Financial Summary
Consolidated Financial Results for the Fiscal Year Ended
March 31, 2008

May 8, 2008

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” in Japanese shallprevail.
- This document contains forward-looking statements that are based on management’s estimates, assumptions andprojections 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
(URL: http://www.bandainamco.co.jp/)
May 8, 2008

Consolidated Financial Report for the Fiscal Year Ended March 31, 2008
Representative:
Contact:
Date of General Meeting of Stockholders:
Scheduled starting date for dividend payments:
Scheduled filing date of the annual security report:

Takeo Takasu, President and Representative Director
Yuji Asako, Executive Officer, Corporate Planning Division
June 23, 2008
June 24, 2008
June 24, 2008

1. Consolidated Results for the Fiscal Year Ended March 31, 2008
(April 1, 2007 ~ March 31, 2008)(1) Consolidated Operating Results
Net sales

Fiscal Year Ended
March 31, 2008
Fiscal Year Ended
March 31, 2007

Recurring income¥ million
460,473%
0.3¥ million
33,411%(20.9)¥ million
36,198%(20.6)

459,132

1.8

42,22418.4

45,61522.9

Net income

Fiscal Year Ended
March 31, 2008
Fiscal Year Ended
March 31, 2007

Operating income

Net income per share

Net income per share(diluted)¥ million
32,679%34.7¥
128.65¥128.47

24,252

71.4

95.73

95.67

ROE
(Net income / Net assets)

ROA(Recurring income /Total assets)

Operating Margin(Operating income /Net sales)%%
Fiscal Year Ended
11.7
8.8
March 31, 2008
Fiscal Year Ended
9.4
11.5
March 31, 2007
(Reference)
Gain or loss from the equity method: (441) million yen (FY 2008.3), 191 million yen (FY 2007.3)

%
7.3
9.2

(2) Consolidated Financial Position
Total assets

Net assets

Equity ratio¥ million¥ million%
Fiscal Year Ended
413,023
289,944
69.4
March 31, 2008
Fiscal Year Ended
408,490284,254
67.1
March 31, 2007
(Reference)
Shareholder's equity: 286,795 million yen (FY 2008.3), 274,169 million yen (FY 2007.3)

2

Net asset per
share¥
1,127.72
1,063.29

(3) Consolidated Statement of Cash Flows
Operatingactivities

Fiscal Year Ended
March 31, 2008
Fiscal Year Ended
March 31, 2007

Investingactivities

Financing
activities¥ million
35,000¥ million(14,980)¥ million(15,066)

Cash and cash
equivalents at
year-end¥ million
129,289

42,493(15,253)(18,856)

124,155

2. Dividend

Dividend record dates

End of
1Q

Dividend per share
End of
End ofFiscalInterim
3Q
Year-end

Total

Payout Ratio

Total
dividend
payment(Consolidated)

Dividend /Net Assets(Consolidated)(Full Year)

Fiscal Year Ended
March 31, 2007
Fiscal Year Ended
March 31, 2008
(Projection)
Fiscal Year Ending
March 31, 2009 (*)
*

¥
−

¥
12

¥
−

¥
16

¥
28

¥ million
7,254

%
29.2

%
2.8

−

12

−

12

24

6,092

18.7

2.2

−

12

−

12

24

−

27.1

−

The stable portion of the dividend is given in the projection for the interim-end and fiscal year-end based on the company’s basic policy
regarding appropriation of profits. Thus, the actual fiscal year-end dividend will be decided according to the consolidated financial
results.

3. Consolidated Projections for Fiscal Year ending March 2009
(April 1, 2008 ~ March 31, 2009)
Net sales
OperatingRecurring
Net income
Net income
incomeincomeper share¥ million% ¥ million% ¥ million% ¥ million%¥
Interim Period
202,000(5.4)
7,500(50.3)
8,500(51.1)
4,500(43.6)
17.69
Full Year
470,000
2.1
38,00013.7
39,5009.1
22,500(31.1)
88.47* The company recently announced that it will acquire its own shares, but the number of shares to be bought back is not included in thecalculation of the net income per share.

4. Other Information(1) Significant changes in scope of consolidation: No(2) Changes in accounting policiesa) Changes due to changes in accounting standard: Yesb) Other changes: Yes
Note: Pease refer to P41-43 and P46-47 for details.
(3) Number of shares issued (common shares)a) Number of shares issued at the fiscal year end (including treasury stocks)
Fiscal Year ended March 31, 2008
256,080,191
Fiscal Year ended March 31, 2007
260,580,191b) Number of treasury stocks at the fiscal year end
Fiscal Year ended March 31, 2008
1,766,271
Fiscal Year ended March 31, 2007
2,731,047
Note: Please refer to P86 (“Per share data”) for the number of shares used to calculate “Net income per share”.

3【Reference】 Non-consolidated Financial Statements

1. Non-consolidated Results for the Fiscal Year Ended March 31, 2008
(April 1, 2007 ~ March 31, 2008)(1) Non-consolidated Operating Results
Ordinary Revenue

Fiscal Year Ended
March 31, 2008
Fiscal Year Ended
March 31, 2007

Recurring income¥ million
11,958%91.6¥ million
8,465

%
124.9

¥ million
8,489

%
119.0

6,239

(77.5)

3,764(85.8)

3,877(85.3)Net income

Fiscal Year Ended
March 31, 2008
Fiscal Year Ended
March 31, 2007

Operating income

Net income per share

Net income per share(diluted)¥ million
7,624

%
49.9

¥
30.00

¥
29.96

5,085

(80.7)

19.57

19.56

(2) Non-consolidated Financial Position
Total assets

Net assets

Equity ratio¥ million¥ million%
Fiscal Year Ended
299,245
255,76485.0
March 31, 2008
Fiscal Year Ended
291,923265,286
90.7
March 31, 2007
(Reference)
Shareholder's equity: 254,233 million yen (FY 2008.3), 264,709 million yen (FY 2007.3)

Net asset per
share¥
998.13
1,026.20

Notes:*Figures are in millions of yen, rounded down, except where noted.
*Qualitative information regarding forward-looking statements:
Forward-looking statements that have been released prior to 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 to differ materially fromexpectations.

41. Results of Operations(1) Analysis on Results of Operations
a. Summary for the Period (April 1, 2007 to March 31, 2008)
This fiscal year created a distinct sense of caution about the direction of Japan’s economy
because of soaring oil prices and the effect on global financial markets by the subprime mortgage
crisis in the U.S. This caution toward the future economy, and the generational transition of the
hardware caused uncertainty in the business environment of the entertainment industry as awhole.
With these general economic concerns as a background, the BANDAI NAMCO Group (“theGroup”) pushed ahead with strengthening, enriching, and expanding its portfolio management,
which was based on the three-year medium-term management plan launched in April 2006.
On the business front, although the Game Contents Business performed strongly – particularly
in domestic arcade game machines and overseas home video game software – the Toys andHobby Business, and Visual and Music Content Business did not continue their strong
performances of the prior fiscal year when they had benefited from hit products and groupsynergies. Meanwhile, the Amusement Facility Business performed weakly amid harsh market
conditions, particularly at existing facilities. As a result of the reconsidering its business strategy
in light of trends of the future market, the Amusement Facility Business decided to close downsome facilities to improve profitability.
On the expenses front, there were some factors increasing costs such as base integration in theGame Contents Business and changes to the depreciation accounting rules.
Consequently, the Group’s consolidated results for this fiscal year ended with net sales of
460,473 million yen (year-on-year increase of 0.3%); operating income of 33,411 million yen(year-on-year decrease of 20.9%); recurring income of 36,198 million yen (year-on-year decreaseof 20.6%). Net income of this fiscal year was 32,679 million yen (year-on-year increase of
34.7%) due to the report of the extraordinary income arising from the sales of fixed assets and theloss of impaired fixed assets arising from the closed amusement facilities in Japan as noted
above.
An overview of each business is presented as follows.
Results by Business Segment
Toys & Hobby
Amusement
Facility

Net Sales
FY08.3
FY07.3
180,164
185,586change(5,421)(million yen)
Operating Income
FY08.3
FY07.3change14,30917,403 (3,093)

89,82988,196

1,633

1,631

4,004 (2,372)

Game Contents

145,672

139,187

6,485

14,793

11,5093,283

Network

12,044

12,489

(445)

904

880

24

Visual & Music
Content
Other
Elimination andCorporate
Consolidated

36,94943,006(6,056)

3,832

19,80920,900(1,090)

753

1,017

(264)

(23,997)(30,234)

6,236(2,813)(2,088)(725)

460,473459,132

1,341

33,411

42,224 (8,812)

5

9,496 (5,664)

Toys and Hobby BusinessIn the Toys & Hobby Business, boys’ toys based on the Masked Rider Den-O characters andgirls’ toys based on YES! Pretty Cure 5 characters posted strong performances in Japan. However,results fell short of the prior fiscal year, when the business posted strong earnings fuelled by hit
products including Tamagotchi Plus series and DATA CARDDASS.
Overseas, the Power Rangers and Tamagotchi series continued to perform steadily, mainly in
America and Europe, while boys’ toys featuring the characters from BEN 10 gained popularity inEurope in addition to America.
As a result, net sales in the Toys & Hobby Business were 180,164 million yen (year-on-year
decrease of 2.9%) and operating income was 14,309 million yen (year-on-year decrease of
17.8%).
Amusement Facility BusinessIn the Amusement Facility Business, the domestic market sales at existing facilities amounted
to 94.1% of the figure for the prior fiscal year amid harsh market conditions, but large-scale
facilities that opened in the previous and current fiscal years supplemented sales by performing
well. Nevertheless, profits were dulled by struggling existing facilities and lower gross margins
due to changes in the sales mix.
Overseas, sales in Europe were solid, particularly among hybrid facilities, but in America theimpact of the sluggish market environment and costs associated with boosting prize category
weighed down earnings in spite of the Group’s efforts to streamline directly-managed facilities
and expand revenue sharing facilities.
As a result, net sales in the Amusement Facility Business were 89,829 million yen(year-on-year increase of 1.9%) and operating income was 1,631 million yen (year-on-year
decrease of 59.3%).
Number of Facilities
Directly-Managed
Facilities

Revenue-Sharing
Facilities

Theme Parks

Spa
Facilities

Total

408

1,320

5

3

1,736

Game Contents BusinessIn the Game Contents Business, home video games, particularly Ace Combat 6: Fires of
Liberation for Xbox360 and Dragon Ball Z Sparking! METEOR for PlayStation 2 and Wii, were
promoted intensively worldwide. In addition, SD Gundam G Generation Spirits for PlayStation 2
performed well in the domestic market, while titles in the NARUTO and the Dragon Ball Z seriesdelivered strong performances in America and in Europe, respectively.
Arcade game machines, particularly Tekken 6 and Wangan Midnight Maximum Tune 3, were
well received and repeat sales of machines released in the prior fiscal year contributed to earnings.
Game contents for mobile phones and other mobile devices showed solid performance bydeveloping a wide variety of contents catering to users’ increasingly diverse preferences.
As a result, net sales in the Game Contents Business were 145,672 million yen (year-on-yearincrease of 4.7%) and operating income was 14,793 million yen (year-on-year increase of
28.5%).

6

Network BusinessIn the Network Business, game contents within the mobile content sector tailored to users’
needs from high value-added contents such as Dragonball Mobile to casual games such as the
Simple 100 series performed well. Although the ring tone services continued to struggle, thecustomizable wallpapers for mobile phones became popular, and the overall number of paid
subscribers, which had been falling, turned to increase. In the solutions services sector,
consignment work developing and operating mobile content sites for other companies generated
strong revenues.
As a result, net sales in the Network Business were 12,044 million yen (year-on-year decreaseof 3.6%) and operating income was 904 million yen (year-on-year increase of 2.7%).
Visual and Music Content BusinessIn the Visual and Music Content Business, visual software packages including the animated TV
series CODE GEASS: Lelouch of the Rebellion and music software packages from the animatedTV series Lucky Star proved popular. Sales were launched of the Mobile Suit Gundam Memorial
Box (the Movie Version) and Mobile Suit Gundam 00, the latest Gundam series, DVD packaged
software. However, with the industry on the whole stagnant, sales of the Group’s DVD software
were sluggish. In addition, since some merchandise was returned at the year end in anticipation of
the definitive shift to the Blu-ray Disc format in the near future, this sector faced difficult
challenges.
As a result, net sales in the Visual and Music Content Business were 36,949 million yen(year-on-year decrease of 14.1%) and operating income was 3,832 million yen (year-on-year
decrease of 59.6%).
Other Business
Other Businesses consist of companies that provide support to the Group’s strategic business
units. Operations conducted by such companies include logistics, leasing, and building
management. During the fiscal year under review, the business remained focused in its efforts toimprove the operational efficiency of these group support services.
As a result of the foregoing, net sales in the Other Business were 19,809 million yen(year-on-year decrease of 5.2%) and operating income was 753 million yen (year-on-year
decrease of 26.0%).

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Operating Results By Geographic Segment(million yen)
Net Sales
FY08.3Operating Income

FY07.3changeFY08.3

FY07.3changeJapan360,697

367,447(6,750)24,48033,127(8,647)

Americas54,56653,989

577

2,318

3,376

(1,057)

Europe46,39737,763

8,633

6,830

5,253

1,576

Asia

37,93237,060

871

2,854

2,730

124

Elimination andCorporate(39,119)(37,129)(1,990)(3,072)(2,263)(808)

Consolidated

460,473459,132

1,341

33,411

42,224(8,812)Japan
In the Toys & Hobby Business, although some products became popular, such as the Masked
Rider Den-O character toys for boys, results as a whole did not match those of the previous term;when hit products like the Tamagotchi Plus series and DATA CARDDASS performed well.
In the Amusement Facility Business, decreased sales at existing facilities amid harsh market
conditions and lower gross margins due to changes in the sales mix resulted in sluggish results.
As for the Game Contents Business, the home videogame software showed solid performancewith titles such as SD Gundam G Generation Spirits for the Play Station 2. As for the arcade
game machines, Tekken 6 became popular, and the repeat sales of machines released in theprevious term contributed to earnings results.
In the Network Business, the mobile contents category benefited from the popularity ofhigh-value-added games, casual games and other game content, as well as customized content formobile phones. Likewise, the number of pay-subscribers, which had previously been in a
downward trend, is shifting to flat or upward trend.
In the Visual and Music Content Business, although some packaged software became popular,
DVD software sales for the Group lacked vitality with the industry as a whole performing
sluggishly. In addition, the Group accepted the return of certain products from the retailers for the
future wholesale-shift to the Blu-ray Disc format in mind, causing this Business to struggle
overall.
As a result, net sales in Japan were 360,697 million yen (year-on-year decrease of 1.8%) andoperating income was 24,480 million yen (year-on-year decrease of 26.1%).
Americas
In the Toys & Hobby Business, BEN10 character toys for boys became popular in addition to
the solid performance by Tamagotchi series. On the other hand, the results for POWER
RANGERS did not match those of the previous term.
In the Amusement Facility Business, the impact of the sluggish market environment and costs
associated with strengthening prize sales weighed on earnings in spite of the Group’s efforts tostreamline directly-managed facilities and expand revenue-sharing facilities.
The Game Contents Business performed well centering on videogame software, such as ACE
COMBAT 6: Fires of Liberation for the Xbox 360, NARUTO, and other repeat sales.
As a result, net sales in Americas were 54,566 million yen (year-on-year increase of 1.1%) and8

operating income was 2,318 million yen (year-on-year decrease of 31.3%).
EuropeIn the Toys & Hobby Business, POWER RANGERS and Tamagotchi continued to show solid
performance. In addition, the BEN10 character toys for boys, which went on release in European
markets this period, also proved popular. In the Amusement Facility Business, hybrid facilities
acquired in the previous fiscal year contributed to sales, and in the Game Contents Business,home videogame titles, especially the Dragon Ball Z series, delivered a strong performance.
As a result, net sales in Europe were 46,397 million yen (year-on-year increase of 22.9%) andoperating income was 6,830 million yen (year-on-year increase of 30.0%).
Asia
In Asia, the Toys and Hobby Business enjoyed solid performance from boys’ toys based on
POWER RANGERS and Masked Rider characters and from plastic models based on the Mobile
Suit Gundam series. In the Amusement Facility Business, the Group continued to expand its
presence with prize games and own-brand products.
As a result, net sales in Asia were 37,932 million yen (year-on-year increase of 2.4%) andoperating income was 2,854 million yen (year-on-year increase of 4.6%).

b. Outlook for the Fiscal Year ending March 2009
Economic conditions are likely to continue to be unstable in the future due to numerous factors;
including the impact of the slowdown in the U.S. economy on exports, high crude oil prices, theappreciation of the Japanese Yen, and sluggish personal consumption in response to rising prices
for daily necessities. Moreover, the entertainment business environment will likely continue to be
characterized by uncertainty moving forward with the diversification of consumer trends, andfurther changes to the industry with the introduction of new technologies and services.
Amidst these conditions, during this final year of the current medium-term management plan,
the BANDAI NAMCO Group will continue to promote the “Strengthening, enriching, andexpanding of the group's portfolio management”. In addition, the Group will focus on developing
the foundations for growth in the next medium-term management plan starting April 2009.
In the Toys & Hobby Business in Japan, the Group is aiming to cultivate deeper loyalty among
existing customers through established character series, such as new POWER RANGER series
and new Masked Rider series for boys, as well as Yes! Pretty Cure 5, Go, Go! for girls. Further, it
will develop products for adults so as to expand the target customer age. Overseas, in addition to
the POWER RANGERS and BEN10 character toys for boys, along with the Tamagotchi products,
Dragon Ball and other new character products will be on the market.
For the Amusement Facility Business in Japan, the Group will pursue further efficiency in theoperations by closing approximately 20 percent of the existing stores, mainly unprofitable ones,
reviewing the rules for future store openings/closures, and pooling low-cost business operations
proficiency. In overseas, the emphasis is on achieving a balance between expansion andefficiency according to the regional characteristics. Moreover, it will develop new facilities withadded value unique to the Group.
In the Game Contents Business, the Group will strengthen its balanced multiplatform-strategy,
which adapts to user preferences, and release worldwide videogame titles such as Soul Calibur IV
9for the Play Station 3 and the Xbox360, as well as Family Trainer for the Wii. It will also trim
down the total number of titles it offers and devote more attention to marketing individual titles
in order to pursue greater profitability. As for the arcade game machines, the Group will beef up
its arcade game machines in tandem with its amusement facilities and concentrate its efforts ondeveloping large medal machines, such as the Umi Monogatari—Lucky Marine Theater in order
to expand its market share,
As for the Network Business, it will develop content designed with profitability in mind andbolster the earnings base by strengthening collaboration throughout the Group. In addition, it willcontinue to bolster its solution business by offering new technologies for mobile phones andconcentrating on system development for mobile sites.
The Visual & Music Content Business is concentrating its efforts on developing software toeach platform according to the characteristics of contents, including those for the Blu-ray Disc
format; such as the animated TV programs CODE GEASS: Lelouch of the Rebellion R2, Mobile
Suit Gundam 00 and Macross F. In addition, the Group is planning full-scale involvement insupplying Blu-ray Disc software to the rental industry from this summer.
In light of all of the above considerations, the consolidated plans of the fiscal year ending
March 2009 are the followings:
A Net Sales of 470,000 million yen (year-on-year increase of 2.1%), an Operating Income of
38,000 million yen (year-on-year increase of 13.7%) , a Recurring Income of 39,500 million yen(year-on-year increase of 9.1%), and a Net Income of 22,500 million yen (year-on-year decreaseof 31.1%).

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

10(2) Financial Position
a. Analysis of assets, liabilities, and net assets
Looking to the assets situation as of the end of the term in question, in a year-on-yearcomparison there was an increase of 4,532 million yen to 413,023 million yen. This was largely
due to the fact that the 11,509 million yen decrease in property, plant and equipment (such as
Land and amusement facilities/machines) was more than offset by a 12,392 million yen increasein cash and time deposits.
Meanwhile, liabilities declined by 1,157 million yen (YOY) to 123,079 million yen. Thislargely resulted from the fact that, although long-term debt and short-term borrowings increased
by 9,529 million yen and 3,168 million yen respectively, trade payables fell by 4,493 million yen
and bonds decreased by 10,000 million yen.
Net assets increased by 5,690 million yen (YOY) to 289,944 million yen. This was mainly due
to a 32,679 million yen increase in Net Income, which more than counterbalanced the 10,235
million yen reductions in acquisition of its own stocks and the 15,001 million yen decreasecaused by land reevaluation differences.
As a result, the equity ratio grew from 67.1% a year before to 69.4%.
b. Cash Flows
As of the end of the term in question, cash and cash equivalents (hereafter “funds”) remaining
on hand had increased by 5,133 million yen (YOY) to 129,289 million yen. Below is thebreakdown of cash flows by activities.
(Cash Flows from Operating Activities)
Operating Activities generated 35,000 million yen in funds (down 17.6% YOY). There aresome factors to decrease in funds, such as corporate tax and other disbursements of 16,286
million yen (13,670 million yen in the previous term) and installation of amusement facility
equipment of 9,286 million yen (10,601 million yen in the previous term). On the other hand, theoverall amount of funds booked was up, because the Net income before income taxes was 45,964
million yen (43,713 million yen in the previous term).
(Cash Flows from Investing Activities)
The amount of funds employed for Investment Activities totaled 14,980 million yen (up 1.8%YOY). There was 22,424 million yen in revenue from the sale of property, plant and equipment(568 million yen in the previous term). However, this was more than offset by the 15,982 million
yen in expenditures (1,102 million yen in the previous term) for the take over bid of consolidated
subsidiary shares; including Bandai Visual and Bandai Networks. It was even further offset by
the 14,670 million yen in expenditures for the acquisition of property, plant and equipment(14,520 million yen in the previous term), as well as the 4,993 million yen (7,594 million yen in
the previous term) in expenditures for purchase of investment securities, such as in Toei
Company, Ltd.

11

(Cash Flows from Financing Activities)
Funds employed for Financing Activities came to 15,066 million yen (down 20.1% YOY). This
total includes 16,000 million yen in revenue from long-term debt (not applicable to previousterm). The other side of the ledger includes disbursements of 10,235 million yen for theacquisition of its own shares (11 million yen in the previous term), 10,000 million yen forredemption of corporate bonds (5,000 million yen in the previous term), and 7,162 million yen
for Dividends paid (6,073 million yen in the previous term).
(Reference) Cash Flow Indices
FY2006.3
Equity ratio (%)
Equity ratio (market capitalization basis) (%)
Cash flows to interest bearing debt ratio (%)
Interest coverage ratio (times)

63.0
105.5
102.0
90.4

FY2007.3
67.1
116.1
53.8
180.1

FY2008.3
69.4
83.1
41.9
199.6

Stockholders’ equity ratio: Total stockholders’ equity/Total assets
Stockholders’ equity ratio (market capitalization basis): Market capitalization/Total assets
Cash flows to interest bearing debt ratio: Interest-bearing debt/Cash flow
Interest coverage ratio: Cash flow/Interest expenses(Note 1) All calculations are performed using consolidated financial figures.
(Note 2) Market capitalization is calculated on the basis of the number of issued shares excluding treasury stock.
(Note 3) Operating cash flow is used for cash flow.
(Note 4) Interest-bearing debt covers all debt reported in the consolidated balance sheet for which interest is paid.

c. 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 sound financial position. In
concrete terms, the Company plans to maintain the consolidated dividend payout ratio at a levelof 30%, based on stable annual dividend payments of 24 yen per share.
In addition, in the past, after appropriation of dividend from the consolidated periodical net
income, the Company, in principle, allocated the remaining balance of net income to the retained
earnings as a reserve for the future investments and for strengthening its financial position. Afterconsideration of the current level of shareholders’ equity, the Company has resolved to attribute a
portion of this remaining balance to the acquisition of its own shares, with comprehensive
consideration of aspects such as the level of cash held, its operating performance, its share pricetrend, and its plan for large-scale investments.
Based on the thinking outlined above, on March 13, 2008, the Board of Directors made adecision on the acquisition of Own Shares as stipulated below.
Share classes subject to acquisition:

Shares of common stock

Total number of shares authorized to be acquired:

Up to 8,000,000 shares(Equivalent to 3.14% of the total shares issued,
excluding treasury stocks)
Up to 12,000 million yen
From April 1, 2008 to December 30, 2008

Total amount of shares to be acquired:
Schedule of acquisition:* Please refer to Page 3 for the Dividend forecasts of FY2008.3 and FY2009.3.
12

d. Business Risks
Risk factors related to the Group’s businesses that may significantly affect decisions made by
the investment community, include, but are not limited to, those listed below. These statements
on risk are based on information available to the Group as of May 8, 2008, the filing date for the
NAMCO BANDAI Holdings Inc.’s financial report (Kessan Tanshin) for the Fiscal Year ended
March 31, 2008.
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 by changes
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 throughthree-dimensional and multi-lateral business administration. This portfolio compromises abusiness portfolio, in which the Group conducts operations in a diverse array of businessdomains; 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, and conducts marketing activities designed to cultivateand develop that content over the long term.
Risks associated with overseas business expansion
The Group is aggressively expanding its business overseas. This initiative exposes the Group toa 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 thoserelated to counterfeit products; and risks associated with fluctuations in exchange rates.
Operationally, the Group conducts sufficient research to minimize these risks 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 recognition of 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
compensation system that will facilitate the retention of these employees, the Group actively
delegates authority. To develop the next generation of employees, the Group is devoting
resources to training seminars and other development programs. Furthermore, we will actively
adopt personnel exchanges with the aim of reinforcing cooperation between each Strategic
Business Unit.
Risk associated with Game Contents BusinessIn the game contents business, titles are a significant cause of fluctuations in profits, and there
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
13risks by flexibly developing multiple products with different software characteristics anddevelopment periods. Moreover, the market environment is undergoing tremendous changes dueto the diversification of customer needs. Therefore, the BANDAI NAMCO Group is seeking to
implement a title lineup that will reflect a balance among the various platforms, and respondpromptly to customer needs.
Risks associated with advances in and new generations of platforms
In developing game content, visual content, and network content, the Group faces the risk
related to advances in and new generations of content-provision platforms and the 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 takes steps to further develop the content it creates and toacquire rights to new content. In line with its medium- to long-term strategy, the Group is also
distributing the appropriate management resources to growth areas with an eye toward the global
market.
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 and quality control in China
In the Group’s Toys and Hobby SBU, approximately 90% of the toys are manufactured in
China. Thus the Group faces risk of higher production costs from the revaluation of the yuan,country risk stemming from the regional concentration of production, and risk regarding quality
control of the products. In response, the Group is working to reduce production costs and todiversify its production bases into Southeast Asia and other regions. Additionally, the Group isestablishing stricter quality standards and designing products with safety in mind based on
relevant legal restrictions and industry quality and safety standards in all of its business fields.
Risks from higher crude oil prices
The Group faces the risk that higher crude oil prices could lead to higher production costs fromincreased product raw material prices and to higher transportation costs. Accordingly, the Groupis 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 andregulations, defective or deficient products or services, leaks of customer information, andlitigation associated with business activities. The Group maintains risk management systems andworks to strengthen its management foundation in order to minimize the effects on its results inthe unlikely event that any of these risks should materialize.

14

2. The BANDAI NAMCO Group(1) Business Overview
The BANDAI NAMCO Group (the Group) comprises NAMCO BANDAI Holdings Inc. (The Company), 73
subsidiaries and 11 affiliates. Operations primarily encompass the manufacture and sale of toys and plastic
models, the core activity of the character merchandising business; amusement facility operations; arcade gamemachines and other related products; the production and sale of home videogame software; mobile content; andthe 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 andaffiliates with business segments are outlined below. Business classifications correspond directly to theclassifications for business segment information.
Business
Segment

Business Outline

RegionMajor Companies
Bandai Co., Ltd., Megahouse Corp., Seika Co., Ltd.,

Domestic
Toys and

Toys, candy toys, products for vending

Hobbymachines, cards, plastic models, apparel,

Businesssundries, stationery and other products

Seeds Co., Ltd., Plex Co., Ltd., CCP Co. Ltd.,
People Co., Ltd., Sunlink Co., Ltd.,and 4 other companies
BANDAI AMERICA INC., BANDAI S. A.,
BANDAI U.K. LTD., BANDAI ESPANA S.A.,BANDAI (H.K.) CO., LTD., BANDAI ASIA CO. LTD.,

Overseas

BANDAI INDUSTRIAL CO., LTD.,BANDAI KOREA CO., LTD.,
CREATIVE B WORKS CO. LTD.,and 5 other companies

Domestic
Amusement

Hanayashiki Co. Ltd., NAMCO SPA RESORT LTD.
NAMCO CYBERTAINMENT INC.,

Amusement facility operations, andFacility

NAMCO OPERATIONS EUROPE LTD.,

other operations
Business

NAMCO LIMITED, Pleasure Cast Co., Ltd.,

Overseas

NAMCO OPERATIONS SPAIN S.L.,
NAMCO ENTERPRISES ASIA LTD.,XS ENTERTAINMENT INC. *1,
SHANGHAI NAMCO LTD.
NAMCO BANDAI Games Inc., Banpresto Co., Ltd.,

Domestic

Bec Co., Ltd., Banpresto Sales Co., Ltd.,
Banpresoft Co., Ltd., NAMCO TALES STUDIO LTD.,and 3 other company

Software for home videogames, carcade

NAMCO BANDAI Games America Inc.,

game machines, prizes for amusement

NAMCO AMERICA INC.,

Game Contents
Business

NAMCO NETWORKS AMERICA INC.,

machines, and other products
Overseas

NAMCO Holdings UK LTD.,
NAMCO EUROPE LTD.,
NAMCO BANDAI Games Europe S.A.S.,BANPRESTO (H.K.) LTD.,
NAMCO BANDAI Network Europe LTD.

15

Business
Segment

Business Outline

RegionNetwork
Mobile content and other services

Domestic

Business

Major Companies
Bandai Networks Co., Ltd., VIBE Inc.
and 1 other company
Bandai Visual Co., Ltd., Sunrise Inc.,

Visual andVisual works, visual software, on-demandMusic Content

video distribution and other products andBusiness

Domestic

Bandai Channel Co., Ltd., Lantis Co., Ltd.,EMOTION CO., LTD., ANIME CHANNEL CO., LTD.,and 1 other company
BANDAI ENTERTAINMENT INC.,

services
Overseas

BANSAI VISUAL USA INC.,
and 2 other companies
Bandai Logipal Inc. *2, Logipal Express Inc. *2,

Transportation and warehousing of

NAMCO BANDAI Business Services Inc.,

products, leasing, real estate management,
Other Business

Domestic

printing, development and sale of

NAMCO TRADING LTD., Happinet Corp.,
Sotsu Co.,Ltd. *3, Italian Tomato Ltd.

environmental equipment, and other

Corporate

Artpresto Co., Ltd., NAMCO ECOLOTECH LTD.,and 5 other companies

activities

Overseas

2 companies

Management of regional business companies

Overseas

NAMCO BANDAI Holdings (USA) Inc.

*1: Not operational as of March 31, 2008.
*2: On July 2, 2007, Logipal Express Inc. was formed as a spin of Bandai Logipal Inc.
*3: On April 1, 2007, Sotsu Agency Co., Ltd. changed its name to Sotsu Co., Ltd.

16

Chart of business system is as follows:
END USERJAPANOVERSEAS

Plan andWork

Production

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

Bandai Co., Ltd.

Plex Co., Ltd.

Seika Co., Ltd. C.C.P.
Co., Ltd. People Co.,
Ltd. *

Megahouse
Corp.

Seeds 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
Production

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

Product Sale

SHANGHAI NAMCO LTD.*

NAMCO LIMITED

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

NAMCO SPA RESORT LTD.

Amusement Facility Business

Product Parts Sale

NAMCO OPERATIONSEUROPE LTD.
NAMCO OPERATIONSSPAIN S.L.
Product Sale

NAMCO ENTERPRISESASIA LTD.

Product Sale

NAMCO CYBERTAINMENT INC.
XS ENTERTAINMENT INC.
Intellectual Properties License

Plan andWork

Licenses（Mobile） Distribution License

NAMCO NETWORKSAMERICA INC.
Production License,
Selling License

NAMCO AMERICA INC.
Licenses, Product sale

NAMCO EUROPE LTD.
Licenses

Production

NAMCO BANDAI
Games America Inc.
Product Sale

NAMCO BANDAI Games Inc.

Plan andWork

Product Sale

NAMCO TALES STUDIO LTD.
Bec Co., Ltd.
Banpresoft Co., Ltd.

Banpresto Co., Ltd.

Game Contents Business

Banpresto Sales
Co., Ltd.

ProductSale

BANPRESTO (H.K.) LTD.

NAMCO BANDAI
Games Europe S.A.S.
NAMCO BANDAI
Networks Europe LTD.

Business

NetworkBusiness

Visual and Music Content

Bandai Networks Co., Ltd.
VIBE Inc.
Sunrise Inc.

Lantis Co., Ltd.
Bandai Channel Co., Ltd.

Plan and Work

Provide Contents

Bandai Visual Co., Ltd.

BANDAI VISUAL USA INC.

Provide Contents

Emotion Co., Ltd.

Provide WorksBANDAI ENTERTAINMENT INC.

Anime Channel Co., Ltd.

Bandai Logipal Inc.
Logipal Express Inc.
NAMCO BANDAI
Business Services Inc.
Artpresto Co., Ltd.
NAMCO ECOLOTECH LTD.
NAMCO TRADING LTD.
Happinet Corp.*
Sotsu Co., Ltd.*
Italian Tomato Ltd.*

Other Business

Serviceｓ to Support Group Companies

NAMCO BANDAI Holdings (USA) Inc.

NAMCO Holdings UK LTD.**NAMCO BANDAI Holdings Inc.
*Affiliated companies accounted for by the equity method.
** NAMCO Holdings UK LTD. is a regional holding company in Europe, and is included in the Game Contents segment.

17

(2) Associated Companies (Subsidiaries and Affiliated Companies)

Name

Address

CapitalMain Business% of Voting
Rights by
NAMCO
BANDAI
Holding Inc.

DescriptionofRelationship

Notes(Consolidated subsidiaries)
Bandai Co., Ltd.

Taito-ku,Tokyo¥24,664
millionToys & Hobby

100.0%

A: 1
B: ¥5
billion4, 9

Megahouse Corp.

Taito-ku,Tokyo¥10 million

Toys & Hobby

100.0%(100.0%)--

Seika Co., Ltd

Taito-ku,Tokyo¥10 million

Toys & Hobby

87.3%(87.3%)--

Seeds Co., Ltd

Shimotsuga-gun,Tochigi¥100 million

Toys & Hobby

100.0%(100.0%)--Plex Co., Ltd.

Taito-ku,
Tokyo¥50 million

Toys & Hobby

100.0%(100.0%)--

CCP Co., Ltd.

Taito-ku,Tokyo¥300 million

Toys & Hobby

100.0%(100.0%)--BANDAI AMERICA INC.

California,
U.S.A.

US$ 24.6
millionToys & Hobby

100.0%(100.0%)-4

BANDAI S.A.

CERGYPONTOISE,FRANCE

Euro 9millionToys & Hobby

100.0%--BANDAI U.K. LTD.

Southampton, U.K.

Stg £. 5
millionToys & Hobby

100.0%--BANDAI ESPANA S.A.

Madrid ,Spain

Euro 4,808
thousandToys & Hobby

100.0%--BANDAI (H.K.) CO., LTD.

Central,Hong Kong

HK$ 103
millionToys & Hobby

100.0%-

4

BANDAI ASIA CO., LTD.

Central,Hong Kong

HK$ 7
millionToys & Hobby

100.0%(100.0%)--BANDAI INDUSTRIAL
CO., LTD.

Chacheongsao,
ThailandBart 475
millionToys & Hobby

100.0%(100.0%)--BANDAI KOREA CO.,LTD.

Seoul,Korea

WON 1,500
millionToys & Hobby

66.7%

-

-

CREATIVE B WORKS CO.,LTD.

Seoul,Korea

WON 50
millionToys & Hobby

100.0%(100.0%)--

NAMCO LIMITED

Ota-ku,Tokyo¥10,000
millionAmusement
Facilities

100.0%

A: 2
B: ¥1
billion4, 10

Pleasure Cast Co., Ltd.

Shinagawa-ku,
Tokyo¥480 million

Amusement
Facilities

100.0%(100.0%)--Hanayasiki Co., Ltd

Taito-ku,Tokyo¥480 million

Amusement
Facilities

100.0%(100.0%)--

NAMCO SPA･RESORTLTD.

Kishiwada,
Osaka¥100 million

Amusement
Facilities

100.0%(100.0%)

-

-

18

Name

Address

CapitalMain Business% of Voting
Rights by
NAMCO
BANDAI
Holding Inc.

DescriptionofRelationship

Notes

NAMCO
CYBERTAINMENT INC.

Illinois,
U.S.A.

US$ 2,800

Amusement
Facilities

100.0%(100.0%)

A:1-

NAMCO OPERATIONSEUROPE LTD.

London,U.K.

Stg £. 23
millionAmusement
Facilities

100.0%(100.0%)-4

NAMCO OPERATIONSSPAIN S.L.

Madrid ,Spain

Euro 500
thousandAmusement
Facilities

100.0%(100.0%)--

NAMCO ENTERPRISESASIA LTD.

Causeway Bay,
Hong Kong

HK$ 47
millionAmusement
Facilities

100.0%A:1-

XS ENTERTAINMENT
INC.

Florida,U.S.A.

US$ 10

Amusement
Facilities

100.0%(100.0%)-13

NAMCO BANDAI GamesInc.

Shinagawa-ku,
Tokyo¥15,000
millionGame Contents

100.0%

A: 1
B: ¥3.5billion4, 11

Banpresto Co., Ltd.

Shinagawa-ku,
Tokyo¥3,020
millionGame Contents

100.0%-

4

Bec Co., Ltd.

Taito-ku,Tokyo¥166 million

Game Contents

100.0%(100.0%)--Banpresto Sales Co., Ltd.

Shinagawa-ku,
Tokyo¥200 million

Game Contents

100.0%(100.0%)--Banpresoft Co., Ltd.

Shinagawa-ku,
Tokyo¥200 million

Game Contents

100.0%(100.0%)--

NAMCO TALES STUDIO
LTD.

Toshima-ku, Tokyo¥100 million

Game Contents

94.0%(94.0%)--

NAMCO BANDAI Games
America Inc.

California,
U.S.A.

US$ 100

Game Contents

100.0%(100.0%)--

NAMCO AMERICA INC.

Illinois,
U.S.A.

US$ 10Game Contents

100.0%(100.0%)--

NAMCO NETWORKSAMERICA INC.

California,
U.S.A.

US$ 10Game Contents

100.0%(100.0%)--

NAMCO Holdings UK LTD.

London,U.K.

Stg £ 24.5
millionGame Contents

100.0%

NAMCO EUROPE LTD.

London,U.K.

Stg £ 7.3
millionGame Contents

100.0%(100.0%)-4

NAMCO BANDAI Games
Europe S.A.S.

CERGYPONTOISE,FRANCE

Euro 14,241
thousandGame Contents

100.0%(100.0%)-4

BANPRESTO (H.K.) LTD.

New Territories,
Hong Kong

HK$ 32
millionGame Contents

100.0%(100.0%)--

NAMCO BANDAI
Networks Europe LTD.

London,U.K.

Stg £ 500
thousandGame Contents

100.0%(100.0%)

-

-

19

4

Name

Address

CapitalMain Business% of Voting
Rights by
NAMCO
BANDAI
Holding Inc.

DescriptionofRelationship

Notes

Bandai Networks Co., Ltd.

Minato-ku,
Tokyo¥1,113
millionNetwork

100.0%

A: 1
B: ¥3
billion4

VIBE Inc.

Minato-ku,
Tokyo¥352 million

Network

100.0%(100.0%)--

Bandai Visual Co., Ltd.

Minato-ku,
Tokyo¥2,182
millionVisual & Music
Content

100.0%

A: 1
B: ¥5.2
billion4

Sunrise Inc.

Suginami-ku, Tokyo¥49 million

Visual & Music
Content

99.1%(7.6%)

B: ¥8billion-Bandai Channel Co., Ltd.

Minato-ku,
Tokyo¥30 million

Visual & Music
Content

94.5%

A: 1

-

Lantis Co., Ltd.

Shibuya-ku
Tokyo¥420 million

Visual & Music
Content

50.6%(50.6%)--EMOTION CO., LTD.

Minato-ku,
Tokyo¥120 million

Visual & Music
Content

100.0%(100.0%)

A: 1-

ANIME CHANNEL CO.,LTD.

Minato-ku,
Tokyo¥200 million

Visual & Music
Content

100.0%(100.0%)--BANDAI
ENTERTAINMENT INC.

California,
U.S.A.

US$ 100
Thousand

Visual & Music
Content

100.0%(100.0%)--BANDAI VISUAL USA
INC.

California,
U.S.A.

US$ 4
millionVisual & Music
Content

100.0%(100.0%)--

Bandai Logipal Inc.

Katsushika-ku,
Tokyo¥1,424
millionAffiliated Business100.0%

A: 1
B: ¥1
billion4

Logipal Express Inc.

Katsushika-ku,
Tokyo¥100 million

Affiliated Business100.0%(100.0%)

A: 1-

NAMCO BANDAI Business
Services Inc.

Taito-ku,Tokyo¥1,405
millionAffiliated Business100.0%(100.0%)-4, 12Artpresto Co., Ltd

Taito-ku,
Tokyo¥30 million

Affiliated Business100.0%(100.0%)--

NAMCO ECOLOTECHLTD.

Ota-ku,Tokyo¥225 million

Affiliated Business

89.6%

-

-

NAMCO TRADING LTD.

Ota-ku,Tokyo¥40 million

Affiliated Business100.0%(100.0%)--100.0%

A: 1-

NAMCO BANDAI
Holdings (USA) Inc.

California,
U.S.A.

US$ 10

North America
Region Business.
Management ofcompanies’
operations(Companies accounted for by the equity method)
Shanghai,
SHANGHAI NAMCO LTD.
China

RMB 26,724
thousandAmusement
Facilities

70.0%(70.0%)--

People Co., Ltd¥238 million

Toys & Hobby

20.5%(0.1%)-

5, 7

Chuo-ku, Tokyo

20

Name

Sunlink Co., Ltd.
Happinet Corp.
Sotsu Co., Ltd.
Italian Tomato Ltd.

DescriptionofRelationship

Notes

33.4%
(33.4%)--

Affiliated Business

25.3%(0.5%)-

5, 6¥414 million

Affiliated Business

16.5%

-

5, 7, 8¥759 million

Affiliated Business

30.6%(30.6%)--

Address

Bunkyo-ku,
Tokyo
Taito-ku,Tokyo
Chuo-ku,Tokyo
Minato-ku,
Tokyo% of Voting
Rights by
NAMCO
BANDAI
Holding Inc.

CapitalMain Business¥480 million

Toys & Hobby¥2,751
million* The value of ‘A’ represents the number of directors and auditors at the company in question who are also directors,
auditors, or employers of NAMCO BANDAI Holdings Inc.
* The value of ‘B’ represents the amount of borrowings from the subsidiaries to NAMCO BANDAI Holdings Inc.
Notes:
1) In the “Main business” column, the name of the relevant type-of-business segment is given.
2) In “% of Voting Rights or Equity Owned by NAMCO BANDAI Holding Inc.”, amounts within parenthesis
represent indirect ownership.
3) NAMCO BANDAI Holdings Inc. manages and provides guidance to BANDAI NAMCO Group companies,
except for certain affiliated companies.
4) These companies are “Tokutei Kogaisha” (specified subsidiaries).
5) These companies file their “Yuka Shoken Houkokusho" (securities reports)
6) Listed on the First Section of the Tokyo Stock Exchange (TSE).
7) Listed on the JASDAQ Stock Exchange.
8) Although less than 20% of the equity is owned, the company in question is classified as an affiliated company
because NAMCO BANDAI Holdings Inc. has effective leverage over the company.
9) The percentage of net sales (excluding inter-segment sales among consolidated subsidiaries) of Bandai Co., Ltd.
exceeds 10% of the consolidated net sales.
Key financial data
(millions of yen)
(1) Net sales
108,199(2) Recurring income
6,900(3) Net income
18,137(4) Net assets
70,362(5) Total assets
96,010
10) The percentage of net sales (excluding inter-segment sales among consolidated subsidiaries) of NAMCO
LIMITED exceeds 10% of the consolidated net sales.
Key financial data
(millions of yen)
(1) Net sales
64,883(2) Recurring income
1,923(3) Net income(332)(4) Net assets
37,974(5) Total assets
48,318
11) The percentage of net sales (excluding inter-segment sales among consolidated subsidiaries) of NAMCO
BANDAI Games Inc. exceeds 10% of the consolidated net sales.
Key financial data
(millions of yen)
(1) Net sales
85,575(2) Recurring income
9,926(3) Net income
7,272(4) Net assets
50,840(5) Total assets
66,921
12) As a result of the recent capital reduction implemented on March 25, 2008, as of March 31, 2008 NAMCO
BANDAI Business Services Inc’s Common Stock stood at ¥100 million. Incidentally, as a result of the
reduction in capital, NAMCO BANDAI Business Services Inc. is no longer categorized as a specified
subsidiary.
13) Business activities ceased as of March 31, 2008.

21

3. 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 theGroup’s relations with external business partners in this ever changing and competitiveentertainment industry, expand and cultivate our operations, and continually aim to achieve higher
corporate value.

(2) Targets and Management Performance Indicators
The Group has adopted ROA (Return on Assets) and ROE (Return on Equity) 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 to maximum
efficiency and by effectively using our equity.
Specifically, the Group plans consolidated ROA of 10.0% and ROE of 8.0% for the fiscal year
ending March 2009, and pursues more efficient management and business expansion at the same time.

16.0%
11.5%
12.0%

9.6%

8.0%
4.0%

11.7%
10.0%

9.4%

8.8%

5.8%

8.0%
ROA
ROE

0.0%
FY06.3

FY07.3

FY08.322

FY09.3 (plan)

(3) 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 (Toysand Hobby, Amusement Facility, Game Contents, Network, and Visual and Music Content)
formed by agglomerations of the Group’s business operating companies.
a. 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, withportfolio management implemented through a three-dimensional and multi-layered administration.
Under the Medium-Term Management Plan, together with reinforcing these portfolios andthrough creating new businesses going forward; the company will generate growth frominter-portfolio synergy effects, and work to strengthen, enrich, and expand overall portfolio
management.
b. Management Strategies
1) 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.
2) 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 for self realization byintroducing efficient and flexible systems such as personnel exchange within the Group,
reinforcement of personnel training programs, and adoption of new hiring rules.
3) Building Optimal Management System
The Group constantly strives toward achieving the ideal group structure for its strategy and thechanging environment and will continue to take a flexible approach. Specifically, the Group will
optimally allocate its management resources to markets that need a full-Group approach throughorganizational restructuring and other measures. The Group will also continue to implement
measured efforts toward organizational restructuring, such as consolidating its back office
functions to streamline operations.
c. Business Strategies
1) 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 ourpartner companies and creators in and outside Japan, we will make active mutual use of the23

entertainment hub function to create new businesses as well as products and services, and provide
further strengthening in the process.
2) Strengthening Overseas BusinessIn overseas business initiatives, we have established the regional holdings companies in theAmericas, Europe, and Asia, and each Strategic Business Unit works to expand operations though
optimized business portfolios and content portfolios according to regional characteristics.

(4) 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, enrich and expand its portfolio
management further, based on the “Entertainment Hub Concept” laid out in its medium-term
management plan. Operationally, the Group places “strategic business units” (“SBUs”) – i.e.,groupings of businesses that the Group is engaged in - at its core, and is working to enrich its
cross-functional capabilities across each of the SBUs.
a. Common issues faced by all SBUs
Efforts toward Domestic Business Expansion
The Group will maximize utilization of the managerial resources that it owns—contents,
technologies, and locations—to create new markets and attract new customer segments for the
expansion of its domestic operations. The synergies developed among its SBUs, the use of M&A,
and alliances with outside partners will further contribute to the expansion of its operations. In
addition, in response to the changing environment surrounding the entertainment industry, theGroup will also engage in building new business models free from the constraints imposed byexisting business practices and models.
Efforts toward Overseas Business Expansion
The Group is examining ways to build the optimal business model and strengthening
cooperation among regions for the expansion of operations overseas. In addition, we haveestablished the regional holdings companies in America, Europe, and Asia, and are working to
expand well-balanced operations according to regional characteristics.
Efforts toward Corporate Social Responsibility (CSR)
The Group's corporate philosophy is to provide “Dreams, Fun and Inspiration” to people aroundthe world through entertainment based on creativity and boundless enthusiasm. To ensure that we
can continue to provide “Dreams, Fun and Inspiration,” we have formulated Groupwide CSR
initiatives that include three types of responsibilities.
In accordance with these fundamental principles, a range of measures are implemented by theGroupwide CSR Committee and its sub-committees—the Social Contribution Committee and theEnvironmental Project Committee—as well as by the Crisis Management Committee, theCompliance Committee and the Internal Control Committee.

24

・ Environmental and social responsibilities (safety/quality, environmental conservation,
cultural/social support activities)
Safety / quality initiatives
We follow industry standards and in-house standards, and we have built a system thatfacilitates the achievement of higher levels of safety and quality, so that customers canuse our products with confidence.
Environmental conservation initiatives
We are aggressively implementing forward-looking environmental conservation
measures to ensure that we can continue to provide “Dreams, Fun and Inspiration” topeople around the world.
Cultural / social support activities
We are also active in areas outside the provision of products and services, such as
museum operations and volunteer activities.
・ Economic initiatives
We are continually working to enhance management transparency and monitoring themanagement plans and conditions of Group companies. Moreover, we are working to provide
maximum returns to society and stakeholders by selecting the optimal operational fields forGroup development and focusing our management resources on those fields.
・ Legal and ethical responsibilities (compliance)
We have formulated basic compliance standards for Group companies, officers, andemployees in Japan and overseas, and we conduct continual monitoring to ensure appropriate
observance of legal and ethical standards.
b. 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 addition to enhancing its toy business, a core business of
the unit in Japan, as well as actively expanding operations in overseas markets. For speedy
implementation of its plans, this unit will also actively build cooperative relationships with outside
partners.
Amusement Facility SBU“Changes in business revenue structures”, “diversifying consumer needs”, and “revision of
consumption tax rate” are among the issues for this unit’s industry. To address them, this unit isworking to enhance profitability by closing unprofitable facilities, reviewing its standards for
opening and closing facilities, and working in conjunction with other SBUs to develop andprovide highly valued-added, distinctive facilities and services that target a broad range ofcustomer segments. The Amusement Facility SBU is also working proactively to develop overseas
operations depending on the regional characteristics.

25

Game Contents SBUThis unit’s industry is facing issues such as “changing consumer needs” and “soaring content
development costs for higher performance platforms”. In response, this unit is reviewing andrevising the content development process through sharing know-how and technologies among theamusement machines, home video game software, and mobile content businesses, to build aflexible 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 needs.
Network SBU
The issues for this unit’s industry include “responding to the continuous evolutions of newtechnology and function for mobile phone handsets” as well as “responding to a broader and more
highly evolved network environment”. In regards to these issues, the Group will aggressively planand develop attractive new content while reinforcing our B to B business by developing andinnovating new technologies. In addition, as competition in the industry grows fiercer, we will
facilitate cooperation within the Group to create a solid foundation for income and achieve theoptimal allocation of management resources to new growing businesses.
Visual and Music Content SBU
This industry’s issues include the “changes of content business toward emergence ofnext-generation media,” “adaptation to the Blu-ray Disc format,” and “enhancing overseas
development”. In order to respond to these problems, the Group strives to maximize the value of
its content and foster cross-media strategies. In concrete terms, we focus our attention on thecreation of superior content, as well as the expansion into music / publishing content development,in order to increase business opportunities. Furthermore, we will be constructing new businessmodels by developing both Blu-ray Disc offerings and networks simultaneously in the world andwe will be assessing the most suitable group organization structure to meet such models.

26

4. Consolidated Financial Statements(1) Consolidated Balance Sheets
Prior fiscal year
As of March 31, 2007
Note

Millions of yen

vs. Priorfiscalyear

Current fiscal year
As of March 31, 2008

Share (%)

Millions of yen

Share (%)

Change(Assets)
I Current assets:
1. Cash and time deposits*2113,710

126,103

2. Trade receivables*5

78,42973,1403. Short-term investments

12,191

7,068

4. Inventories

32,291

36,428

5. Deferred tax assets

5,717

5,908

6. Other current assets

16,816

19,670

7. Allowance for doubtful receivables(1,947)(607)

Total current assets

257,209

63.0

267,71364.8

10,504

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

30,285

Accumulated Depreciation

18,277(2) Amusement facilities and machines

85,262

Accumulated Depreciation

59,138(3) Land*4

26,31512,007

14,477
81,042

26,12357,241

20,597(4) Other property, plant and equipment

65,093

Accumulated Depreciation

48,86723,801
14,346

66,576
16,22674,955

Total Property, plant and equipment

11,83853,115
18.3

13,46063,44615.4 (11,509)

2. Intangible assets(1) Goodwill

9,739

15,800(2) Other intangible assets

9,729

11,191

Total Intangible assets

19,4684.8

26,991

6.5

7,523

3. Investments and other assets

28,817

26,143(2) Guarantee money deposited

21,022

20,112(3) Deferred tax assets

4,141

6,290

(4) Other investments and assets

4,171

3,541

(5) Allowance for doubtful receivables(1,296)(1,215)

Total Investments and other assets

56,85713.9

54,87113.3(1,985)

Total fixed assets

151,28137.0

145,30935.2(5,971)

Total assets

408,490100.0

413,023

100.0

4,532

(1) Investment securities*127

Prior fiscal year
As of March 31, 2007
Note

Millions of yen

vs. Priorfiscalyear

Current fiscal year
As of March 31, 2008

Share (%)

Millions of yen

Share (%)

Change(Liabilities)
I Current Liabilities
1. Trade payables*5

47,09742,603

2. Short-term borrowings

*2

2,169

5,338

3. Bonds—current portion

10,000−4. Accounts payable—other

22,33424,8895. Accrued income taxes

10,8759,262

6. Provision for directors’ bonus

651

473

7. Provision for losses from business restructuring

−

1,082

8. Provision for sales return−829

9. Other current liabilities

17,701

17,169Total current liabilities

110,82927.1

101,648

24.6(9,180)

II Long-term Liabilities
1. Long-term debt

1,133

10,662

2. Deferred tax liabilities

5,194

4,239

591

492

2,223

1,571

525

27

7. Other long-term liabilities

3,738

4,438

Total long-term liabilities

13,407

3.3

21,4305.2

8,022

Total liabilities

124,23630.4

123,079

29.8(1,157)

3. Deferred tax liabilities, land revaluation difference*4

4. Accrued retirement and severance benefits
5. Accrued directors’ and auditors’ retirement andseverance benefits

28

Prior fiscal year
As of March 31, 2007
Note

Millions of yen

vs. Priorfiscalyear

Current fiscal year
As of March 31, 2008

Share (%)

Millions of yen

Share (%)

Change(Stockholders’ Equity)
I Stockholders’ Equity
1. Common stock

10,00010,0002. Additional paid-in capital

97,142

87,945

3. Retained earnings

182,389

192,865

4. Treasury stock(3,952)(2,840)Total stockholders’ equity

285,57869.9

287,971

69.7

2,392

II. Valuation difference and translation
adjustments
1. Other securities valuation difference
2. Deferred gains or losses on hedges, net of taxes
3. Land revaluation difference*4

4. Translation adjustment
Total valuation difference and translation
adjustments

4,100

192

91

(112)

(21,286)(6,284)

5,684

5,028

(11,409)(2.8)(1,175)(0.3)

10,233

577

0.2

1,531

0.4

954

9,507

2.3

1,616

0.4

(7,890)Total net assets

284,25469.6

289,944

70.2

5,690

Total liabilities and net assets

408,490100.0

413,023

100.0

4,532

III. Stock subscription rights
IV. Minority Interests29

(2) Consolidated Statements of Income
Prior fiscal year
(April 1, 2006 ~March 31, 2007)
Millions of yen

Note
I Net sales
II Cost of sales*1

Gross profit
III Selling, general and administrative expenses*2 *3Operating income

Current fiscal year
(April 1, 2007 ~March 31, 2008)

Share (%)

Millions of yen

vs. priorfiscalyear

Share (%)

Change459,132100.0

460,473

100.0

1,341

291,052

63.4

296,400

64.4

5,348

168,07936.6

164,072

35.6(4,007)

125,855

27.4

130,661

28.3

4,805

42,224

9.2

33,411

7.3(8,812)

3,954

0.9

(78)

1,167

0.3

526

36,1987.9(9,417)

IV Non-operating income
1. Interest income

1,448

2,342

2. Dividend income

639

210

3. Foreign exchange gain

573

−

1,371

4. Other non-operating income

4,032

0.9

1,400

V Non-operating expenses
1. Interest expense

237

202

2. Foreign exchange loss−

225

3. Loss of investment in the equity method−441

4. Loss on valuation of derivatives

246

96

5. Other non-operating expenses

157

Recurring income

30

641

0.2

45,6159.9

201

Current fiscal year
(April 1, 2007 ~March 31, 2008)

Prior fiscal year
(April 1, 2006 ~March 31, 2007)
Millions of yen

Note

Share (%)

Millions of yen

vs. priorfiscal year

Share (%)

ChangeVI Extraordinary income

160

16,974

498

1

4,917

298

4. Reversal of accrued retirement and severance benefits−

501

5. Reversal of allowance for doubtful receivables

145

208

6. Government subsidy income

102−

7. Other extraordinary income

13

1. Gain on sale of fixed assets*4

2. Gain on sale of investment securities
3. Gain on sale of investments in affiliated companies

5,837

1.3

−

17,984

3.9

12,146

8,217

1.8

477

45,964

10.0

2,250

12,633

2.8(4,935)VII Extraordinary loss
1. Loss on sale of fixed assets

*5

20

125

2. Loss on disposal of fixed assets

*6

406

743

3. Loss on impairment of fixed assets

*7

5,069

4,247

4. Extraordinary depreciation of fixed assets

246−

5. Non-deductible consumption tax, etc.

−775

6. Litigation settlement

3282

7. Loss on liquidation of affiliates

38−

8. Loss on business restructuring−460

9. Provision for losses on business restructuring

−

1,082

10. Loss on valuation of investment securities

690

224

11. Loss on sale of investment in affiliated companies

587−

12. Loss on valuation of investments in affiliatedcompanies

10−

13. Provision for allowance of doubtful receivables

343

200

14. Office relocation expenses

221−

15. Loss for deferring income tax of depreciation ofproperty, plant and equipment

100

−

1

16. Other extraordinary loss
Net income before income taxes and minority interests

Corporate income, inhabitant and enterprise taxes

17,822

Deferred income taxes

(253)

7,739

1.7

43,7139.5

73

14,843
17,5693.8

Minority interests

1,891

0.4

651

0.1

(1,240)Net income

24,252

5.3

32,679

7.1

8,426

31

(2,209)(3) Consolidated Statement of Changes in Net Assets
Prior fiscal year (April 1, 2006 ~ March 31, 2007)
Stockholders’ equity
Additional paid-in

Common stock

Retained earnings

Total stockholders’

Treasury stock

capitalBalance, March 31, 2006(¥ million)

10,000equity95,772

164,503(11,156)

259,119

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

Cash dividends(3,036)(3,036)

Directors’ bonuses (*)

(417)

(417)

Net income

24,252

24,252

Purchase of treasury stock
Disposal of treasury stock

867

Acquisition of treasury stock fromconsolidated subsidiaries

502

(23)

(23)

7,227

8,095
502

Changes in the scope of consolidation(increase in the number of consolidated
subsidiaries)

30

30

Decrease in retained earnings on merger ofconsolidated subsidiaries

(28)

(28)

Changes in the scope of application of theequity method(decrease in companies to which theequity method applies)

295

295

Reversal of land revaluation difference

(173)

(173)

Net changes other than changes instockholders’ equity
Total changes during the period(¥ million)
Balance, March 31, 2007(¥ million)

−

1,369

17,885

7,203

26,45810,00097,142

182,389(3,952)285,578

32

Valuation difference and translation adjustments

Other
securities
valuationdifference
Balance, March 31, 2006(¥ million)

4,145

Deferred
gains orlosses onhedgesLand
revaluationdifference

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments(21,459)

1,801(15,512)−Stocksubscription
rights−Minority
interests

8,636

Total net
assets252,243

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

Cash dividends(3,036)

Directors’ bonuses (*)(417)

Net income

24,252

Purchase of treasury stock(23)

Disposal of treasury stock

8,095

Acquisition of treasury stock fromconsolidated subsidiaries

502

Changes in the scope of consolidation(increase in the number of consolidated
subsidiaries)

30

Decrease in retained earnings on mergerof consolidated subsidiaries(28)

Changes in the scope of application of theequity method(decrease in companies to which theequity method applies)

295

Reversal of land revaluation difference(173)

Net changes other than changes instockholders’ equity

(44)

91

173

3,882

4,103

577

870

5,551

Total changes during the period(¥ million)

(44)

91

173

3,882

4,103

577

870

32,010

Balance, March 31, 2007(¥ million)

4,100

91

(21,286)

5,684(11,409)

577

9,507

284,254(*) Item for appropriation of earnings at the Ordinary General Meeting of Shareholders

33

Current fiscal year (April 1, 2007 ~ March 31, 2008)
Stockholders’ equity
Additional paid-in
capitalCommon stock
Balance, March 31, 2007(¥ million)

10,00097,142Retained earnings

Total stockholders’equityTreasury stock

182,389(3,952)285,578

Changes during the period
Cash dividends(7,162)(7,162)

Net income

32,67932,679Purchase of treasury stock(10,235)(10,235)

Retirement of treasury stock(8,184)

8,184−

Decrease in treasury stock due to shareexchange(1,012)

3,164

2,152

(1)

(1)

Increase in treasury stock
accompanying changes to holdings incompanies to which the equity method
is applied
Changes in the scope of consolidation(increase in the number of consolidated
subsidiaries)

(103)

(103)

Changes in the scope of Consolidation(decrease in the number of consolidated
subsidiaries)

(27)

(27)

Increase due to transition of
consolidated subsidiaries into
companies to which the equity method
is applied

92

92

Reversal of land revaluation difference(15,001)(15,001)

Net changes other than changes instockholders’ equity
Total changes during the period(¥ million)
Balance, March 31, 2008(¥ million)−(9,196)

10,476

1,112

10,00087,945

192,865(2,840)34

2,392
287,971

Valuation difference and translation adjustments

Other
securities
valuationdifference
Balance, March 31, 2007(¥ million)

4,100

Deferred
gains orlosses onhedgesLand
revaluationdifference

Translation
adjustment

Totalvaluationdifferenceandtranslation
adjustments(21,286)

5,684(11,409)91

Stock
subscription
rights577

Minority
interests

9,507

Total net
assets284,254

Changes during the period
Cash dividends(7,162)

Net income

32,679Purchase of treasury stock(10,235)−

Retirement of treasury stock
Decrease in treasury stock due to shareexchange

2,152

Increase in treasury stock accompanying
changes to holdings in companies to which
the equity method is applied(1)

Changes in the scope of consolidation(increase in the number of consolidated
subsidiaries)(103)

Changes in the scope of consolidation(decrease in the number of consolidated
subsidiaries)(27)

Increase due to transition of consolidated
subsidiaries into companies to which theequity method is applied

92

Reversal of land revaluation difference(15,001)

Net changes other than changes instockholders’ equity(3,908)(204)

15,001(655)

10,233954(7,890)3,297

Total changes during the period(¥ million)(3,908)(204)

15,001(655)

10,233954(7,890)

5,690

192

(112)

(6,284)

5,028(1,175)

1,531

1,616

289,944

Balance, March 31, 2008(¥ million)35

(4) Consolidated Statements of Cash Flows

Note

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)

vs. priorfiscalyear

Millions of yen

Millions of yen

ChangeI Cash Flows from Operating Activities

43,713
20,954
246
5,069
2,399

45,96424,758
−
4,247
2,870

Increase (decrease) in allowance for doubtfulreceivables

473(1,272)

Increase (decrease) in allowance for loss on
business restructuring

(147)

1,082

Income before income taxes and minority interests

Depreciation and amortization
Extraordinary depreciation of fixed assets
Loss on impairment of fixed assets
Amortization of goodwill

Increase (decrease) in provision for sales return−

324

Increase in provision for directors’ bonus

649

(177)

Increase in accrued retirement and severance benefits

72

(421)

Decrease in directors’ and auditors’ retirement
and severance benefits

(387)

(505)

(2,087)(2,553)

237

202

5

25

(191)

441

Loss on disposal of fixed assets

406

743

Loss (gain) on sale of fixed assets(139)(16,849)

Loss on disposal of amusement facilities andmachines

1,129

1,214

(4,826)

(288)

700

224

Decrease (increase) in trade receivables(3,111)

6,128

Decrease (increase) in inventories(3,636)(3,936)

Investment for amusement facilities and machines(10,601)(9,286)

3,465(4,203)(2,574)2,074Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in loss (gain) of affiliated companies

Gain on sale of investment securities
Loss on valuation of investment securities

Increase (decrease) in trade payables
Increase (decrease) in accounts payable—other

777

46

Bonuses to directors

(448)

−

Other

2,175

(1,916)

Subtotal

54,322

48,940Interest and dividends received

2,077

2,521

Increase (decrease) in consumption tax payables

Interest paid
Income taxes paid
Net cash provided by operating activities

36

(235)

(175)

(13,670)(16,286)

42,49335,000(5,381)(7,493)

Note

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)

vs. priorfiscalyear

Millions of yen

Millions of yen

ChangeII Cash Flows from Investing Activities(1,413)(4,206)

Proceeds from withdrawal from time deposits

1,546

1,988

Purchases of property, plant and equipment(9,730)(10,470)

Proceeds from sales of property, plant andequipment

568

22,424Purchases of intangible assets(4,789)(4,199)Purchases of investment securities(7,594)(4,993)6,165

26(1,102)(15,982)

Payments for deposit in time deposits

Sales of investment securities
Acquisition of shares in consolidated
subsidiaries, net of cash acquired
Acquisition of subsidiary shares related tochanges in scope of consolidation

*2

(416)

−

Proceeds from sale of subsidiary shares related
to changes in scope of consolidation

*3

445

(62)

Advances of loans receivable(11,701)(1,617)

Collection of loans receivable

14,941

1,452

Guarantee money deposited(2,577)(1,587)

1,556

2,259

Proceeds from collection of guarantee money
deposited
Cost of business acquisition

*4

Other
Net cash used in investing activities

37(1,248)

−

98

(11)

(15,253)(14,980)

272

Note

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)

vs. priorfiscalyear

Millions of yen

Millions of yen

ChangeIII Cash Flows from Financing Activities(13,112)(739)

Proceeds from long-term debt−

16,000

Repayment of long-term debt

(2,434)(2,542)

Repayment of bond

(5,000)(10,000)(11)(10,235)

8,095−

Net increase (decrease) in short-term borrowings

Purchases of treasury stock
Proceeds from disposal of treasury stock(6,073)(7,162)

Dividends paid to minority interests

(319)

(387)

Net cash used in financing activities(18,856)(15,066)

3,789

IV Effect of exchange rate changes on cash
and cash equivalents

2,548

(304)

(2,852)

V Net increase (decrease) in cash and cash
equivalents

10,932

4,648(6,284)

VI Cash and cash equivalents at the
beginning of the period

113,186

124,155

10,969

15

485

470

Dividends paid

VII Net increase in cash and cash equivalents
due to additional consolidation ofsubsidiaries
VIII Increase in cash and cash equivalents
due to merger of subsidiaries

*5

21

−

(21)

IX Cash and cash equivalents at the end of
the period*1124,155

129,289

5,133

38

(5) Important Information Constituting the Basis for Preparation of Consolidated Financial Statements(April 1, 2007 ~ March 31, 2008)

1. Information
Concerning the Scopeof Consolidation

2. Information
Concerning Applicationof the Equity Method

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)(1) Consolidated subsidiaries:
There are 54 consolidated subsidiaries.
The names of consolidated subsidiaries have been omitted
as they are listed in Section 2; Corporate Group; (2) Group
companies.

(1) Consolidated subsidiaries:
There are 55 consolidated subsidiaries.
The names of consolidated subsidiaries have been omitted
as they are listed in Section 2; Corporate Group; (2) Group
companies.

Four companies were added to the scope of consolidationfrom the current period under review:
NAMCO NETWORKS AMERICA INC., a newly
established company, and Lantis Co., Ltd and C.C.P. Co.
Ltd. which became subsidiaries following the purchase ofstock and CREATIVE B WORKS CO. LTD., due toincrease in significance.
On the other hand, St. Tropez Ltd. and NAMCO IRELAND
LTD have been removed from the consolidation, the former
because it no longer counts as a subsidiary owing to the saleof its shares, and the latter due to its liquidation. 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 nameto NAMCO BANDAI Games America Inc.
Due to above, BANDAI GAMES, has been excluded fromthe scope of consolidation from the current period underreview.
Additionally, BHK TRADING LTD. changed its corporatename to BANDAI ASIA CO. LTD.
NAMCO BANDAI Games Europe S.A.S, which started
operating in July 2006, was newly included in the
consolidation, associated with the concentration of home
video game software operations.

As EMOTION CO., LTD., ANIME CHANNEL, CO.,LTD., and BANDAI VISUAL USA INC. gained inimportance, and as LOGIPAL EXPRESS INC. was newly
incorporated as a result of an incorporation-type company
split, such companies were added to the scope of
consolidation from this consolidated fiscal year.
Following (i) the sale of stocks in MONOLITH
SOFTWARE Inc. and Yunokawa Kanko Hotel Co., Ltd.
and (ii) the merger of NAMCO SUPPORTERS LTD., andPopy Co., Ltd. with other consolidated subsidiaries, thesaid companies were excluded from the scope of
consolidation. Sunlink Co., Ltd., was also excluded fromthe scope of consolidation after Bandai Co., Ltd.’s sold apart of its shares to Happinet Corporation, and the equity
method was applied thereto.
In addition, the corporate name of NAMCO EUROPE LTD.
was changed in January, 2007, to NAMCO Holdings UK
LTD., NAMCO EUROPE LTD. and NAMCO BANDAI
Networks Europe LTD. were newly established as
subsidiaries and added to the scope of consolidation.

(2) Non-consolidated subsidiaries:
Including SHANGHAI NAMCO LTD, 26 of the Company’s
subsidiaries are excluded from the scope of consolidation,
because total assets, net sales, net income (corresponding toequity therein) and retained earnings (corresponding to equity
therein) for each company would not have a material impact
on the interim consolidated financial statements of theCompany.

(2) Non-consolidated subsidiaries:
Including SHANGHAI NAMCO LTD, 18 of theCompany’s subsidiaries are excluded from the scope of
consolidation, because total assets, net sales, net income(corresponding to equity therein) and retained earnings(corresponding to equity therein) for each company would
not have a material impact on the interim consolidated
financial statements of the Company.

(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 therefore the equity method
was not applied for the current 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.,
People Co., Ltd. andItalian Tomato Ltd.
Sunlink Co.
Note that beginning with the period under review, Sotsu
Agency Co., Ltd. changed its corporate name to Sotsu Co.,
Ltd.

39

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

3. Information
Concerning the
Settlement Date forConsolidated
Subsidiaries

Current fiscal year
(April 1, 2007 ~March 31, 2008)(2) Non-consolidated subsidiaries and affiliates to which
the equity method is not applied(2) Non-consolidated subsidiaries and affiliates to which
the equity method is not applied

The equity method was not applied to 25 nonconsolidated
subsidiaries including SUNLINK KYUSHU CO. LTD. as
well as an affiliate, EURO VISUAL S.A.S., because thesecompanies 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.

The equity method was not applied to 17 nonconsolidated
subsidiaries including Sunrise Interactive as well as 6
affiliates, including EURO VISUAL S.A.S., because thesecompanies 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.

Consolidated subsidiaries with fiscal years to March 31st.
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIO LTD.
VIBE Inc.

Consolidated subsidiaries with fiscal years to March 31st.
Bandai Co., Ltd.
NAMCO LIMITEDNAMCO BANDAI Games Inc.
Banpresto Co., Ltd.
Bandai Networks Co., Ltd.
Banpresoft Co., Ltd.
NAMCO TALES STUDIO LTD.
VIBE Inc.

Consolidated subsidiaries with fiscal years to January 31:
Artpresto Co., Ltd.

Consolidated subsidiaries with fiscal years to January 31:
Artpresto Co., Ltd.

Consolidated subsidiaries with fiscal years to December
31st:
NAMCO BANDAI Holdings (USA) Inc.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT INC.
NAMCO BANDAI Games America Inc.
NAMCO AMERICA INC.
NAMCO NETWORKS AMERICA INC.
BANDAI ENTERTAINMENT INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
NAMCO EUROPE LTD.
NAMCO OPERATRIONS EUROPE LTD.
NAMCO OPERATRIONS SPAIN S.L.
NAMCO BANDAI Games Europe S.A.S.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BANDAI ASIA CO., LTD. (Formerly BHKTRADING LTD.)
NAMCO ENTERPRISES ASIA LTD.
BANDAI INDUSTRIAL CO., LTD.
BANDAI KOREA CO., LTD.
CREATIVE B WORKS CO., LTD.

Consolidated subsidiaries with fiscal years to December
31st:
NAMCO BANDAI Holdings (USA) Inc.
BANDAI AMERICA INC.
NAMCO CYBERTAINMENT INC.
NAMCO BANDAI Games America Inc.
NAMCO AMERICA INC.
NAMCO NETWORKS AMERICA INC.
BANDAI ENTERTAINMENT INC.
BANDAI VISUAL USA INC.
BANDAI S.A.
BANDAI U.K. LTD.
BANDAI ESPANA S.A.
NAMCO Holdings UK LTD.
NAMCO EUROPE LTD.
NAMCO OPERATRIONS EUROPE LTD.
NAMCO OPERATRIONS SPAIN S.L.
NAMCO BANDAI Games Europe S.A.S.
NAMCO BANDAI Networks Europe LTD.
BANDAI (H.K.) CO., LTD.
BANPRESTO (H.K.) LTD.
BANDAI ASIA CO., LTD.
NAMCO ENTERPRISES ASIA LTD.
BANDAI INDUSTRIAL CO., LTD.
BANDAI KOREA CO., LTD.
CREATIVE B WORKS CO., LTD.

XS ENTERTAINMENT INC.
Consolidated subsidiaries other than those above have fiscal
years to the end of February.
All of the above settlement dates fall within three months ofthe consolidated settlement date. Consequently, the resultsof the above consolidated subsidiaries are reflected in the
consolidated financial statements.
However, necessary adjustments are made to theconsolidated financial statements for material transactions
occurring between the subsidiary settlement dates and theconsolidated settlement date.

40

XS ENTERTAINMENT INC.
Consolidated subsidiaries other than those above have fiscal
years to the end of February.
All of the above settlement dates fall within three months ofthe consolidated settlement date. Consequently, the resultsof the above consolidated subsidiaries are reflected in the
consolidated financial statements.
However, necessary adjustments are made to theconsolidated financial statements for material transactions
occurring between the subsidiary settlement dates and theconsolidated settlement date.

Prior fiscal year
(April 1, 2006 ~March 31, 2007)
4. Information

Concerning Accounting
Policies

Current fiscal year
(April 1, 2007 ~March 31, 2008)(1) Valuation basis and methods for significant assets:(i)Short-term investments:
Bonds to be held to maturity
Stated at amortized cost (straight-line method)
Other securities
Securities with market values:
Stated at market price method based on amounts using,among other amounts, market prices, etc. on the last day of
the fiscal year (valuation differences are reflected directly in
net assets and cost of sales is calculated using the moving
average method).
Securities without market values:
Stated at cost based on the moving average method.
However, with respect to the contributions to limited liability
partnerships for investment businesses and similar
partnerships, the amount corresponding to the equity holdingsof the partnership’s assets is stated as investment insecurities, and the amount corresponding to profits or losses
resulting from the operations of the partnership is stated as
profits or losses for the fiscal year.
(ii) Derivative trading:Stated using the market price method(iii) Inventories:
Domestic consolidated subsidiaries
Products in progress, such as game software, etc.:
Stated at cost using the specific cost method.
Others:Generally, stated at cost using the total average method.
Overseas consolidated subsidiaries:
Products in progress, such as game software, etc.:
Stated at cost using the specific cost method.
Others:Generally, stated at the lower of cost or market value using
the first-in first-out (FIFO) method.

(1) Valuation basis and methods for significant assets:(i)Short-term investments:
Bonds to be held to maturity
Same as left column
Other securities
Securities with market values:
Same as left column

Securities without market values:
Same as left column(ii) Derivative trading:Same as left column(iii) Inventories:
Domestic consolidated subsidiaries
Game software and other work in progress:
Same as left column
Other Inventories:
Same as left column
Overseas consolidated subsidiaries:
Game software and other work in progress
Same as left column
Other inventories:
Same as left column(2) Depreciation methods for significant depreciable assets:(i) Property, plant and equipment:(2) Depreciation methods for significant depreciable assets:(i) Property, plant and equipment:

The Company and its domestic consolidated subsidiaries
Generally the declining-balance method is used.
However, for buildings (excluding equipment attachedthereto) acquired on or after April 1, 1998, and certain
amusement facilities and equipment, the straight-line method
is used.

The Company and its domestic consolidated subsidiaries:
Generally the declining-balance method is used.
However, for buildings (excluding equipment attachedthereto) acquired on or after April 1, 1998, and certain
amusement facilities and equipment, the straight-line
method is used.

The general useful life of property, plant and equipment is asfollows:
Buildings and structures:
2 to 50 years
Amusement facilities and machines: 3 to 15 years

The general useful life of property, plant and equipment is
as follows:
Buildings and structures:
2 to 50 years
Amusement facilities and machines: 3 to 15 years
Changes in Accounting Policies:
Due to the revision of the Corporation Tax Law, theCompany and some of its domestic consolidated
subsidiaries changed the method of calculating thedepreciation of property, plant and equipment acquired on
or after April 1, 2007 for the accounting period of thisconsolidated fiscal year (from April 1, 2007 to March 31,2008) based on the revised Corporation Tax Law.
As a result of this, operating income, recurring income andnet income before taxes and minority interests eachdecreased by ¥988 million.
The impact on segment information is noted in the relevant
section.

41

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)(Additional Information)
Due to the revision of the Corporation Tax Law, theCompany and some of its domestic consolidated
subsidiaries, in respect of the property, plant and equipment
acquired prior to March 31, 2007, are depreciating theamount of difference between the memorandum value andan amount equivalent to 5% of the acquisition cost of theassets using the straight-line method over a period of 5
years, from the consolidated fiscal year following theconsolidated fiscal year when the book value of the assets
was depreciated to the amount equivalent to 5% of theacquisition cost based on the Corporation Tax Law prior torevision.
As a result of this, operating income, recurring income andnet income before taxes and minority interests eachdecreased by ¥186 million.
The impact on segment information is noted in the relevant
section.

Overseas consolidated subsidiaries:
Overseas consolidated subsidiaries:
The straight-line method was used.
Same as left column
The general useful life of property, plant and equipment is asfollows:
Buildings and structures:
5 to 50 years
Amusement facilities and machines:
2 to 7 years(ii) Intangible assets:
The straight-line method was used.
The general useful life of software is as follows:
Software (used internally):
1 to 5 years(ii) Intangible assets:
Same as left column

3) Basis of recognition for significant provisions:(i) Allowance for doubtful receivables:
The allowance for doubtful receivables is provided forpossible losses on unrecoverable receivables. For ordinary
receivables, the amount of the allowance is based on thehistorical rate of loss. For receivables from debtors at risk ofbankruptcy and receivables from debtors in bankruptcy orunder reorganization, the amount of allowance is based on
individually estimated unrecoverable amounts.

3) Basis of recognition for significant provisions:(i) Allowance for doubtful receivables:
Same as left column(ii) Provision for directors’ bonus:
The Company and its domestic consolidated subsidiaries
provide for the amount expected to be payable for directors’
bonus in the consolidated fiscal year for the bonus payment.

(ii) Provision for directors’ bonus:
The Company and its domestic consolidated subsidiaries
provide for the amount expected to be payable for directors’
bonus in the consolidated fiscal year for the bonus payment.

(Changes in Accounting Policies)
The Accounting Standard for Directors’ Bonus(Corporate Accounting Standard No.4, November 29, 2005)
applies from the current fiscal year.
As a result of this, operating income, recurring income, andnet income before income taxes and minority interests areeach reduced by ¥657 million.
The impact on segment information is noted in the relevant
section.
(iii) ──────(iii) Provisions for losses from business restructuring:Some consolidated subsidiaries state an estimated loss inprovision for losses from restructuring operations.
(iv) Provision for sales return:Some consolidated subsidiaries book estimated amounts inthe current consolidated fiscal year based on sales return inthe past, in order to provide for losses on returned goods
after the end of the current consolidated fiscal year.

(iv) ──────

42

Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)(Changes in display of accounting categories)
Estimated losses on returned goods at foreign subsidiaries
that were disclosed within “Other current liabilities” in theprevious consolidated fiscal year are disclosed within“Provision for sales return” in the consolidated fiscal year
because some domestic consolidated subsidiaries now bookprovision for sales return.
Estimated losses on returned goods included in “Other
current liabilities” in the previous consolidated fiscal year
amounted to ¥514 million.

(v) Accrued retirement and severance benefits:
The Company and its consolidated subsidiaries provide forretirement and severance benefits for employees based on
estimated retirement benefit obligations and pension assets
as of the end of the consolidated fiscal year.
Actuarial gain/loss is amortized in equal amounts in eachconsolidated fiscal year over a fixed period (9 to 17 years)
from the following consolidated fiscal year within the
average remaining period of service for affected employees
when incurred.
At some domestic consolidated subsidiaries, past service
obligations are amortized over a fixed period (10 to
11years) within the average remaining period of service for
affected employees when incurred.
(vi) Directors’ and auditors’ retirement and severance
benefits:
To prepare for the payment of directors’ and auditors’
retirement and severance benefits, some domestic
consolidated subsidiaries record the amounts payable at theend of fiscal year in accordance with their respective internal
rules.

(v) Accrued retirement and severance benefits:
The Company and its consolidated subsidiaries provide forretirement and severance benefits for employees based on
estimated retirement benefit obligations and pension assets
as of the end of the consolidated fiscal year.
Actuarial gain/loss is amortized in equal amounts in eachconsolidated fiscal year over a fixed period (9 to 17 years)
from the following consolidated fiscal year within the
average remaining period of service for affected employees
when incurred.
At some domestic consolidated subsidiaries, past service
obligations are amortized over a fixed period (10 years)
within the average remaining period of service for affected
employees when incurred.
(vi) Directors’ and auditors’ retirement and severance
benefits:
Same as left column(4) Accounting policies for translation of significant assets
and liabilities into Japanese currency:
Receivables and payables denominated in foreign
currencies are translated at spot exchange rates prevailingat the end of each fiscal year, and resulting gains or losses
are included in income.
Assets and liabilities of overseas subsidiaries are translated
at spot exchange rates prevailing at the end of each fiscal
year, while revenues and expenses of the same aretranslated at the average rates for the period. The
differences resulting fromsuch translations are recorded in minority interests andtranslation adjustment under net assets.

(4) Accounting policies for translation of significant assets
and liabilities into Japanese currency:
Same as left column(5) Accounting standards for recording income andexpenses:
Videogame software production costs:
The production of videogame software involves thecomplex combination of both software and content.
Consequently, it is difficult to treat these constituent items
as separate components for accounting purposes.
The Company judges the main component of videogame
software is the content, which includes visual image andmusic data, including the game itself.
Based on the above, videogame software production costs
are recorded as either inventories or advance payments
effective from the point an internal decision is made tocommercialize a product.
For software production costs recorded under assets, cost of
sales is recorded based on estimated sales volume.

(5) Accounting standards for recording income andexpenses:
Videogame software production costs:
The production of videogame software involves thecomplex combination of both software and content.
Consequently, it is difficult to treat these constituent items
as separate components for accounting purposes.
The Company judges the main component of videogame
software is the content, which includes visual image andmusic data, including the game itself.
Based on the above, videogame software production costs
are recorded as inventories effective from the point aninternal decision is made to commercialize a product.
For software production costs recorded under assets, cost of
sales is recorded based on estimated sales volume.
(Change in display of accounting categories)
In order to disclose videogame software production costrecorded under assets in a more appropriate manner, the43Prior fiscal year
(April 1, 2006 ~March 31, 2007)

Current fiscal year
(April 1, 2007 ~March 31, 2008)(6) Accounting policies for significant lease transactions: The
Company and its consolidated subsidiaries account for
financing lease transactions, other than those in which titles
to leased property are transferred to lessees, by applying
accounting treatment applicable to ordinary leasetransactions.
However, overseas consolidated subsidiaries follow theaccounting standards in the country of domicile and therefore
treat financing lease transactions in accordance withaccounting treatment applicable to ordinary sale andpurchase transactions.
(7) Significant accounting policies for hedging:(i) Accounting for hedging:
The Company uses deferred hedge accounting.
The allocation method is used for forward exchange contracts
when appropriate. The special method is used for interest rate
swaps when appropriate.
(ii) Hedging instruments and hedged items:-Hedging instruments:
Forward exchange contracts, interest rate swaps, etc.
-Hedged items:
Foreign currency-denominated liabilities and scheduledtransactions, and interest on debt.
(iii) Hedging policies:
Hedging is implemented for the purpose of reducing risks
arising from fluctuations in exchange rates and interest rates
involved in operational and financing activities.
(iv) Method of assessing the effectiveness of hedging:
The effectiveness of a hedging transaction is in principle
determined by comparing the cumulative change in the cash
flows or market movement of the hedged item and that of
the hedging instrument from the start of hedging to the timeof assessing the effectiveness thereof.

account in which such costs are to be disclosed has beenchanged from “Other current assets (payments in advance)”
to “Inventories” in some consolidated subsidiaries.
The videogame software production cost included in “Other
current assets (payments in advance)” in the previous
consolidated fiscal year totals ¥2,026 million.
(6) Accounting policies for significant lease transactions:
Same as left column(7) Significant accounting policies for hedging:(i) Accounting for hedging:
Same as left column(ii) Hedging instruments and hedged items:-Hedging instruments:
Same as left column-Hedged items:
Same as left column(iii) Hedging policies:
Same as left column(iv) Method of assessing the effectiveness of hedging:
Same as left column

However, if important conditions are common for thehedging instrument and the hedged asset, liability, orscheduled transaction, no such determination is madebecause it is apparent that 100% effectiveness in hedging
was achieved.
No such determination is made, either, for interest rate swaps
with using the special method.

5. Valuation of Assets
and Liabilities ofConsolidated
Subsidiaries(8) Other important information constituting the basis ofpreparation of consolidated fiscal year-end statements:(i) Accounting treatment of consumption tax:
Consumption tax is accounted for separately and is notincluded in each account.

(8) Other important information constituting the basis ofpreparation of consolidated fiscal year-end statements:(i) Accounting treatment of consumption tax:

Assets and liabilities of consolidated subsidiaries areassessed based on their fair market value.

Same as left column

44Consumption tax, etc. is accounted for separately and is not
figured into each listed item. Note that non-deductible
consumption taxes, etc. regarding assets, etc. were recorded
as expenses for the current consolidated fiscal year.

Prior fiscal year
(April 1, 2006 ~March 31, 2007)
6. Amortization of

positive and negative
goodwill

7. Scope of Cash andCash Equivalents inInterim Consolidated
Statements of Cash
Flows

Current fiscal year
(April 1, 2007 ~March 31, 2008)

Goodwill is amortized over a five-year period using thestraight-line method.
Goodwill of overseas consolidated subsidiaries is treated inaccordance with the accounting regulations of the countryof domicile.

Same as left column

Cash and cash equivalents include cash on hand, deposits
on demand, and short-term, highly liquid investments withmaturities of three months or less from the date ofacquisition that are readily convertible to cash and are
subject to only insignificant risk of changes in value.

Same as left column

45

(6)Changes in Important Information Constituting the Basis for Preparation of the Consolidated Financial
Statements
Prior fiscal year
(April 1, 2006 ~ March 31, 2007)

Current fiscal year
(April 1, 2007 ~ March 31, 2008)

Accounting Standard For Presentation of Net Assets──────

From the current consolidated accounting period, “Accounting Standard
for Presentation of Net Assets” (Corporate Accounting Standard No.5,
December 9, 2005) and “Guidance on the Accounting Standard 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 ¥274,077 million.
In line with this revision in the standards for consolidated financial
statements, this method was applied in the net assets section of theconsolidated balance sheets for the current consolidated accounting
period.
Accounting Standard for Share-based Payment──────

From the current 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, and net income
before income tax and minority interests are each reduced by ¥577
million.
The effect of this on segment information is set out in that section.
Accounting Standard for Business Combinations──────

From this consolidated fiscal year, Accounting Standards for Business
Combinations (Business Accounting Council, October 31, 2003),
Accounting Standards for Business Divestitures (Corporate AccountingStandard No. 7, December 27, 2005), and Guidance on AccountingStandards for Business Combinations and Accounting Standards for
Business Divestitures (Guidance on Corporate Accounting Standard
No.10, December 27, 2005) apply.

(7) Changes in Display of Accounting Categories
Prior fiscal year
(April 1, 2006 ~ March 31, 2007)

Current fiscal year
(April 1, 2007 ~ March 31, 2008)

Consolidated balance sheet

Consolidated balance sheet

Amounts recorded in “Other (business rights) (¥2,248 million in the priorconsolidated accounting period)” under Intangible assets in the previous
consolidated balance sheet are presented as “Goodwill" from the current
consolidated accounting period.
Also, amounts recorded in the “Consolidation adjustment accounts” arepresented as "Goodwill” or “Other (Negative goodwill)” under long-term
liabilities.
Consolidated statements of income
1. Rental income (¥250 million in the current consolidated accounting
period), which has been recorded under independent item in the
consolidated statement of income up until the previous consolidated
accounting period, has been changed to be included in “Other nonoperating income” as it does not exceed 10/100 of non-operating income.
2. Operation consignment income (¥349 million in the current
consolidated accounting period), which has been recorded under
independent item in the consolidated statement of income up until theprevious consolidated accounting period, has been changed to be
included in “Other non-operating income” as it does not exceed 10/100
of non-operating income.

46──────

Consolidated statements of income──────

Prior fiscal year
(April 1, 2006 ~ March 31, 2007)

Current fiscal year
(April 1, 2007 ~ March 31, 2008)

3. “Foreign exchange gain”, which has been included in “Other nonoperating income until the previous consolidated fiscal year, has beenchanged to be recorded under the category in the current consolidated
fiscal year as it exceeds 10/100 of non-operating income.
“Foreign exchange gain” included in “Other non-operating income” inthe previous consolidated accounting period was ¥17 million.
4. Amounts recorded in the previous consolidated accounting period as“Amortization of goodwill” are presented from the current consolidated
fiscal year as “Selling, general and administrative expenses”.
Statement of Cash Flows

Statement of Cash Flows

Amortization of business rights (¥610 million in the previous term)
which was previously included in depreciation, and stated amortizationof consolidation goodwill are, beginning with the current term, presented
as amortization of acquired goodwill.

1. Changes in foreign subsidiaries’ estimated losses from sales return,which in the previous fiscal year were included in other operating
cash flows, are in the period under review presented as changes inprovision for sales return, as some domestic consolidated subsidiaries
reported provision for sales return. Changes in estimated losses fromsales retun included in other operating cash flows in the previous
fiscal year reflected a decline of ¥8 million.
2. To achieve a more appropriate presentation of capitalized gamesoftware costs, at some consolidated subsidiaries the line item waschanged from other current assets (advances) to inventories. Owing tothis adjustment, changes in capitalized software production cost,which in the previous fiscal year were included in changes inadvances among other operating cash flows, are in the period underreview included in changes in inventories. Changes in capitalized
game software production cost included in the previous fiscal year inchanges in advances among other operating cash flows reflected adecline of ¥48 million.

(8) Supplemental information
Prior fiscal year
(April 1, 2006 ~ March 31, 2007)

Current fiscal year
(April 1, 2007 ~ March 31, 2008)

Change of useful life of fixed assets──────

Previously, Data Carddass hardware and software was depreciated basedon a useful life of five (5) years but, because product cycles wereshortened due to escalating competition, the useful life for hardware waschanged to three (3) years and one (1) year for software from thisconsolidated fiscal period.
Due to this change, depreciation of ¥560 million was added to selling,
general and administrative expenses and an “Extraordinary Depreciationof Fixed Assets” of ¥246 million was added to extraordinary loss for pastfiscal years.
Accordingly, by comparison, operating income and recurring income
decreased respectively by ¥560 million and net income before-tax for
this fiscal term decreased by ¥806 million.The effect of this on segment
information is set out in that section.
(Legal action)
The Company and its US consolidated subsidiaries had a suit brought
against them on October 5, 2006 in California by Game Ballers Inc,
claiming compensatory damages in relation to certain business
transactions.

47(Legal action)
The Company and its US consolidated subsidiaries had a suit brought
against them on October 5, 2006 in California by Game Ballers Inc,
claiming compensatory damages in relation to certain business
transactions, but a settlement was reached and a settlement agreement
concluded in September 2007. An extraordinary loss of ¥282 million(US$2.4 million) was booked under “Litigation Settlement” in respectof this settlement.

(9）Notes to Consolidated Financial Statements

Consolidated Balance Sheet
Prior fiscal year
As of March 31, 2007

Current fiscal year
As of March 31, 2008

*1. Shares of non-consolidated subsidiaries andshares of Affiliates*1. Shares of non-consolidated subsidiaries andshares of Affiliates

Investment securities (shares)

9,056 million yen

Investment securities (shares)*2. Secured assets and secured loans
The following assets are accompanied by collateral (security).
Cash and time deposits
54 million yen
Obligations secured by the above collateral
Short-term borrowings
23 million yen*2.

3. Guarantees for loans
Guarantees for lease agreements concluded withtrading partners of overseas subsidiaries

3. Guarantees for loans
Guarantees for lease agreements concluded withtrading partners of overseas subsidiaries

86 million yen

9,122 millionyen──────

82 million yen*4. Land revaluation*4. Land revaluation

Due to revaluation of land used for operations in accordance with the
Law Concerning Revaluation of Land (Law No. 34, promulgated March
31, 1998), the Company booked a land revaluation reserve in capital
accounts.
In order to calculate the land prices that provide thebasis of calculation for the ratable values for land
value taxation stipulated in Article 16 of the Land
Revaluation
Value Tax Law (Law No. 69, promulgated May 2,
method1991) in accordance with Article 2, Clause 4, of the
Enforcement order for the Law Concerning
Revaluation of Land (Cabinet Order No. 119,
promulgated March 31, 1998), reasonableadjustments for property depth have been made toroad side values based on prices established inaccordance with the methods prescribed andpublished by the National Tax Agency.

Due to revaluation of land used for operations in accordance with the
Law Concerning Revaluation of Land (Law No. 34, promulgated March
31, 1998), the Company booked a land revaluation reserve in capital
accounts.
In order to calculate the land prices that provide
the basis of calculation for the ratable values forland value taxation stipulated in Article 16 of the
Revaluation
Land Value Tax Law (Law No. 69, promulgatedmethodMay 2, 1991) in accordance with Article 2,
Clause 4, of the Enforcement order for the Law
Concerning Revaluation of Land (Cabinet OrderNo. 119, promulgated March 31, 1998),
reasonable adjustments for property depth havebeen made to road side values based on prices
established in accordance with the methods
prescribed and published by the National Tax
Agency.
Revaluation date…March 31, 2002
-Difference between the fair value of revalued landat the end of the fiscal year and the carrying value(581) million yen
after revaluation.

Revaluation date…March 31, 2002

*5. Notes due at the end of the consolidated accounting period
Notes due at the end of the consolidated accounting period are settled on
the appropriate note transfer date. However, the final day of the current
consolidated accounting period coincided with a holiday for financial
institutions. Therefore, the following notes due at the end of theconsolidated accounting period are included in the balance sheet of theconsolidated accounting period.
Notes receivable¥683 million

Notes payable¥1,891 million

48

*5.

──────

Consolidated Income Statements
Prior fiscal year
(April 1, 2006 ~Current fiscal year
(April 1, 2007 ~March 31, 2008)

March 31, 2007)*1. 88 million yen of inventory valuation loss of by cost or market*1. 199 million yen of inventory valuation loss of by cost or market

method is included

method is included*2. Major components of selling, general and administrative*2. Major components of selling, general and administrative

expenses

expenses

Advertising expenses:
Officers’ remuneration and employee salaries andbenefits:
Provision for employee retirement and severance
benefits:
Provision for directors’ bonus:
Provision for officers’ retirement and severance
benefits:¥31,031 million¥29,425 million¥1,163 million¥657 million¥138 million

Advertising expenses:
Officers’ remuneration and employee salaries
and benefits:
Provision for employee retirement andseverance benefits:
Provision for directors’ bonus:
Provision for officers’ retirement andseverance benefits:¥30,549 million¥30,884

million¥1,115 million¥497 million¥46 million

Research and development expenses:¥18,004 million

Research and development expenses:¥17,583 million

Allowance for doubtful receivables:¥397 million

Allowance for doubtful receivables:¥55 million

Depreciation¥7,082 million

Property rents¥7,146 million*3. Research and development expenses included
in selling, general and administrative expenses:

18,004 million yen*3. Research and development expenses
included in selling, general and

17,583 million yen*4. Gains from sale of property, plant and equipment related mainly

administrative expenses:

to the sales of land

*4. Gains from sale of property, plant and equipment related mainly to*5. Losses from sales of fixed assets related mainly to the sales of land.

the sales of land

*6. Losses from disposal of fixed assets related mainly to the disposal of*5. Losses from sales of fixed assets related mainly to the sales ofbuildings and structures and disposal ofland.

tools, furniture and fixtures:*6. Losses from disposal of fixed assets related mainly to the disposalof buildings and structures and disposal oftools, furniture and fixtures:

49

Prior fiscal year
(April 1, 2006 ~Current fiscal year
(April 1, 2007 ~March 31, 2008)

March 31, 2007)*7. Loss on impairment of fixed assets*7. Loss on impairment of fixed assets

In order to identify assets for impairment, the Company and its

In order to identify assets for impairment, the Company and its

consolidated subsidiaries group their fixed assets according toconsolidated subsidiaries group their fixed assets according tomanagement accounting classifications based on each strategic business

management accounting classifications based on each strategic

unit, except for important idle assets, assets scheduled for disposal andbusiness unit, except for important idle assets, assets schedule forlease assets. Of these, in the amusement facilities business, most aredisposal of and lease assets. Of these, in the amusement facilities

grouped according to fixed regions because the assets owned for thebusiness, most are grouped according to fixed regions because thebusiness of this unit are widely spread across Japan and overseas.

assets owned for the business of this unit are widely spread acrossAlso, the book value of the following assets, except for those assets

Japan and overseas.

which may be reused, is reduced to the collectible amount and theAlso, the book value of the following assets, except for those assets

decrease in value is recorded as an impairment loss in extraordinary

which may be reused, is reduced to the collectible amount and thelosses.

decrease in value is recorded as an impairment loss in extraordinary
losses.
Impairment

Impairment
Location

Items

Classification

loss

Location

Items

Classificationloss(¥ million)(¥ million)
Yokohama City,

Toshima-ku, Tokyo

Amusement facility

Amusement facility(Note 1)(theme park)and machines, etc.

Kanagawa, etc.

Amusement facility(Note 1)

Amusement facility

1,543
Amusement facility

937
and machines, etc.

Sapporo City, Hokkaido
Amusement facility(Note 2)160
Kanazawa City, Ishikawa

and machines, etc.

Amusement facility
Amusement facility(Note 2)

Hakodate City,
Amusement facility

Buildings &(tourist hotel)

structures, and land

Hokkaido

173
and machines, etc.

Ayase City, Kanagawa,

1,338

Amusement facility(Note 3)etc.

Yokohama City,(Note 3)

Amusement facility

84
and machines, etc.

Other intangible
LAN entertainment

Kanagawa

fixed assets; other219

Hakodate City, Hokkaido

Amusement facility

Buildings &(Note 2)(tourist hotel)

structures, etc.

482

business(Note 4)

investments, etc.

BEDFORDSHIRE, U.K.,

Management, Sales,
Ota-ku, Tokyo, etc.

Amusement facility

Buildings &etc.

Production control,(Note 5)structures, and land

CAUSEWAY BAY,

Buildings &Idle assets and Assets

Tochigi, etc.

structures, and land,

Assets scheduled

Amusement facility

for disposal, etc.

and machines, etc.

HONG KONG.

486

scheduled for disposal(Note 6)etc.

(Note 4)

Buildings &ILLINOIS, U.S.A.

2
Amusement facility

Ibaragi City, Osaka
Assets for lease, etc.

946
and machines, etc.

(Note 2)

R&D
Shimotsukagun,

Amusement facility

1,160

structures, and land,

Goodwill

662(Note 5)160

(Note 7)
etc.
Total

Shimotsukagun,Tochigi, etc.

5,069

Buildings &Idle assets(Note 6)

structures, and land,

789

etc.
Buildings &Bunkyo-ku, Tokyo, etc.

Assets scheduled forstructures, property,(Note 4)

disposal, etc.

plant and equipment

116(others), etc.
Inashikigun
Buildings &IbarakiWarehouse

35
structures, and land

(Note 7)Koto-ku,

Property, plant andSoftware for internetTokyo

equipment (others),

17

contents operations(Note 2)Total

50and software
4,247

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

Current interim period(April 1, 2007 ~ September 30, 2007)

Notes

Notes

1. This asset was separated from its current grouping and registered as a

1. This asset was separated from its current grouping and recorded as anloss because it was decided to change the primary management objective

impairment loss because the collectible amountfrom generating income via sales to concentrating on its advertisingdecreased due to the decision to close the facility. The collectible amountvalue, and it was considered a different category of investment decision

was calculated using a value of use as “zero”.

of this asset largely

from the group, which consisted of facilities that aimed at generating
income. The collectible amount was calculated using a value of use of

2. An impairment loss was recorded because it was predicted that the"zero".

book value of this fixed asset could not be collected due to the decrease

2. Because it was judged that the collectable amount from this fixed asset

in business profitability. The collectible amount was calculated using awould decrease greatly due to the decision to close the facility, this asset

value of use as “zero”.

was separated from its group and registered as a loss. The collectible

3. This asset was separated from its current grouping and recorded as an

amount was calculated using a value of use of "zero".

impairment loss because it was decided to change the primary

3. A loss was registered because it was predicted that the book value ofmanagement objective from business aiming at generating income tothis fixed asset could not be collected due to the decrease in businessconcentrating on the value of social welfare projects, and this asset was

profitability. The collectible amount was measured by the net sale value

considered to have largely decreased its collectible amount due to theand assessed based on the appraised real estate value.

decision and have lost its mutually complementary function in its

4. Assets used for unprofitable businesses slated for closing werecurrent grouping. The collectible amount was calculated using a value ofregistered as losses. The collectible amounts were calculated using a value

use as “zero”.

of use of "zero".

4. An impairment loss was recorded of the asset which is unlikely to be

5. Assets that had no foreseeable use due to integration or relocation ofused because of relocation of facilities, etc. The collectible amounts

subsidiary bases were registered as losses. The collectible amounts for real

were calculated using a value of use as “zero”.

estate were measured by the net sale value and assessed based on the

5. An impairment loss was recorded because the profitability over theappraised real estate value. Collectible amounts of other assets werebook value of this fixed asset could not be predicted due to the decrease

calculated using a value of use of "zero".

in profitability of the takeover business. The collectible amount was

6. Assets that had no foreseeable use because of integration of subsidiarycalculated using a value of use as “zero”.

bases were registered as losses. The collectible amounts for real estate

6. An impairment loss was recorded of the assets that had no foreseeable

were measured by the net sale value and assessed based on the appraiseduse due to integration, etc. of subsidiary bases. The collectible amounts

real estate value, planned sales price, etc. Collectible amounts of otherfor real estate were measured by the net sale value and assessed based

assets were calculated using a value of use of "zero".

on road rating.

7. Assets scheduled for sale and leased assets of no foreseeable use were

7. An impairment loss was recorded because it was predicted that theregistered as losses. Collectible amounts for assets scheduled for sale werebook value of this fixed asset could not be collected due to the decrease

assessed based on the planned sales price. Collectible amounts for leasedin business profitability. The collectible amounts for real estate wereassets added income from the remainder of the lease to the land value asmeasured by the net sale value and assessed based on fixed assets tax

frontage property.

rating.

51

Consolidated Statement of Changes in Net Assets
For the fiscal year ended March 31, 2007
(April 1, 2006 to March 31, 2007)
1. Matters concerning the total number and category of shares in issue and the total number and category of treasury stock.
Number of shares at the end of Increase in number of shares

Decrease in number of shares

Number of shares at the end of

the previous fiscal period

in the current period

the current period

in the current period

Issued shares
Common stock

260,580,191--

260,580,191

Total

260,580,191--

260,580,191

Treasury stock
Common stock(Note 1, 2)
Total

7,616,892

14,2774,900,122

2,731,047

7,616,892

14,2774,900,122

2,731,047

Note:1. The increase in treasury stock (shares of common stock) of 14,277 shares consists of an increase of 6,191 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 4,900,122 shares consists of decrease of 122 sharesfrom the sale of fractional shares and 4,900,000 shares from the disposal of treasury stock through private
placements.
2. Notes to stock subscription rights and treasury stock subscription rights
Number of shares covered by stock subscription rights
Category

Details of stock

Type of stock for stock

subscription rights

subscription rights

Balance at end of
periodAt end of previous
fiscal period

Increase in

Decrease incurrent period current period

At end of period(¥ million)

Series 1
Stock
subscription
Stock
The
Company

subscription
rights as
stock options(Note 1)

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

149

-

-

-

-

-

577

rightsSeries 2
Stocksubscription
rightsSeries 3
Stocksubscription
rightsTotal

Note: Exercise periods have not started for any of the stock acquisition rights tabulated above.

52

3. Matters concerning dividends(1)Dividend payment amount
Total dividend amountResolved

Share category(millions of yen)

Dividend per share (¥)

Date of record

Annual general meeting ofshareholders

Common stock

3,036

12 March 31, 2006

Common stock

3,036

12 September 30, 2006

Effective dateJune 27, 2006

June 26, 2006
Board of Directors
October 26, 2006

(Note 2)
December 8, 2006

Note:1. Information is stated net of dividends on treasury stock held by affiliates. Amounts before deductions are 3,126
million with respect to the annual general meeting of shareholders held June 26, 2006, and ¥3,126 million withrespect to the board meeting held October 26, 2006.
2. The effective date denotes the payment start date.
(2) Out of dividends whose record date concerns the current term, the following resolution is planned concerning dividends
whose effective date falls into the next term.
Resolved

Share category

Total dividend amount

Assets underlying

Dividend per share(millions of yen)

dividend(¥)

Date of record

Effective date

Annual general
meeting ofshareholders

4,127 Retained earnings

Common stock

16

March 31,2007

June 26, 2007

June 25, 2007

For the fiscal year ended March 31, 2008
(April 1, 2007 to March 31, 2008)
1. Matters concerning the total number and category of shares in issue and the total number and category of treasury stock.
Number of shares at the end of Increase in number of shares in Decrease in number of shares

Number of shares at the end

the previous fiscal periodof the current period

the current period

in the current period

Issued shares
Common stock

260,580,191-

4,500,000

256,080,191

Total

260,580,191-

4,500,000

256,080,191

Treasury stock
Common stock(Note 1, 2, 3)
Total

2,731,047

5,186,011

6,150,787

1,766,271

2,731,047

5,186,011

6,150,787

1,766,271

Notes:
1. The decrease of 4,500,000 shares in the total number of shares issued resulted from the retirement of treasury stock.
2. The increase of 5,186,011 shares in treasury stock (shares of common stock) consists of an increase of 4,980,000 shares from the purchaseof treasury stock as per a decision made by the Board of Directors, 5,646 shares from the repurchase of shares less than a unit, 198,600
shares from the purchase of treasury stock via a put for purchase in connection with the share exchange between the Company and Bandai
Visual Co., Ltd., and 1,765 shares as a result of an increase in the shareholding ratio in respect of affiliates to which the equity method
applies.
3. The decrease of 6,150,787 shares in treasury stock (shares of common stock) consists of a decrease of 4,500,000 shares from the retirementof treasury stock, 1,650,696 shares from the allotment of treasury stock to shareholders of Bandai Networks Co., Ltd. and Bandai Visual
Co., Ltd., via the share exchange carried out between them and the Company, and 91 shares from the sale of shares less than a unit.
2. Notes to stock subscription rights and treasury stock subscription rights

53

Number of shares covered by stock subscription
rightsCategory

Details of stock subscription rights

subscription rights
Series 2 Stocksubscription rights
Stock subscription Series 3 Stockrights as stock
subscription rights
options

Series 4 Stock(Note 1)

subscription rights

end of period

subscription rights

Series 1 Stock

The Company

Balance at

Type of stock for stock

Series 2-1 Stocksubscription rights
Series 2-2 Stocksubscription rights
Total

At end ofIncrease in Decrease in(¥ million)

At end ofpreviouscurrent

current

fiscal period

periodperiod

-

-

-

-

-

195

-

-

-

-

-

232

-

-

-

-

-

345

-

-

-

-

-

80

-

-

-

-

-

175

-

-

-

-

-

501

-

-

-

-

-

1,531

periodNote 1: Exercise periods have not started for any of the stock acquisition rights tabulated above.
3. Matters concerning dividends(1) Dividend payment amount
Total dividend amountResolved

Share category(millions of yen)

Dividend per share (¥)

Date of record

Effective date

Annual general meeting ofshareholders

Common stock

4,127

16

March 31, 2007

June 26, 2007

Common stock

3,035

12

September 30, 2007

December 10, 2007

June 25, 2007
Board of Directors
November 8, 2007

(2) Out of dividends whose record date concerns the current term, the following resolution is planned concerning dividends
whose effective date falls into the next term.
Resolved

Share category

Total dividend amount

Assets underlying

Dividend per share

Date of(millions of yen)

dividend(¥)

recordEffective date

Annual general
meeting ofshareholders

Common stock

3,056 Retained earnings

June 23, 2008

54

12

March 31,2008

June 24, 2008

Consolidated Statements of Cash Flows
Prior Fiscal year
(April 1, 2006 ~ March 31, 2007)

Current Fiscal year
(April 1, 2007 ~ March 31, 2008)*1 Relationship between cash and cash equivalents at the end of the*1 Relationship between cash and cash equivalents at the end of theperiod under review and the amounts accounted for on the consolidated

period under review and the amounts accounted for on the consolidatedbalance sheets:balance sheets:(millions of yen)(millions of yen)

Cash and time deposits

113,710

Cash and time deposits

Short-term investments

12,191

Short-term investments

126,103
7,068

Total

125,901

Total

133,172

Time deposits with maturities(1,746)Time deposits with maturities(3,882)exceeding 3 months
Cash and cash equivalents

exceeding 3 months*2 Key assets and liabilities of companies newly consolidated as*2

subsidiaries due to acquisition of their equity.
Lantis Co. Ltd.
Main assets and liabilities of Lantis Co.Ltd. at the time of its newconsolidation due to the acquisition of its shares by the Company related
as follows to the share acquisition price and net acquisition cost.
(millions of yen)
Current assets

687

Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Minority interests

159
578
(548)
(207)
(411)

Cost of share acquisition
Cash and cash equivalents

259
(160)

Difference: Net acquisition cost98

CCP Co. Ltd.
Main assets and liabilities of CCP Co. Ltd. at the time of its newconsolidation due to the acquisition of its shares by the Company related
as follows to the share acquisition price and net acquisition cost.
(millions of yen)
Current assets

Cash and cash equivalents

124,155

2,399

Fixed assets

322

Goodwill

416

Current liabilities(2,464)Long-term liabilities(104)

Cost of share acquisition

568

Cash and cash equivalents(249)

Difference: Net acquisition cost

318

55

129,289

Prior Fiscal year

Current fiscal year

(April 1, 2006 ~ March 31, 2007)(April 1, 2007 ~ March 31, 2008)*3 Principal assets and liabilities of companies removed from the*3 Principal assets and liabilities of companies removed from theconsolidation due to the sale of the Company’s shareholdings

consolidation due to the sale of the Company’s shareholdings

St. Tropez Ltd.

MONOLITH SOFTWARE INC.

St. Tropez Ltd. was removed from the consolidation owing to the sale of

MONOLITH SOFTWARE INC. was removed from the consolidation

the Company’s shareholdings. Assets and liabilities at the time of removal

owing to the sale of the Company’s shareholdings. Assets andfrom the consolidation, the sales price of the shares, and the net effect on

liabilities at the time of removal from the consolidation, the sales priceincome were as follows.

of the shares, and the net effect on income were as follows.
(millions of yen)(millions of yen)
Current assets

607

Current assets
Fixed assets

Fixed assets

6,477

Current liabilities(508)

Long-term liabilities(4,674)(551)

Book value of the shares

1,351

Loss on sale of shares(480)

Proceeds from sale of shares

871

Cash and cash equivalents(426)

Difference: Net received

445

167

Current liabilities(1,125)Long-term liabilities(50)

Minority interests(9)

Decrease in retained earnings due to
exclusion from the consolidation

Minority interests

1,290

Equity interest at the time of exclusionfrom the consolidation
Book value of the shares

(27)
(20)
226

Gain or loss on sale of shares−

Proceeds from sale of shares

226

Cash and cash equivalents(304)

Difference: Net received(78)

SUNLINK co.,ltd
SUNLINK co.,ltd was removed from the consolidation owing to the saleof the Company’s shareholdings. Assets and liabilities at the time ofremoval from the consolidation, the sales price of the shares, and the net
effect on income were as follows.
(millions of yen)
Current assets
Fixed assets

653

Current liabilities(3,074)Long-term liabilities(471)

Increase in retained earnings due to
exclusion from the consolidation

56

2,613

92

Book value of the shares(185)

Gain on sale of shares

298

Proceeds from sale of shares

113

Cash and cash equivalents(237)

Difference: Net received(124)

Prior Fiscal year

Current fiscal year

(April 1, 2006 ~ March 31, 2007)(April 1, 2007 ~ March 31, 2008)
Yunokawa Kanko Hotel Co., Ltd.
Yunokawa Kanko Hotel Co., Ltd. was removed from the consolidation
due to the disposition of the Company’s equity interest. The following
states the amounts of assets and liabilities of Yunokawa Kanko Hotel
Co., Ltd. at that time, as well as the selling price of and the net
proceeds from the sale of equity shares and claims in Yunokawa Kanko
Hotel Co., Ltd.
(1) Disposal of shares in Yunokawa Kanko Hotel Co., Ltd.
(millions of yen)
Current assets
Fixed assets
Current liabilities
Long-term liabilities

127
545(2,567)(194)

Book value of the shares(2,087)

Gain on sale of investments

2,097

Proceeds from sale of shares (i)10(2) Sale of claims in the company(millions of yen)
Claims amount

2,387

Allowance for doubtful receivables(2,272)

Disposal book value of claims*4 Principal asset increases due to business acquisitions*4

NAMCO OPERATIONS EUROPE LTD.
The acquisition of bowling alley operations in Europe entailed thefollowing expenses.
(millions of yen)Fixed assets
Cost of business acquisition

1,248
1,248

57

115

Gain on sale of claims

30

Proceeds from sale of claims (ii)145

Proceeds – Total (i + ii)

155

Cash and cash equivalents(15)

Difference: Net received

140

Prior Fiscal year

Current fiscal year

(April 1, 2006 ~ March 31, 2007)(April 1, 2007 ~ March 31, 2008)*5. Main assets and liabilities assumed in connection with a merger ofsubsidiaries
The Company assumed the following assets and liabilities from On The
Run Co., Ltd., which in the period under review merged with Lantis Co.,
Ltd. The merger caused no increase in common stock and additional
paid-in capital of the Company.
(millions of yen)
85

Current assets
Fixed assets

2

Total assets

87

Current liabilities

176

Total liabilities

176

Lease Transactions
Descriptions are omitted as information is considered to be not important.

58*5Marketable Securities
1. Bonds held to maturity with market values
millions of yen

TypePrior fiscal year

Current fiscal year

As of March 31, 2007

As of March 31, 2008

Book value on the
consolidated balance
sheetMarketPrice

Book value on the
Difference

consolidated balance
sheetMarketPrice

Difference

i. Government and
−

−

−

10

10

−

ii. Corporate bonds

−

−

−

−

−

−

iii. Other items

−

−

−

−

−

−

Subtotal

−

−

−

10

10

−

6,017

6,016

−

19

19

−

ii. Corporate bonds

−

−

−

−

−

−

iii. Other items

−

−

−

−

−

−

Subtotal

6,017

6,016

−

19

19

−

6,017

6,016

−

30

30

−

local government
Bonds held to maturity(Market price exceeds
balance sheet amount)bonds, etc.

i. Government andlocal government(Market price does notexceed balance sheet
amount)bonds, etc.

Total

59

2. Other securities with market values
millions of yen

TypeAcquisition
Cost(i) Equity

Current fiscal year
As of March 31, 2008

Book value on the
consolidated

Difference

Acquisition
Costbalance sheet

Book value on the
consolidated balance

Difference

sheet

8,980

17,239

8,259

1,888

6,820

4,931

Corporate bonds

−

−

−

−

−

−

(iii) Other

149

195

45

−

−

−

9,130

17,435

8,304

1,888

6,820

4,931

395

274

(120)

10,521

7,775(2,745)

Corporate bonds

100

98

(1)

300

298

(1)

(iii) Other

72

69

(3)

222

206

(16)

568

442

(125)

11,0448,280(2,763)

9,699

17,878

8,178

12,933

15,101

2,167

securities
Other securities

Prior fiscal year
As of March 31, 2007(ii) Bonds(Balance sheet
amount exceeds
acquisition cost)

Sub-total(i) Equity
securities(Balance sheet(ii) Bonds

amount does notexceed acquisition
cost)

Sub-total
Total

Note: Stocks and other securities with market values included in Other Securities were recognized as 547 million yen for the priorperiod and 132 million yen for the current period as impairment losses. These were:
Stocks whose market value declined 50% or more:

All stocks

Stocks whose market value declined more than 30% but less than 50%:

Stocks for which no recovery in value is expected

3. Other marketable securities sold during the current year
(April 1, 2007 to march 31, 2008)
millions of yen

Proceeds of sale

533

Prior fiscal year

Current fiscal year

As of March 31, 2007

As of March 31, 2008

Total gains on sale

Total loss on sale

498

Proceeds of sale1

60

Total gains on sale

26

Total loss on sale

111

4. Principal securities holdings without market value
millions of yen
Prior fiscal year

Current fiscal year

As of March 31, 2007

As of March 31, 2008

Book value on consolidated balance sheet

Book value on consolidated balance sheet

37

34

37

34

8,018

8,924

i ) Unlisted stocks

1,762

1,720

ii) MMF

5,706

5,863

iii) Other

549

1,339

1. Bonds held to maturity
Unlisted bonds
2. Other marketable securities

5. Redemption amounts for other marketable securities with maturities and bonds which are to beheld to maturity

One year or
lessPrior fiscal year

Current fiscal year

As of March 31, 2007

As of March 31, 2008

More thanMore thanone, up to

five, up to

five years

ten years

More than ten One year or
less

years

More thanMore thanone, up to

five, up to

five years

ten years

More thanten years

Bonds
Government and local

5,996

20

−

−

9

20

−

−

Corporate bonds

−

−

37

−

−

34

−

−

Total

5,996

20

37

−

9

54

−

−

government bonds, etc.

Derivative Transactions
Descriptions are omitted as information is considered to be not important.

61

Retirement and Severance Benefits
1. Retirement plan types
The Company and part of domestic consolidated subsidiaries

The Company has established a fixed benefit plan for lump sum
retirement awards and a comprehensive employee’s pension
fund.

Other domestic consolidated subsidiaries(excluding domestic consolidated subsidiaries without retirement
benefit schemes)

Domestic consolidated subsidiaries have established as fixed
benefit types, qualified retirement benefit plans, retirement
lump-sum grants, or comprehensive employees’ pension funds.
Additional benefits may also be paid at retirement.

Foreign consolidated subsidiaries

Some foreign consolidated subsidiaries have established defined
contribution types or retirement lump-sum grants.

2. Retirement benefit liabilities
millions of yen
Prior Fiscal Year(as of March 31, 2007)

Current Fiscal Year(as of March 31, 2008)

i. Projected benefit obligations(15,381)ii. Plan assets at fair value
12,811
iii. Projected benefit obligation in excess of(2,569)plan assets (i + ii)
iv. Unrecognized transition liability−
v. Unrecognized actuarial gain/loss
524
vi. Unrecognized prior service liability(41)(reduction in liability)vii. Net retirement and severance benefits
recognized on the balance sheets (iii + iv + v +(2,086)vi)
viii. Prepaid pension expense
137
ix. Accrued retirement and severance benefits(2,223)(vii + viii)
Notes:
1. In addition to the plan assets shown above, there are 1,191 million yen for the prior fiscal year and 539 million yen for thecurrent fiscal year in plan assets under the employee’s pension fund (accounted for by the ratio of contribution).
2. To calculate retirement benefit liabilities, some subsidiaries have adopted the simplified method.

3. Retirement benefit expenses

62(13,544)
10,531(3,013)
−
1,996
(413)

(1,429)141(1,571)

millions of yen
Prior fiscal year
As of March 31, 2007

Current fiscal year
As of March 31, 2008

i. Service cost for benefits earned – net of
1,545
employee contributions
ii. Interest cost on projected benefit obligation
271
iii. Estimated return on plan assets(245)
iv. Transition liability charged off−
v. Amortization of unrecognized actuarial gain
197
vi. Amortization of prior service cost
16vii. Net periodic cost (total i-vi)
1,785
Notes:
1. In addition to the retirement benefit expenses shown above, there are also 102 million for the prior fiscal year and 37
million for the current fiscal year in contributions to the employees’ pension fund charged to the cost of sales and selling,
general and administrative expenses. Additional benefits are 109 million yen for the prior fiscal year and 117 million forthe current fiscal year.
2. Retirement benefit expenses for the subsidiaries which have adopted the simplified methods are included in (i) service cost
above.
3. A portion of overseas defined contribution values related to the establishment of a defined contribution pension plan has
been recorded as (i) service cost.
4. Retirement benefit expenses in the amount of ¥501 million due to the change in the Company’s retirement benefit scheme
were recognized as extraordinary gain.

1,470
237
(253)
−
236
(40)
1,650

4. Key factors in calculation of retirement benefit liabilities
Prior Fiscal Yeari. Method of the benefit attribution
ii. Discount rate:iii. Estimated rate of return on plan assets
iv. Period of amortization of prior unrecognizedservice cost
v. Period of amortization of unrecognizedactuarial gain or loss

Current Fiscal Year

Benefit/year of service
1.3% – 2.0%
1.5% – 3.0%
10 – 11 years

Benefit/year of service
2.0%
2.0% – 3.0%
10 years

Amortized in equal amounts over a given
number of years (9-17) from thefollowing consolidated fiscal year (within
the average remaining period of service
for affected employees)

Amortized in equal amounts over agiven number of years (9-17) fromthe following consolidated fiscal year(within the average remaining periodof service for affected employees)

63Concerning stock options, etc.
Previous fiscal year (from April 1, 2006 to March 31, 2007)
1. Item and amount of stock option expenses in the consolidated fiscal year
Selling, general and administrative expenses: ¥577 million

2. Types, sizes and changes of stock options(1) Types of Stock Option
2006 Stock Options
Series 1
Stock subscription rights

Series 2
Stock subscription rights

Series 3
Stock subscription rights

Directors of the Company (8)Directors of subsidiaries (14)

Employees of the Company andsubsidiaries (603)Common stock 126,300

Common stock 149,700

Common stock 1,838,000

Grant dateJuly 18, 2006

July 18, 2006

July 18, 2006

Conditions for exercising rights(Note 2)

(Note 3)(Note 4)

Required tenure

Not specified

Not specified

Position and number ofbeneficiaries
Type and number of stock
options (Note 1)

from July 18, 2006 to July 9,
2008from July 10, 2008 to June 30,
2010

from July 10, 2009 to June 30,
Applicable period forfrom July 10, 2009 to June 30, 2014
2014
exercising rights(Notes)1. The number of stock options is given in that of shares.
2. After stock subscription rights are allocated, if the Company's stock price growth rate up to the start of the period forexercising those rights does not exceed the TOPIX (Tokyo Stock Price Index) growth rate, then those stock subscription
rights cannot be exercised. The Company's stock price growth rate shall be calculated as the average closing price forcommon shares of the Company on the Tokyo Stock Exchange on each of the days within the previous three months
prior to the month in which the starting date for the period for exercising the stock subscription rights falls (except if
there is no trading) divided by the average closing price for common shares of the Company on the Tokyo Stock
Exchange on each of the days within the previous three months prior to the month in which the allotment date falls(except if there is no trading). The TOPIX growth rate is calculated in the same way as the Company’s stock pricegrowth rate.
3. The annual target of business performance and evaluation period (3 years from the time of the issuance of rights to thetime it is possible to exercise those rights) shall be determined, with the sales and operating income, etc. of the strategic
business unit – to which persons to whom stock subscription rights were allotted (hereinafter referred to as “Stock
Subscription Rights Holder(s)”) belongs at the time of issuance of the stock subscription rights – used as the evaluationindex. The ratio of achievement of that target shall be measured for each fiscal year during that evaluation period. If theratio of achievement at the end of evaluation period is above 50% on average during the evaluation period, those rights
may be exercised.
However, even if the ratio of achievement is above 50% on average during the evaluation period, the number of sharesthat can be acquired by exercising those rights shall be based on a ratio equivalent to the average ratio of achievement(maximum of 100%).
4. (i) Stock Subscription Rights Holder(s) must be an employee of the Company or of its Group Companies at the timethose rights are exercised.
(ii) Regardless of the regulation in (i), if the Stock Subscription Rights Holder leaves the Company or its Group
companies due to his or her own personal reasons, that person may possess and exercise the corresponding rights only
up to 6 months from the time of leaving. However, he or she may not possess and exercise the corresponding rights
beyond the period for exercising those rights. If that person leaves upon the company's request or for any other reason
that the company believes to be appropriate, those rights and the period for exercising those rights shall remainunchanged.

64

(2) Stock Option Sizes and Changes
Information is given only for stock options that existed in this consolidated fiscal year. The number of stock options is givenin that of underlying shares.
(i) Number of Stock Options (Shares)

2006 Stock Options
Series 1
Stock subscription rights
Before rights become
effective (shares)
End of previous
consolidated term

Series 2
Stock subscription rights

Series 3
Stock subscription rights

−

−

−

Granted126,300

149,700

1,838,000

Expired

−−21,000Offered rights

−

−

−

126,300

149,700

1,817,000

End of previous
consolidated term

−

−

−

Offered rights

−

−

−

Exercised rights

−

−

−

Expired−−−

Unexercised

−

−

−

Unoffered
After offer (shares)(ii) Price Information

2006 Stock Options
Series 1
Stock subscription rights
Exercise price of option(Yen)
Average stock price when
exercised (Yen)Fair market price on grant
date (Yen)

Series 2
Stock subscription rights

Series 3
Stock subscription rights

1

1

1,754

−

−

−

1,550.90

1,550.90

219.0765

3. Method for Estimating Fair Market Price for Stock Options
The method for estimating a fair market price for 2006 stock options granted in this fiscal year is as follows.
(i) Valuation Formula … Black-Scholes Model(ii) Basic Figures and Estimation Method

2006 Stock Options
Series 1
Stock subscription rights
Stock price fluctuation(Note 1)
Estimated remaining life (Note2)
Estimated dividends (Note 3)
No-risk interest rate (Note 4)

Series 2
Stock subscription rights

Series 3
Stock subscription rights

24.17％

24.17％

24.17％

5.464 years

5.464 years

2.964 years

1.04％
1.424％

1.04％
1.424％

1.04％
0.959％(Notes)1. Stock price fluctuation is based on stock prices over the period from the company’s incorporation to the grant date (fromSeptember 29, 2005 to July 18, 2006).
2. The remaining life of the stock options could not be rationally estimated due to a lack of data stock. Estimated remaining
life is therefore based on the assumption that options would be exercised at the midpoint of the applicable period forexercising rights.
3. Estimated dividends were based on actual dividends over the period from the company’s incorporation to grant date(from September 29, 2005 to July 18, 2006).
4. The no-risk interest rate is the rate of yield on government bonds for the period corresponding to the estimated remaininglife.

4. Method for estimating the number of effective rights of stock options
Basically, it is difficult to rationally estimate the number of expired options at a future date. The number of previously
expired options was therefore used.

Concerning stock options, etc.
Fiscal Year to March 2007 (from April 1, 2007 to March 31, 2008)
1. Item and amount of stock option expenses in the consolidated fiscal year
Selling, general and administrative expenses: ¥954 million

2. Types, sizes and changes of stock options(1) Types of Stock Option
2006 Stock Options
Series 1
Stock subscription rights

Series 2
Stock subscription rights

Directors of the Company (8)Directors of subsidiaries (14)Common stock 126,300

Common stock 149,700

Common stock 1,838,000

July 18, 2006
(Note 2)

July 18, 2006
(Note 3)Required tenure

Not specified

Not specified

Applicable period forexercising rightsfrom July 10, 2009 to June 30,
2014

from July 10, 2009 to June 30,
2014

July 18, 2006
(Note 4)from July 18, 2006 to July 9,
2008from July 10, 2008 to June30, 2010

Position and number ofbeneficiaries
Type and number of stock
options (Note 1)
Grant dateConditions for exercising rights

66

Series 3
Stock subscription rights
Employees of the Company
and subsidiaries (603)2007 Stock Options
Series 4
Stock subscription rights

Series 2–1
Stock acquisition rights

Series 2–2
Stock acquisition rights

Position and number ofbeneficiaries

Employees of the Company andsubsidiaries (231)

Directors of the Company (6)Directors of subsidiaries (85)Type and number of shares(Note 1)

Common stock 583,000

Common stock 92,600

Common stock 268,100

Grant date

April 18, 2007

July 19, 2007

July 19, 2007

Conditions for exercising rights(Note 4)(Note 2)

(Note 3)Required tenurefrom April 18, 2007 to March 31,
2009

Not specified

Not specified

Applicable period for exercising from April 1, 2009 to June 30,
from July 10, 2010 to June 30, from July 10, 2010 to March 31,
rights
2010
2015
2015
(Notes)1. The number of stock options is given in that of shares.
2. After stock subscription rights are allocated, if the Company's stock price growth rate up to the start of the period forexercising those rights does not exceed the TOPIX (Tokyo Stock Price Index) growth rate, then those stock subscription
rights cannot be exercised. The Company's stock price growth rate shall be calculated as the average closing price forcommon shares of the Company on the Tokyo Stock Exchange on each of the days within the previous three months prior
to the month in which the starting date for the period for exercising the stock subscription rights falls (except if there is no
trading) divided by the average closing price for common shares of the Company on the Tokyo Stock Exchange on eachof the days within the previous three months prior to the month in which the allotment date falls (except if there is no
trading). The TOPIX growth rate is calculated in the same way as the Company’s stock price growth rate.
3. The annual target of business performance and evaluation period (3 years from the time of the issuance of rights to thetime it is possible to exercise those rights) shall be determined, with the sales and operating income, etc. of the strategic
business unit – to which persons to whom stock subscription rights were allotted (hereinafter referred to as “Stock
Subscription Rights Holder(s)”) belongs at the time of issuance of the stock subscription rights – used as the evaluationindex. The ratio of achievement of that target shall be measured for each fiscal year during that evaluation period. If theratio of achievement at the end of evaluation period is above 50% on average during the evaluation period, those rights
may be exercised.
However, even if the ratio of achievement is above 50% on average during the evaluation period, the number of sharesthat can be acquired by exercising those rights shall be based on a ratio equivalent to the average ratio of achievement(maximum of 100%).
4. (i) Stock Subscription Rights Holder(s) must be an employee of the Company or of its Group Companies at the timethose rights are exercised.
(ii) Regardless of the regulation in (i), if the Stock Subscription Rights Holder leaves the Company or its Group
companies due to his or her own personal reasons, that person may possess and exercise the corresponding rights only up
to 6 months from the time of leaving. However, he or she may not possess and exercise the corresponding rights beyond
the period for exercising those rights. If that person leaves upon the company's request or for any other reason that thecompany believes to be appropriate, those rights and the period for exercising those rights shall remain unchanged.

67

(2) Stock Option Sizes and Changes
Information is given only for stock options that were existed in this consolidated fiscal year. The number of stock options isgiven in that of underlying shares.
(i) Number of Stock Options (Shares)

2006 Stock Options
Series 1
Stock subscription rights
Before rights become effective(shares)
End of previous consolidated
term

Series 2
Stock subscription rights

Series 3
Stock subscription rights

126,300

149,700

1,817,000

Granted−−−Expired

−−12,000Offered rights

−

−

−

126,300

149,700

1,805,000

End of previous consolidated
term

−

−

−

Offered rights

−

−

−

Exercised rights

−

−

−

Expired−−−

Unexercised

−

−

−

Unoffered
After offer (shares)

2007 Stock Options
Series 4
Stock subscription rights
Before rights become
effective (shares)
End of previous
consolidated term
GrantedExpiredOffered rights
Unoffered
After offer (shares)
End of previous
consolidated term
Offered rights
Exercised rights
Expired
Unexercised

Series 2–1
Stock acquisition rights

Series 2–2
Stock acquisition rights

−

−

−

583,000
4,000−
579,000

92,600−−92,600268,100
3,400−
264,700

−

−

−

−
−
−
−

−
−
−
−

−
−
−
−

68

(ii) Price Information

2006 Stock Options
Series 1
Stock subscription rights

Series 2
Stock subscription rights

Series 3
Stock subscription rights

Exercise price of option (Yen)

1

1

1,754

Average stock price when
exercised (Yen)Fair market price on grant
date (Yen)

−

−

−

1,550.90

1,550.90

219.072007 Stock Options

Exercise price of option (Yen)
Average stock price when
exercised (Yen)Fair market price on grant
date (Yen)

Series 4
Stock subscription rights
1,895

Series 2–1
Stock acquisition rights

Series 2–2
Stock acquisition rights
1

1

−

−

−

279.13

1,893.38

1,893.38

69

3. Method for Estimating Fair Market Price for Stock Options
The method for estimating a fair market price for 2006 Stock Options granted in the previous consolidated fiscal year and2007 Stock Options granted in this consolidated fiscal year is as follows.
(i) Valuation Formula … Black-Scholes Model(ii) Basic figures and Estimation Method

2006 Stock Options
Series 1
Stock subscription rights
Stock price fluctuation(Note 1)
Estimated remaining life (Note2)
Estimated dividends (Note 3)
No-risk interest rate (Note 4)

Series 2
Stock subscription rights

Series 3
Stock subscription rights

24.17％

24.17％

24.17％

5.464 years

5.464 years

2.964 years

1.04％
1.424％

1.04％
1.424％

1.04％
0.959％

2007 Stock Options
Series 4
Stock subscription rights
Stock price fluctuation(Note 1)
Estimated remaining life (Note2)
Estimated dividends (Note 3)
No-risk interest rate (Note 4)

Series 2–1
Stock acquisition rights

Series 2–2
Stock acquisition rights

23.85％

23.20％

23.20％

2.576 years

5.461 years

5.461 years

1.50％
0.9387％1.27％
1.551％

1.27％
1.551％(Notes)1. Stock price fluctuation is based on stock prices over the period from the company’s incorporation to the grant date (*).
2. The remaining life of the stock options could not be rationally estimated due to a lack of data stock. Estimated remaining
life is therefore based on the assumption that options would be exercised at the midpoint of the applicable period forexercising rights.
3. Estimated dividends were based on actual dividends over the period from the company’s incorporation to grant date (*).
4. The no-risk interest rate is the rate of yield on government bonds for the period corresponding to the estimated remaininglife.
(*) Series 1 Stock subscription rights: from September 29, 2005, to July 18, 2006
Series 2 Stock subscription rights: from September 29, 2005, to July 18, 2006
Series 3 Stock subscription rights: from September 29, 2005, to July 18, 2006
Series 4 Stock subscription rights: from September 29, 2005, to April 18, 2007
Series 2-1 Stock subscription rights: from 29 September, 2005, to 19 July, 2007
Series 2-2 Stock subscription rights: from 29 September, 2005, to 19 July, 2007

4. Method for estimating the number of effective rights of stock options
Basically, it is difficult to rationally estimate the number of expired options at a future date. The number of previously
expired options was therefore used.

70

Tax effect accounting(millions of yen)
Prior fiscal year

Current fiscal year

(April 1, 2006 ~ March 31, 2007)(April 1, 2007 ~ March 31, 2008)

1. Significant components of deferred tax assets and liabilities

1. Significant components of deferred tax assets and liabilities

Deferred tax assets:

Deferred tax assets:

Excess depreciation on fixed assets

4,588

Excess depreciation on fixed assets

4,830

Losses carried forward

3,387

Losses carried forward

2,983

Loss on impairment of fixed assets

1,889

Accrued employee bonuses

1,743

Inventory valuation loss

1,626

Loss on impairment of fixed assets

1,536

Accrued employee bonuses

1,348

Inventory valuation loss

1,253

Valuation loss on advance money

1,269

Valuation loss on advance money

924

Accrued enterprise taxes etc.

1,066

Excess allowance for doubtful accounts

906

Employee retirement and severance benefits824

Accrued enterprise taxes etc.

801

Research and development expenses

442

Research and development expenses

614

Excess allowance for doubtful accounts

321

Employee retirement and severance benefits

580

Other
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets

5,058
21,822(10,520)
11,302

Deferred tax liabilities:

Other
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets

21,913(8,870)13,043

Deferred tax liabilities:

Retained earnings of foreign consolidated

Retained earnings of foreign consolidated(3,652)subsidiaries
Other securities valuation difference

5,740(4,177)

subsidiaries(3,324)

Other securities valuation difference(1,294)

Deduction for inventories(867)

Reserve for deferred income tax on fixed assets(134)

Reserve for deferred income tax on fixed assets

(147)

Other

(75)

Other

(105)

Total deferred tax liabilities(8,096)

Net deferred tax assets

3,205

71

Total deferred tax liabilities(5,682)

Net deferred tax assets

7,360

Prior fiscal year

Current fiscal year

(April 1, 2006 ~ March 31, 2007)(April 1, 2007 ~ March 31, 2008)

Net deferred tax assets are reported on the consolidated balance

Net deferred tax assets are reported on the consolidated

sheet as:balance sheet as:

Current assets — Deferred tax assets

5,717

Current assets — Deferred tax assets

5,908

Fixed assets — Deferred tax assets

4,141

Fixed assets — Deferred tax assets

6,290

Current liabilities — Other (deferred tax liabilities)

1,458

Current liabilities — Other

Long-term liabilities — Deferred tax liabilities

5,194(deferred tax liabilities)

599

Long-term liabilities — Deferred tax liabilities

4,239

In addition to the above, deferred tax assets and liabilities due

In addition to the above, deferred tax assets and liabilities

to land revaluation recorded as “deferred

due to land revaluation recorded as “deferred

tax liabilities – land revaluation” are as follows:

tax liabilities – land revaluation” are as follows:

Deferred tax assets due to land revaluation

9,185

Deferred tax assets due to land revaluation

3,035

Valuation allowance(8,993)

Valuation allowance(2,843)

Total deferred tax assets

192

Total deferred tax assets

192

Deferred tax liabilities due to land revaluation(783)

Deferred tax liabilities due to land revaluation(684)

Total deferred tax liabilities(591)

Total deferred tax liabilities(492)

2. Principle reasons for significant differences between normal

2. Principle reasons for significant differences between

effective statutory tax rate and the effective

normal effective statutory tax rate and the effective

tax rate after application of tax effect accounting:tax rate after application of tax effect accounting:

Effective statutory tax rate

40.6％

(Adjustments)

Effective statutory tax rate

40.6％

(Adjustments)

Increase in valuation allowance related to deferredAmortization of goodwill

1.9

1.6

tax assets

Permanent nondeductible expense such as
0.8

Amortization of goodwill

1.7

Permanent nondeductible expense such asentertainment expense
Inhabitants tax lump-sum payments

0.6

Directors’ bonuses

0.5

1.0

entertainment expense
Inhabitants tax lump-sum payments

0.6

Increase in valuation allowance related to deferred(14.1)

Reversal of deferred tax liabilities for retained

tax assets(5.1)

income of foreign subsidiaries
Other

(0.2)

Actual effective tax rate after application of tax
40.2

effect accounting

Tax deductible testing and research expenses(1.3)

Tax rate differential of foreign subsidiaries

(0.9)

Other

(0.6)

Actual effective tax rate after application of tax
27.5

effect accounting72

Segment Informationa. By Business Segment(¥ million)

Prior fiscal year (April 1, 2006 to March 31, 2007)
Toys &
Hobby
Business

Amusement
Facility
Business

Game
Contents
Business

NetworkBusiness

Visual &Music
Content
Business

179,473

87,862

127,389

12,081

41,954

6,112

333

11,798407

185,586

88,196

139,187

168,183

84,192

17,403Eliminations
andCorporate

Consolidated

10,369 459,132―

459,132

1,051

10,530 30,234(30,234)―

12,48943,006

20,900 489,366(30,234)

459,132

127,677

11,60833,50919,882 445,054(28,145)416,908

4,004

11,509880

9,496

1,017 44,312(2,088)42,224

151,547

65,144

119,102

11,191

42,26823,571 412,824(4,334)408,490

Depreciation andamortization

8,054

8,706

4,422

173

663

1,639 23,660(158)

23,501

Impairment loss

486

3,752

670

―

―

(47)

5,069

AffiliatedBusiness

Total(i) Net sales andoperating income
Net sales(1) To externalcustomers(2) Inter-segment
sales and transfers
Total
Operatingexpenses
Operatingincome(ii) Assets,
depreciation andamortization,
impairment loss,
and capital
expenditure
Assets208

5,116

Capital
9,062
10,678
4,220
156
1,436
2,368 27,924―
expenditureNote1: 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
LIMITED on 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 senior citizens 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 “Affiliated Business" 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.

73

27,924(¥ million)

Prior fiscal year (April 1, 2005 to March 31, 2006)
Toys &
Hobby
Business

Amusement
Facility
Business

Game
Contents
Business

NetworkBusiness

Visual &AffiliatedMusic
Content BusinessBusiness

Total

Eliminations
andCorporate

Consolidated(i) Net sales andoperating income
Net sales(1)To externalcustomers

176,474

80,769128,448

12,19642,27910,661 450,829―

450,829

4,533

525

2,326

324

1,048

10,142

18,901(18,901)―

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

19,616 429,838(14,678)

415,160

Operating income

19,085

1,888

9,707

1,835

6,187

1,187

39,892(4,222)35,669136,692

60,180113,799

10,57836,927

20,742 378,921

7,729

386,651

Depreciation andamortization

5,055

9,292

2,240

151

527

1,184

18,450693

19,144

Impairment loss

825

―

556

1,619

―

―

3,001

―

3,001

Capital expenditure

8,456

11,168

1,458

252

1,594

510

23,441

578

24,020(2)Inter-segment
sales and transfers(ii) Assets,
depreciation andamortization,
impairment loss,
and capital
expenditure
Assets

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
Amusement facility operations, and other operations
Business:(3)
Game Contents Business: Software for home videogames, coin-operated game machines, prizes for coin-operated game machines
and other products(4)
Network Business:
Mobile content and other services(5)

Visual and Music Content
Business:(6)

Other Business:

Video titles, visual software, on-demand video distribution and other products and services
Transportation and warehousing of products, leasing, real estate management, printing, development
and sale of environmental equipment and other activities74

3. Operating expenses include an unallocatable amount of ¥2,538 million under eliminations and corporate. This figure
primarily consists of expenses related to management divisions the Company and NAMCO BANDAI Holdings (USA) Inc.
4. Assets include 34,674 million yen in corporate assets included in eliminations and corporate. This figure primarily consistsof surplus working capital (cash and deposits), long-term investments (investment securities), and assets, etc. related to
management divisions.
5. Depreciation includes goodwill amortization. Extraordinary depreciation on fixed assets is not included.
6. Changes in accounting policy
As set out in “Important Information Constituting the Basis for Preparation of Interim Consolidated Financial Statements” 4.
(3) (ii), 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 AccountingStandard for Stock Options (Corporate Accounting Standard Application Guideline No. 11, May 31, 2006) apply from thecurrent interim consolidated accounting period.
These changes had the following effect on Operating Income for each segment.
Visual ＆Game
Amusement
Toys &
Music
Network
Contents
Facility
Hobby
Business Content
Business
Business
Business
Business
Directors’ bonus
(176)
(48)
(99)
―
(162)
Stock options
(100)
(31)
(99)
―
―
Operating income
(276)
(80)
(199)
―
(162)
(loss)

Other
Business

Total

Eliminations
andCorporate

Consolidated

(61)
―

(547)
(232)

(110)
(345)

(657)
(577)

(61)

(779)

(455)

(1,235)

7. Additional information
In prior years, Data Carddass hardware and software were depreciated based on a useful life of 5 years, in fiscal year 2007, theuseful life for hardware and software was changed to 3 years and 1 year, respectively.
The change in accounting estimate caused depreciation and operating loss to increase by 560 million yen and operating income
decreased by the same corresponding amount in Toys and Hobby Business segment.

75

Current fiscal year (April 1, 2007 ~ March 31, 2008)(¥ million)
Amusement
Facility
Business

Game
Contents
Business

NetworkBusiness

Visual &Music
Content
Business

175,991

89,430137,946

11,68736,019

4,172

399

7,725

356

930

Total

180,164

89,829145,672

12,044

Operatingexpenses

165,855

88,198130,878

Operating income

14,3091,631

160,334

Depreciation andamortization
Impairment loss

Toys &
Hobby
Business

AffiliatedBusiness

Total

Eliminations
Consolidated
and Corporate(i) Net sales andoperating income
Net sales(1) To externalcustomers(2)Inter-segment
sales and transfers

9,397 460,473―

460,473

23,997(23,997)―

36,94919,809 484,471(23,997)

460,473

11,13933,117

19,056 448,246(21,184)

427,062

14,793904

3,832

36,224(2,813)33,411

62,034

118,785

11,752

52,897

20,534 426,339(13,316)

413,023

9,128

11,312

4,643

223

1,351

1,665

28,325(561)

27,763

940

3,289

17

―

―

―

4,247

―

4,247

10,412753(ii) Assets,
depreciation andamortization,
impairment loss,
and capital
expenditure
AssetsCapital
9,225
9,827
3,439
1,043
10,079484 34,101
14
34,115expenditureNotes: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
Toys, candy toys, products for vending machines, cards, plastic models, apparel, sundries, stationery
Business:and other products(2)
Amusement Facility
Amusement facility operations, and other operations
Business:(3)
Game Contents Business: Software for home videogames, coin-operated game machines, prizes for coin-operated game machines
and other products(4)
Network Business:
Mobile content and other services(5)
Visual and Music
Video titles, visual software, on-demand video distribution and other products and services
Content Business:(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 ¥3,253 million under eliminations and corporate. This figure
primarily consists of expenses related to management divisions the Company and NAMCO BANDAI Holdings (USA) Inc.
4. Assets include 26,151 million yen in corporate assets included in eliminations and corporate. This figure primarily consistsof surplus working capital (cash and deposits), long-term investments (investment securities), and assets, etc. related to
management divisions.
5. Depreciation includes goodwill amortization.
6. Changes in accounting policy
Beginning with the period under review, as set forth in Item 4. (2) (i) of the “Important Matters Concerning the Basis ofPreparation of Consolidated Financial Statements,” the Company and some of its domestic consolidated subsidiaries have in76

accordance with the revision of the Corporation Tax Law changed their depreciation method with respect to assets acquiredon or after April 1, 2007.
These changes had the following effect on Operating Income for each segment.
Toys &
Hobby
Business
Operating income(loss)(681)

Amusement
Facility
Business(3)

Game
Contents
Business

NetworkBusiness(175)

Visual ＆
Other
Music
Content BusinessBusiness

(13)

(105)

(9)

Total

(988)

Eliminations
and Corporate

Consolidated

―

(988)

7. Additional information
Beginning with the period under review, as set forth in Item 4. (2) (i) of the “Important Matters Concerning the Basis ofPreparation of Consolidated Financial Statements,” in respect of the property, plant and equipment acquired prior to March
31, 2007, are depreciating the amount of difference between the memorandum value and an amount equivalent to 5% of theacquisition cost of the assets using the straight-line method over a period of 5 years, from the consolidated fiscal year
following the consolidated fiscal year when the book value of the assets was depreciated to the amount equivalent to 5% of
the acquisition cost based on the Corporation Tax Law prior to revision.
These changes had the following effect on Operating Income for each segment.
Toys &
Hobby
Business
Operating income(loss)(160)

Amusement
Facility
Business―

Game
Contents
Business

NetworkBusiness

(20)

77

(3)

Visual ＆
Other
Music
Content BusinessBusiness
―

(2)

Total

(186)

Eliminations
and Corporate―

Consolidated(186)

b. By Geographic Segment

Prior fiscal year (April 1, 2006 ~ March 31, 2007)(¥ million)
Japan

Americas

Europe

Asia

Total

Eliminations
and Corporate

Consolidated(i) Net sales and operating
incomeNet sales
1) To external customers

356,248

52,31537,76312,805459,132―

459,132

2) Inter-segment sales andtransfers

11,1991,673―

24,25537,129(37,129)―

Total

367,447

53,98937,76337,060496,261(37,129)

459,132

Operating expenses

334,320

50,61232,51034,330451,773(34,865)

416,908

Operating income

33,127

3,376

5,253

2,730

44,487(2,263)42,224(ii) Assets

310,465

37,36945,763

21,239414,837(6,347)

408,490

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(i)
Americas:
U.S.A. and Canada(ii)
Europe:France, U.K. and Spain(iii) Asia:
Hong Kong, Thailand and South Korea
2. Operating expenses include an unallocatable amount of ¥2,538 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. Assets include 34,674 million yen in corporate assets included in eliminations and corporate. This figure primarily
consists of surplus working capital (cash and deposits), long-term investments (investment securities), and assets,etc. related to management divisions.
4. Change in accounting policy
As set out in “Important Information Constituting the Basis for Preparation of Interim Consolidated Financial
Statements” 4. (3) (ii), 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 theApplication 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.
Japan
Directors’ bonus
Stock options
Operating income (loss)

(547)
(232)
(779)

Americas

Europe

―
―
―

Asia
―
―
―

―
―
―

(¥ million)
Eliminations
Consolidated
Total
and Corporate
(547)
(110)
(657)
(232)
(345)
(577)
(779)
(455)
(1,235)

5. Additional information
In prior years, Data Carddass hardware and software were depreciated based on a useful life of 5 years, in fiscal
year 2007, the useful life for hardware and software was changed to 3 years and 1 year, respectively.

78

The change in accounting estimate caused operating loss to increase by 560 million yen and operating income
decreased by the same corresponding amount in Japan geographic segment.

Current fiscal year (April 1, 2007 ~ March 31, 2008)(¥ million)
Japan

Americas

Europe

Asia

Total

Eliminations
and Corporate

Consolidated(i) Net sales and operating
incomeNet sales
1) To external customers

346,736

52,623

46,387

14,726

460,473−

460,473

2) Inter-segment sales andtransfers

13,9611,943

923,206

39,119(39,119)−

Total

360,697

54,566

46,39737,932499,593(39,119)

460,473

Operating expenses

336,217

52,24739,56735,077463,109(36,047)

427,062

Operating income

24,480

2,318

6,830

2,854

36,483(3,072)33,411(ii) Assets

321,489

35,61948,86423,938429,912(16,889)

413,023

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(i)
Americas:
U.S.A. and Canada(ii)
Europe:France, U.K. and Spain
(iii)
Asia:
Hong Kong, Thailand and South Korea
2. Operating expenses include an unallocatable amount of ¥3,253 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. Assets include 26,151 million yen in corporate assets included in eliminations and corporate. This figure primarily
consists of surplus working capital (cash and deposits), long-term investments (investment securities), and assets,etc. related to management divisions.
4. Change in accounting policy
Beginning with the period under review, as set forth in Item 4. (2) (i) of the “Important Matters Concerning theBasis of Preparation of Consolidated Financial Statements”, the Company and some of its domestic consolidated
subsidiaries have in accordance with the revision of the Corporation Tax Law changed their depreciation methodwith respect to assets acquired on or after April 1, 2007.
As a result of this change, consolidated operating expenses in Japan in the term under review increased ¥988
million while operating income decreased by the same amount.
5. Additional information
Beginning with the period under review, as set forth in Item 4. (2) (i) of the “Important Matters Concerning theBasis of Preparation of Consolidated Financial Statements”, in respect of the property, plant and equipment
acquired prior to March 31, 2007, are depreciating the amount of difference between the memorandum value andan amount equivalent to 5% of the acquisition cost of the assets using the straight-line method over a period of 5
years, from the consolidated fiscal year following the consolidated fiscal year when the book value of the assets
was depreciated to the amount equivalent to 5% of the acquisition cost based on the Corporation Tax Law prior torevision.
As a result of this change, consolidated operating expenses in Japan in the term under review increased ¥186 million
while operating income decreased by the same amount.

79

c. Overseas Sales

Prior fiscal year (April 1, 2006 ~ March 31, 2007)
Americas
I. Overseas sales (¥ million)
II. Consolidated sales (¥ million)
III. Overseas sales as a ratio of consolidated sales (%)

Europe

Asia

Total

53,71941,267

17,813

−

−

−

11.7

9.0

3.9

112,799
459,132
24.6

Notes:
1. Overseas sales represent the total of sales generated in countries and regions other than Japan by the Company andits 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)EuropeFrance, U.K., Spain, the Middle East, and Africa
(ii)
Asia
Hong Kong, Singapore, Thailand, South Korea, Australia, China and Taiwan

Current fiscal year (April 1, 2007 ~ March 31, 2008)
Americas
I. Overseas sales (¥ million)
II. Consolidated sales (¥ million)
III. Overseas sales as a ratio of consolidated sales (%)

Europe

Asia

Total

54,83547,855

20,232

−

−

−

11.9

10.4

4.4

122,923
460,473

Notes:
1. Overseas sales represent the total of sales generated in countries and regions other than Japan by the Company andits 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)EuropeFrance, U.K., Spain, the Middle East, and Africa
(iii)
Asia
Hong Kong, Singapore, Thailand, South Korea, Australia, China and Taiwan

Related Party Transactions
Prior fiscal year (April 1, 2006 ~ March 31, 2007)
None
Current fiscal year (April 1, 2007 ~ March 31, 2008)
None

80

26.7

Business Integration, etc.
Prior fiscal year (April 1, 2006 to March 31, 2007)
Transactions under common control, etc.
I. Company Restructuring in North America
1. Names and Business Content of Restructured Companies, Legal Form of Combination and Divestiture andOverview of Business and Business Objectives(1) Overview of Business and Business Objectives
Overview of Business and Business Objectives With the objective of maximizing group value in North America,
North American subsidiaries were restructured from January 2 to 4, 2006. As a result, the North American holding
company NAMCO BANDAI Holdings (USA) Inc. controls the five companies listed as [ii] to [vi] in (2) below aswell as the business company of NAMCO CYBERTAINMENT INC. operating amusement facilities, and is now
structured to promote strategies for the North American region.
(2) Names and Business Content of Restructured Companies(i) NAMCO BANDAI Holdings (USA) Inc.
Management administration, instruction and supporting of businesscompanies in North America region Promotion of North America
region(ii) BANDAI AMERICA INC.
Sales of toys(iii) NAMCO BANDAI Games America Inc.
Development and sales of home videogame software(iv) NAMCO AMERICA INC.
Sales of coin-operated game machines(v) NAMCO NETWORKS AMERICA INC.
Development and distribution of Mobile content(vi) BANDAI ENTERTAINMENT INC.
Planning, production, sales and copyrights(vii) BANDAI GAMES INC.
Development and sales of home videogame software(3) Legal Form of Combination and Divestiture
Legal Form of Combination and Divestiture Transaction in form of combination or divestiture in the
aforementioned restructuring are as follows.
(i) The Company made an in-kind investment of BANDAI AMERICA INC. in NAMCO BANDAI Holdings (USA)Inc.
(ii) BANDAI AMERICA INC. transferred shares of BANDAI GAMES INC. and BANDAI ENTERTAINMENT
INC. to NAMCO BANDAI Holdings (USA) Inc.
(iii) To spin off the mobile content business of the former NAMCO AMERICA INC., which sold coin-operated
machines and developed and distributed mobile content, the former NAMCO AMERICA INC. merged with
NAMCO BANDAI Holdings (USA) Inc. and remaining business was transferred to the new NAMCO AMERICA
INC. and NAMCO NETWORKS AMERICA INC.
(iv) BANDAI GAMES INC. merged with NAMCO HOMETEK INC. (newly created after the merger) and was
renamed NAMCO BANDAI Games America Inc.
2. Overview of Accounting
Accounting process of consolidated financial statements was handled in accordance with the provision in (1)“Business Transaction of Commonly Controlled Entities”, Paragraph 4 “Accounting Process for Commonly
Controlled Entities” in Article 3 of “Accounting Standards for Business Combinations”.
II. Making Banpresto Co., Ltd. a wholly owned subsidiary
1. Names and Business Content of Restructured Companies, Legal Form of Combination and Divestiture andOverview of Business and Business Objectives(1) Names and Business Content of Restructured Companies(i) Integrating Company (Parent company after share exchange)
Name
NAMCO BANDAI Holdings Inc. (the “Company”)
Business content
Planning and implementation of management strategy and business management andinstruction of the Group companies(ii) Integrated Company (Wholly owned subsidiary after share exchange)
Name
Banpresto Co., Ltd.
Business content
Planning, development and sales of amusement machines and prizes etc.

81(2) Legal form of Business Combination
In the share exchange, the Company is a parent company and Banpresto Co., Ltd. is a wholly owned subsidiary. In
accordance with Article 358, Paragraph 1 of the former Commercial Code for the Company and in accordance with
Article 12-4, Paragraph 2 of the Industrial Revitalization Law for Banpresto, Co., Ltd. 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.
(3) Transaction guideline including transaction objective
The share exchange was undertaken for the purpose of creating an organization that responds flexibly to theGroup’s management strategy through making Banpresto Co., Ltd. a wholly owned subsidiary. In accordance withthe share exchange agreement concluded on March 29, 2006, the Company paid ¥3,450 for each Banpresto Co.,
Ltd. Stock owned by the remaining shareholders of Banpresto Co., Ltd., who have entered or otherwise recorded
their shares in the shareholders’ 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.
2. Overview of Accounting
Accounting process of the non-consolidated financial statements and consolidated financial statements was handledin accordance with the provision in “(2) Business with Minor Shareholders” in “Accounting for Commonly
Controlled Business” of Article 3, Paragraph 4 of “the Accounting Standards for Business Combinations”.
3. Additional Acquisitions of Subsidiary Companies’ Shares(1) Acquisition Cost and its Breakdown
Price of Acquisition
Cash and deposits¥1,060 million
Amount required directly for acquisition¥50 million
Acquisition cost
¥1,110 million(2) Amount, Source, Method and Period of Depreciation of Goodwill Incurred(i) Amount of Goodwill:¥555 million(ii) Source
The difference between the cost of additional acquiring shares of Banpresto CO., LTD. and the decreased
amount of minor shareholders’ holdings was handled as goodwill.
Straight-line method,(iii) Method and Period of Depreciation:
5 years82

Current fiscal year (April 1, 2007 ~ March 31, 2008)
Transactions conducted by commonly controlled entities, etc.
I. Making Bandai Visual Co., Ltd. a wholly owned subsidiary
1. Names and Business Content of Restructured Companies, Legal Form of Business Combination and Overview ofTransaction including Transaction Objectives.
(1) Names and Business Content of Restructured Companies, Legal Form of Business Combination and Overview ofTransaction including Transaction Objectives.
(i) Integrating Company (Parent company after share exchange)
Name
NAMCO BANDAI Holdings Inc. (the “Company”)
Business content
Planning and implementation of management strategy and business management
and instruction of the Group companies(ii) Integrated Company (Wholly owned subsidiary after share exchange)
Name
Bandai Visual Co., Ltd.
Business content
Planning, production, and sales of visual and music contents(2) Legal form of Business Combination
A summary share exchange was conducted for the Company as stipulated in Article 796, Paragraph 3 of theCompanies Act, and a simplified share exchange was conducted for Bandai Visual, Co., Ltd. (Bandai Visual) as
stipulated in Article 784, Paragraph 1 of the Companies Act.
(3) Overview of Transaction including Transaction Objective
The Company, with the goal of making Bandai Visual a wholly owned subsidiary, commenced a tender offer for
Bandai Visual shares during the period from November 9, 2007 to December 10, 2007. Consequently, as ofDecember 17, 2007, the Company acquired 134,824 shares of Bandai Visual, 93.63% of Bandai Visual’s
outstanding shares. The Company and Bandai Visual judged that making Bandai Visual a wholly owned subsidiarywould promote (i) optimal efficiency in decision making under the Group’s medium to long-term management
strategy, (ii) business expansion by way of the effective use of comprehensive capabilities through Group synergies,and (iii) maximization of the value of the Group companies. Thus, as of December 17, 2007, both parties enteredinto a share exchange agreement to make Bandai Visual a wholly owned subsidiary of the Company (“the shareexchange agreement”), and on February 21, 2008, the share exchange became effective, and Bandai Visual became
a wholly owned subsidiary of the Company.
2. Overview of Accounting Process
The accounting process for the non-consolidated financial statements and consolidated financial statements washandled in accordance with the provision of “Accounting for transactions conducted by commonly controlled
entities, etc.” of Article 3, Paragraph 4 of “the Accounting Standards for Business Combinations”.
3. Additional Acquisitions of Subsidiary Companies’ Shares(1) Acquisition Cost Detail
The acquisition cost was ¥1,866 million, which was paid solely from treasury stock.
(2) Type of Shares
Common Shares(3) The Share Exchange Ratio, Basis of Calculation, Number of Shares Delivered, and their Valuation Amount(i) Share Exchange Ratio
156 shares in the Company were delivered for one (1) share in Bandai Visual.
(ii) Basis of Calculation
To arrive at the above share exchange ratio, the market value method was used for the Company’s shares; thediscounted cash flow method, market value method, and comparable companies method were used for Bandai
Visual’s shares; and upon prudent consideration of the results of the evaluation so calculated and mutual
deliberation, both parties agreed to the share exchange ratio stated above.
The Company and Bandai Visual chose, as the third-party advisor for each. Daiwa Securities SMBC Co. Ltd. andNomura Securities Co., Ltd., respectively.
(iii) Number of Shares Delivered and Valuation Amount
Number of shares
1,431,456 shares
Valuation amount¥1,866 million83

(4) Amount, Source, Method and Period of Depreciation of Goodwill Incurred(i) Amount of Goodwill: ¥1,064 million(ii) Source
The difference between the cost of acquiring additional shares of Bandai Visual and the decreased amount of minor
shareholders’ holdings was handled as goodwill.
(iii) Method and Period of Depreciation: Straight-line method, 5 years
II. Making Bandai Networks Co., Ltd. a wholly owned subsidiary
1. Names and Business Content of Restructured Companies, Legal Form of Business Combination and Overview ofTransaction including Transaction Objectives(1) Names and Business Content of Restructured Companies(i) Integrating Company (Parent company after share exchange)
Name
NAMCO BANDAI Holdings Inc. (the “Company”)
Business content
Planning and implementation of management strategy and business management andinstruction of the Group companies(ii) Integrated Company (Wholly owned subsidiary after share exchange)
Name
Bandai Networks Co., Ltd.
Business content
Distributing content for mobile phones, website development, and mail-order sales, etc..
(2) Legal form of Business Combination
A summary share exchange was conducted for the Company as stipulated in Article 796, Paragraph 3 of theCompanies Act, and a simplified share exchange was conducted for Bandai Networks, Co., Ltd. (Bandai Networks)
as stipulated in Article 784, Paragraph 1 of the Companies Act.
(3) Overview of Transaction Including Transaction Objective
The Company, with the goal of making Bandai Networks a wholly owned subsidiary, commenced a tender offer for
Bandai Networks shares during the period from November 9, 2007 to December 10, 2007. Consequently, as ofDecember 17, 2007, the Company acquired 177,951 shares in Bandai Networks, 92.00% of Bandai Networks’
outstanding shares. The Company and Bandai Networks judged that making Bandai Networks a wholly owned
subsidiary would promote (i) optimal efficiency in decision making under the Group’s medium to long-term
management strategy, (ii) business expansion by way of the effective use of comprehensive capabilities throughGroup synergies, and (iii) maximization of the value of the Group companies. Thus, as of December 17, 2007, bothparties entered into a share exchange agreement to make Bandai Networks a wholly owned subsidiary of theCompany (“the share exchange agreement” ), and on February 21, 2008, the share exchange became effective, andBandai Networks became a wholly owned subsidiary of the Company.
2. Overview of Accounting Process
The accounting process for the non-consolidated financial statements and consolidated financial statements washandled in accordance with the provision of “Accounting for transactions conducted by commonly controlled
entities, etc.” of Article 3, Paragraph 4 of “the Accounting Standards for Business Combinations”.

84

3. Additional Acquisitions of Subsidiary Companies’ Shares(1) Acquisition Cost Detail
The share exchange ratio, basis of calculation, number of shares exchanged, and their valuation
The acquisition cost was ¥666 million, which was paid solely from treasury stock.
(2) Type of Share
Common Shares(3) The Share Exchange Ratio, Basis of Calculation, Number of Shares Delivered, and their Valuation Amount(i) Stock Exchange ratio
33 shares in the Company were delivered for one (1) share in Bandai Networks.
(ii) Basis of Calculation
To arrive at the above share exchange ratio, the market value method was used for the Company’s shares; thediscounted cash flow method, market value method, and comparable companies method were used for Bandai
Networks’ shares; and upon prudent consideration of the results of the evaluation so calculated and mutual
deliberation, both parties agreed to the share exchange ratio stated above.
The Company and Bandai Networks chose, as the third-party advisor for each, Daiwa Securities SMBC Co. Ltd.
and PwC Advisory Co., Ltd., respectively.
(iii) Number of Shares and Valuation Amount
Number of shares
510,972 shares
Valuation Amount¥666 million(4) Amount, Source, Method and Period of Depreciation of Goodwill Incurred(i) Amount of Goodwill:¥39 million(ii) Source
The difference between the cost of acquiring additional shares of Bandai Networks and the decreased amount ofminor shareholders’ holdings was handled as goodwill.
(iii) Method and Period of Depreciation: Straight-line method, 5 years

85Per share data
Prior fiscal year
(April 1, 2006 to March 31, 2007)

Current fiscal year
(April 1, 2007 to March 31, 2008)

Net asset per share¥1,063.29

Net asset per share¥1,127.72

Net income per share¥95.73

Net income per share¥128.65

Diluted net income per share¥95.67

Diluted net income per share¥128.47

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
(April 1, 2006 to March 31, 2007)
Net income per share
Net income (¥ million)
Amount not applicable to common
stockholders (¥ million)
Net income available to common
stock(¥ million)
Average number of common stock
outstanding
Diluted net income per share
Net income adjustment (¥ million)
Increase in number of common
stock[Stock subscription rights]
Summary of potential shares notincluded in the calculation of diluted
net income per share as they do
not have a diluting effect.

Current fiscal year
(April 1, 2007 to March 31, 2008)

24,252

32,67924,252

32,679253,331,026

254,024,711

182,608

341,026(182,608)(Affiliate)
Bandai Networks Co., Ltd.
Stock options agreed at the annual
general meeting of shareholders on
June 23, 2004 (245 stock
subscription rights)
1,225 common stock(341,026)(the “Company”):
Pursuant to resolution of the ordinary general
meeting of shareholders of June 26, 2006, proposal
No. 9: series 3 stock acquisition rights for
1,805,000 shares;
Pursuant to resolution of the ordinary general
meeting of shareholders of June 26, 2006, proposal
No. 9: series 4 stock acquisition rights for 579,000
shares of common stock; pursuant to resolution of
the ordinary general meeting of shareholders ofJune 25, 2007, proposal No. 3: series 2 - 1 stockacquisition rights for 92,600 shares of common
stock(Affiliate)
Bandai Networks Co., Ltd.
Stock options agreed at the annual general meetingof shareholders on June 23, 2004 (245 stock
subscription rights)
1,225 common stock86

Significant Subsequent Events
Prior consolidated fiscal year
(April 1, 2006 to March 31, 2007)

Current consolidated fiscal year
(April 1, 2007 to March 31, 2008)

1. At the Board of Directors’ Meeting of April 18, 2007, theCompany decided to acquire treasury stocks as follows, based on
Article 156 of the Corporation Law and Article 165, Paragraph 3of the same Law.
(1) Reasons for the acquisition
The acquisition occurred with a view to making effective use ofgroup assets and implementing flexible asset policies in responseto changes in the management environment.
(2) Type of share to be acquired:
Common stock of the Company(3) Total number of shares to be acquired: 5,000,000 shares(maximum)(4) Total amount of share to be acquired:¥10,000 million (maximum)(5) Acquisition method
Acquisition occurred through open market purchases on theTokyo Stock Exchange.
(6) Period of acquisition: From May 10, 2007 to September 30,
2007
The Company purchased 4,980,000 shares at a cost of ¥9,960
million in the time until June 12, 2007, on which date theCompany terminated purchasing.
2. Cancellation of treasury stock
In accordance with a resolution by the board of directors meetingon June 20, 2007, the Company resolved to cancel treasury stocks
pursuant to Article 178 of the Company Law, which cancellation
was implemented as follows.

(Transactions conducted by commonly controlled entities, etc.)
Organizational Restructuring of the Domestic Group
1. Overview of Transaction Including Transaction Objectives,
Names and Business Content of Restructured Companies, andLegal Form of Business Combination and Split of Operations.
(1) Overview of Transaction including Transaction Objectives
An organizational restructuring of the Group companies in Japanwas carried out as of April 1, 2008, to maximize the value of theGroup companies.
a. Transfer of Game Operations from Banpresto Co., Ltd., andMerger
The game operations of Banpresto Co., Ltd., which planned anddeveloped home video game software and coin-operated gamemachines, was transferred and consolidated into BANDAI
NAMCO Games, Inc., which integrates the Group game
operations; Pleasure Cast Co., Ltd., and Hanayashiki Co., Ltd.,subsidiaries of Banpresto engaged in operating amusement
facilities, were made subsidiaries of NAMCO LIMITED, which
integrates the amusement facilities operations of the Group.
Banpresto Co., Ltd. was redefined as focusing on the prizebusiness, with an emphasis on prizes for coin-operated gamemachines.
b. Consolidation of Subsidiaries with Group Support Functions
As of 1 April, 2008, a Shared Services Division was establishedwithin the Company and the share management operations for
BANDAI NAMCO Business Services Inc., and Artpresto Co.,
Ltd., which had been carried out by Bandai Co, Ltd., andBanpresto Co., Ltd., were transferred to the Company.
(2) Names and Business Content of Restructured Companiesa) BANDAI NAMCO Games Inc.
Planning, development, and sales of home video game softwareand coin-operated game machines, etcb) NAMCO LIMITEDManagement of amusement facilities, etc.
c) Banpresto Co., Ltd. (a newly-incorporated company in anincorporation-type company split)
Planning, development, and sales of prizes, etc., for coin-operated
game machines.
d) Bandai Co., Ltd.
Manufacturing and sales of toys, apparel, and related products.
e) NAMCO BANDAI Holdings Inc.
Planning and implementation of management strategy andbusiness management and instruction of the Group companies.

(1) Reason for the cancellation
To enhance capital efficiency and increase shareholder value(2) Cancellation method
Reduction of other capital surplus(3) Class of cancelled shares
Shares of common stock(4) Number of cancelled shares
4,500,000 shares(5) Cancellation dateJune 20, 2007

87

Prior consolidated fiscal year
(April 1, 2006 to March 31, 2007)

Current consolidated fiscal year
(April 1, 2007 to March 31, 2008)(3) Legal Form of the Business Combination and Split ofOperationsa) An incorporation-type company split of Banpresto Co., Ltd.,
with the establishment of a subsidiary, the new Banpresto Co.,Ltd.
b) A company split in which Banpresto Co., Ltd., is a split
company in an absorption-type company split and NAMCO
LIMITED is the successor company in the absorption-typecompany split.
c) A company split in which Banpresto Co., Ltd., is a split
company in an absorption-type company split and the Company is
the successor company in the absorption-type company split.
d) A merger in which Banpresto Co., Ltd., is a merged company inan absorption-type merger and NAMCO BANDAI Games, Inc., isthe surviving company in the absorption-type merger.
e) A company split in which Bandai Co., Ltd., is a company of anabsorption-type company split and the Company is the successor
company in the absorption-type company split.
2. Overview of Accounting Process
The accounting process for the consolidated financial statements
was handled in accordance with the provisions of “Accounting fortransactions conducted by commonly controlled entities, etc.” ofArticle 3, Paragraph 4 of the “Accounting Standard for Business
Combinations”.

88Changes in Officers
1. Changes in Representative Directors
No changes to be reported.

2. Other Changes in Officers (Effective June 23, 2008)(1) Candidates for Directors
Name: Shuji Ohtsu
Current position: Advisor of NAMCO BANDAI Holdings Inc.
Name: Yusuke Fukuda
Current position: Advisor of NAMCO BANDAI Holdings Inc., Director of Bandai Co., Ltd.

(2) Retiring Directors
Director: Masaatsu Hayakawa(3) Responsible Area of Directors (Effective June 23, 2008)
Takeo Takasu

President and Representative Director

Jun Higashi

Director, responsible for all SBUs and Affiliated Business Companies

Shuji Ohtsu

Director, responsible for Regional Holdings Companies, Administrative Headquarter,and Internal Auditing Division

Yusuke Fukuda

Director, responsible for Corporate Planning Division
and Corporate Legal Services Department

Kazunori Ueno

Director (part time), responsible for Toys and Hobby SBU

Masahiro Tachibana

Director (part time), responsible for Amusement Facility SBU

Shukuo Ishikawa

Director (part time), responsible for Game Contents SBU

Satoshi Oshita

Director (part time), responsible for Network SBU

Kazumi Kawashiro

Director (part time), responsible for Visual and Music Content SBU

Masatake Yone

Director (outside)

Kazuo Ichijo

Director (outside)89