advantage of the Group’s strengths, wewill focus on generating synergic effects with the Amusement Facility Business.
In the Network Business, we will work to strengthen our base through thedevelopment of well-modulated content with a strong emphasis on profitability. We will
also actively develop new business domains with future growth potential such as the
Solution Business and net-based advertising businesses.
In the Visual and Music Content Business, we will work to further cultivate ourexisting business in DVD video sales, as in the sale of DVD box sets of the hugely
popular TV series Mobile Suit GUNDAM, while responding to environmental changes
involving new markets and media.
The Group as a whole will focus its efforts on pursuing internal synergies throughvarious initiatives that span across all five Strategic Business Units. For its businessoverseas, we will continue to work to widen targets and strengthen distribution networks
to promote overseas operations as a focus strategy under the “Medium-Term
Management Plan”.
In light of the aforementioned, the Group maintains its unamended forecast of
business results released on October 26, 2006, for consolidated and non-consolidated
results.

Forward-looking statements
This document contains forward-looking statements based on information currently
available to the Company and Group, and as such, include inherent risks and uncertainties.
Actual results may differ materially from forecasts for a variety of reasons.
Significant factors that may actually affect actual results include but are not limited to,changes in the Company and Group’s operating environment, market trends and exchange
rate fluctuations.

17II. Financial Position
1. Cash Flows
Cash and cash equivalents at September 30, 2006 totaled ¥111,566 million, a decrease of¥9,367 million compared to the same period of the prior year. Cash flows in the interim
period were as follows:
Cash flows from operating activities
Operating activities provided net cash of ¥20,417 million, an increase of 25.0%
compared to the same period of the prior year. This mainly reflected net income before
income taxes of ¥21,507 million, a decrease in trade receivables of ¥12,700 million, adecrease in accounts payable of ¥7,874 million, and income taxes paid of ¥7,102 million.
Cash flows from investing activities
Investing activities used net cash of ¥4,385 million, an increase of 23.5% comparedto the same period of the prior year. Despite cash of ¥5,301 million from the sale ofinvestment securities in shares of Tohato, Inc. and others, cash outflows of ¥6,729 million
for the acquisition of intangible assets and property, plant and equipment, and ¥1,099
million for the acquisition of shares in Banpresto Co. Ltd. for its planned consolidation asa wholly owned subsidiary, and ¥1,215 million for costs related to the acquisition of
bowling businesses in Europe.
Cash flows from financing activities
Financing activities used net cash of ¥18,121 million, an increase of 11.0%
compared to the same period of the prior year. This primarily reflected ¥13,451 million
from the net decrease in short-term borrowings and dividends paid of ¥3,036 million, etc.
2. Full-year Cash flow Forecasts
Cash flows from operating activities is forecast to exceed last year’s figure due to theprojected increase of net income this fiscal year before income taxes and minority
interests compared to that of last year, as well as a refund of corporate tax. With respect
to cash flows from investment activities, the amount of investment is forecast to
decrease compared to the previous year, when share acquisitions and otherinvestments were made in connection with group restructuring. Although expenditures
for the redemption of bonds are expected to decrease, cash flows from financing
activities is forecast to increase due to the repayment of short-term borrowings initiatedlast year.
As a result, net cash flow for this period is projected to shift to income, and the cash
and cash equivalents balance for the period end is projected to exceed the balancefrom the end of last year.

3. Cash Flow Indices
FY 2006.3

FY 2007.3

Interim period

End of Year

Interim period

Equity ratio

61.3%

63.0%

65.8%

Equity ratio (market capitalization basis)126.1%

105.5%

123.1%

Debt retirement period (years)

1.0

1.0

0.6

Interest coverage ratio

110.8

90.4

144.7

Notes:(1) “Stockholders’ equity ratio” has been changed to “Equity ratio”(2) Equity ratio = Total stockholders’ equity/Total assets(3) Equity ratio (market capitalization basis) = Market capitalization/Total assets(4) Debt retirement period = Interest-bearing debt/Operating cash flow(5) Interest coverage ratio = Operating cash flow/Interest expenses

18

(Reference)
1. All figures are calculated using data from the consolidated financial statements.
2. Market capitalization is calculated by multiplying the share price at the end of the interim period (fiscal year end) by the
number of shares outstanding (net of treasury stock) at the end of the interim period (fiscal year end).
3. Operating cash flow is the figure shown in the consolidated statements of cash flows. Interest-bearing debt is the sum of all
debt upon which interest must be paid as shown in the consolidated balance sheets. Interest expenses are interest
payments as shown in the consolidated statements of cash flows.
4. For calculating the debt retirement period for the interim period, operating cash flow is doubled to create a full-year figure.

III. Business Risks
Risk factors related to the Group’s businesses that may significantly affect decisions madeby the investment community, include, but are not limited to, those listed below. Thesestatements on risk are based on information available to the Group as of November 10, 2006,
the filing date for the NAMCO BANDAI Holdings Inc.’s financial report (Kessan Tanshin) for
the interim period ended September 30, 2006.
Risks associated with the core business model
The BANDAI NAMCO Group’s businesses are centered on products and services based oncontent, including various characters. The Group's operating results may be affected bychanges in the popularity of specific content or related trends. Therefore, the Group is
working to achieve stable earnings by strengthening, enriching, and expanding its portfolio
management through three-dimensional and multi-lateral business administration. This
portfolio compromises a business portfolio, in which the Group conducts operations in adiverse array of business domains; a contents portfolio, consisting of many different
characters and content; and a regional portfolio, where businesses are conducted in various
regions around the world. In each business, the Group works to develop new content, andconducts marketing activities designed to cultivate and develop that content over the longterm.
Risks associated with overseas business expansion
The Group is aggressively expanding its business overseas. This initiative exposes theGroup to a variety of risks, including business risks associated with regional characteristics,
such as local media and distribution systems; risks associated with intellectual property rights,
such as those related to counterfeit products; and risks associated with fluctuations in
exchange rates. Operationally, the Group conducts sufficient research to minimize theserisks and formulates countermeasures before proceeding with overseas business expansion.
With respect to intellectual property rights, the Group cooperates with local government
agencies and other authorities to identify counterfeit products, promote enhanced recognitionof genuine products, etc. In addition, for foreign exchange risks, the Group uses forward
contracts to lower the risks from short-term fluctuations in the exchange rates for major
currencies.
Retaining and developing key personnel
In the fast-changing entertainment industry, it is essential for the Group to retain anddeveloping personnel who can respond effectively to rapid changes. In addition to developing
a compensation system that will facilitate the retention of these employees, the Group
actively delegates authority. To develop the next generation of employees, the Group isdevoting resources to training seminars and other development programs.

19

Risk associated with Game Contents BusinessIn the game contents business, titles are a significant cause of fluctuations in profits, andthere is a risk that changes in the timing of product launches will affect earnings in a given
period. The Group tightly controls software development schedules for every game while
striving to diversify risks by flexibly developing multiple products with different software
characteristics and development periods. Moreover, the launch of new game platforms anddiversification of customer needs lead to market conditions remain marked by uncertainty.
The Group has therefore implemented a multi-platform strategy with titles that respond to
customer needs across individual game platforms.
Risks associated with advances in and new generations of platforms
In developing game content, visual content, and network content, the Group faces the risk ofdelays in responding to advances in and new generations of content-provision platforms andthe risk of delays in changing its business models in response to these developments. The
Group conducts research into new technologies and works to develop competitive content
that is in step with the latest advances. At the same time, the Group actively works toaccumulate expertise on new business models. Additionally, the Group takes steps to further
develop the content that it has created and to acquire rights to new content.
Decline in domestic birthrate
In the future, an ongoing decline in the domestic birthrate might affect the financial results of
the Group. Accordingly, the Group has been expanding the scope and target of its businessactivities in Japan and is aggressively taking steps to expand its operations in overseas
markets.
Concentration of production in China
In the Group’s Toys and Hobby SBU, approximately 90% of the toys are manufactured in
China. The Group faces the risk of higher production costs from the revaluation of the yuan
and country risk stemming from the regional concentration of production. In response, theGroup is working to reduce production costs and to diversify its production bases into
Southeast Asia and other regions.
Risks from higher crude oil prices
The Group faces the risk that higher crude oil prices could lead to higher production costs
from increased product raw material prices and to higher transportation costs. Accordingly,
the Group is working to standardize the metal casts and molds used for character toys
marketed worldwide and to reduce costs by enhancing the efficiency of processes, ranging
from production to distribution.
Additional risks include disasters, such as natural disasters or accidents, changes in laws
and regulations, defective or deficient products or services, leaks of customer information,and litigation associated with business activities. The Group maintains risk management
systems and works to strengthen its management foundation in order to minimize the effects
on its results in the unlikely event that any of these risks should materialize.

20

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

Note

Prior interim period

Current interim period

As of September 30, 2005

As of September 30, 2006

Millions of yen

Share
(%)

Millions of yen

Share
(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2006

ChangeMillions of yen

Share
(%)

(Assets)
Current assets:
1. Cash and time deposits*2112,526

108,985

109,513

2. Trade receivables*5

61,60960,74070,9103. Short-term investments

9,893

4,434

5,546

4. Inventories

32,472

34,48527,5295. Deferred tax assets

4,257

5,580

7,037

6. Other current assets

18,837

17,642

21,062

7. Allowance for doubtful receivables(1,346)(575)(1,506)

Total current assets

238,249

63.3

231,29360.6

240,634

62.2

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

16,16914,02014,460(2) Amusement facilities and machines

22,03824,78023,910(3) Land

23,342

22,19022,094(4) Other property, plant and equipment

14,04675,596

16,02277,013

1,417

13,606

74,073

2. Intangible assets(1) Consolidation adjustment accounts(2) Goodwill(3) Other intangible assets

67

-

7,668

-

10,818

-

8,457

8,525

8,495

19,314

10,7899,326

16,994

3. Investments and other assets(1) Investment securities

20,707

19,86922,521(2) Guarantee money deposited

25,602

25,13924,916(3) Deferred tax assets

3,680

5,292

3,901

(4) Other investments and assets

5,423

4,905

4,821

(5) Allowance for doubtful receivables(1,505)53,908(1,375)

Total fixed assets

138,030

36.7

Total assets

376,280 100.0

2153,830150,158(78)(1,211)

54,94839.4

12,128146,01637.8

381,452 100.0

5,171

386,651 100.0

Note

Prior interim period

Current interim period

As of September 30, 2005

As of September 30, 2006

Share

Millions of yen

(%)

Share

Millions of yen

(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2006

ChangeMillions of yen

Share
(%)

(Liabilities)
I Current Liabilities
1. Trade payables

40,34744,96040,561

2. Short-term borrowings

3,521

2,453

14,888

3. Bonds—current portion

11,000

5,000

5,000

4. Accounts payable—other

20,565

16,53423,767

5. Accrued income taxes

8,457

8,473

6,827

-

339

-

-

147

147

8. Other current liabilities

11,81016,796

16,335

Total current liabilities

95,701

6. Provision for directors’ bonus
7. Provision for losses from businessrestructuring

*5

25.4

94,705

24.9

(996)

107,527

27.8

II Long-term Liabilities
1. Bonds

15,00010,00010,0002. Long-term debt

3,277

1,497

2,542

849

690

690

2,015

2,130

2,065

867

602

904

6. Other long-term liabilities

7,765

11,488

10,677

Total long-term liabilities

29,775

7.9

26,4096.9(3,366)

26,8797.0

Total liabilities

125,477

33.3

121,11431.8(4,362)

134,40734.8

20,267

5.4--(20,267)

8,636

2.2

I Common stock

10,0002.7--(10,000)

10,0002.6

II Additional paid-in capital

92,43024.6--(92,430)

95,772

24.8

III Retained earnings

157,885

42.0-- (157,885)

164,503

42.5

IV Land revaluation difference(21,246)

(5.7)

-

-

21,246(21,459)

(5.6)

3,381

0.9

-

-

(3,381)

4,145

1.1

(778)

(0.2)

-

-

778

1,801

0.5

VII Treasury stock(11,136)

(3.0)

-

-

11,136(11,156)(2.9)

Total stockholders’ equity

230,535

61.3-- (230,535)

243,607

63.0

376,280 100.0-- (376,280)

386,651 100.0

3. Deferred tax liabilities, land
revaluation difference
4. Accrued retirement and severance
benefits
5. Directors’ and auditors’ retirement
and severance benefits(Minority Interests)
Minority Interests(Stockholders’ Equity)

V Other securities valuationdifference
VI Translation adjustment

Total liabilities, minority interestsand stockholders’ equity

22

Note

Prior interim period

Current interim period

As of September 30, 2005

As of September 30, 2006

Share

Millions of yen(%)

Millions of yen

Share
(%)

VS.
Prior
Interim
PeriodRef: prior fiscal year
condensed balance sheet
As of March 31, 2006

ChangeMillions of yen

Share
(%)

(Net Assets)
I Stockholders’ Equity
1. Common stock--

10,0002.6

10,000--2. Additional paid-in capital--

95,772

25.1

95,772--

3. Retained earnings--

172,35845.2

172,358--

4. Treasury stock--(11,173)(2.9)(11,173)--

Total stockholders’ equity--

266,95670.0

266,956--

1. Other securities valuation difference

-

-

3,053

0.8

3,053

-

-

2. Deferred gains or losses on hedges

-

-

10

-

10

-

-

3. Land revaluation difference--(21,459)(5.6)(21,459)--

4. Translation adjustment

-

-

2,432

0.6

2,432

-

-

-

-

(15,963)(4.2)(15,963)--

III. Stock subscription rights

-

-

478

0.1

478

-

-

IV. Minority Interests

-

-

8,865

2.3

8,865

-

-

Total net assets--

260,33768.2

260,337--

Total liabilities and net assets--

381,452

100.0

381,452--

II. Valuation difference and translation
adjustments

Total valuation difference andtranslation adjustments23

(2) Interim Consolidated Statements of Income
Current interim period(April 1, 2006 ~September 30, 2006)

Prior interim period(April 1, 2005 ~September 30, 2005)
Note

Millions of yen

Share
(%)

Millions of yen

Share
(%)

VS prior
interimperiodRef: Prior fiscal year
condensed statements ofincome(April 1, 2005 ~March 31, 2006)

ChangeMillions of yen

Share
(%)

I Net sales

218,873 100.0

206,636 100.0(12,237)

450,829 100.0

II Cost of sales

141,34664.6

130,896

63.3(10,450)

294,263

65.3

Gross profit

77,52635.4

75,73936.7(1,787)

156,565

34.7

59,97927.4

58,47628.3(1,503)

120,89626.8

17,5468.0

17,263

8.4(283)

35,669

7.9

2,514

0.5

1,061

0.2

37,122

8.2

4,737

1.1

III Selling, general andadministrative expenses*1

Operating income
IV Non-operating income
1. Interest income

396

625

820

2. Dividend income

101

106

140

3. Rental income

131

127

248

4. Foreign exchange gain

186

347

17

5. Operation consignment income

138

195

266

6. Other non-operating income

327

1,282

0.6

271

1,673

0.8

390

1,021

V Non-operating expenses
1. Interest expense

147

112

292

2. Equity in loss of affiliatedcompanies

25

-

-

3. Amortization of goodwill

242

-

485

4. Expenses related to rental
assets-52

63

5. Loss on valuation of derivatives

-

158

-

6. Other non-operating expenses

170

Recurring income

585

0.3

18,244

8.3

51

375

0.2

(210)

18,561

9.0

317

220

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

182

32

1,270

282

316

480

2,602

4,917

2,592

195

92

58

5. Government subsidy income

-

102

-

6. Other extraordinary income

7

2. Gain on sale of investment
securities
3. Gain on sale of investments inaffiliated companies
4. Reversal of allowance for
doubtful receivables

*2

3,271

1.5

24

-

5,461

2.6

2,189

335

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

Prior interim period(April 1, 2005 ~September 30, 2005)
Note

Millions of yen

Share
(%)

Millions of yen

Share
(%)

VS prior
interimperiodRef: Prior fiscal year
condensed statements ofincome(April 1, 2005 ~March 31, 2006)

ChangeMillions of yen

Share
(%)

VII Extraordinary loss
1. Loss on sale of property, plantand equipment
2. Loss on disposal of property,
plant and equipment
3. Loss on impairment ofproperty, plant and equipment
4. Loss on business restructuring
5. Loss on valuation of investment
securities
6. Loss on valuation of
investments in affiliated
7. Loss on valuation of guaranteemoney deposited
8. Loss on changes in equity
interests
9. Provision for allowance of
doubtful receivables
10. Loss for deferring income tax
of depreciation of property,
plant and equipment
11. Other extraordinary loss
Net income before income taxes
and minority interests
Corporate income, inhabitant andenterprise taxes
Deferred income taxes
Minority interests
Net income

*3

19

2

799

*4

174

164

538

*5

1,636

1,616

3,001

50

-

296

201

462

244

17

-

16

2

-

2

15

-

21

317

168

480

-

100

-

-

2,436

1.1

19,079

8.7

7,633
2,735

1

2,515

1.2

79

21,507

10.4

2,427

8,406
10,369

4.7

875
7,834

6,290

1.4

35,5697.9

19,282

4.3

14,468
9,692

4.7

(676)

0.4

803

0.4

(72)

2,137

0.5

3.6

11,011

5.3

3,177

14,149

3.1

25

1,285

889

4,813

(3) Interim Consolidated Statements of Retained Earnings andInterim Consolidated Statements of Changes in Net Assets
Interim Consolidated Statements of Retained Earnings

Note

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

Ref: Prior fiscal year
consolidated statements ofretained earnings(April 1, 2005 ~March 31, 2006)

Millions of yen

Millions of yen(Additional paid-in capital)
I Consolidated additional paid-in
capital at the beginning of theperiod92,03392,033

II Increase in consolidated
additional paid-in capital
1. Increase in additional paid-in
capital by exercise of rights to
subscribe for new shares

396

2. Increase in additional paid-in
capital for issuance of newshares-

III Consolidated additional paid-in
capital at the end of the period

396

396

3,341

3,738

92,43095,772

158,181

158,181(Retained Earnings)
I Consolidated retained earnings at
the beginning of the period
II Increase in retained earnings

7,834

14,1492. Increase in retained earnings
resulting from exclusion from thescope of consolidation

29

29

3. Increase in retained earnings
resulting from the new
application of the equity method

15

15

4. Reversal of land revaluationdifference83

1. Net income

7,962

303

14,497

III Decrease in retained earnings
1. Cash dividends

4,415

4,415

2. Share transfer payments

3,097

3,013

3. Bonuses to directors andcorporate auditors

559

559

4. Decrease in retained earnings
resulting from exclusion ofsubsidiaries from the scope of
consolidation
V Consolidated retained earnings
at the end of the interim period(fiscal year)

186

8,258

157,885

26

186

8,174

164,503

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

Balance at March 31, 2006(¥ million)

Common stock

Additional paid-in
capitalRetained earnings

Treasury stock

Total stockholders’equity10,00095,772

164,503-11,156

259,119

Changes during the period
Cash dividends (*)
Directors’ bonuses (*)
Net income-3,036-3,036-417-417

11,011

11,011

Purchase of treasury stock-17

Changes in the scope of
consolidation (increase in

-17

30

30

295

295

-28

-28

consolidated subsidiaries)
Changes in the scope of
application of the equity method(decrease in companies to which
the equity method applies)
Decrease in retained earnings onmerger of consolidated
subsidiaries
Net changes other than forchanges in stockholders’ equity
Total changes during the period(¥ million)
Balance, September 30, 2006(¥ million)

-

-

7,854

-17

7,837

10,00095,772

172,358-11,173

266,956(*) June 2006 annual general meeting of shareholders earned surplus item.

27

Valuation difference and translation adjustments
Other
securities
valuationdifference
Balance at March 31, 2006(¥ million)

4,145

Deferred
gains orlosses onhedges-Land
revaluationdifference-21,459

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments

Stocksubscription rights

Minority
interests

Total net
assets

1,801-15,512-8,636

252,243

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

Directors’ bonuses (*)-417

Net income

11,011

Purchase of treasury stock-17

Changes in the scope of30

consolidation (increase inconsolidated subsidiaries)
Changes in the scope of
application of the equity method(decrease in companies to which295

the equity method applies)
Decrease in retained earnings onmerger of consolidated-28

subsidiaries
Net changes other than forchanges in stockholders’ equity
Total changes during the period(¥ million)
Balance, September 30, 2006(¥ million)-1,092

10

-

631

-450

478

228

256

-1,092

10

-

631

-450

478

228

8,093

3,053

10

-21,459

2,432-15,963

478

8,865

260,337(*) June 2006 annual general meeting of shareholders earned surplus item.

28

(4) Interim Consolidated Statements of Cash Flows

September 30, 2005)

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

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2005 ~March 31, 2006)

Millions of yen

Millions of yen

ChangeMillions of yen

Prior interim period(April 1, 2005 ~Note
I Cash Flows from Operating Activities
Income before income taxes and minority

19,07921,50735,569

8,743

8,988

19,144

1,636

1,616

3,001

83

-

753

-

1,136

-

679

(782)

260

-

337

-

126

60

174

(129)

(309)

(92)

Interest and dividend income

(498)

(731)

(960)

Interest expense

147

112

292

Foreign exchange gain

(31)

(46)

(41)

Equity in loss (gain) of affiliated companies

25

(1)

(27)

174

164

538

(162)

(30)

(470)

575

435

1,347

(2,885)(5,232)(3,073)

219

462

260

Decrease in trade receivables

11,546

12,7004,454

Decrease (increase) in inventories(1,151)(6,236)

5,841(5,149)(4,506)(10,892)

Increase (decrease) in trade payables(1,930)2,613(2,678)

Increase (decrease) in accounts payable—other(4,328)(7,874)

3,254

(627)

(448)

(627)

(2,526)3,000(8,076)

23,616

26,932

Interest and dividends received

574

727

1,348

Interest paid

(147)

(141)

(352)

Income taxes paid

(7,704)(7,102)(17,140)

Net cash provided by operating activities

16,33820,417

interests
Depreciation and amortization
Loss on impairment of property, plant andequipment
Amortization of consolidated adjustment
account
Amortization of goodwill
Increase (decrease) in allowance for doubtfulreceivables
Increase in directors’ bonus
Increase in accrued retirement and severance
benefits
Decrease in directors’ and auditors’ retirement
and severance benefits

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

Investment for amusement facilities andmachines

Bonuses to directors
Other
Subtotal

29

3,316

4,078

47,95231,808

Prior interim period(April 1, 2005 ~September 30, 2005)

Note

Millions of yen

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

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2005 ~March 31, 2006)

Millions of yen

ChangeMillions of yen

II Cash Flows from Investing Activities
Payments for deposit in time deposits

(143)

(147)

(954)

Proceeds from withdrawal from time deposits

170

171

603

Proceeds from sales of short-term investments

499

-

499

(5,628)(4,534)(9,924)

588

34

4,387

Purchases of intangible assets(1,656)(2,194)(3,203)Purchases of investment securities(1,194)(447)(2,063)

341

5,301

783

(26)

(1,099)(18,032)

220

-

349

(1,780)(416)(1,780)

5,185

-

5,439

100

-

150

Advances of loans receivable(308)(10,977)(528)

Collection of loans receivable

293

10,948581

Guarantee money deposited

(463)

(784)

(883)

627

974

1,963

-

(1,215)-Purchases of property, plant and equipment
Proceeds from sales of property, plant andequipment

Sales of investment securities
Acquisition of shares in consolidated
subsidiaries, net of cash acquired
Proceeds from sales of shares in consolidated
subsidiaries
Purchase of subsidiary shares related tochanges in scope of consolidation
Proceeds from sale of subsidiary shares related
to changes in scope of consolidation
Proceeds from decrease in capital at
non-consolidated subsidiaries

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

30

(376)

1

(3,551)(4,385)(1,793)(834)(24,406)

Prior interim period(April 1, 2005 ~September 30, 2005)

Note

Millions of yen

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

VS. PriorinterimperiodRef: Condensed
statements of cash
flows for the priorfiscal year
(April 1, 2005 ~March 31, 2006)

Millions of yen

ChangeMillions of yen

III Cash Flows from Financing Activities
Net decrease in short-term borrowings
Repayment of long-term debt

(444)

(13,451)

10,847(1,118)(1,405)(2,398)

Repayment of bond redemption--(11,000)

Proceeds from issuance of shares

396

-

396

Proceeds from capital paid by minority interests

20

-

20

Purchases of treasury stock(10,539)(4)(10,552)

Dividends paid

(4,415)(3,036)(4,415)

(226)

(222)

(426)

-

-

(2,436)(16,327)(18,121)(1,794)(19,965)

410

439

28

1,675

(3,129)(1,651)

1,478(10,887)

124,923

113,186(11,737)

124,923

-

10

10

10

-

21

21

-

(860)

-

860

(860)

120,933

111,566(9,367)113,186

Dividends paid to minority interests
Other
Net cash used in financing activities
IV Effect of exchange rate changes oncash and cash equivalents
V Net increase (decrease) in cash and cash
equivalents
VI Cash and cash equivalents at beginningof period
VII Net increase in cash and cash
equivalents due to additional
consolidation of subsidiaries
VIII Increase in cash and cash equivalents
due to merger of subsidiaries
IX Decrease in cash and cash equivalents
due to exclusion of consolidated
subsidiaries
X Cash and cash equivalents at end ofinterim period (fiscal year)*31Important Information Constituting the Basis for Preparation of Interim Consolidated
Financial Statements (April 1, 2006 ~ September 30, 2006)

1. Information Concerning
the Scope ofConsolidation

Prior interim period

Current interim period(April 1, 2005 ~(April 1, 2006 ~March 31, 2006

September 30, 2005)

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(1) Consolidated subsidiaries:
There are 55 consolidated
subsidiaries.
The major consolidated
subsidiaries are listed here:
Bandai Co., Ltd.,NAMCO LIMITED,NAMCO BANDAI Games Inc.,
Bandai Networks Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Logipal Inc.,
NAMCO BANDAI Holdings (USA)Inc.,
BANDAI S.A.,
NAMCO EUROPE LTD.,BANDAI (H.K.) CO., LTD.

(1) Consolidated subsidiaries:
There are 52 consolidated
subsidiaries.
The major consolidated
subsidiaries are listed here:
Bandai Co., Ltd.,NAMCO BANDAI Games Inc.,
NAMCO LIMITED,
Bandai Networks Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Logipal Inc.,
NAMCO BANDAI Holdings(USA) Inc.,BANDAI S.A.,
NAMCO EUROPE LTD.,BANDAI (H.K.) CO., LTD.

Four companies were added tothe scope of consolidation fromthe interim period under review:
NAMCO NETWORKS AMERICA
INC., a newly establishedcompany, and Lantis Co., Ltd and
C.C.P. Co. Ltd. which became asubsidiaries following thepurchase of stock and CREATIVE
B WORKS CO. LTD., due toincrease in significance.
Moreover, effective April 1, 2006,
NAMCO HOMETEK INC. andBANDAI GAMES INC. merged,
with NAMCO HOMETEK INC. as
the surviving entity. NAMCO
HOMETEK INC. subsequently
changed its corporate name to
NAMCO BANDAI Games AmericaInc.
Due to above, BANDAI GAMES,
has been excluded from the scopeof consolidation from the interim
period under review．
Additionally, BHK TRADING LTD.
changed its corporate name to
BANDAI ASIA CO. LTD.

Beginning with the fiscal
year under review, added tothe consolidation were
newly established NAMCOSPA RESORT LTD andBandai Games Inc., as wellas VIBE Inc. which becamea subsidiary due toacquisition of its stock.
Removed fromconsolidation were PalBox
Co., Ltd. following
completion of liquidation,
and BRENT LEISURE LTD.
in liquidation proceedings,
which is underadministration. Also
removed from consolidation
were Italian Tomato Ltd.
and Nikkatsu Corporation,
which ceased to be
subsidiaries due to the saleof their equities.
Moreover, effective April 1,
2005, Banwave Co., Ltd. andBanpocket Co., Ltd. merged,
with Banwave Co., Ltd. as thesurviving entity. Banwave Co.,
Ltd. subsequently changed its
corporate name to Banpresto
Sales Co., Ltd.
Additionally, effective March
31, 2006, NAMCO LIMITED
implemented a spin-off, withthe divested operations reincorporated as NAMCO
LIMITED and the name of thedivesting entity changed to
NAMCO BANDAI Games Inc.
Assets and liabilities of the
newly established entity
NAMCO LIMITED were
freshly consolidated.

(1) Consolidated subsidiaries:
There are 51 consolidated
subsidiaries.
The major consolidated
subsidiaries are listed here:
Bandai Co., Ltd.,NAMCO LIMITED,
Bandai Networks Co., Ltd.,
Bandai Visual Co., Ltd.,
Bandai Logipal Inc.,
NAMCO HOLDING CORP.,
BANDAI S.A.,
NAMCO EUROPE LTD.,BANDAI (H.K.) CO., LTD.

Two companies were added
to the scope of consolidationfrom the interim period:
BANDAI GAMES INC, anewly established company,
and VIBE Inc., which becamea subsidiary following thepurchase of stock. Threecompanies were excluded
from the scope of
consolidation from the interim
period: PalBox Co., Ltd., due
to liquidation, and Italian
Tomato Ltd. and Nikkatsu
Corporation, which are nolonger treated as
consolidated subsidiaries
following sales of stock inthese companies
Effective April 1, 2005,
Banwave Co., Ltd. and
BanPocket Co., Ltd. merged,
with Banwave, the surviving
company. The company has
been renamed Banpresto
Sales Co., Ltd.

32

Fiscal Year EndedPrior interim period

Current interim period(April 1, 2005 ~(April 1, 2006 ~September 30, 2005)(2) Non-consolidated
subsidiaries:
Including SUNRISE
INTERACTIVE INC., 22 of theCompany’s subsidiaries are
excluded from the scope of
consolidation, because total
assets, net sales, interim net
income (corresponding toequity therein) and retained
earnings (corresponding toequity therein) for eachcompany would not have amaterial impact on the interim
consolidated financial
statements of the Company.

September 30, 2006)

Fiscal Year Ended
March 31, 2006
(April 1, 2005 ~ March 31,
2006)(2) Non-consolidated(2) Non-consolidated subsidiaries:
Including SHANGHAI NAMCO
subsidiaries:
Including SHANGHAI NAMCO
LTD, 25 of the Company’sLTD, 21 of the Company’s
subsidiaries are excluded from thesubsidiaries are excluded
scope of consolidation, becausefrom the scope of
total assets, net sales, net income
consolidation, because total(corresponding to equity therein)
assets, net sales, interim net
and retained earnings
income (corresponding to(corresponding to equity therein)equity therein) and retainedfor each company would not haveearnings (corresponding toa material impact on the interim
equity therein) for eachconsolidated financial statements
company would not have aof the Company.
material impact on the interim
consolidated financial
statements of the Company.

33

2. Information Concerning
Application of the Equity
MethodPrior interim period

Current interim period(April 1, 2005 ~(April 1, 2006 ~March 31, 2006

September 30, 2005)

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(1) Application of equity method:
1 non-consolidated subsidiary,
SHANGHAI NAMCO LTD.,is accounted for by the equity
method.
Five affiliates are accounted
for by the equity method:
Happinet Corp.,
Sotsu Agency Co., Ltd.,
Tohato Inc.,
People Co., Ltd. andItalian Tomato Ltd.
People Co., Ltd. and Italian
Tomato Ltd. became equitymethod affiliates from theinterim period under review.

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

(1) Application of equity method:
1 non-consolidated subsidiary,
SHANGHAI NAMCO LTD.,is accounted for by the equity
method.
Five affiliates are accounted
for by the equity method:
Happinet Corp.,
Sotsu Agency Co., Ltd.,
Tohato Inc.,
People Co., Ltd. andItalian Tomato Ltd.
People and Italian Tomato
became equity-method
affiliates from the interim
period under review.

(2) Non-consolidated
subsidiaries and affiliates towhich the equity method is
not applied
The equity method was notapplied to 21 non-consolidated
subsidiaries and five affiliates,
because these companies
would have only a minimal
impact on the Company’s
interim consolidated net
income and retained earnings,
as their significance is minimal
as a whole.

(2) Non-consolidated
subsidiaries and affiliates towhich the equity method is
not applied
The equity method was notapplied to 24 non-consolidated
subsidiaries including
SUNLINK KYUSHU CO. LTD.
as well as 3 affiliates such as
EURO VISUAL S.A.S.,
because these companies
would have only a minimal
impact on the Company’s
interim consolidated net
income and retained earnings,
as their significance is minimal
as a whole.

(2) Non-consolidated
subsidiaries and affiliates towhich the equity method is
not applied
The equity method was notapplied to 20 non-consolidated
subsidiaries including
SUNLINK KYUSHU CO. LTD.
as well as 5 affiliates such as
Primeworks Corporation
because these companies
would have only a minimal
impact on the Company’s
consolidated net income andretained earnings, as theirsignificance is minimal as awhole.

34

Fiscal Year Ended3. Information Concerning theInterim Settlement Date forConsolidated Subsidiaries

Prior interim period

Current interim period(April 1, 2005 ~(April 1, 2006 ~March 31, 2006

September 30, 2005)

September 30, 2006)(April 1, 2005 ~ March 31, 2006)

Consolidated subsidiaries withan interim settlement date of
September 30:
Bandai Co., Ltd.,NAMCO LIMITED,
Banpresto Co., Ltd.,
Bandai Networks Co., Ltd.,
Banpresoft Co., Ltd.,NAMCO Tales Studio Ltd.,VIBE Inc.

Consolidated subsidiaries withan interim settlement date of
September 30:
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games
Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIOLTD.
VIBE Inc.
C.C.P. Co., Ltd.
Consolidated subsidiaries withan interim settlement date ofJuly 31:
Same as left column

Consolidated subsidiaries withfiscal years to March 31st.
Bandai Co., Ltd.
NAMCO BANDAI Games
Inc. (formerly NAMCO
LIMITED)NAMCO LIMITED (the newly
established entity)
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIOLTD.
VIBE Inc.

Consolidated subsidiaries withan interim settlement date ofJuly 31:
Artpresto Co., Ltd.
St. Tropez Ltd.
Consolidated subsidiaries withan interim settlement date ofJune 30:
BANDAI AMERICA INC.
BANDAI ENTERTAINMENT
INC.
BANDAI GAMES INC.
BANDAI S.A.
BANDAI U.K.LTD.
BANDAI ESPANA S.A.
BANDAI (H.K.) CO., LTD.,BANPRESTO（H.K.）LTD.
BHK TRADING LTD.
BANDAI INDUSTRIAL CO.,LTD.
BANDAI KOREA CO., LTD.

Fiscal Year Ended

Consolidated subsidiaries withan interim settlement date ofJuly 31:
Same as left column

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

Consolidated subsidiaries withan interim settlement date ofJune 30:
NAMCO BANDAI Holdings(USA) Inc.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT
INC.
NAMCO BANDAI GAMESINC.
NAMCO AMERICA INC.
NAMCO NETWORKSAMERICA INC.
BANDAI ENTERTAINMENT
INC.
NAMCO BANDAI Holdings(USA) Inc.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BHK TRADING LTD.
BANDAI INDUSTRIAL CO.,LTD.
BANDAI KOREA CO., LTD.
Consolidated subsidiaries notlisted above have the interim
settlement date of August 31:

Consolidated subsidiaries otherthan those above have fiscal
years to the end of February.

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

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

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

35

Consolidated subsidiaries withfiscal years to December
31st:.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT
INC.
NAMCO HOMETEK INC.
BANDAI GAMES INC.
NAMCO AMERICA INC.
BANDAI ENTERTAINMENT
INC.
NAMCO BANDAI Holdings(USA) Inc.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BHK TRADING LTD.
BANDAI INDUSTRIAL CO.,LTD.
BANDAI KOREA CO., LTD.

4. Information Concerning
Capital Consolidation
Related to the Stock
Transfer

5. Information Concerning
Accounting Policies

Prior interim period

Current interim period(April 1, 2005 ~(April 1, 2006 ~Fiscal Year Ended
March 31, 2006

September 30, 2005)

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(1) NAMCO BANDAI Holdings
Inc., the parent company ofBandai Co., Ltd. and NAMCO
LIMITED, was establishedthrough a transfer of stock.
Management integration
through capital consolidation is
being carried out based on thepooling-of-interests method in
accordance with “Accounting for
the Consolidation of a Holding
Company Established by Stock
Exchange or Stock Transfers”(JICPA Accounting Committee
Research Report No. 6).

-(1) NAMCO BANDAI Holdings
Inc., the parent company ofBandai Co., Ltd. and NAMCO
LIMITED, was establishedthrough a transfer of stock.
Management integration
through capital consolidation is
being carried out based on thepooling-of-interests method in
accordance with “Accounting for
the Consolidation of a Holding
Company Established by Stock
Exchange or Stock Transfers”(JICPA Accounting Committee
Research Report No.6).

(2) Based on comprehensive
analysis of the operations andfinancial position of each wholly
owned subsidiary, the pooling ofinterests was judged to be theappropriate method for carryingout management integration toallow each wholly owned
subsidiary to continuously share
the risks and benefits of the
NAMCO BANDAI Group-(2) Based on comprehensive
analysis of the operations andfinancial position of each wholly
owned subsidiary, the pooling ofinterests was judged to be theappropriate method for carryingout management integration toallow each wholly owned
subsidiary to continuously share
the risks and benefits of the
NAMCO BANDAI Group(1) Valuation basis and methods
for significant assets:(1) Valuation basis and methods
for significant assets:(1) Valuation basis and methods
for significant assets:(i)Short-term investments:(i)Short-term investments:(i)Short-term investments:

Bonds to be held to maturity

Bonds to be held to maturity

Bonds to be held to maturity

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

Same as left column

Same as left column

Other securities

Other securities

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

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

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

Securities without market
values:Same as left column

36

Securities with market
values:Stated at market value
using, among others, market
prices at period end settlement
dates. (Valuation differences arereflected directly in stockholder’sequity and the cost of securities
sold is calculated by the movingaverage method).
Securities without market
values:Stated at cost based on
the moving-average method.
However, with respect toinvestments in limited liability
partnerships for investment
businesses and similar
partnerships, the amountcorresponding to the equity
holding of the partnership’s
assets is stated as investment insecurities, and the amountcorresponding to the profit orloss derived from the operationsof the partnership is stated as
profit or loss for the fiscal year.

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(ii) Derivative trading:Stated using the market
price method(iii) Inventories:
Domestic consolidated
subsidiaries:
Game software and otherwork in progress:
Stated at cost using thespecific cost method
Other inventories:
Generally stated atcost using the movingaverage method(ii) Derivative trading:Overseas consolidated
subsidiaries:
Game software and otherwork in progress:
Stated at cost using thespecific cost method
Other inventories:
Generally stated at thelower of cost or market
using the first-in, first-out
method(ii) Derivative trading:Same as left column

Same as left column(iii) Inventories:
Domestic consolidated
subsidiaries
Game software and otherwork in progress:
Same as left column(iii) Inventories:
Domestic consolidated
subsidiaries
Game software and otherwork in progress:
Same as left column

Other inventories:
Same as left column

Other Inventories:
Same as left column

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

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

Other inventories:
Same as left column

Other inventories:
Same as left column(2) Depreciation methods for(2) Depreciation methods for
significant depreciable assets:
significant depreciable assets:(i) Property, plant and(i) Property, plant andequipment:
equipment:
The Company and its
The Company and its
domestic consolidated
domestic consolidated
subsidiaries
subsidiaries
Same as left column
Generally the decliningbalance method is used.
However, for buildings(excluding equipment
attached thereto) acquiredon or after April 1, 1998,
and certain amusement
facilities and equipment,
the straight-line method isused.
The useful life ofbuildings and structuresis 2 to 50 years.
The useful life ofamusement facilities andequipment is 3 to 15
years.
Overseas consolidated
Overseas consolidated
subsidiaries
subsidiaries
The straight-line method isSame as left column
used.
The useful life of buildings
and structures is 5 to 50
years.
The useful life ofamusement facilities andequipment is 2 to 7 years

37

Fiscal Year Ended(2) Depreciation methods for
significant depreciable assets:(i) Property, plant andequipment:
The Company and its
domestic consolidated
subsidiaries
Same as left column

Overseas consolidated
subsidiaries
Same as left column

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(ii) Intangible assets:(ii) Intangible assets:

The straight-line method isused.
The useful life of software
used internally is 2 to 5
years.

The straight-line method isused.
The useful life of goodwill is
5 years.
Goodwill at overseas
consolidated subsidiaries
is treated in accordancewith the accounting
regulations of the countryof domicile.
The useful life of software
used internally is 2 to 5
years.

Fiscal Year Ended(ii) Intangible assets:
The straight-line method isused.
The useful life of software
used internally is 2 to 5
years.

Goodwill at domestic
consolidated subsidiaries isamortized equally over a
period of five years inaccordance with
enforcement regulations of
the Japanese Commercial
Code. Goodwill atoverseas consolidated
subsidiaries is treated inaccordance with theaccounting regulations of
the country of domicile.

Goodwill at domestic
consolidated subsidiaries isamortized equally over a
period of five years inaccordance with
enforcement regulations of
the Japanese Commercial
Code. Goodwill at overseas
consolidated subsidiaries istreated in accordance withthe accounting regulationsof the country of domicile.

(3) Basis of recognition for
significant provisions:(3) Basis of recognition for
significant provisions:(3) Basis of recognition for
significant provisions:(i) Allowance for doubtfulreceivables:
The Company provides forpotential losses due to bad debts
using historical credit loss ratios
for ordinary receivables.
Projected uncollectible amounts
are also recorded for receivables
clearly at risk and receivablesfrom companies underbankruptcy or reorganization
processes, based on individual
consideration of the account's
potential for collection.

(i) Allowance for doubtfulreceivables:(i) Allowance for doubtfulreceivables:

Same as left column

Same as left column

38

(ii)-

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~September 30, 2006)(ii) Provision for directors’ bonus

Fiscal Year Ended
March 31, 2006
(April 1, 2005 ~ March 31,
2006)
(ii)-

The portion of the amount
expected to be payable fordirectors’ bonus in the current
fiscal year that is attributable to thecurrent interim accounting period
is booked by the Company and its
domestic consolidated subsidiaries
against the bonus payment.
Changes in Accounting Policies:
The Accounting Standard for
Directors’ Bonus (Corporate
Accounting Standard No.4,
November 29, 2005) applies fromthe current interim accounting
period.
As a result of this, operating
income, recurring income, interim
net income before income taxes
and minority interests, and net
income are each reduced by¥337 million.
(iii)-(iii) Provisions for losses frombusiness restructuring
The Company provides forlosses from business restructuring
by recognizing provisions in the
expected loss amounts to beabsorbed by domestic consolidated
subsidiaries.

(iv) Allowance for retirement and (iv) Allowance for retirement andseverance benefits:
severance benefits:
Same as left column
The Company provides for
retirement and severance
benefits for employees
based on estimatedretirement benefit
obligations and pension
assets as of theconsolidated fiscal year-end.
The amount recognized toas having been accrued at
the end of the interim
period-end has beenrecorded.
Actuarial gain/loss isamortized in equal amounts
in each fiscal year over a
fixed period (10 to 17 years)
from the following
consolidated fiscal year
within the averageremaining period of service
for affected employees.
At certain domestic
consolidated subsidiaries,
past service obligations areamortized over a fixed period(10 years) within the averageremaining period of service
for affected employees whenincurred.

39(iii) Provisions for losses frombusiness restructuring
Same as left column(iv) Allowance for retirement
and severance benefits:
The Company provides for
retirement and severance
benefits for employees
based on estimatedretirement benefit
obligations and pension
assets as of theconsolidated fiscal yearend.
Actuarial gain/loss isamortized in equal amounts
in each fiscal year over a
fixed period (10 to 17 years)
from the following
consolidated fiscal year
within the averageremaining period of service
for affected employees.
At certain domestic
consolidated subsidiaries,
past service obligations areamortized over a fixed
period (10 years) within the
average remaining period ofservice for affected
employees when incurred.

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(v) Directors’ and auditors’
retirement and severance
benefits:
Certain domestic
consolidated subsidiaries
record provisions for retirement
and severance benefits
payable at the end of theinterim period in accordancewith internal rules.
(4) Accounting policies fortranslation of significant assets
and liabilities into Japanesecurrency

Fiscal Year Ended(v) Directors’ and auditors’
retirement and severance
benefits:
Same as left column(v) Directors’ and auditors’
retirement and severance
benefits:

Assets and liabilities ofoverseas subsidiaries aretranslated at spot exchange
rates prevailing at the end ofeach interim period, while
revenues and expenses of thesame are translated at the
average rates for the period.
The differences resulting fromsuch translations are recorded
in minority interests and inforeign currency translation
adjustments under net assets.

Assets and liabilities ofoverseas subsidiaries aretranslated at spot exchange
rates prevailing at the end ofeach fiscal year, while
revenues and expenses of thesame are translated at the
average rates for the period.
The differences resulting fromsuch translations are recorded
in minority interests and instockholders’ equity under
foreign currency translation
adjustment.

Certain domestic
consolidated subsidiaries
record provisions for retirement
and severance benefits
payable at the end of the fiscal
year in accordance withinternal rules.
(4) Accounting policies for(4) Accounting policies fortranslation of significant assets
translation of significant assets
and liabilities into Japaneseand liabilities into Japanesecurrency
currency
Receivables and payables
Receivables and payables
Receivables and payables
denominated in foreign
denominated in foreign
denominated in foreign
currencies are translated at spot currencies are translated at spot currencies are translated at spot
exchange rates prevailing at theexchange rates prevailing at theexchange rates prevailing at theend of each fiscal year, andend of each interim period, andend of each interim period, andresulting gains or losses are
resulting gains or losses are
resulting gains or losses areincluded in income.
included in income.
included in income.
Assets and liabilities ofoverseas subsidiaries aretranslated at spot exchange
rates prevailing at the end ofeach interim period, while
revenues and expenses of thesame are translated at the
average rates for the period.
The differences resulting fromsuch translations are recorded
in minority interests and instockholders’ equity under
foreign currency translation
adjustment.

40

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(5) Accounting standards for(5) Accounting standards forrecording income and expenses recording income and expenses

Fiscal Year Ended(5) Accounting standards forrecording income and expenses

Same as left column

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

Same as left column

Same as left column

Videogame software
production costs:
The production ofvideogame software involves thecomplex combination of both
software and content.
Consequently, it is difficult totreat these constituent items as
separate components foraccounting purposes.
The Company judges themain component of videogame
software to be content, which
includes visual image and music
data, including the game itself.
Based on the above,
videogame software production
costs are recorded as either
inventories or advancepayments effective from thepoint an internal decision ismade to commercialize a
product. For software
production costs recorded
under assets, cost of sales isrecorded based on estimatedsales volume.
(6) Accounting policies for
significant lease transactions
The Company and its
consolidated subsidiaries
account for financing leasetransactions, other than those inwhich titles to leased property
are transferred to lessees, byapplying accounting treatment
applicable to ordinary leasetransactions.
However, overseas
consolidated subsidiaries follow
the accounting standards in the
country of domicile and therefore
treat financing lease transactionsin accordance with accounting
treatment applicable to ordinary
sale and purchase transactions.

41

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~Fiscal Year Ended
March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(7) Significant accounting
policies for hedging(i) Accounting for hedging:(7) Significant accounting
policies for hedging(i) Accounting for hedging:(7) Significant accounting
policies for hedging(i) Accounting for hedging

Same as left column

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

Same as left column

Same as left column

The Company uses deferredhedge accounting.
The allocation method isused for forward exchange
contracts when appropriate.
The special method is used forinterest rate swaps whenappropriate.
(ii) Hedging instruments andhedged items:
Hedging instruments:
Forward exchange contracts,
interest rate swaps, etc.
Hedged items:

Hedged items:
Same as left column

Foreign currencydenominated liabilities andscheduled transactions, andinterest on debt.
(iii) Hedging policies:
Hedging is implemented forthe purpose of reducing risks
arising from fluctuations in
exchange rates and interest
rates involved in operationaland financing activities.
(iv) Method of assessing theeffectiveness of hedging:(iii) Hedging policies:

Hedged items:
Same as left column(iii) Hedging policies:

Same as left column

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

Same as left column

Same as left column

The effectiveness of ahedging transaction is inprinciple determined bycomparing the cumulativechange in the cash flows ormarket movement of thehedged item and that of thehedging instrument from thestart of hedging to the time ofassessing the effectivenessthereof.
However, if importantconditions are common for thehedging instrument and thehedged asset, liability, orscheduled transaction, no suchdetermination is made because
it is apparent that 100%
effectiveness in hedging wasachieved.

42

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

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~Fiscal Year Ended
March 31, 2006

September 30, 2006)(April 1, 2005 ~ March 31, 2006)(8) Other important information(8) Other important information(8) Other important information
constituting the basis ofconstituting the basis ofconstituting the basis ofpreparation of interim financial
preparation of interim financial
preparation of interim financial
statements
statements
statements(i) Accounting treatment of(i) Accounting treatment of(i) Accounting treatment ofconsumption tax:
consumption tax:
consumption tax:
Consumption tax is
Consumption tax is
Consumption tax is
accounted for separately and is accounted for separately and isaccounted for separately and is
not included in each account.
not included in each account.
not included in each account.
(ii) Reserve for deferring income (ii) Reserve for deferring income
tax of depreciation of plant,
tax of depreciation of plant,
property and equipment
property and equipment byappropriation of earnings.
The amounts of current and
The amounts of current anddeferred income taxes for thedeferred income taxes for theinterim period under review areinterim period under review arecalculated assuming the reversal calculated assuming thereversal of reserve forof the reserve for deferring
deferring income tax ofincome tax of depreciation ofdepreciation of plant, property
plant, property and equipment
and equipment set forth for theset forth in the proposal for
current fiscal year.
appropriation of retained
earnings for the current fiscal
year.
Cash and cash equivalents
Same as left column
Same as left column
include cash on hand, deposits
on demand, and short-term,
highly liquid investments withmaturities of three months orless from the date of acquisition
that are readily convertible tocash and are subject to only
insignificant risk of changes invalue.

43

Changes in Important Information Constituting the Basis for Preparation of theInterim Consolidated Financial Statements (April 1, 2006 ~ September 30, 2006)
Prior interim period

Current interim period(April 1, 2005 ~ September 30, 2005)(April 1, 2006 ~ September 30, 2006)-

Accounting Standard For Presentation of

Fiscal Year Ended
March 31, 2006
(April 1, 2005 ~ March 31, 2006)-

Net Assets
From the current interim consolidated
accounting period, “Accounting Standard
for Presentation of Net Assets” (Corporate
Accounting Standard No.5, December 9,2005) and “Guidance on the AccountingStandard for Presentation of Net Assets”(Guidance on Corporate AccountingStandard No.8, December 9, 2005) are
adopted.
The amount corresponding to total
stockholders’ equity until now has been
¥250,983 million.
In line with this revision in the standards
for interim consolidated financial
statements, this method was applied in the
net assets section of the interim
consolidated balance sheets for the current
interim consolidated accounting period.

-

Accounting Standard for Share-based
Payment
From the current interim consolidated
accounting period, “Accounting Standard
for Share-based Payment”(Corporate
Accounting Standard No.8, December 27,2005) and the “Guidance on the
Accounting Standard for Share-based
Payment” (Guidance on Corporate
Accounting Standard No.11, May 31, 2006)
are adopted.
As a result of this, operating income,recurring income, interim net income
before income tax and minority interestsand interim net income are each reducedby ¥478 million.
The effect of this on segment informationis set out in that section.

44-

Changes in Display of Accounting Categories
Prior interim period(April 1, 2005 ~ September 30, 2005)-

Current interim period(April 1, 2006 ~ September 30, 2006)
Interim Consolidated Balance Sheet
Amounts recorded in “Other (business rights)” under Intangible
assets in the previous interim consolidated balance sheet arepresented as “Goodwill" from the current interim consolidated
accounting period.
Also, amounts recorded in the “Consolidation adjustment
accounts” are presented as "Goodwill” or “Other (Negative-

goodwill)” under long-term liabilities.
Interim Consolidated Statement of Income
1.”Expenses related to rental assets”, which have been included
in “Other non-operating expenses” on the interim consolidated
statement of income up until the previous interim consolidated
accounting period, have been changed to be recorded under the
category “Expenses related to rental assets” in the current interim
consolidated accounting period as it exceeds 10/100 of nonoperating expenses.
Expenses related to rental assets included in other non-operating
expenses in the previous interim consolidated accounting period
were ¥53 million.
2.Amounts recorded in the previous interim consolidated
accounting period as “Amortization of goodwill” are presented
from the current interim consolidated accounting period as“Selling, general and administrative expenses (Amortization of
goodwill)”.

-Interim Consolidated Statement of Cash Flow
Amounts for the “Amortization of business rights” included in“Depreciation and amortization” and amounts recorded as“Amortization of consolidated adjustment accounts" in theprevious interim consolidated accounting period are presented as“Amortization of goodwill” from the current interim consolidated
accounting period.

45

Notes
Notes to Interim Consolidated Balance Sheet
Prior interim period

Current interim period

As of September 30, 2005

As of September 30, 2006

*1. Accumulated depreciation of tangible
assets:¥123,336 million*1. Accumulated depreciation of tangible
assets:¥122,591 million

Prior Fiscal YearAs of March 31, 2006
*1. Accumulated depreciation of tangible
assets:¥122,360 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits:¥54 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits:¥54 million*2. Secured assets and secured loans
The following assets are accompanied bycollateral (security). .
Cash and time deposits: ¥54 million

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

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

The above collateral is applicable tooverdraft contracts by subsidiaries. At theend of the fiscal year, there was anapplicable short term loan in the amountof ¥28 million

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries:¥80 million

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries:¥84 million

4. Other occurring loans
Additionally, in the stock purchase andsale agreement concluded with Index
Corporation related to Nikkatsu
Corporation stock, NAMCO LIMTED is
obligated to pay Index compensation of
up to ¥354 million for damages in theevent of violations by NAMCO to clausesthat it has declared or guaranteed.
(Effective until April 30, 2006)

4. -

5. -

5. Notes due at the end of the interim
consolidated accounting period
Notes due at the end of the interim
consolidated accounting period aresettled on the appropriate note transfer
date. However, the final day of thecurrent interim consolidated accounting
period coincided with a holiday for
financial institutions. Therefore, thefollowing notes due at the end of theinterim consolidated accounting period
are included in the balance sheet of theinterim consolidated accounting period.

3. Guarantees for loans
Guarantees for lease agreements
concluded with trading partners ofoverseas subsidiaries:¥85 million
4. -Notes receivable¥295 million

Notes payable¥1,115 million

46

5. -

Notes to Interim Consolidated Statements of Income
Prior interim period(April 1, 2005 ~ September 30, 2005)

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

Fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2006)*1. Major components of selling, general andadministrative expenses
Advertising expenses:¥15,359 million
Officers’ remuneration and employee
salaries and benefits:¥14,051 million
Research and development expenses:¥9,835 million
Allowance for doubtful receivables:¥689 million
Provision for employee retirement andseverance benefits:¥571 million
Provision for officers’ retirement andseverance benefits:¥111 million*1. Major components of selling, generaland administrative expenses
Advertising expenses: ¥14,038 million
Officers’ remuneration and employee
salaries and benefits:¥14,398 million
Research and development expenses:¥7,816 million
Allowance for doubtful receivables:¥201 million
Provision for employee retirement andseverance benefits:¥582 million
Provision for officers’ retirement andseverance benefits:¥74 million
Provision for directors’ bonus:¥337 million*1. Major components of selling, generaland administrative expenses
Advertising expenses:¥31,055 million
Officers’ remuneration and employee
salaries and benefits:¥28,219 million
Research and development expenses:¥20,239 million
Allowance for doubtful receivables:¥797 million
Provision for employee retirement andseverance benefits:¥1,124 million
Provision for officers’ retirement andseverance benefits:¥186 million*2. Breakdown of gains on sales of property, *2. Breakdown of gains on sales of *2. Breakdown of gains on sales of property,
plant and equipment
property, plant and equipment
plant and equipment
Buildings and structures:¥99 million
Machinery, equipment and vehicles:
Buildings and structures:¥99 million
Machinery, equipment and vehicles:¥12 million
Land:¥1,154 million¥2 million
Other:¥20 million
Other:¥15 million
Tools, furniture and fixtures:¥6 million
Land:¥74 million*3. Breakdown of losses on sales of property, *3. Breakdown of losses on sales of *3. Breakdown of losses on sales ofplant and equipment
property, plant and equipment
property, plant and equipment
Tools, furniture and fixtures:¥4 million
Tools, furniture and fixtures: ¥2 million
Buildings and structures:¥538 millionLand:¥14 million
Tools, furniture and fixtures: ¥11 million
Land:¥249 million*4. Breakdown of losses on disposal of *4. Breakdown of losses on disposal of *4. Breakdown of losses on disposal ofproperty, plant and equipment
property, plant and equipment
property, plant and equipment
Buildings and structures:¥72 million
Buildings and structures:¥13 million
Buildings and structures:¥253 million
Machinery, equipment and vehicles:
Tools, furniture and fixtures:
Machinery, equipment and vehicles:¥5 million¥132 million¥55 million
Tools, furniture and fixtures:¥83 million
Software:¥11 million
Tools, furniture and fixtures:Construction in progress:¥5 million
Other:¥ 6 million¥215 million
Software:¥7 million
Software:¥13 million*5. Loss on impairment of property, plant and *5. Loss on impairment of property, plant *5. Loss on impairment of property, plant
equipment
and equipment
and equipment
In order to identify assets for impairment,
In order to identify assets for
In order to identify assets for impairment,
the Company and its consolidated
impairment, the Company and its
the Company and its consolidated
subsidiaries group their fixed assets
consolidated subsidiaries group theirsubsidiaries group their fixed assets
according to management accounting
fixed assets according to management
according to management accountingclassifications based on each businessaccounting classifications based onclassifications based on each business
unit, except for important idle assets,
each strategic business unit, except for
unit, except for important idle assets,
assets to be disposed of and lease assets.
important idle assets, assets to beassets to be disposed of and lease assets.
disposed of and lease assets.
To establish a more sound financial base,To establish a sounder financial base,the Company has reduced the book value
To establish a more sound financial
the Company has reduced the book valueof the following intangible assets in thebase, the book value of the followingof the following intangible assets andperiod under review to a level deemed
assets, except for those assets whichassets to be disposed of in the period
recoverable, and recorded the reduction
may be reused, is reduced to theunder review to a level deemed
under extraordinary loss as loss onrecoverable amount and the decrease
recoverable, and recorded the reduction
impairment of property, plant andin value accounted for as an
equipment.
impairment loss in extraordinary losses. under extraordinary loss as a loss on
impairment of property, plant andRecoverable amounts are calculated
equipment.
taking the value in use of the asset tobe zero.

47

Prior interim period

Current interim period

Fiscal year ended March 31, 2006

(April 1, 2005 ~ September 30, 2005)(April 1, 2006 ~ September 30, 2006)(April 1, 2005 ~ March 31, 2006)

Items

Classification

Shibuya
-ku,
Tokyo
(VIBE
Inc.)

－

Consolidation
adjustment
accounts

Taitoku,
Tokyo

Internetcontent
andadministrative
software

Location

Total

Other
intangible
assetsImpairment
loss(¥ million)Location

Items

Classification

1,610

Toshima
-ku,
Tokyo

Amuse
ment
facility(Themepark)

Amusement facility,
machines,etc.

Minatoku,
Tokyo

Amuse
ment
facility

Saitama-shi,
SaitamaAmuse
mentfacility

25

1,636

In determining loss on impairment ofproperty, plant and equipment, theCompany assumes a zero value in use to
calculate recoverable asset value.

Total

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

Impairment
loss(¥ milli
on)

1,543

46

26

Location

Minatoku,
Tokyo－

Matsudo-shi,
Chiba

Suburban
Culturalfacility

Ota-ku,Tokyo

Parking
lotInternetcontent
andadminist
rativesoftware1,616

Since the management of amusement
facilities is spread widely around Japanand overseas, asset grouping is carriedout mainly according to fixed regions
based on the management accounts
classifications.
The above facilities have been
separated from the existing groupingsand have had impairment losses booked
against them for the following reasons:Toshima-ku Theme Park
For this facility, it was decided tochange the main operational
objective from sales aimed atattaining profits to concentrating on
the facility’s advertising value, and it
is considered as a different categoryof investment decision from thegroup, which consists of facilities,
etc. the purpose of which is to attainprofits.
Minato-ku and Saitama facilities
The recoverable amount of the fixed
assets has fallen significantly as aresult of the decision to close thesefacilities.

48

Items

Taitoku,
Tokyo
Total

Classifi-cationConsolidation
adjustment
accounts
Buildings,
structures,
etc.

Land
Other
intangibl
e assets

Impairment
loss(¥ millio
n)

1,619

825

530

25

3,001

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

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

Issued shares
Common stock

260,580,191--

260,580,191

Total

260,580,191--

260,580,191

Treasury Stock
Common stock

7,616,892

10,90470

7,627,726

Total

7,616,892

10,90470

7,627,726

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

Category

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

The

Series 1

CompanyStocksubscription

Balance at
end of interim
period(¥ million)

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

50

-

-

-

-

-

-

-

-

-

-

rightsStock

Series 2

subscription

Stockrights as stock

subscription

optionsrightsSeries 3
Stocksubscription
rightsConsolidated-

subsidiaries
Total

49

478

Matters concerning dividends
Dividend payment amount
Share category

Total dividend
amount(millions of yen)

Common stock

3,126

Resolved

Dividend pershare (¥)

Date of record

Effective date

March 31, 2006

June 27, 2006

Annual general meeting ofshareholders

12

June 26, 2006

Dividends the date of record for which falls in the consolidated interim period and the effective date for which falls after theend of the consolidated interim period.
Share category
Resolved

Total dividend
amount(millions of yen)

Meeting of the Boardof Directors

Common Stock

October 26, 2006

3,126

Assetsunderlying
dividend

Dividend pershare (¥)

Retained
Earnings

12

Date of record

Effective date

September 30, 2006 December 8, 2006

Notes to Interim Consolidated Statements of Cash Flows
Prior interim period(April 1, 2005 ~ September 30, 2005)

Current interim period(April 1, 2006 ~ September 30, 2006)* Relationship between cash and cash

* Relationship between cash and cash

equivalents at the end of the interim
period and the amounts accounted for on
the consolidated balance sheets:

equivalents at the end of the interim
period and the amounts accounted for on
the consolidated balance sheets:(As of September 30, 2005)
Cash and time deposits:¥112,526 million
Short-term investments:¥9,893 million
Total¥122,419 million(As of September 30, 2006)
Cash and time deposits:¥108,985 million
Short-term investments:¥4,434 million
Total¥113,419 million

Time deposits with maturities exceeding
three months:(¥1,485 million)
Cash and cash equivalents:¥120,933 million

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

50

Fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2006)* Relationship between cash and cash
equivalents at the end of the period
under review and the amounts
accounted for on the consolidatedbalance sheets:(As of March 31, 2006)
Cash and time deposits:
Short-term investments:
Total¥109,513 million¥5,546 million¥115,060 million

Time deposits with maturities exceeding
three months:(¥1,874 million)
Cash and cash equivalents:¥113,186 million

1. Lease Transactions
Descriptions are omitted as information is disclosed via EDINET (Electronic
Disclosure for Investors’ NETwork).
2. Marketable Securities
At the end of the prior interim period (As of September 30, 2005)
1. Bonds held to maturity with market values(¥ million)
Book value on
consolidatedbalance sheet

Market Price

Difference

1. Government and local government bonds, etc.

9

9

-

2. Corporate bonds

-

-

-

3. Other

-

-

-

9

9

-

Total

2. Other securities with market values(¥ million)
Book value on
consolidatedbalance sheet
1. Securities

Market Price

Difference

2,832

9,802

6,970

i) Government and local government bonds, etc.

-

-

-

ii) Corporate bonds

-

-

-

iii) Other

-

-

-

242

274

32

3,074

10,077

7,002

2. Bonds

3. Other
Total

Note: Stocks and other securities with market values included in Other Securities wererecognized as 200 million yen for the prior interim period as impairment losses. These were:
Stocks whose market value declined 50% or more:
All stocks
Stocks whose market value declined more than
Stocks for which no recovery in
30% but less than 50%:
value is expected

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

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

1,310ii) MMF

6,893

iii) CP

499

iv) Other

2,562

3. Securities of subsidiaries and affiliates
2,777

Unlisted stocks

51

At the end of the current interim period (As of September 30, 2006)
1. Bonds held to maturity with market values(¥ million)
Book value on
consolidatedbalance sheet

Market Price

Difference

2,009

2,008

-

2. Corporate bonds

-

-

-

3. Other

-

-

-

2,009

2,008

-

1. Government and local government bonds, etc.

Total

2. Other securities with market values(¥ million)
Book value on
consolidatedbalance sheet
1. Securities.

Market Price

Difference

2,537

8,672

6,135

-

-

-

100

98

(1)

-

-

-

222

258

36

2,860

9,030

6,169

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

Note: Stocks and other securities with market values included in Other Securities wererecognized as 200 million yen for the current interim period as impairment losses. These were:
Stocks whose market value declined 50% or more:
All stocks
Stocks whose market value declined more than
Stocks for which no recovery in
30% but less than 50%:
value is expected

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

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

2,089ii) MMF

1,294

iii Other

1,199

3. Securities of subsidiaries and affiliates
1,835

Unlisted stocks52

At the end of the prior fiscal year (As of March 31, 2006)
1. Bonds held to maturity with market values(¥ million)
Book value on
consolidatedbalance sheet

Market Price

Difference

1. Government and local government bonds, etc.

9

9

-

2. Corporate bonds

-

-

-

3. Other

-

-

-

9

9

-

Total

2. Other securities with market values(¥ million)
Book value on
consolidatedbalance sheet
1. Securities

Market Price

Difference

2,970

11,159

8,188

-

-

-

100

98

(2)

-

-

-

232

290

58

3,303

11,5488,244

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

Note: Stocks and other securities with market values included in Other Securities wererecognized as 200 million yen for the prior fiscal year as impairment losses. These were:
Stocks whose market value declined 50% or more:
All stocks
Stocks whose market value declined more than
Stocks for which no recovery in
30% but less than 50%:
value is expected

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

Unlisted bonds
2. Other marketable securitiesi) Unlisted stocks

1,579ii) MMF

5,046iii) Other563

3. Securities of subsidiaries and affiliates
2,489

Unlisted stocks

3. Derivative Transactions
Descriptions are omitted as information is disclosed via EDINET.
4. Stock option and related information
Descriptions are omitted as information is disclosed via EDINET.

53

Other Notes
5. Segment Information
1. By Business Segment(¥ million)
Prior interim period ended September 30, 2005
(April 1, 2005 ~ September 30, 2005)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Total

Eliminations
Consolidated
andCorporate

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

81,10640,90862,151

5,805

22,557

6,342

218,873－

218,873

1,432

143

1,621

144

495

4,878

8,716

(8,716)－

Total

82,53941,052

63,773

5,950

23,053

11,220227,590(8,716)

218,873

Operating expenses

74,14238,751

56,325

5,092

19,958

11,280205,551(4,224)

201,326

Operating income (loss)

8,397

2,300

7,448

857

3,095

(59)

22,039(4,492)

17,546

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

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

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

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

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

Video titles, visual software, on-demand video distribution and other products andservices

Transportation and warehousing of products, leasing, real estate management,
printing, licensing, restaurant management, human services and nursing care facilities,
development and sale of environmental equipment and other activities
3. Operating expenses include an unallocatable amount of ¥4,762 million under eliminations and corporate. This figure primarily(6) Other Business:consists of expenses related to management divisions at Bandai Co., Ltd. and NAMCO LIMITED.

(¥ million)
Current interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Total

Eliminations
Consolidated
andCorporate

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

82,61343,07450,7006,086

18,714

5,446

206,636－

206,636

3,171

141

6,307

179

568

5,496

15,865(15,865)－

Total

85,784

43,21657,007

6,266

19,282

10,943

222,501(15,865)

206,636

Operating expenses

77,59841,33255,154

5,725

14,765

10,043

204,619(15,247)

189,372

Operating income (loss)

8,186

1,883

1,853

540

4,516

899

17,881(617)

17,263

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

54(¥ million)
Prior interim period ended September 30, 2005
(April 1, 2005 ~ September 30, 2005)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Total

Eliminations
Consolidated
andCorporate

Net sales
81,10641,92662,3685,805

22,557

5,108

218,873－

218,873

1,432

74

1,621

144

495

4,906

8,676

(8, 676)－

Total

82,53942,001

63,9905,950

23,053

10,015

227,549(8,676)

218,873

Operating expenses

74,14240,01756,827

5,092

19,958

9,471

205,510(4,184)

201,326

Operating income (loss)

8,397

1,983

7,162

857

3,095

543

22,039(4,492)

17,546

1. To external customers
2. Intersegment sales andtransfers(¥ million)
Prior fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2005)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

176,474

80,769128,448

12,19642,27910,661450,829－

450,829

4,533

525

2,326

324

1,048

10,142

18,901(18,901)－

Total

Eliminations
Consolidated
andCorporate

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

181,007

81,294

130,774

12,521

43,32820,804

469,730(18,901)

450,829

Operating expenses

161,922

79,406

121,067

10,68537,141

19,616429,838(14,678)

415,160

Operating income (loss)

19,085

1,888

9,707

1,835

6,187

1,187

39,892(4,222)35,669Notes:
1. Principal products and business in each business segment:(1) Toys and Hobby Business:

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

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

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

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

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

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

3. Operating expenses include an unallocatable amount of ¥1,336 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions the Company and NAMCO BANDAI HOLDINGS (USA) Inc.
4. Changes in accounting policy
As set out in “Changes in Important Information Constituting the Basis for Preparation of Interim Consolidated Financial
Statements” 5. (3) ②, the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29,2005) applies from the current interim consolidated accounting period. Also, as set out in “Changes in Important Information
Constituting the Basis for Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options(Corporate Accounting Standard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock
Options (Corporate Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated
accounting period.
These changes had the following effect on Operating Income for each segment.

55

(¥ million)
Toys & Amusement
Hobby
Facility
Business
Business

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

Total

Eliminations
Consolidated
andCorporate

Directors’ bonus

(84)

(33)

(83)

(54)

(12)

(19)

(286)

(50)

(337)

Stock options

(100)

(31)

(99)

-

-

-

(232)

(246)

(478)

Operating income (loss)

(184)

(65)

(183)

(54)

(12)

(19)

(518)

(296)

(815)

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

Game
Contents
Business

NetworkBusiness

Visual ＆Music Content
Business

Other
Business

176,474

78,792

128,104

12,19642,27912,981450,829－

450,829

4,533

591

2,326

324

1,048

10,08918,914(18,914)－

Total

Eliminations
Consolidated
andCorporate

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

181,007

79,384130,430

12,521

43,32823,071

469,744(18,914)450,829

Operating expenses

161,92276,878

119,979

10,68537,141

23,242429,849(14,689)

415,160

Operating income (loss)

19,0852,506

10,451

1,835

6,187

(171)

39,894(4,225)35,669Notes:
1. Business segment classifications are in accordance with classifications adopted for internal management purposes.
2. Principal products and business in each business segment:(1) Toys and Hobby Business:

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

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

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

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

Video titles, visual software, on-demand video distribution and other products andservices

Transportation and warehousing of products, leasing, real estate management,
printing, licensing, restaurant management, human services and nursing care facilities,
development and sale of environmental equipment and other activities
3. Operating expenses include an unallocatable amount of ¥5,812 million under eliminations and corporate. This figure primarily(6) Other Business:consists of expenses related to management divisions at the Company, Bandai Co., Ltd. and NAMCO LIMITED (currently
NAMCO BANDAI Games Inc.).

56

2. By Geographic Segment(¥ million)
Prior interim period ended September 30, 2005
(April 1, 2005 ~ September 30, 2005)

Net sales
1. To external customers
2. Intersegment sales and transfers

Eliminations andCorporate

Consolidated

218,873－

218,873

12,974(12,974)－

Japan

Americas

Europe

Asia

Total

180,849

20,04812,659

5,315

3,879

581

－

8,513

Total

184,728

20,62912,65913,829231,847(12,974)

218,873

Operating expenses

162,350

23,856

10,867

12,626

209,701(8,375)201,326

Operating income (loss)

22,377(3,226)

1,791

1,202

22,145(4,598)17,546

Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment
U.S.A. and Canada(i) Americas:
France, U.K. and Spain(ii) Europe:Hong Kong, Thailand and South Korea(iii) Asia:
2. Operating expenses include an unallocatable amount of ¥4,762 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at Bandai Co., Ltd. and NAMCO LIMITED.

(¥ million)
Current interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)

Net sales
1. To external customers

Japan

Americas

Europe

Asia

Total

Eliminations andCorporate

Consolidated

166,121

19,975

13,9986,541

206,636－

206,636

2. Intersegment sales and transfers

4,981

818

－

9,873

15,673(15,673)－

Total

171,103

20,793

13,99816,414

222,309(15,673)

206,636

Operating expenses

154,504

21,661

12,593

15,040203,799(14,427)

189,372

Operating income (loss)

16,598

(867)

1,405

1,373

18,509(1,245)

17,263

Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment
U.S.A. and Canada(i) Americas:
France, U.K. and Spain(ii) Europe:Hong Kong, Thailand and South Korea(iii) Asia:
2. Operating expenses include an unallocatable amount of ¥1,336 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at the Company and NAMCO BANDAI Holdings (USA) Inc.
3. Change in accounting policy
As set out in “Changes in Important Information Constituting the Basis for Preparation of Interim Consolidated Financial
Statements” 5. (3) ②, the Accounting Standard for Directors’ Bonuses (Corporate Accounting Standard No. 4, November 29,2005) applies from the current interim consolidated accounting period. Also, as set out in “Changes in Important Information
Constituting the Basis for Preparation of Interim Consolidated Financial Statements”, the Accounting Standard for Stock Options(Corporate Accounting Standard No. 8, December 27, 2005) and the Application Guideline for the Accounting Standard for Stock
Options (Corporate Accounting Standard Application Guideline No. 11, May 31, 2006) apply from the current interim consolidated
accounting period.
These changes had the following effect on Operating Income for each segment.

57

(¥ million)
Japan

Americas

Europe

Asia

Total

Eliminations andCorporate

Consolidated

Directors’ bonus

(286)

-

-

-

(286)

(50)

(337)

Stock Options

(232)

-

-

-

(232)

(246)

(478)

Operating income (loss)

(518)

-

-

-

(518)

(296)

(815)

(¥ million)
Prior fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2006)

Net sales
1. To external customers

Eliminations andCorporate

Consolidated

450,829－

450,829

Japan

Americas

Europe

Asia

Total

365,823

42,76931,231

11,005

2. Intersegment sales and transfers

8,497

1,334

13

21,10630,951(30,951)－

Total

374,320

44,10331,244

32,112

481,780(30,951)

450,829

Operating expenses

336,705

47,38826,91429,841

440,848(25,688)415,160

Operating income (loss)

37,614(3,284)

4,330

2,270

40,931(5,262)35,669Notes:
1. Methods for classifying geographic segments and principal countries and regions(1) The Company classifies geographic segments by such factors as degree of geographic closeness, similarities in
economic activities, and mutual relationship of business activities.
(2) Principal countries and regions belonging to each geographic segment
U.S.A. and Canada(i) Americas:
France, U.K. and Spain(ii) Europe:Hong Kong, Thailand and South Korea(iii) Asia:
2. Operating expenses include an unallocatable amount of ¥5,812 million under eliminations and corporate. This figure primarily
consists of expenses related to management divisions at Bandai Co., Ltd. and NAMCO LIMITED (currently NAMCO BANDAI
Games Inc.).

3. Overseas Sales
Prior interim period ended September 30, 2005
(April 1, 2005 ~ September 30, 2005)
Americas
I

Overseas sales (¥ million)

II
III

Europe

Asia

Total

21,20019,3595,928

46,487

Consolidated sales (¥ million)

－

－

－

218,873

Overseas sales as a ratio ofconsolidated sales (%)

9.6

8.8

2.7

21.2

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

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

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

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

58

Current interim period ended September 30, 2006
(April 1, 2006 ~ September 30, 2006)
Americas
I

Overseas sales (¥ million)

II
III

Europe

Asia

Total

20,361

15,971

7,354

43,687

Consolidated sales (¥ million)

－

－

－

206,636

Overseas sales as a ratio ofconsolidated sales (%)

9.9

7.7

3.6

21.1

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

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

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

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

Prior fiscal year ended March 31, 2006
(April 1, 2005 ~ March 31, 2006)
Americas
I

Overseas sales (¥ million)

II
III

Europe

Asia

Total

43,406

31,537

10,84385,787

Consolidated sales (¥ million)

－

－

－

450,829

Overseas sales as a ratio ofconsolidated sales (%)

9.6

7.0

2.4

19.0

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

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

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

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

59Per share data
Prior interim period

Current interim period

Prior fiscal year ended March 31, 2006

(April 1, 2005 ~ September 30, 2005)(April 1, 2006 ~ September 30, 2006)(April 1, 2005 ~ March 31, 2006)

Net asset per share¥918.42

Net asset per share¥992.26

Net income per share¥30.98Net income per share¥30.97

Diluted net income per
share

Diluted net income per
share

Net asset per share¥961.36¥43.53

Net income per share.

¥54.39¥43.51

Diluted net income pershare¥54.37

Note: The basis of calculation net income per share figure for the interim (current period) and the diluted net income per share figure
interim (current period) is as follows:
Prior fiscal year ended
March 31, 2006

Prior interim period

Current interim period(April 1, 2005 ~September 30, 2005)(April 1, 2006 ~September 30, 2006)

7,834

11,01114,149Amount not applicable to common
stockholders (¥ million)

-

-

417

Unappropriated directors’ bonus

(-)

(-)

(417)

7,834

11,011

13,731

252,916,758

252,957,362

252,487,961

Net income adjustment (¥ million)

-1

-

-4

(Effect of dilutive shares in certain
affiliated companies)

(-1)

(-)

(-4)

Increase in number of common stock

16,754

118,286

8,377(Stock subscription rights)(16,754)(118,286)(8,377)(April 1, 2005 ~March 31, 2006)

Net income per share
Net income (¥ million)

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

Diluted net income per share

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

Affiliate

The Company

Affiliate

Bandai Networks Co., Ltd.

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

Bandai Networks Co., Ltd.

Stock options agreed at
the annual general
meeting of shareholders
on June 23, 2004 (245stock subscription rights)
1,225 common stock

1,831,000 common stock
Affiliate
Bandai Networks Co., Ltd.
Stock options agreed at
the annual general
meeting of shareholders
on June 23, 2004 (245stock subscription rights)
1,225 common stock60

Stock options agreed at
the annual general
meeting of shareholders
on June 23, 2004 (245stock subscription rights)
1,225 common stockSignificant Subsequent Events
Prior consolidated interim period (April 1, 2005 to September 30, 2005):
None

Current consolidated interim period (April 1, 2006 to September 30, 2006)
None

Prior consolidated fiscal year (April 1, 2005 to March 31, 2006)
1. Simplified share exchange with grant
The Company implemented a share exchange which BANPRESTO Co., Ltd.
(BANPRESTO), became a wholly owned subsidiary on June 1, 2006, based on a decisionof the Company’s Board of Directors held on March 29, 2006, and a share exchange
agreement concluded with BANPRESTO on that date. In accordance with Article 358,
Paragraph 1 of the former Commercial Code for the Company and in accordance with
Article 12, Paragraph 4, Clause 2 of the Industrial Revitalization Law for BANPRESTO, a
simplified share exchange was conducted without obtaining the approval of the general
meetings of shareholders as stipulated in Article 353, Paragraph 1 of the former
Commercial Code. The share exchange allows the Company to acquire the remaining
shares for cash in accordance with Article 12-9 of the Industrial Revitalization Law.
(1) Objective of making BANPRESTO a wholly owned subsidiary through a shareexchange
From February 24, 2006, to March 16, 2006, the Company made a take-over bid for theshares of BANPRESTO with the objective of making BANPRESTO a wholly owned
subsidiary. The Company acquired 97.01% of the 10.8 million shares of BANPRESTO.
Subsequently, on June 1, 2006, through the share exchange, the Company achieved its
final objective of making BANPRESTO a wholly owned subsidiary. BANPRESTO becoming
a wholly owned subsidiary was undertaken for the purpose of creating an organization that
responds flexibly to the Group’s management strategy.
(2) Terms of share exchange agreement
In accordance with the share exchange agreement concluded on March 29, 2006, theCompany will pay ¥3,450 for each BANPRESTO stock owned by the remaining
shareholders of BANPRESTO, who have entered or otherwise recorded their shares in theshareholders’ register as of May 31, 2006, which is the day prior to the effective date of theshare exchange. The share exchange will not apply to those shares held by the Company.

61

2. Announcement of Zapf Creation AG take-over bid
On June 13, 2006, the Company decided to make a take-over bid to acquire the shares ofZapf Creation AG (“Zapf”) of Germany through Bandai GmbH of Germany. Bandai GmbH is
a subsidiary of BANDAI S.A., a wholly owned subsidiary of the Company. Zapf’s
Supervisory Board and Management Board have expressed their support for this take-overbid.
(1) Purpose of take-over bid
Under the three-year medium-term management plan (April 2006 to March 2009) being
implemented by the BANDAI NAMCO Group, the key theme is “Strengthening, Enriching,and Expanding the BANDAI NAMCO Group’s portfolio management”, and one of the key
business strategies is to strengthen overseas operations. The take-over bid for Zapf will
enable the Company to achieve one of the strategies in the medium-term management
plan.
Zapf is headquartered in Germany and has an extremely high name recognition in theEuropean markets for large dolls for infants and girls, with a share of more than 60% in
Germany and more than 40% in the United Kingdom. In Europe, the BANDAI NAMCO
Group’s toys and hobby product portfolio is centered on products for boys. Zapf’s productportfolio and the Group’s product portfolio complement each other well. Zapf has
operations not just in Central Europe but also in Eastern Europe, where the Company does
not have a sales network. Zapf and the Company will also complement each other well inmarkets. Accordingly, the Company decided that a capital tie-up with Zapf will enable thetwo companies to synergize their products and markets.
(2) Summary of take-over bid
1. Summary of target company
Company name:
Zapf Creation AG
Main business:
Production and sales of toys
Establishment:

1932

Head office:Rödental, Germany

Representative:

Georg Kellinghusen, CFO

Stock exchange listings:

Frankfurt, Stuttgart, Munich

Number of sharesissued and outstanding:
Relationship with theCompany:
Number of employees,
consolidated:
Net sales:

8,000,000 shares of common stock140.7 million euro (year ended December 31, 2005)*

Net loss:

27.0 million euro (year ended December 31, 2005)*

Total assets:

135.6 million euro (as of December 31, 2005)*

Net assets:

11.0 million euro (as of December 31, 2005)*

There are no capital, personal, or trading relationships.
408 (as of December 31, 2005)* Figures for the year ended December 31, 2005, are unaudited.

62

2. Type of shares to be acquired
Shares of common stock
3. Take-over bid period
Approximately a 6-week period from the end of June 2006 is scheduled.
4. Purchase price (per share)
One share of common stock: 10.50 euro
5. Planned total number of shares to be acquiredMore than 75% of shares issued and outstanding
Planned total number of shares to be acquired: 6,000,001 or more
6. Movement of shares owned as a result of tender offer bid
Before take-over bid: 0 shares
After take-over bid: 6,000,001 or more (ownership rate of 75% or more)
7. Public announcement of take-over bid
The take-over bid will be made pursuant to Germany’s regulations, and accordingly, a
local take-over bid public announcement will be made based on Germany’s securities
exchange laws. There will be no public announcement in Japan.
8. Take-over bid agent
BNP PARIBAS Securities Services
9. The target company acceptance of the take-over bid
The target company’s Supervisory Board and Management Board have accepted inprincipal the take-over bid.
10. Other
In Germany, BANDAI GmbH has not yet submitted the notification of the take-over bid
to Deutsche Gesellschaft für Ad-hoc-Publizität mbH, which is responsible for handlingthese procedures. There is a possibility that the application may not be accepted. If theapplication is not accepted, the take-over bid will not commence.

63

5. Production, Orders Received and Net Sales
1. Production
Production by business segment during the current consolidated interim period was as follows:Business Segment

Output (¥ million)

YoY Change (%)

Toys and Hobby Business

4,541

Game Contents Business

22,350

4.2

Visual and Music Content Business

7,600(20.3)

65(50.6)

34,558(3.5)

Affiliated Business
Total

(2.7)

Notes:
1. The above amounts are stated at manufacturing cost.
2. The above amounts include fees for product commercialization rights.
3. Intersegment transactions have been eliminated from the above amounts.

2. Orders Received
Orders received by business segment during the current consolidated interim period were as follows:
Order Backlog(¥ million)

Business Segment

Orders Received(¥ million)

YoY Change (%)

Toys and Hobby Business

485

(5)

92

26

Visual and Music Content Business

211

168

822

782

Total

696

162

914

809

YoY Change (%)

Note: Intersegment transactions have been eliminated from the above amounts.

3. Net Sales
Net sales by business segment during the current consolidated interim period were as follows:Business Segment

Net Sales (¥ million)

YoY Change (%)

Toys and Hobby Business

85,784

3.9

Amusement Facility Business

43,2162.9Game Contents Business

57,007(10.9)

Network Business

6,266

5.3

Visual and Music Contents Business

19,282(16.4)

Other Business

10,943

9.3.

Eliminations and Corporate(15,865)-

206,636

(5.6)

Total

Note: Changes have been made to the configuration of business segments during the current interim period. Segmentsfrom the prior interim period have been modified to reflect the changes in regard to year on year comparisons.

64

Stock Listing: Tokyo Stock Exchange
Code Number: 7832
Registered Business Location: Tokyo(URL: http://www.bandainamco.co.jp)
November 10, 2006

Non-Consolidated Financial Report for the Interim Period
Ended September 30, 2006
Representative: Takeo Takasu, President and Representative Director
Contact:
Keiji Tanaka, Director
Date of the Meeting of the Board of Directors: November 10, 2006
Interim period dividend payment starting date: December 8, 2006
Use of unit system of shares: Yes (1 unit: 100 shares)

1. Non-consolidated Operating Results for the Interim Period
Ended September 30, 2006 (April 1, 2006 ~ September 30, 2006)(1) Non-consolidated Operating Results

Interim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Ordinary Revenue

Operating income¥ million%¥ million%¥ million

%

3,126

－

1,644

－

1,741

－

10

－

(263)

－

(286)

－

27,747
Net income¥ million

Interim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Recurring income

26,42826,365

Net income per share
%

¥

2,885

－

11.07

(286)

－

(1.11)

26,365101.62

Notes:

1. Average number of shares outstanding during period under review:
Interim period ended September 30, 2006
260,571,685
Interim period ended September 30, 2005
258,613,382
Fiscal year ended March 31, 2005
259,452,088
2. Changes in accounting treatment: None
3. Percentage figures accompanying ordinary revenue, operating income, recurring income and net
income represent changes compared to the same period of the prior year.

65

(2) Non-consolidated Financial Position
Total assets

Interim Period Ended
September 30, 2006
Interim Period Ended
September 30, 2005
(Ref.) FYE March 31, 2006

Net assets

Equity ratio

Net assets pershare¥ million¥ million%¥

288,460

271,22293.9

1,039.04

200,131

196,54598.2

760.00283,397

271,44195.8

1,041.71

Note:
1. Number of shares outstanding at period-end:
Interim period ended September 30, 2006
260,570,254
Interim period ended September 30, 2005
258,613,382
Fiscal year ended March 31, 2005
260,573,002
2. Number of shares of treasure stock at period-end:
Interim period ended September 30, 2005
9,937
Interim period ended September 30, 2004—
Fiscal year ended March 31, 2005
7,189
3. Previous figures of “Stockholders’ equity”, “Stockholders’ equity ratio”, and “Stockholders’ equity per share”
are used for figures from interim period ended September 30, 2005 and fiscal year ended March 31,
2006.

2. Non-consolidated Projections for Fiscal Year ending March 2007
(April 1, 2006 ~ March 31, 2007)
Ordinary Revenue

Recurring income¥ million¥ million¥ million

4,000

5,500

Fiscal Year Ending
March 31, 2007
6,500
(Reference)
Projected net income per share (full year): ¥21.11

Net income

3. Dividend payment: Current Status
Cash Dividends

Dividend payment per share (¥)
End of 1st

End of

End of 3rd

End ofQuarter

1st Half

Quarter

Fiscal Year

(Ref.) FYE March 31, 2006
Interim Period Ended
September 30, 2006
FYE March 31, 2007
(Forecast)
Note:

Other

－
－

－*1
12.0

－
－

12.0
－

－
－

－

－

－

12.0 *2－

For the
Year

12.0
24.0

*1: Share transfer payments to stockholders of BANDAI Co., Ltd. and NAMCO LIMITED（currently NAMCO BANDAI
Games Inc.）listed in the September 28, 2005 were made, instead of the interim dividend, on December 19, 2005,
amounting to ¥18 and ¥12 respectively for each common stock, giving a total of ¥3,097,276,824.
*2: The stable portion of the period-end dividend is given in the forecast based on the company’s basic policy regarding
appropriation of profits. Thus, the actual period-end dividend will be decided according to the consolidated financial
results.
*Figures less than ¥1 million have been omitted
Note:
The above projections are based on information available to the Company at the time of release, and assumptions
involving uncertain factors thought likely to have an effect on future results. Actual results may differ significantly fromprojections due to a variety of factors. Please refer to page 17 of the supplementary materials for more details.

66Significant Subsequent Events
Prior interim period (April 1, 2005 to September 30, 2005)
1. Transfer of Operations After Corporate Separation
As part of Group business restructuring, NAMCO BANDAI Holdings Inc. resolved at a meeting of theBoard of Directors on September 30, 2005 to separate the supervision and management of certain
subsidiaries and affiliates conducted by BANDAI and NAMCO, and activities related to the
management of all listed investment securities owned by BANDAI and NAMCO, and transfer them to
NAMCO BANDAI Holdings Inc. On the same date, NAMCO BANDAI Holdings Inc. concluded a
corporate separation agreement with both BANDAI and NAMCO.
Overview of the Corporate Separation Agreement
A corporate separation in which BANDAI and NAMCO are the separated companies and whereby
the supervision and management of certain BANDAI and NAMCO subsidiaries and affiliates
stipulated in the agreement and activities related to the management of all listed investment
securities owned by BANDAI and NAMCO are transferred to the parent company NAMCO BANDAI
Holdings Inc. on December 1, 2005, the date of the separation.
As a result of the corporate separation, NAMCO BANDAI Holdings Inc.’s common stock will increase
as follows. There will be no increase in capital.
Capital reserve:
The amount of the Company’s capital increase in accordancewith Article 374-21 of Japan’s Commercial Code, less retained
earnings appropriated for legal reserves and general reserves to betransferred, both indicated below.
Retained earnings appropriated for legal reserves:
The entire amount of BANDAI’s retained earnings appropriated for legal reserves.
Retained earnings appropriated for general reserves:
The amount remaining after the deduction of ¥17.6 billion and the entire
amount of BANDAI’s retained earnings from the assets separated from BANDAI.
No shares will be allotted and no payments will be made with regard to the corporate separation.
As of September 30, 2005, the book values of shares of subsidiaries and affiliates and listed
investment securities to be transferred from BANDAI and NAMCO to NAMCO BANDAI Holdings Inc.
as a result of the corporate separation are as follows.
BANDAI:

Shares of affiliates:
Investment securities:¥27,785 million¥4,357 million

NAMCO:

Shares of affiliates:
Investment securities:¥12,434 million¥908 million

67

2. Share-for-share Exchange Agreement
A share-for-share exchange agreement was concluded between NAMCO BANDAI Holdings Inc.
and BANDAI LOGIPAL INC. on October 14, 2005. This agreement was made at NAMCO BANDAI
Holdings Inc.’s Board of Directors’ meeting held on October 14, 2005 to conduct a corporate
separation in which BANDAI’s operations was partially split and transferred to NAMCO BANDAI
Holdings Inc., as well as on BANDAI LOGIPAL INC.’s extraordinary meeting of shareholders
conducting a share-for-share exchange under which NAMCO BANDAI Holdings Inc. making
BANDAI LOGIPAL INC. a wholly-owned subsidiary on January 31, 2006. A divestiture wasundertaken on December 1, 2005 under which the company succeeded to part of the business of
BANDAI Co., Ltd. and a share swap was approved at an extraordinary general meeting of theshareholders of Bandai Logipal Inc. held on December 15, 2005.

(1) Objective of share-for-share exchange agreement
As competition intensifies in a rapidly changing environment, it can be expected that the logistics
industry in Japan will experience even more industry consolidation. Under these conditions, NAMCO
BANDAI Holdings Inc. and BANDAI LOGIPAL INC. have determined it necessary to proceed with thecentralized management of logistics capabilities in the Toys & Hobby business, the Group’s main
business, and over the mid-term, realize synergistic effects in the Group’s logistics capabilities.
By making BANDAI LOGIPAL INC. a wholly-owned subsidiary through a share-for-share exchange,
NAMCO BANDAI Holdings Inc. will aim to realize efficiencies such as cost reduction by achieving
effective cooperation between business line and logistics over multiple business lines over the midto long-term in the BANDAI NAMCO Group.

(2) Terms, etc., of the share-for-share exchange agreement(i) Outline of schedule
October 14, 2005:
December 1, 2005:
December 15, 2005:
January 25, 2006 (expected):
January 30, 2006 (expected):
January 31, 2006 (expected):
March 20, 2006 (expected):

Board of Director meetings to approve theshare-for-share exchange
Succession of BANDAI LOGIPAL INC. shares bycorporate separation (NAMCO BANDAI Holdings Inc.)
Extraordinary meeting of shareholders (BANDAI
LOGIPAL INC.) to approve the share-for-share exchange
agreement
JASDAQ delisting date (BANDAI LOGIPAL INC.)
Due date for submitting share certificates (BANDAI
LOGIPAL INC.)
Share-for-share exchange date
Grant new shares* Pursuant to the provisions of Article 358, Paragraph 1 (Share-for-share exchanges) of
the Commercial Code of Japan, at NAMCO BANDAI Holdings Inc., the share-for-shareexchange will be conducted without obtaining approval for the share-for-share agreement
at a general meeting of shareholders.

68

(ii) Share-for-share exchange ratios
0.6 shares of common stock of NAMCO BANDAI Holdings Inc. for 1 share of common stockof BANDAI LOGIPAL INC. will be allotted.
However, no shares will be allotted with respect to the BANDAI LOGIPAL INC. shares(2,640,000 shares), which NAMCO BANDAI Holdings Inc. will succeed from BANDAI Co., Ltd.
as a result of the corporate split on December 1, 2005 (expected).
As a result of the above, the number of NAMCO BANDAI Holdings Inc.’s outstanding shares
will total 260,580,191 shares.

(iii) Cash payments upon the share-for-share exchange
NAMCO BANDAI Holdings Inc. will not make any cash payments upon the share-for-shareexchange.

3. Interim Dividends From Wholly-owned Subsidiaries
On October 3, 2005, NAMCO BANDAI Holdings Inc. received interim dividends of ¥16,822
million and ¥9,915 million from wholly-owned subsidiaries BANDAI and NAMCO, respectively.

Current interim period (April 1, 2006 to September 30, 2006)
None

Prior fiscal year (September 29, 2005 to March 31, 2006)
1.Loans from affiliates
As part of the group financing policy, the company took out a total of ¥13,100 million in loans for
repayment on July 3, 2006 from Bandai Networks Co., Ltd., Bandai Visual Co., Ltd., Banpresto Co.,
Ltd., and Bandai Logipal Inc. on April 3, 2006, and from Sunrise Inc. on April 17, 2006 with theobjective of focusing the funding of group companies in this company.
2.Simplified share swap by cash transfer
The company passed a resolution at a meeting of the board of directors on March 29, 2006 for ashare swap to make Banpresto Co., Ltd a wholly-owned subsidiary, and undertook a share swap
on June 1, 2006 to make that company a wholly-owned subsidiary, based on a share-swap
agreement entered into with that company. This share swap was a simplified share swap
undertaken without the approval of a general meeting of shareholders as stipulated in Article 353,
1 of the pre-revision Commercial Code, on the basis for this company of the provisions of Article
358, 1 of the pre-revision Commercial Code and on the basis for Banpresto Co., Ltd. of Article 12,4, 2 of the Law on Special Measures for Industrial Revitalisation. Furthermore this share swap was
carried out by cash transfer under the provisions of Article 12, 9 of the Law on Special Measuresfor Industrial Revitalisation.
Details are set out in “4. Interim Consolidated Financial Statements, Notes (Significant
Subsequent Events).

69