N
I

A
D
N

O
C
M
A

A
p
B u
o
r
G

RT
O
P

E
R
L

AN

A
U
N

13
0
2

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

ISSIONOUR M
MENTS TAT EDREAMS, FUN
AND INSPIRATION
Through our entertainment products and services, BANDAI NAMCO will continue
to provide “Dreams, Fun and Inspiration” to people around the world, based on
our boundless creativity and enthusiasm.

OUR V

ISION

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

CONTENTS
02 The Strengths of the BANDAI NAMCO Group
04 Board of Directors and Audit & Supervisory Board Members
06 Consolidated Financial Highlights
08 Mid-term Plan
10 Top Message
13 Special Feature:

IP AXIS STRATEGY:
Maximizing the Value of Our Intellectual Property—Explanations and examples of our Groupwide strategies

23 Review of Strategic Business Unit (SBU) Operations
and Focus Strategies

26 The BANDAI NAMCO Group’s CSR Initiatives
28 Corporate Governance
31 Financial Section
65 Corporate Data
66 Overview of Main Group Companies

VIEW
OVER E GROUP
OF TH¥487.2
¥48.6
14.1
6,983
Net Sales:

3.3)(FY201billionOperating Income:billion

ROE:%

Group Organization

Number of
Employees:

Core Company

Strategic Business Units (SBUs)

NAMCO BANDAI HOLDINGSTOYS AND HOBBY

Bandai

CONTENTNAMCO BANDAI Games

AMUSEMENT FACILITY

NAMCO

AFFILIATED BUSINESS COMPANIES(supporting the Group)

Net Sales by Segment

Reference: Contributions to Net Salesby Geographic Region

Other
Amusement Facility

4.9%

Europe5.8%

Asia, excluding Japan

3.9%

Americas11.5%

Toys and Hobby

33.1%
2013

6.9%
2013

Content

Japan

50.5%

83.4%

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

Forward-Looking Statements
The forward-looking statements in this annual report are based on the information available
to management as of August 2013 and include various risks and uncertainties. Accordingly,
actual results may differ materially from these projections for a variety of reasons. Major
factors that could influence actual results include changes in the BANDAI NAMCO Group’s
operating environment, market trends, and exchange rate fluctuations.

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

Notes
1. All figures in this annual report are rounded to the nearest unit.
2. FY2013.3 and the year under review represent the one-year period ended March 31, 2013.
3. Figures in this annual report are as of August 2013.

01

F
O
P
S
U
H
T
O
R
G
G
N
E
O
R
C
T
S
M
A
E
N
I
TH
A
D
N
A
B
THE
Toys
Visual content

Home video
game software

ApparelNetwork
content

Business development
capabilities

Distributionof video
on demand(VOD) content

Vending
machinecapsuletoys

Technology

Live
performances

Strong Content

Prizes foramusementmachines(IP*)
Planning
andDevelopment

Human
Resources

Amusement
facilities

Plastic
modelsBusiness development
capabilities

Music
content

Cards

Web
Candy
toys

Arcade gamemachines* IP: Characters andother intellectual property

In a wide range of business areas, the BANDAI NAMCO Group is conducting speedy development of its
IP (characters and other intellectual property), which has fans around the world. The full potential of our
IP is brought out by our advanced planning and development capabilities, our high levels of technical skill,and our employees, who are passionate about entertainment. Leveraging these distinctive strengthsof the Group, we will strive to realize sustained growth in the years ahead.

02

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

TOYS AND HOBBY
MID-TERM
VISIONNet Sales

Operating Income¥ billion¥ billion

True Globalization
178.0
158.4

173.0

Towards globalization, we are striving to become the premiercompany in the character merchandising business.

16.1
13.8

11.3
Toys

Plastic
modelsApparel

Candy
toys

Vending
machinecapsule
toys

Cards

2011

CONTENT
MID-TERM
VISION

2012

2013

Net Sales

2011

2012

Operating Income¥ billion¥ billion

263.6

Become the No. 1 Content Company
in Japan and Borderless Development

2013

36.4

225.5
179.9

We are implementing borderless operations, targeting a range ofexits,including overseas markets.
Network
content

Prizes forLive
Performances amusement
machines

Music
content

Arcadegamemachines

Home
video
game
software

Visualcontent

17.0

3.1
Distributionof video on
demand (VOD)
content

Web

AMUSEMENT FACILITY
MID-TERM
VISION

2011

2012

2013

2011

2012

2013

Net Sales

Operating Income¥ billion¥ billion

Become an Overwhelming Leader
in the Market

We provide amusement facilities that leverage BANDAI
NAMCO’s distinctive strengths in order to provide value.
62.3

Amusement
facilities

2011

61.0

2012

60.2

2013

1.8

2.4

1.7

2011

2012

2013

For the years ended March 31

03

S
R
O
T
C
E
R
I
D
F
O
D
BOAR
AND

(Back, from left) Tomohisa Tabuchi, Nobuo Sayama, Yuji Asako, Masahiro Tachibana, Satoshi Oshita(Front, from left) Manabu Tazaki, Shuji Ohtsu, Kazunori Ueno, Shukuo Ishikawa

04

Y
R
O
S
I
V
R
E
P
U
S
&
T
AUDI
S
R
E
B
M
E
BOARD M

As of June 24
24, 2013

DIRECTORS
President and CEO,
Representative Director

Shukuo Ishikawa
Executive Vice President,
Representative Director

Kazunori Ueno
(President and Representative Director,
Bandai Co., Ltd.)

Director

Shuji Ohtsu
Director

Yuji Asako
Director (Part-time)

Satoshi Oshita(President and Representative Director,
NAMCO BANDAI Games Inc.)

Director (Part-time)Masahiro Tachibana(President and Representative Director,
NAMCO LIMITED)

Director (Outside)

Manabu Tazaki
Director (Outside)

Nobuo Sayama
Director (Outside)

Tomohisa Tabuchi

AUDIT & SUPERVISORY
BOARD MEMBERS
Audit & Supervisory Board Member(Full-time)

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

Katsuhiko Kohtari
Audit & Supervisory Board Member(Outside)

Osamu Sudoh
Audit & Supervisory Board Member(Outside)

Kouji Yanase(From left) Kouji Yanase, Osamu Sudoh, Katsuhiko Kohtari, Koichiro Honma

05

CONSOLIDATED FINANCIAL HIGHLIGHTS
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
For the Years Ended March 31

FY2013.3

NET SALESUpOPERATING INCOME

7.3% YOY¥487.2Net Sales

Overseas Sales Proportion

billionUp¥48.6

40.6% YOY

billionOPERATING INCOME MARGIN¥ billion / %

10.0%

7.6%

FY2012.3

487.2
454.2

¥ billion / %

394.2

378.5

Operating Income Margin

Operating Income

426.4

48.6
25.1

24.4

10.0

34.6

21.9
18.0

18.1

7.6
22.3
16.3

5.2

4.1
1.9
0.5
2009

2010

2011

2012

2013

2009

2011

2012

2013

RETURN ON EQUITY (ROE)GROSS PROFIT

Up

2010

9.3% YOY¥183.1Gross Profit

Gross Profit Margin

billion

FY2012.3

14.1%

9.1%

Total Net Assets

ROE¥ billion / %¥ billion / %

167.5
146.0

183.1
260.6

139.4

128.8

229.0

37.6

213.7

248.8

213.1

36.9

14.1

35.4
34.0

34.2
2009

2010

0.8
2011

2012

2013

NET INCOME

Up

67.8% YOY

–12.4
2010

2009

2011

2012

2013

RETURN ON ASSETS (ROA)¥32.4

billion

32.4

Net Income (Loss)¥ billion

FY2012.3

14.0%

10.7%

Total Assets

ROA¥ billion / %

19.3

11.8

363.4
–29.9

9.1

4.3

325.9

342.2

308.3

1.8

374.2
14.0

10.7
6.3
5.2

0.6
2009

06

2010

2011

2012

2013

2009

2010

2011

2012

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Down

6.9% YOY¥36.4

SALES OF MAJOR CHARACTERS (Group total)
Mobile Suit Gundam series

billion¥65.2

Free Cash Flows*

billion¥ billion

23.8
21.6

KAMEN RIDER series

15.2
9.0

¥34.0

billion¥33.9

billion

0.7
2009

2010

2011

2012

2013

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

Interest-Bearing Debt

Debt/Equity Ratio*

Power Rangers series¥ billion / times

20.8

¥20.8

19.8

billion

13.3

12.5
0.09

0.08
0.06

0.05

3.7

UNIT SALES OF HOME VIDEO GAME SOFTWARE

0.02
2009

2010

2011

2012

2013

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

97titles

24,585
Note: After elimination of localized versions

CASH DIVIDENDS PER SHARE

Up

¥45

¥19 YOY

Unit Sales by Region
Europe

22.5%

Japan

NET INCOME PER SHARE (BASIC)

Up¥61.78 YOY

thousand2013¥147.40

38.4%

North America

39.1%

Cash Dividends per Share
Yen

45

24

24

24

26

2009

2010

2011

2012

SALES OF EXISTING AMUSEMENT FACILITIESIN JAPAN

2013

Down

4.5% YOY

95.5%
07

MID-TERM PLAN
Mid-term Plan of the BANDAI NAMCO Group (From April 2012 to March 2015)
The BANDAI NAMCO Group aims at the vision of becoming “the Leading Innovator in Global Entertainment”
under a mission to bring “Dreams, Fun and Inspiration” to the world. Since the management integration in 2005,
we have promoted the development of our management base under the Mid-term Plan from April 2006 to March2009 and of a business base for global growth under the Mid-term Plan from April 2009 to March 2012.
In the new Mid-term Plan from April 2012 to March 2015, we aim to increase our profit both in Japan andoverseas by sticking to our vision of “Empower, Gain Momentum, Accelerate Evolution” in all aspects of ourbusinesses, including our products and services, business model, operations, and numerical targets.

E
T
D
I
M

IO
S
I
V
RM

Strive to achieve
record profit

N

Attain growth ofrecord sales

Enhance our business model
to maximize our IP value

Focus Strategies under the Mid-term Plan
Under the Mid-term Plan, we promote five Focus Strategies. These consist of three Business Area Strategies, which areapplied to each respective business, and two Functional Strategies, which are applied commonly across all businesses.
Business Area Strategies
Toys and Hobby SBU
BASIC BUSINESS AREA
Achieve profitable expansion inbasic business area

Japan

PROFIT RECOVERING AREA
Achieve recovery in low-profit
and loss-making businesses

U.S. &EU

NEW GROWTH AREA
Create and develop new
growth area

Asia

Toys and Hobby

Content SBU
Content[Japan][Japan]Arcade games / Network /Visual & Music

Toys and Hobby

Video Game
Software[U.S. & EU]

Amusement Facility
SBU

Amusement Facility[Japan][Worldwide]

Toys and Hobby

Arcade Games

Amusement Facility[Asia][Asia][Asia]

Functional Strategies

GROUPWIDE NETWORK STRATEGY08

HUMAN RESOURCES STRATEGYKey Points of the Mid-term Plan
Net Sales and Operating Income¥ billion

Previous Mid-term Plan

Current Mid-term Plan

Implementing the Restart Plan
487.2

460.5

459.1

454.2

426.4
394.2

378.5

48.6

42.2
33.4

34.6
22.3
16.3

2007
Net Sales

2008

2009

2010

1.9

2011

2012

2013

For the years
ended March 31

Operating Income

Return on Equity (ROE)
%

14.1

11.7

9.4

9.1
4.3
0.8

–12.4

2007

2008

2009

2010

2011

2012

2013

For the years
ended March 31

Key Progress in FY2013.3

The Group has met quantitative objectives and set new records for net sales and operating income in the period
after the management integration.
The Content SBU’s IP axis strategy has generated favorable results for each content outlet and the growth of network
content, in particular, has made a substantial contribution to the Group’s results.
BASIC BUSINESS AREA
Japan

In the Toys and Hobby SBU, coordinated development across product categories, centered on toys,
led to favorable results by products in established character series. Initiatives targeting a broader rangeof customers made steady progress.
In the Content SBU, favorable results were recorded for all content outlets, including arcade gamemachines, prizes, visual and music content, and home video game software. In particular, network content,
centered on social games, made a substantial contribution to results.
In the Amusement Facility SBU, results were solid, centered on differentiated facilities that offer customers
the opportunity to experience the distinctive worldview of specific characters. However, sales at existing
amusement facilities were down 4.5%.

PROFIT RECOVERING AREA
U.S. &EU

NEW GROWTH AREA
Asia

Products in the Power Rangers series recorded favorable sales in the U.S. and Europe, but market
environments were challenging and sales in the U.S. and Europe were sluggish overall.
In the Content SBU’s home video game software operations, favorable sales were recorded by new titles in
popular series.
In Asia, profits declined due in part to value chain reforms in the Toys and Hobby SBU. However, businessactivities got off to a strong start, and initiatives coordinated with Japan resulted in solid popularity for toys
as well as for plastic models and collectable toys for adults.
In the Amusement Facility SBU, we verified market conditions and took other steps targeting growth overthe mid to long term.

09

TOP MESSAGE

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

We will aim for growthin global markets as we continue to“Empower,
Gain Momentum,
Accelerate Evolution.”10

Record-High Net Sales and Operating Income

with structural reforms targeting a stronger earnings platform andincreased efficiency.

In FY2013.3, the BANDAI NAMCO Group’s results exceeded

By advancing these types of foundation-building and struc-expectations. This achievement was due to the efforts of all oftural reforms, the entire Group will work together to generate

the Group’s employees on the front lines of its business activities.

results in FY2015.3 and thereafter and to achieve dramatic

Consolidated net sales were up 7.3%, to ¥487.2 billion, andgrowth in global markets.

operating income increased 40.6%, to ¥48.6 billion. In the firstyear of the three-year Mid-term Plan that was started in April
2012, we set new record highs for net sales and operating

Advancing the Key IP Axis Strategy

income in the period after the management integration.
The reasons behind our solid start in the first year of theSince the launch of the Restart Plan in 2010, we have shifted

Mid-term Plan include strong results in the Toys and Hobby SBU

our approach to activities with IP as an axis. The IP axis strategy

in the domestic market. In addition, in the Content SBU the IP

has become a major reason behind the recovery in our results.

axis strategy generated favorable results for all content outlets,

This strategy involves the provision of products and services,and growth in network content made a substantial contribution

with consideration for all outlets, at the optimal timing, in theto the Group’s performance. The greatest driving force behind

optimal region, and for the optimal target. In this way, we work

these results has been the commitment and enthusiasm of

to maximize the value of our IP. For example, the use of Mobile

our employees. Following the Group’s weak performance in

Suit Gundam IP in the implementation of a variety of develop-

FY2010.3, the entire Group has worked together to implement

ment initiatives illustrates our approach to the IP axis strategy.

the Restart Plan with a sense of urgency.

With Mobile Suit Gundam, everything from the original visual

However, I believe that our achievement of record-high sales

product to product development is completed within the Group.

and profits merely represents a return to our position immediately

The strategy that we are implementing is not based on a short-

after the management integration. We still have many challenges

term perspective. Rather, from a long-term viewpoint of 10–20

to overcome and strategies to implement. Starting in FY2014.3,

years, this strategy will generate synergies through the coordina-

we will face a crucial period for the realization of true growth fortion of activities among SBUs to sustain the popularity of Mobile

the BANDAI NAMCO Group. To turn our potential into results, we

Suit Gundam.

must tackle the challenges that we face with a heightened senseof urgency.

Under the IP axis strategy, a key point is the effective combination of two of BANDAI NAMCO’s traditional strengths. The firstis our wide range of business fields, which extends from “products,” such as toys, to network content and other “services,” as

FY2014.3: Taking the Initiative for GrowthOver the Mid to Long Termwell as “places,” such as amusement facilities and live events.
The second strength is that we can utilize a variety of popular
IP, such as characters and content, in our own products and ser-For FY2014.3, which is the halfway point of the Mid-term Plan,

vices. We do more than just rapidly create products based on

we are forecasting net sales of ¥480.0 billion, about the samecharacters that are popular at that point in time. We have also

level as in the previous year, but operating income of ¥40.0 bil-developed a large number of characters products that havelion, a year-on-year decline of 17.8%. This is because we havetranscended generations and appealed to a wide range of age

positioned FY2014.3 as a year for taking the initiative for mid- togroups for decades, such as the Power Rangers series and thelong-term growth, and accordingly we will implement investment

KAMEN RIDER series. We have also expanded initiatives withtargeting future growth.

original IP that originated from the Group’s products andFrom a short-term perspective, it would be possible to implement initiatives that are simply an extension of what we did inservices, such as Mobile Suit Gundam and Tamagotchi.
By combining these two strengths, the IP axis strategy fully

FY2013.3. However, I believe this is the best time for the Grouprealizes the potential of the BANDAI NAMCO Group. In imple-

to lay a foundation for growth in global markets in 5 or 10 years.

menting this strategy, we delegate authority and responsibility to

We will take a number of steps to build this foundation, such as

small and medium-sized units, with IP as an axis. In this way, weinvestment targeting the creation of new IP, technical develop-

can achieve rapid decision making and implementation on thement, and innovation in business models. To achieve solid

front lines while fostering mutual support among different units.

growth, it will also be necessary to streamline our operations andA major issue in the entertainment markets that BANDAI NAMCO

establish a more-robust corporate constitution. Accordingly, we

serves is the fast pace at which technical innovation is progress-

will implement these foundation-building initiatives in conjunction

ing and consumer needs are diversifying. In this environment,

11

TOP MESSAGE

we will advance the IP axis strategy, which will maximize thepopular. We are already offering free streaming of Mobile Suitvalue of our strengths—our wide-ranging fields of business andGundam series animations in local languages, and we are also

our extensive IP—without limiting ourselves to existing ways of

stepping up other initiatives, such as Internet sales and local

doing business. In this way, we will strive to overcome the chal-

events. Moreover, local amusement facilities have begun tolenges we face and develop new business models that leverage

expand, and consequently demand for arcade game machines is

BANDAI NAMCO’s distinctive capabilities.

rising. To meet that demand, we are introducing a number of theGroup’s popular machines, such as Taiko Drum Master seriesmachines and racing game machines. Our net sales in Asia are

Targeting Growth in Global Markets

still relatively low, but the market has extremely high potential andwe have positioned Asia as a future growth region. Accordingly,

In overseas operations, unfortunately we are still in the midst of

we will implement aggressive development initiatives.

building our earnings platform in the U.S. and Europe. Overseas
sales still account for less than 20% of the Group’s total net
sales. We have earned many No. 1 positions in the domestic
market, but we still have tremendous room for growth overseas.
In the U.S., for example, the Group’s share of the toy market is

Always Striving to Improve and Continuing
to “Empower, Gain Momentum,
Accelerate Evolution”

less than 1%. In the future, we will continue to position the recovery of our earnings capacity in the U.S. and Europe as a priority

Over the past several years, the operating environment in theissue, and on that basis we will strive to establish a stable foun-entertainment industry has changed substantially, and it isdation. In the U.S. and Europe, we will aggressively employ

expected to undergo further dramatic changes in the years

human resources with local know-how. In addition, we will assign

ahead. However, the BANDAI NAMCO Group will respondhighly experienced employees who can leverage the Group’s

quickly to changes in its operating environment. We are aiming

strengths to overseas operations. In these ways, we are working

to achieve continued development over the next 10, 50, or evento strengthen our organization. The Toys and Hobby SBU will

100 years. That is why we announced our mid-term vision:

approach the U.S. and Europe as a single market, implement“Empower, Gain Momentum, Accelerate Evolution.” This vision

integrated brand management for the U.S. and Europe, andincorporates our strong commitment to achieve continual prog-

foster development with IP as an axis. In this way, we will clarify

ress for both businesses and employees and to record ongoing

responsibility and speed up decision making.

growth. To that end, we will continue to address change and aim

In FY2014.3, we will start new development of PAC-MAN,

for No. 1 over the three years covered by the Mid-term Plan.

which will join the Power Rangers series as another key IP asset

With speed and flexibility—centered on the IP axis strategy—wein the U.S. and Europe. In the past, development of the Powerwill uphold the BANDAI NAMCO tradition of taking on challenges

Rangers series has centered on figures. However, we will com-

as we strive to achieve growth and draw on BANDAI NAMCO’s

mence coordinated development with cards. In addition,

distinctive capabilities to build a new business model for the next

PAC-MAN will be developed on a worldwide basis as Group IP.

generation. In this way, we will work to achieve steady progress.

PAC-MAN and the Ghostly Adventures, a new animation, is

In the future, there will be no change in the importance ofscheduled for broadcast in more than 40 countries around theentertainment in people’s daily lives. With a sense of pride andworld, starting with North American broadcasting in June 2013.

responsibility for our mission of providing “Dreams, Fun and

In conjunction with these broadcasts, we will also introduce otherInspiration,” we will continue to offer people around the world

products, such as arcade game machines, home video gameproducts and services that leverage our unique strengths. The

software, network content, and toys. PAC-MAN already has highBANDAI NAMCO Group will not be satisfied with the status quo.

name recognition, and consequently plans call for the sale of

We will always strive to create new entertainment as we continue

many licensed products as well. In the future, our policy will beto “Empower, Gain Momentum, Accelerate Evolution.”for the entire Group to work together to nurture PAC-MAN overI would like to ask our shareholders, investors, and otherthe medium to long term as a key IP asset in overseas markets.

stakeholders for their continued support and guidance of the

In Asia, the Toys and Hobby SBU has made a solid start with

BANDAI NAMCO Group in the years ahead.

a strategy of conducting Japan-originated business activities
simultaneously in Japan and Asia. In addition to plastic models
and collectors’ products, we have started development of digital
card games originated in Japan. In Asia, consumer preferences
are very similar to those in Japan, and Japan-originated IP is very

12

August 2013

The BANDAI NAMCO Group is advancing its IP axis
strategy on a Groupwide basis. Since the launch of theRestart Plan in 2010, the entire Group has worked to
implement this strategy, and those efforts have generated
significant results. Moving forward, we will continue to
strive for further growth by stepping up and enhancing
its implementation.
This special feature explains our IP axis strategy bypresenting a message from management and specificexamples of success from three key employees.

SPECIAL FEATURE:

BANDAI NAMCO’SIP AXISSTRATEGY
Maximizing the Value of Our Intellectual Property

Management Comments about
the IP Axis Strategy
Conversations with Key Employees
CASE STUDY 1 Mobile Suit Gundam Series
CASE STUDY 2 KAMEN RIDER Series
CASE STUDY 3 THE IDOLM@STER Series

Promising IP in FY2014.3

13

IP AXIS STRATEGY: MAXIMIZING THE VALUE OF OUR INTELLECTUAL PROPERTY

Kazunori Ueno
Executive Vice President, Representative Director,
NAMCO BANDAI Holdings Inc.
President and Representative Director, Bandai Co., Ltd.
Chief Gundam Officerut

ts abot Commen
n
e
m
e
g
a
n
Ma
Strategy
the IP Axis

ategy:
r
wth
t
o
S
r
G
s
i
r
x
e
A
h
t
P
r
I
o Fu
Our
The Key t

In FY2013.3, the BANDAI NAMCO Group set new records forconsolidated net sales and operating income in the period

Content SBU: The IP Axis Strategy Effectively
Drove a Rapid Recovery in Results

after the management integration. The fact that we wereThe IP axis strategy made a major contribution to our results

able to achieve the quantitative objectives of the Mid-term

in FY2013.3. Following the introduction of the Restart Plan inPlan in just one year was due in large part to the contribu-

2010, we were able to achieve a recovery in results in a relatively

tion made by the IP axis strategy, which we have beenshort period of time. The reason is that we shifted our approach

implementing since the launch of the Restart Plan in 2010.

from the previous system, where business development initia-

In this section, NAMCO BANDAI Holdings Executive Vice

tives were organized by content outlet, to a system utilizing thePresident Kazunori Ueno discusses the Group’s IP axis

optimal outlet, with IP as an axis. The ability of the Content SBU

strategy initiatives and future direction.

to respond flexibly to new IP outlets, such as social games, isalso a result of the IP axis strategy. We made strong progress in

Our IP Axis Strategy: Leveraging the Know-how
of the BANDAI NAMCO Group

combining our IP axis strategy and the know-how that we have

The BANDAI NAMCO Group’s IP axis strategy is a simple strat-

we were able to make effective use of IP even more rapidly.

egy for expanding the Group’s business, with characters andI believe that this was a key factor behind the recovery inother IP as an axis. It is, however, a strategy that is made possi-

our performance.

acquired in developing products and services, and as a result

ble only by the distinctive know-how of the BANDAI NAMCO
Group. Our know-how has been cultivated through many yearsof experience in the IP business in Japan. We utilize a wide rangeof IP assets, including some that were launched 30–40 years ago.
In advancing the IP axis strategy, product development capa-

Maximizing IP Value and Sustaining that Value
Over the Medium to Long Term: The Key Pointof the IP Axis Strategy
The IP itself plays the central role of the IP axis strategy. We havebilities that leverage our distinctive know-how are extremely

positioned FY2014.3 as a period for planting seeds for the future.

important, as is the capability to move quickly with businessThis decision was based on our judgment that it is right now,

development initiatives in a wide range of areas. The heart of ourwhen our results are strong, that we need to invest and work

IP axis strategy is a business model in which we create products

from a medium- to long-term perspective to create, acquire, andand services that draw on the worlds of characters and other IP,

nurture new IP with a focus on the future. The creation andand then rapidly implement business development initiatives.

nurturing of IP is one area in which the BANDAI NAMCO Group
has special strengths.
For example, THE IDOLM@STER, which originated fromarcade game machines, has transcended the game framework

14

Developing Appealing IP in a Wide Range of Business Fields
Toys

Visualcontent

ApparelHome video
game software

Network
content

Business development
capabilities

Distribution of video
on demand(VOD) content

Technology

Live performances

Vending
machinecapsule toys

Strong Content(IP)

Prizes foramusementmachines

Amusement
facilities

Planning
andDevelopment

Human
Resources

Plastic models

Business development
capabilities

Music content

Cards
Web
Candy toys

Arcade gamemachines

since its launch in 2005, and of our efforts to develop productsWorking to Build a Framework to Pass Alongthe Strengths of the BANDAI NAMCO Group to
Future Generations

and services in formats that leverage the world of the THE

One of the strengths of the BANDAI NAMCO Group is that we

IDOLM@STER IP. The key point of the IP axis strategy is maxi-

have content outlets for a wide range of products and services.

mizing IP value and sustaining that value over the medium to long

In addition, we work not only with IP developed in-house but

term, with simultaneous consideration for the need to nurture thealso with IP from many other companies. I think that our major

IP over the long term. In this way, we fully leverage the IP’s appeal.

strengths include the know-how to strategically nurture IP in line

Another good example of our IP nurturing is the Mobile Suitwith global trends and the ability to implement business develop-

and earned popularity in a variety of formats. This success was
the result of our steady efforts to nurture THE IDOLM@STER

Gundam series, which will mark its 35th anniversary in 2014.
The Mobile Suit Gundam series has maintained a stable level ofment initiatives with mobility and speed.
In addition, we are moving ahead with the creation of arevenues over many years as a result of the generation offramework for steadily passing down these strengths to the next

synergies through Groupwide initiatives, which extended fromgeneration. Continuous human resources development is essen-

the creation of the IP to its subsequent development.

tial for the survival of a company, and our human resources strat-

The Gundam Project serves as a system for promoting theegy is positioned as a focus strategy in the Mid-term Plan. We

horizontal realization of inter-related Group activities. As Chief

are working aggressively to ensure that we can pass along to the

Gundam Officer, I am the leader of the Gundam Project. Several

next generation of employees the strengths and external partner-

times a year, we assemble managers from businesses through-ships that we have established. With a focus on future genera-out the Group and discuss initiatives for products and services.

tions, I think that this is an important step to take.

These discussions cover not only short-term actions but also

Moving forward, we will work to build a framework within

mid-term activities that extend out over a 3–5 year period. This

the Group to activate the creation of original IP. Establishing an

is not simply the provision of reports from each person on theenvironment in which employees are eager to take on challenges,

products and services for which they are responsible. Rather,even if they fail, is the job of company management. As managers,

these are important discussions to have from the viewpoint of

we first need to ensure that we ourselves maintain the spirit ofraising IP value. Other powerful IP, such as Power Rangers andtaking on challenges.

KAMEN RIDER, are also the focus of initiatives in a variety offormats for the purpose of effective Group cooperation. The
know-how needed to unify and control IP with this Groupwide
comprehensive producer policy is a distinctive strength of the
BANDAI NAMCO Group, and we will continue to refine thisstrength in the years ahead.

15

IP AXIS STRATEGY: MAXIMIZING THE VALUE OF OUR INTELLECTUAL PROPERTY

CASE
STUDY

1

m
a
d
n
u
G
t
i
u
Mobile S
eries
S

entral Role
C
a
y
la
P
h
ic
h
ual Products, w
tsDeveloping Vis ategy, for a Variety of Targetrin the IP Axis S
The Mobile Suit Gundam series is a popular IP that has

Characters that are Loved by Fans of All Ages

been loved by fans for more than 30 years since its first TV

At Sunrise, where I work, we have the important responsibility

broadcast in 1979. The Group is developing a wide range ofof planning and producing visual products in the Mobile Suit

related products and services for the Mobile Suit Gundam

Gundam series and creating business schemes for those prod-

series, centered on visual products created by Sunrise Inc.

ucts. In 2014, the Mobile Suit Gundam series will mark the 35th

In FY2013.3, the Group’s total Mobile Suit Gundam-related

anniversary of its first TV broadcast. The base of Mobile Suitsales reached ¥65.2 billion. For this series, we implement

Gundam fans extends over a wide range of ages. The customer

everything in-house, from IP creation to product and service

base is centered on fans who have enjoyed Mobile Suit Gundam

development. The Mobile Suit Gundam series is a goodsince the series was launched and are now in their 30s and 40s,

example of how the strengths of the IP axis strategy

but it also includes many teenagers and young people in theirproduce effective results.

20s as well as seniors who are over 50. We deliver the Mobile
Suit Gundam products in a form that is appropriate for the specific product type and the target generation, such as visual products as well as movies, packaged media, and Internet distribution.

Conversations withKey Employees
Shin Sasaki
Director
General Manager
High End Works Division
Sunrise Inc.

We target a wide range of generations, and as we plan andproduce the products we always keep in mind what type ofvisual product we will deliver, how we will develop the businessfor that product, and what goods will be produced. However,
if we are overly focused on those issues from the initial stages,
the creativity of the product itself is adversely affected, and so
we strive to think about the optimal development method for thenature of the product.

MOBILE SUIT GUNDAM SERIES SALES(GROUP TOTAL)¥ billion

65.2
44.7

42.8
34.6

2009

16

2010

38.2

2011

2012

2013

Mobile Suit Gundam Series IP Axis
Business Development
Development of a wide rangeof products and services fromestablished IP that boasts thelargest scale in the Group

Plastic models

Game software
Distributionof video on
demand(VOD) content

Arcade game machines

Mobile Suit
GundamseriesVisualsoftwareFacilities

Network content

Card gameses

A Business Model that Advances with the Times
Since I started working with the Mobile Suit Gundam series in the

Demonstrating Synergies Among Visual Products,
Products, and Services

1990s, the key turning point in business development has been

A big strength of the BANDAI NAMCO Group is its ability to

Mobile Suit Gundam SEED in 2002. Although this product wasdevelop business using multiple product and service touchpoints

targeted at customers in their teens and 20s, we succeeded not

on a Groupwide basis. To that end, collaboration within the

only in broadening the age range of our male fans but also at

Group is extremely important, and we are naturally conscious

attracting female fans. In addition, we tried new methods ofof collaboration from the initial stages at which visual products

distribution, such as free distribution of Internet video in tandem

are planned.

with TV broadcasts. We also aggressively collaborated withWe also periodically convene the Gundam Project, which

popular artists in the area of music. A variety of fan-basedis led by NAMCO BANDAI Holdings Executive Vice President

movements arose, and live events mixing visual and music

Kazunori Ueno, who is also Chief Gundam Officer. Meetings ofpresentation drew thousands of fans. From this, I had a strong

this project include about 30 people from throughout the Groupsense of how the times were changing.

who are in charge of products and services in the Mobile Suit

These multifaceted development initiatives became a proto-

Gundam series. A wide range of information is shared at thetype for our current business model. We began to provide fansmeetings, such as product and service concepts and schedules,

with a variety of different ways to enjoy the Mobile Suit Gundam

as well as future issues.

series that were appropriate for the changing times. Subsequently,

The Mobile Suit Gundam series is representative of the IP of

we have taken on the challenge of another new business model

the BANDAI NAMCO Group, and new advances entail the devel-with Mobile Suit Gundam UC (Unicorn). Mobile Suit Gundam UC

opment of a wide range of products and services. In that sense,(Unicorn) was planned and produced with a story that links backGundam is a happy product series. The manufacturers of theseto the very first Gundam. We registered excellent results with the

products are also highly conscious of the need to maintain aestablishment of a business model for the implementation of abalance between change and tradition, and they are working toworldwide simultaneous rollout. This model included special

be able to provide appealing products based on the world thatscreenings at movie theaters, simultaneous sales of packaged

forms the foundation of the Mobile Suit Gundam series but also

goods at those venues, and the nearly simultaneous launch ofreflecting the changing times—so that those products continue

Internet distribution. Prior to the launch we had some concerns,

to be popular for the next 10 or 20 years. Moving forward,

but the special screenings, the packaged goods sales, and theI will always keep uppermost in my mind how we can effectively

distribution generated synergies across all content outlets, anddeliver Mobile Suit Gundam to the world, including the use of TV

as a result the number of fans increased.

broadcasts and the Internet. There are still many challenges that
we can take on only because of the many strengths of the
Mobile Suit Gundam series, and accordingly I wish to continue
taking on the challenges of new business initiatives that will
attract new fans.

17

IP AXIS STRATEGY: MAXIMIZING THE VALUE OF OUR INTELLECTUAL PROPERTY

CASE
STUDY

2

R
E
D
N RI ies

E
M
A
K

Ser

ons

erati
ss Op

Acro
s
d
n
e
at Ext chpoints
h
t
l
e
d
u
ss Mo aracter To
e
n
i
s
h
Bu
and C
p
x
E
to
The KAMEN RIDER series is a popular IP asset that has
been consistently loved for more than 40 years since its first

Product Development with Linked Key Items
as an Axis

TV broadcast in 1971. The BANDAI NAMCO Group develops

In Bandai’s Boys Toys Department, I am responsible for thea variety of related products and services for the KAMEN

development of products for the KAMEN RIDER series. I also do

RIDER series, including the transformation belt, which is thea considerable amount of coordination involving linked develop-

core product. Sales have recorded substantial growth sincement initiatives among Bandai’s various departments and Group

2009, and in FY2013.3, sales related to the KAMEN RIDER

companies. In addition, I work closely with the TV production

series totaled ¥34.0 billion.

side, and propose ideas to enhance the program from the per-

These sales were not just toys with key items as anspective of a toy maker. KAMEN RIDER WIZARD, which wasaxis. We have developed linked products in a variety ofbroadcast from fall 2012, is a good example. The program pro-categories, including capsule toys, candy toys, digital card

duction side decided on the key word “magic,” so I proposed agames, and apparel. This business model that crosses

ring as a key item suitable for that world. We were able to createbusiness lines has enabled us to successfully maximize

links among the ring and various other items that are central tothe appeal of the KAMEN RIDER series.

the KAMEN RIDER world, such as the belt and weapons.
In this way, we developed products using all of the Group’s
touchpoints, with these key items as an axis. As a result, it
became possible to horizontally link Bandai departments andGroup companies, and we succeeded in expanding the scale

Conversations withKey Employeesof KAMEN RIDER products and services.

KAMEN RIDER SERIES SALES
Kiyoto Nishizawa¥ billion

28.3

26.4

27.1

23.0

20.0
17.5
10.4

8.7

2009
Group total

18

34.0

31.9

LeaderKAMEN RIDER Team
Boys Toy Department
Bandai Co., Ltd.

2010

2011

Toys and Hobby Business

2012

2013

Example of Business Model that Extends
Across Operations
With the KAMEN RIDER series, anitem linked to toys, was developed ina variety of categories. In this way, theIP touchpoints were expanded.
Toys

Amusement facilities

Linked item

Sundries

Card games
Candy toys
ApparelAdvancing a Business Model that Extends
Throughout the Group

Making Full Use of the Group’s Touchpoints

Business models based on links among products, with key items

full use of its touchpoints. The strengths of the BANDAI NAMCO

as an axis, were implemented in the past, but the full-fledgedGroup lie in its ability to deliver products to customers through astarting point of this model was KAMEN RIDER Decade in 2009.

variety of means and methods. By making full use of the Group’s

Favorable sales were recorded by this product, which was createdstrengths, we strive to make the days of children more enjoyable

by linking the belt with the cards that were sold with the digital

through the world of KAMEN RIDER. In addition, although thecard game. With KAMEN RIDER OOO in 2010, the O-medal key

main target of the KAMEN RIDER series is 3–6 year old boys,

item, which was linked with toys and digital card games, was soldit has been loved for so many years that it has become an IP thatthrough the Group’s various touchpoints, such as capsule toys,

is now enjoyed by two generations, parents and their children.

candy toys, and apparel. As a result, it became a major hit that

I believe that our linking key items with products that are part ofcontinues to draw great attention in the domestic market.

the parent–child relationship, such as candy, apparel, and sundries,

Furthermore, for KAMEN RIDER FOURZE, in 2011, and KAMEN

was one the reasons for the KAMEN RIDER market boom.

In the distribution of products and services, the Group makes

RIDER WIZARD, which is the latest title in the series, we have moved

However, if we continue to do the same thing over and over,

to a business model that generates synergies by extending acrosschildren will eventually lose interest in the product. Accordingly,

the entire Group’s operations, including amusement facilities.

we will not remain satisfied with the current state of affairs.

The framework that increases the effects of this cross busi-

Instead, we will continuously seek out entirely new and different

ness linkage is the Linked Item Conference. Since about 2007,

developments and take on the challenge of exceeding children’s

the Linked Item Conference, which began with the Power

expectations. Through actions such as this, I hope to enhance

Rangers series, has also included the KAMEN RIDER series. Thiseven further the appeal of KAMEN RIDER, which has been loved

conference is attended by all of the people responsible for KAMEN

for so long by so many.

RIDER business in each department. We coordinate product lineups, sales schedules, and other initiatives with the objective of
maximizing IP value. Each department proposes a number of
product ideas, which are discussed with great enthusiasm. This
process is something that has resulted in many hit products.

19

IP AXIS STRATEGY: MAXIMIZING THE VALUE OF OUR INTELLECTUAL PROPERTY

CASE
STUDY

3

R
E
T
S
@
M
L
O
D
I
E
H
T
ries
Se

Leveraging a Unique World to Nurture IP

THE IDOLM@STER started as an arcade game machine
targeted at males in their teens to 30s. It was based on theDeveloping Products and Services with a Focus
on the World of THE IDOLM@STER IP

concept of being a producer involved in the development

Since 2007, I have worked as the general producer for THE

of new celebrity idols. THE IDOLM@STER has since been

IDOLM@STER. I have been in charge of all content outlets

extended to home video game software, social games,

related to this IP, from home video game software to visual andvisual and music products, and figures. In addition, due tomusic content, as well as related products. In the unique THE

the strong support of fans it has transcended the virtual

IDOLM@STER world, the player acts as an entertainment indus-

world of games and THE IDOLM@STER IP now includes

try producer who gives lessons and holds auditions for women

live events.

who want to be idols. The producer helps the women to succeed as top idols. The players have great empathy for the idols,
and THE IDOLM@STER communities have developed, with IP as
an axis. In advancing the IP axis strategy for THE IDOLM@STER,
we are placing a high priority on the provision of information forthe community of fans. Rather than targeting large numbers ofthmembers of the general public, we focus actively on core fans.
m
In this way, the community itself will be a source of information.

Conversations withKey Employees
Yohzo Sakagami
miGeneral Manager
Production Department
ent 8
Division 3
Production Group 1
NAMCO BANDAI Gamesmes Inc.

We carefully select the products and services that we are develW
oping, with a focus on scale and balance. More than anything else,owe thought carefully about whether the products and services
wwere suitable for the world of THE IDOLM@STER IP. In this way,w
we have steadily nurtured the IP.
w

HISTORY OF THE IDOLM@STER
2005: Launch of THE IDOLM@STER arcade game machine
2007: Launch of THE IDOLM@STER game software for Xbox 360
2009: Launch of THE IDOLM@STER Sp3 Version game software for PSP
Launch of THE IDOLM@STER: Dearly Stars game software forNintendo DS
2010: Implementation of “The World Is All One!!” live event forfifth anniversary
2011: Launch of THE IDOLM@STER 2 for Xbox 360 and PS3
Start of THE IDOLM@STER TV animation
Start of distribution of THE IDOLM@STER CINDERELLA GIRLS
social game2012: Launch of THE IDOLM@STER SHINY FESTA Sp3 Version
game software for PSP
2013: Start of distribution of THE IDOLM@STER Million Live! social game20

THE IDOLM@STER IP Axis Development
Expansion of products and services using unique
THE IDOLM@STER world leads to increased recognition

Arcade gamemachines

Visual content

Home video
game
softwareMusic content

Amusement facilities

Social gameLive performance

A Major Driver of Growth in Social GamesTHE IDOLM@STER started with an arcade game machine

Building THE IDOLM@STER intoa Long-Established IP

in 2005, and in 2007 we began rolling out home video

In the future, we will provide information to core fans and will also

game software. There is a high degree of affinity between

implement initiatives to broaden the target group. To that end,

THE IDOLM@STER IP and the Internet. For example, the promotion

I think an extremely important point will be the extent to which

video for the game software became a major focus of attention

we can roll out products and services in line with the lifestyles ofafter it was uploaded to an Internet video site. As a result, wethe target customer groups. For example, there are many cases

achieved tremendous results with our efforts to integrate the IP

in which customers who first developed an interest in THE

and the Internet, which included sales of download content as

IDOLM@STER through the animation later went on to enjoy thewell as package content.

social game, leading to growth in the number of registered users.

In addition, THE IDOLM@STER songs are also very

The game software acts as a hub that connects various products

popular, and music has become an important element of THE

and services, and also has the capability to provide information.

IDOLM@STER IP. Cumulative sales of related CD titles have

We are also expanding development initiatives targeting a variety

surpassed two million, and THE IDOLM@STER IP has jumpedof mobile devices, such as tablets. Next, I would like to oncefrom the virtual world to the real world, where we hold live

again take on the challenge of arcade game machines, which will

events. It also broke new ground with the receipt of the Project

be, in a sense, a return to our starting point. In this way, byAward at the Japan Record Awards in 2012. In addition, we plan

broadening THE IDOLM@STER IP touchpoints and implementing

to follow up the broadcast of the TV animation with a theater

initiatives in such areas as peripheral products and services, we

version. The development of THE IDOLM@STER as a social game

will strive to further increase the value of the IP.

proved to be a major turning point. With more than 3.5 million reg-In the end, I think that the strength of the BANDAI NAMCO

istered users (as of June 2013), THE IDOLM@STER has achieved

Group is the ability to create and provide a wide range of enter-

popularity that places it on a par with the Mobile Suit Gundam

tainment that is a vital part of the daily lives of customers. I believe

series, and its name recognition has expanded significantly.

it is my mission to continue to draw on the Group’s wide-ranging
portfolio and develop THE IDOLM@STER, which is now in its
eighth year, into a long-established character that customers will
still be enjoying in 10 or 20 years.

21

IP AXIS STRATEGY: MAXIMIZING THE VALUE OF OUR INTELLECTUAL PROPERTY

Promising IP in FY2014.3
Worldwide Development of the PAC-MAN Original IP
From June 2013, TV broadcasts of a new PAC-MAN animation, PAC-MAN and theGhostly Adventures, began in North America. Broadcasts are planned for more than
40 countries around the world, such as the U.K., Australia, and Spain. Accompanying
the start of these broadcasts, the BANDAI NAMCO Group is implementing worldwide development of a range of PAC-MAN character products. By March 2014,
we will launch three home video game software titles, including PAC-MAN and theGhostly Adventures. In addition, we will roll out five arcade game machines, including
PAC-MAN SMASH, which is currently enjoying strong use, and one network content
title—PAC-MAN DASH!—for which service has already commenced. Plans call for
steady global development, starting with the U.S.
In addition, in summer 2013 we began to roll out more than 10 toys, including
figures and stuffed toys. Moreover, plans also call for the sale of more than 500
licensed products from more than 40 companies. PAC-MAN is a promising IP asset
that plays an important role in our IP axis strategy, and the entire Group is excitedabout the worldwide roll out of PAC-MAN, which will start in the U.S.

Further Growth for the Aikatsu! Original IP
Aikatsu! is an original IP asset for elementary school girls. It was launched in October
2012. DATA CARDDASS Aikatsu! is national idol audition game in which players
compete in Audition Battles and work to increase their fan numbers as they strive tobe the No. 1 idol in the nation. The TV broadcast of an animation from Group company Sunrise Inc. was commenced at nearly the same time as the launch of the
DATA CARDDASS products, and the popularity of Aikatsu! grew at a pace that significantly exceeded our expectations. Currently, we are rolling out Aikatsu! Phone andother toys, apparel, candy toys, and Aikatsu! Cinderella Lesson home video gamesoftware. In addition, from December 2012 we have offered special limited-time
Aikatsu! Official Shops in NAMCO amusement facilities throughout Japan. The entire
Group is working together to implement these types of initiatives. In the future, ourpolicy will be to establish Aikatsu! as a long-lasting character for girls and to nurtureits continued growth.

Amusement Facilities that Utilize Popular IP
In July 2013, J-WORLD TOKYO, an indoor theme park, was opened in Tokyo.
J-WORLD TOKYO uses the world of Weekly Shonen Jump and JUMP SQUARE,
popular weekly manga magazines for youths that is published by SHUEISHA Inc.
The new theme park offers a range of attractions and original products, andshowcases the strengths of the entire BANDAI NAMCO Group. There are popular
attractions, such as ONE PIECE, DRAGON BALL, and NARUTO, as well as
J-WORLD KITCHEN, a food court featuring collaboration among multiple characters.
In addition, J-WORLD STORE sells a wide range of original products, such as
limited-edition goods. J-WORLD TOKYO will function as a place to disseminate
information about the entire Group.
In the future, the BANDAI NAMCO Group will work to achieve differentiation
by developing amusement facilities that utilize IP. In addition, we will leverage thesefacilities as important venues for customer contact and for the collection andprovision of information.

22

REVIEW OF STRATEGIC BUSINESS UNIT (SBU) OPERATIONSAND FOCUS STRATEGIESTOYS AND HOBBYSALES RATIO
in the Fiscal Year Ended
March 31, 2013

BUSINESS PERFORMANCEFor the fiscal years ended March 31

Net sales
Segment income
Segment income margin

33.1%

Millions of yen

2011

2012

2013

¥158,374¥177,994¥172,977% change Forecasts for 2014

–2.8%

¥180,000

13,813

16,113

11,255–30.1%

13,000

8.7%

9.1%

6.5%

—

7.2%

Note: The percentage figure is calculated based on sales
before elimination of internal transactions.

MARKET DATASALES OF MAJOR CHARACTERS (Group Total)

Billions of yen

For the fiscal years ended March 31

2011

2012

2013

Mobile Suit Gundam series

¥38.2

¥44.7

¥65.2

KAMEN RIDER series

26.4

31.9

34.0

ONE PIECE

15.4

28.8

33.9

SALES OF MAJOR CHARACTERS (Toys and Hobby Business in Japan)
For the fiscal years ended March 31

Size of Japan’s Toy Market¥ billion

669.4

690.3

672.9

2011

2012

2013

Billions of yen

2011

2012

2013

KAMEN RIDER series

¥23.0

¥28.3

¥27.1

Mobile Suit Gundam series

13.4

15.6

16.5

PRETTY CURE! series

12.5

10.7

10.6

Source: Survey by the Japan Toy Association

STRATEGIC POINTS IN FY2014.3
Japan

Overseas

Implement active measures to achieve
an overwhelming No. 1 position in Japan

Reorganize in the U.S. and European markets,
expand in Asia

Continue to actively implement measures that cross businessboundaries, with established characters as an axis.
Enhance the character lineup and introduce strategic products.
Specifically, nurture Aikatsu!, which was launched in the fiscal year
ended March 31, 2013, and introduce new characters for boys.
Continue to expand targeted customer range by strengthening
development initiatives for adults and for small children.

Give highest priority to reorganizing in the U.S. and Europe. Carryout integrated brand management for the U.S. and Europe. Clarify
responsibility and speed up decision making through IP axis units.
In addition to initiatives using the Power Rangers series as an axis
in the U.S. and Europe, expand lineup through the introduction of
PAC-MAN products.
In plastic models, collectable products, and card products, commence full-fledged application of the strategy of conducting Japanoriginated business activities simultaneously in Japan and Asia.

23

REVIEW OF STRATEGIC BUSINESS UNIT (SBU) OPERATIONS AND FOCUS STRATEGIESCONTENTSALES RATIO
in the Fiscal Year Ended
March 31, 2013

BUSINESS PERFORMANCE

Millions of yen

2011

2012

2013

¥179,917¥225,504¥263,596

16.9%¥250,000

Segment income

3,092

17,00336,438114.3%

28,000

Segment income margin

1.7%

7.5%

13.8%

—

11.2%

For the fiscal years ended March 31

Net sales% change Forecasts for 2014

Note: The percentage figure is calculated based on sales
before elimination of internal transactions.

MARKET DATANET SALES BREAKDOWN

Billions of yen

2011

2012

2013

Arcade game machines¥ 56.0¥ 73.4¥ 71.8Home video game software

81.2

86.0

84.4

Others, elimination*

42.7

66.1

107.3

Total

179.9

225.5

263.5

For the fiscal years ended March 31

50.5%* Including network content, visual and music content, etc.

Share of Unit Sales by Domestic Production Group (2012)
dwango1.6%

OthersSony ComputerEntertainment JapanTECMO KOEI

14.2%
Nintendo
32.5%

2.1%

2.9%
BANDAI NAMCO

LEVEL-5
SEGA

3.4%

17.2%

4.1%

KONAMI

5.7%

Square Enix

7.6%

Capcom

8.7%

Source: Famitsu Game White Paper 2013, Published by ENTERBRAIN, INC.
(Period: December 26, 2011, to December 30, 2012)

STRATEGIC POINTS IN FY2014.3

In accordance with the IP axis strategy, leverage abundant content outlets and emphasize appeal of IP.

24

Arcade game machines, prizes

Network content

Provide entertainment that draws on BANDAI NAMCO’S distinctive
strengths and earns the support of users. Accommodate diversification of sales frameworks. Strengthen overseas development in
Asia and other markets.

Foster stable growth by launching new games and implementing
timely renewals of existing content in the fields of social games andonline games.

Home video game software

Visual and music content

Strengthen new initiatives for titles using established popular series
and IP and for products drawing on network capabilities, such as
download-only titles.

In addition to the Mobile Suit Gundam series, provide high-quality
products in a diverse range of genres. Devote resources to the creation of new IP.

AMUSEMENT FACILITY

SALES RATIO
in the Fiscal Year Ended
March 31, 2013

BUSINESS PERFORMANCE
2011

2012

2013

¥62,338¥61,033¥60,186–1.4%¥60,000

Segment income

1,779

2,381

1,684

–29.3%

2,000

Segment income margin

2.9%

3.9%

2.8%

—

3.3%

For the fiscal years ended March 31

Net sales

11.5%

Millions of yen% change Forecasts for 2014

Note: The percentage figure is calculated based on sales
before elimination of internal transactions.

MARKET DATATOTAL NUMBER OF AMUSEMENT FACILITIES (March 31, 2013)
Facilities

Number of which that are
RegionRegional total

Directly managed
facilities

Revenue-sharing
facilities*

Others

229

216

11

2

Japan
North America

1,007

20

987

0

Europe

13

11

2

0

Asia

22

7

15

0

Total

1,271

254

1,015

2

Size of Japan’s Amusement
Facility Market¥billion

515.0
476.0

466.0

2010

2011

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

2009

Source: Leisure White Paper 2012, Japan Productivity Center

STRATEGIC POINTS IN FY2014.3

As outlets for the IP axis strategy, leverage facilities as Groupwide information provision sites.
Take steps to advance the development ofdifferentiated facilities that offer customers theopportunity to experience the distinctive
worldview of specific characters, such as
facilities that enable visitors to dress up as
characters, cross-sectional campaigns, andcharacter pop-up stores.

Take steps to develop indoor theme parks into
a new operational pillar, such as the openingof J-WORLD TOKYO, which enables customers
to experience the worldview of Jump content,
and the remodeled NAMCO NAMJATOWN.

In response to the issue of an increase in the
consumption tax, enhance earnings platformby taking steps to expand business portfolio,
such as nurturing new businesses, and byimplementing structural reforms.

25

THE BANDAI NAMCO GROUP’S CSR INITIATIVES
To realize the provision of “Dreams, Fun and Inspiration,” the BANDAI NAMCO Group conducts CSR activities in accordance withthe concept of “Fun for the future!” Themes that require special initiatives have been identified as “BANDAI NAMCO Group’s
Important CSR Themes.” In addition, each strategic business unit (SBU) formulates its own “CSR Major Initiative Themes” andleverages the special characteristics of its operations to implement activities in accordance with those themes.

BANDAI NAMCO Group’s CSR Policy
Mission“Dreams, Fun and Inspiration”

CSR Action Concept

FUN FOR THE FUTURE!
The Group’s CSR Initiatives

Compliance Charter

1 Environmental and Social Responsibilities
2 Economic Responsibilities
3 Legal and Ethical Responsibilities

Rules related to appropriate products and services / fairdealings, respect for all employees, information disclosure,respect for and usage of intellectual property, protection of
information and resources, rejection of anti-society groups,
harmony with the environment, and harmony with society.

BANDAI NAMCO Group’s Important CSR Themes
Safety and Cleanliness of Products and Services

Policies Regarding Influence on Society of the Group’s Content and Products

Environmental Consideration

Supply Chain Management

Each SBU and affiliated business company sets up priority initiatives and works to
identify specific activities related to its business operations.

CSR Action Concept
At BANDAI NAMCO, CSR activities are “Fun for the future!” Our work is to provide inspiration tocustomers by realizing individual ideas of “Dreams, Fun and Inspiration.” In turn, those “Dreams,
Fun and Inspiration” provide healing and encouragement as they spread around the world.
We believe that “Dreams, Fun and Inspiration” can change the world, and even change the future.
As a company that provides “Dreams, Fun and Inspiration,” our relationship with the natural environment and society will be guided by the key words “Fun for the future!” We will implement CSR
activities that lead to happiness for stakeholders by featuring fun today while also contributing to
the creation of fun tomorrow. We believe that entertainment can contribute to society by fostering
inspiration and creating a future of “Dreams, Fun and Inspiration.”

26

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

Manufacture of safe, reliable products
In all of our business fields, wefollow all legal and industry quality
and safety standards. We havealso established our own morerigorous in-house standards, andwe pay careful attention to safety.

“BANDAI NAMCO Forest” at Shiga Kogen

Product raw materials and packaging andwrapping initiatives
We are implementing measures to reducepackaging, such as decreasing packaging
space ratios, developing packaging-free
products, using packaging that utilizes
low-environmental-impact materials,
reducing plastic model runners, andreducing packaging materials foramusement machines.
Moving toward low-environmental-impact
packaging (using pulp molds)

Social contribution activities
We are conducting a variety ofactivities to promote a deeper
understanding of culture, science,and entertainment. These include
the Omocha-no-Machi Bandai
Museum, in Tochigi Prefecture,
which has a collection that
includes toys from Japan andoverseas as well as many items
created by the famous inventor
Thomas Edison.

Dropping products to test for quality

Wide-ranging environmental impact reduction
activities
At the Bandai Hobby Center, inthe city of Shizuoka, we are implementing a range of environmental
conservation initiatives, suchas solar power generation andresource recycling. Moreover,
BANDAI LOGIPAL INC. has
acquired Green Management
Certification, which is given totransportation companies that
implement low-environmentalimpact operations.

Bandai Hobby Center (plastic model plant)

Universal design initiatives
From the viewpoint of universal
design, which focuses on making
things easy to use for as many
people as possible, we are taking
steps to increase usability, suchas improving packaging to makeit easier to open.

Omocha-no-Machi Bandai Museum

Initiatives to motivate and support
human resources
The BANDAI NAMCO Group is
implementing a variety of initiatives
to enhance the utilization of humanresources. These include measures to advance dynamic corporate activities. For example, theGroup has established an award
system to recognize products andservices that excel in such areas
BANDAI NAMCO Awards
as market success, creativity, anduniqueness. Other programs
include aggressive personnel exchange initiatives and developmenttraining for future management candidates.

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

Supporting reconstruction activities following
the Great East Japan Earthquake
In partnership with Save theChildren Japan, we are offering a
range of activities, such as eventsfor children. In addition, we haveintroduced a system offering
choices of complimentary gifts forshareholders. One of the choices
is to make a donation to support
activities for children.
Workshops in disaster-stricken areas

27

CORPORATE GOVERNANCE
Our highest management priority is the provision of benefits to all of our stakeholders, who support our business activities.
We believe that to achieve ongoing growth in enterprise value over the long term, the continuous enhancement of corporate
governance is an important management issue. The Group aims to be a corporate group that is trusted by society and that makes
an ongoing contribution to society. While striving to raise management soundness, transparency, and efficiency, we will build a
corporate governance system that facilitates rapid information disclosure.

Corporate Governance System
NAMCO BANDAI Holdings is working to enhance management
oversight. As of June 24, 2013, the Company had nine directors,
including three outside directors. Moreover, to respond rapidly tochanges in the management environment and to further clarify the
responsibilities of directors, the term of directors has been set at
one year or less.
The Company uses the audit & supervisory board system andhas established the Audit & Supervisory Board. The Company
believes that the auditing system based on the Audit & Supervisory
Board, including outside Audit & Supervisory Board members, isan effective means of implementing the management oversightfunction. Our outside directors and outside Audit & Supervisory
Board members have the important duty of monitoring management through the implementation of objective, neutral auditing andsupervision based on their high levels of independence andspecialized knowledge. We believe that they are contributing to
the bolstering of our internal control systems.
In regard to internal audits, the Internal Auditing Division audits
business execution by conducting on-site audits or document
audits of each Company division in accordance with internal

auditing rules. The Internal Auditing Division reports the results of
those audits to the president. In addition, the Internal Auditing
Division formulates basic guidelines for internal audits within theGroup and monitors the implementation of internal audits ateach Group company in accordance with the Group’s internal
auditing rules. In regard to audits by the Audit & Supervisory
Board, the four Audit & Supervisory Board members (of whom
two are full-time Audit & Supervisory Board members and three
are outside Audit & Supervisory Board members), attend important meetings, such as meetings of the Board of Directors. In
addition, in accordance with the Audit & Supervisory Board regulations, the audit standards for the Audit & Supervisory Board,and implementation standards and auditing plans related tointernal control systems, the Audit & Supervisory Board members
conduct audits regarding the status of business execution by the
directors. The Internal Auditing Division, the Audit & Supervisory
Board members, and the independent auditors continually
exchange opinions and maintain close ties. The status of theGroup’s business operations is monitored, issues are identified
and understood, and recommendations for resolving those issues
are provided.

General Meeting of Shareholders
Appointment /Dismissal

Account
Auditing /Reports on
Results

Appointment /Dismissal

Audit & Supervisory Board

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

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

Auditing

Appointment /Dismissal

Independent Auditors
Dismissal

Appointment /Dismissal /Supervision
Auditing

President and CEO,
Representative Director

Personnel Committee
Reports
Reports

Directions
Directions

Cooperation

Reports

Internal Auditing Division
Committees

SBU Quarterly Report MeetingGroup CSR Committee

Group Management MeetingGroup Risk Compliance Committee

Content Business Strategy
Meeting

Group Information Security Committee
SupportAsia Strategy Meeting
Policy Directions

Group CSR
Subcommittee

Auditing

Internal Control Committee
Policy Directions

Reports

BANDAI NAMCO Group Companies
As of June 24, 201328

As shown in the table on page 30, the Company holds a variety
of top management meetings and has established a system thatfacilitates rapidly tracking and responding to Group management
information.
Moreover, the Company has established the Personnel
Committee, which objectively and neutrally considers personnel
and compensation issues regarding directors, as well as othermatters about which it has received inquiries, in particular fromthe president and representative director. (The majority of thecommittee members are outside directors.)

Furthermore, the Group comprises three SBUs and the affiliated business companies, which principally provide support services to the SBUs. In each SBU, operating strategies for Japanand overseas are formulated and implemented, with the lead roletaken by the SBU’s core company.
The Company, which is a holding company, monitors each
SBU; holds meetings of Groupwide committees, such as the SBU
Quarterly Report Meeting, the Group Management Meeting, theContent Business Strategy Meeting, the Asia Strategy Meeting,
the Group CSR Committee and the Waigaya Meeting; and, for the

Message from Outside Officers

Director (Outside) Manabu Tazaki
Immediately after the management integration of Bandai and
NAMCO in 2006, I became a business advisor to theCompany, and in 2009 I became an outside director. I have
had previous management experience in the toy industry, andI have some understanding of the industry as well as theCompany. Accordingly, I believe that my experience is usefulin the management of the Company.
I believe that my role as an outside director is to protect
the interests of shareholders through the control and supervision of management. In the management of a holding company,
it is important to monitor the operating companies to ensurethat they are being run appropriately. I strive to draw on myown experience to contribute in the areas of control and supervision. I also think it is important to understand the business andstrategies of each operating company and to listen carefully
to the intentions of the leader of each SBU’s core company.
At BANDAI NAMCO Holdings, the president of each SBU’score company is a member of the holding company’s Board of
Directors. Accordingly, the Board of Directors can directly

confirm appropriate information from the front lines as well as
the intentions of the presidents of the core companies. At
meetings of the Board of Directors, we have lively discussions
based on this information, and I strive to offer a range ofadvice from an outside perspective in consideration of myexperience to date.
This approach enhances the steady monitoring of theoperating companies by the holding company. In addition, theCompany is actively appointing independent officers. In theseways, I believe that the Company has established a corporate
governance system that functions effectively. From my outside perspective, the Company’s management is sound andstable. In the future, I will strive to draw on my experience tocontribute to management and help BANDAI NAMCO Holdings
to achieve further growth as a company with dreams.

Audit & Supervisory Board Member (Outside) Kouji Yanase
I am now in my second term as an outside Audit & Supervisory
Board member at the Company. As an Audit & Supervisory
Board member, I regularly attend meetings of the Audit &Supervisory Board. At these meetings, reports from full-time
Audit & Supervisory Board members regarding methods ofauditing the Company’s operations are received and discussed. In addition, I periodically have discussions with therepresentative directors and other directors with businessexecution responsibilities. In these ways, I work to fulfill myduties as an Audit & Supervisory Board member.
At meetings of the Board of Directors, I listen to reports
from directors in their fields of specialty and the related discussions, as well as a range of other questions and discussions. In these ways, I learn about the actual state of theCompany’s affairs.
I am an attorney, but I believe that my most important duty
as an outside Audit & Supervisory Board member is to monitor the appropriateness and soundness of the Company’s

affairs, not just from the viewpoint of a legal specialist but also
from a third-party viewpoint, as well as the viewpoint of someone who is a novice in business administration.
With society undergoing daily change, the Company continues
to consider from a variety of pespectives how it can contribute tosociety. In order for the Company to be able to focus its capabilities on external challenges in an effective manner, it is important
to maintain careful administration internally.
Heretofore, I believe that the corporate governance andcompliance systems of NAMCO BANDAI Holdings have functioned well, and henceforth, as an Audit & Supervisory Board
member, I will focus on ensuring that these systems continue
to function in this manner. Moving forward, I will do my utmost
to help the Company to meet the expectations of its shareholders and other stakeholders.

29

CORPORATE GOVERNANCE

Meeting Name

Schedule

Agenda / Purpose

Participants

Board of Directors

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

SBU Quarterly
Report Meeting

Quarterly

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

Directors, Audit & Supervisory Board members,
other designated employees

Group Management 6 times a year Deliberations regarding issues extending across SBUs, other Group
Meetingmanagement issues, strategic deliberations

Full-time directors, other designated employees

Content Business
Strategy Meeting

Quarterly

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

Directors with related responsibilities, directors frommajor subsidiaries with related responsibilities, otherdesignated employees

Asia Strategy
Meeting

Quarterly

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

Directors with related responsibilities, directors frommajor subsidiaries with related responsibilities, otherdesignated employees

Group CSR
Committee

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

Full-time directors, other designated employees

Waigaya Meeting

WeeklyFull-time directors, other designated employees

Weekly reports regarding the departments for which directors are responsible

Group as a whole, shares the status of operations and considers
and formulates strategies.
The Board of Directors has decided fundamental policies
regarding internal control systems as stipulated by the Companies
Act. In regard to the internal control reporting system under the
Financial Instruments and Exchange Act, the Company’s Internal
Control Committee formulates policies regarding the establishment and evaluation of internal control systems in the Group,
shares information, and conducts internal Group monitoring. The
committee also presents internal control system reports, and theBoard of Directors makes decisions on fundamental issues.
In addition, the Group Information Security Committee has
been established with the objective of decision making, implementation reporting, and information sharing in regard to the Group’s
information security activities overall.

Outside Directors and Outside Audit & Supervisory
Board Members
Of the Company’s nine directors, three meet the conditions foroutside director. The Company is working to strengthen the
management oversight function. In addition, of the four Audit &Supervisory Board members (including two full-time Audit &Supervisory Board members), three meet the conditions for outside Audit & Supervisory Board members. They work together andmonitor the Company’s internal control situation on a daily basis.
The status of audits by internal auditors, audits by the Audit &Supervisory Board members, and audits by the independent auditors are reported to the Board of Directors. By attending meetingsof the Board of Directors, the outside directors track the status ofthese audits and work to maintain close ties.
In addition to tracking the status of internal audits reported atmeetings of the Board of Directors, outside audit & supervisoryboard members track the status of audits by the Audit & Supervisory
Board members at meetings of the Audit & Supervisory Board andmaintain cooperative relationships with the internal auditors andthe other Audit & Supervisory Board members. In addition, allmembers of the Audit & Supervisory Board, including outside Audit& Supervisory Board members, receive explanations from theindependent auditors of the status of account audits on a quarterly
basis. In this way, they track the status of these audits and maintain cooperative relationships with the independent auditors.

30

Furthermore, through matters brought to the Board of
Directors, outside directors and outside Audit & Supervisory Board
members track the status of internal control departments (all of
the Company’s departments). In addition, they attend the SBU
Quarterly Report Meeting, where reports on the status of theGroup’s operations are made; strengthen the supervisory function;and provide advice as needed.

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

Financial
Section

CONTENTS
32 Consolidated Six-Year Financial Summary
33 Financial Review
36 Consolidated Balance Sheets
38 Consolidated Statements of Income and		 Consolidated Statements of Comprehensive Income

39 Consolidated Statements of Changes in Net Assets
40 Consolidated Statements of Cash Flows
41 Notes to Consolidated Financial Statements
64 Independent Auditors’ Report31Consolidated Six-Year Financial Summary
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31
Millions of yen, except per share data and main financial indicators

2008

2009

2010

2011

2012

2013

Net sales¥460,474¥426,400¥378,547¥394,179¥454,211¥487,241

Gross profit

164,073

146,023

128,753

139,415

167,503

183,079

Selling, general and administrative expenses

130,662

123,675

126,869

123,077

132,896

134,436

Operating income

33,411

22,3481,884

16,33834,607

48,643

Recurring income*1

36,19824,513

1,908

16,39934,96049,973

Net income (loss)

32,67911,830(29,929)

1,848

19,30432,383———(4,600)21,551

41,505

34,115

17,481

14,41813,43923,75823,836

Depreciation and amortization

24,75922,54618,98918,001

18,142

20,416

Cash flows from operating activities

35,00019,301

10,582

22,562

39,112

36,411

Total assets¥413,023¥363,445¥325,936¥308,269¥342,172¥374,203

Total current assets

267,713230,086

217,763

210,934

240,920

264,804

Total current liabilities

101,649

84,30486,605

86,105

107,946

108,391

Total net assets

289,944

260,579

229,012

213,693

213,126

248,770¥128.65¥47.95¥(123.98)¥ 7.71¥85.62¥147.40

24.00

24.00

24.00

24.00

26.00

45.00

Return on equity (ROE)*3 (%)

11.7

4.3

–12.4

0.8

9.1

14.1

Return on assets (ROA)*4 (%)

8.8

6.3

0.6

5.2

10.7

14.0

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

28.4

29.0

33.5

31.2

29.3

27.6

Operating income margin (%)

7.3

5.2

0.5

4.1

7.6

10.0

Net income margin (%)

7.1

2.8

–7.9

0.5

4.3

6.6

Shareholders’ equity ratio (%)

69.4

70.9

69.5

68.8

61.8

66.0

Debt/equity ratio (times)

0.06

0.08

0.06

0.02

0.09

0.05

For the Year:

Comprehensive income (loss)
Capital expenditures*2

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

Notes:*1 Recurring income is a Japanese accounting term denoting income before extraordinary items.
*2	Until the previous fiscal year, transfers from inventories had not been included in capital expenditures. However, from the fiscal year under review, transfers from inventories are included
in capital expenditures. Figures for the previous fiscal years have been restated.
*3 ROE = Net income (loss) / Average total shareholders’ equity (= Total net assets – Stock acquisition rights – Minority interests)*4 ROA = Recurring income / Average total assets

32

Financial Review
Overview of Performance in the
Fiscal Year Ended March 31, 2013
In this fiscal year, although some signs of improvement in economic
conditions have begun appearing thanks to positive expectations
towards factors such as economic policies aimed at promoting
growth in the domestic environment from late 2012, the economic
slowdown in Europe resulting from financial instability and the effectof exchange rate fluctuations have meant that, overall, harsheconomic conditions continued. As for the entertainment industry,
weak individual consumption and other factors added further
uncertainty to conditions.
In this environment, the BANDAI NAMCO Group (“the Group”)
is implementing various measures aimed at medium- to long-term
growth under the concept of “Empower, Gain Momentum, Accelerate
Evolution,” which is the vision of the Group’s new Mid-term Plan,
started in this fiscal year. On the business front, the Content Business
contributed to performance in each category, particularly in network
content by coordinated deployment revolving around IP (intellectual
property) such as characters.
Net Sales
On a consolidated basis, the Group’s net sales were ¥487, 241 million(year-on-year increase of 7.3%).
Cost of Sales
Cost of sales was ¥304,162 million, and the ratio of cost of sales to
net sales declined to 62.4%, compared with 63.1% in the previous
fiscal year. As a result, gross profit was ¥183,079 million, and thegross profit margin increased to 37.6%, compared with 36.9% in
the previous fiscal year.

SG&A Expenses
Selling, general and administrative (SG&A) expenses were ¥134,436
million (year-on-year increase of 1.2%), and the ratio of SG&A
expenses to net sales declined to 27.6%, compared with 29.3% in
the previous fiscal year. Principal items included advertising expensesof ¥32,600 million, directors’ remuneration and employees’ wagesof ¥36,160 million, employees’ retirement and severance benefitsof ¥2,159 million, and research and development expenses of¥16,619 million.
Operating Income
Operating income was ¥48,643 million (year-on-year increase of
40.6%), and the operating income margin rose to 10.0%, comparedwith 7.6% in the previous fiscal year.
Other Income (Loss)
In other income (loss), loss on valuation of investment securities
declined substantially to ¥21 million, compared with ¥1,406 million in
the previous fiscal year. Loss on sales and disposal of fixed assets,net, declined to ¥234 million, compared with ¥925 million in theprevious fiscal year. In addition, other items netted out to a gain of¥278 million, compared with a loss of ¥1,073 million in the previous
fiscal year. As a result, other loss was ¥153 million.
Net Income
The Group recorded net income of ¥32,383 million (year-on-yearincrease of 67.8%). In addition to favorable consolidated results, theGroup used the consolidated tax return filing system from this fiscal
year, and as a result, the amount of the tax credit for research anddevelopment expenses, and others increased. Accordinagly, income
taxes were less than initially forecast. The net income margin in thisfiscal year was 6.6%, and net income per share rose substantially,reaching ¥147.40, compared with ¥85.62 in the previous fiscal year.

Results by Segment

Millions of yen

Millions of yen

Net sales

Segment income

2013

2012

Year on year

2013

2012

Year on year

Toys and Hobby¥172,977¥177,994¥ (5,017)¥11,255¥16,113¥ (4,858)
19,435

Content

263,596

225,504

38,09236,43817,003

Amusement Facility

60,18661,033

(847)

1,684

2,381

(697)

Other

25,78827,482(1,694)

1,693

2,051

(358)

Toys and Hobby BusinessIn the Toys and Hobby Business, domestically, sales performed
favorably due to coordinated sales of products in the variety of
categories revolving around toys including long-established characters such as the KAMEN RIDER series and PRETTY CURE! series.
Although domestic performance was lower year on year in total, forreasons such as a lower gross margin ratio resulting from changes in
the product mix, the Group made steady efforts toward broadening
the scope of target customers, including by developing products
such as the new Aikatsu! characters for girls, plastic models forelementary school students, and collectable toys for adults.
Overseas, in North America and Europe, although products of thePower Rangers series sold favorably, overall performance was weakamid a harsh market environment. In the Asian region, plastic models
and collectable toys for adults became popular in addition tocharacter toys thanks to developments in conjunction with Japan.
As a result, net sales in the Toys and Hobby Business were
¥172,977 million (year-on-year decrease of 2.8%), and segment
income was ¥11,255 million (year-on-year decrease of 30.1%).
Content BusinessIn the Content Business, the network content area made a significant
contribution to performance mainly through social games such as the
Mobile Suit Gundam series, ONE PIECE Grand Collection, and
IDOLM@STER CINDERELLA GIRLS. Arcade game machines forwell-established series and new game machines such as FishingSpirits became popular, and prize sales of popular characters werefavorable. Also contributing to performance were visual and music
content areas, which enjoyed favorable sales of Mobile Suit Gundam
UC (Unicorn) and repeat sales of visual packages that were launched33

Financial Review

in previous years, as well as sales of LCD units for pachinko andpachi-slot machines. In home video game software, the launch of
the latest titles of popular series such as SOULCALIBUR, NARUTO,TALES OF, and ONE PIECE in both the Japanese and overseas
markets, and domestic sales of titles with concepts based on
popular television programs, trended strongly.
As a result, net sales in the Content Business were ¥263,596
million (year-on-year increase of 16.9%), and segment income was¥36,438 million (year-on-year increase of 114.3%).
Amusement Facility BusinessIn the Amusement Facility Business, domestically, despite a steady
performance mainly by differentiated facilities located in shopping
centers that offer customers the opportunity to experience thedistinctive worldview of specific characters, sales at existing facilities
declined to 95.5% of the previous fiscal year, when we recorded
a high level of sales.
In the challenging market environment presented by countries
outside Japan, results were at a similar level to those of the previous
fiscal year as a result of efficiency in operations from the selection
and concentration of stores.

Cash Flows
As of the end of this fiscal year, cash and cash equivalents(“net cash”) had increased by ¥11,715 million from the end of theprevious fiscal year, to ¥119,042 million. Below is the breakdown
of cash flows by activities.

As a result, net sales in the Amusement Facility Business were¥60,186 million (year-on-year decrease of 1.4%), and segment
income was ¥1,684 million (year-on-year decrease of 29.3%).

Cash Flows from Operating Activities
The amount of net cash provided by operating activities totaled¥36,411 million (year-on-year decrease of 6.9%). Net cash usedmainly included income taxes paid of ¥20,378 million (compared with
¥13,834 million in the previous fiscal year) and an increase in tradereceivables of ¥5,522 million (compared with ¥12,667 million in theprevious fiscal year). However, overall, there was a net increase in net
cash due to income before income taxes and minority interests of¥48,490 million (compared with ¥30,408 million in the previous fiscal
year), and depreciation and amortization of ¥20,416 million (comparedwith ¥18,142 million in the previous fiscal year).

Other Businesses
Other Businesses consist of companies that conduct businesses
such as logistics support, printing, and other kinds of administrationand operational support for each of the Group’s businesses. We aremaking efforts to manage such operations related to group support
in an efficient manner.

Cash Flows from Investing Activities
The amount of net cash used in investing activities totaled ¥14,861
million (year-on-year decrease of 2.6%). The main item of net cashused was purchases of property, plant and equipment and intangible
assets totaling ¥13,531 million (compared with ¥14,530 million in theprevious fiscal year).

Net sales in the Other Businesses were ¥25,788 million (year-onyear decrease of 6.2%), and segment income was ¥1,693 million(year-on-year decrease of 17.5%).

Financial Position
As of March 31, 2013, total assets stood at ¥374,203 million, an
increase of ¥32,031 million from the end of the previous fiscal year.
The main factors were increases of ¥12,174 million in cash and time
deposits and ¥7,967 million in trade receivables in connection withfavorable results, ¥3,228 million in investment securities due tomarket valuation, and ¥3,818 million in deferred tax assets.
Total liabilities amounted to ¥125,433 million, a decrease of ¥3,613
million from the end of the previous fiscal year. The main factors weredecreases of ¥5,383 million in long-term borrowings and ¥1,177
million in short-term borrowings, both due to repayment.
Total net assets stood at ¥248,770 million, an increase of ¥35,644
million from the end of the previous fiscal year. The main factors wereincreases of ¥25,868 million in retained earnings thanks to the recordingof net income through favorable consolidated results, and ¥6,165
million in foreign currency translation adjustments due to foreignexchange fluctuation, despite cash dividends paid of ¥5,715 million.
As a result, the shareholders’ equity ratio became 66.0%,
compared with 61.8% at the end of the previous fiscal year. The
current ratio*1 was 244.3%, compared with 223.2% at the end of theprevious fiscal year, the quick ratio*2 was 185.1%, compared with
165.0%; and the interest coverage ratio*3 was 244.4 times,
compared with 337.2 times.

34

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

Cash Flows from Financing Activities
The amount of net cash used in financing activities amounted to¥12,500 million (year-on-year increase of 110.7%). The main factors
for net cash used were cash dividends paid of ¥5,715 million(compared with ¥5,546 million in the previous fiscal year) and repayment of long-term borrowings of ¥5,333 million (compared with
¥5,167 million in the previous fiscal year).

Basic Policy on the Distribution of Profits andthe Payment of Dividends
The Company positions the return of profits to stockholders as oneof its highest management priorities. The fundamental policy is tomaintain a stable dividend and increase corporate value while
becoming an even more competitive Group, and preserving a soundfinancial position. The Company is maintaining the consolidated
dividend payout ratio at a level of 30%, based on stable annual
dividend payments of ¥24 per share. The Company has paid
dividends of ¥45 per share for the fiscal year ended March 31, 2013,
including the stable dividend portion of ¥24 and a results-linked
dividend of ¥21. For the fiscal year ending March 31, 2014, theCompany plans to pay the stable dividend portion of ¥24 per share,
and this will be considered by the Company in light of the consolidated
operating results and other factors.

In addition, after appropriation of dividends from the consolidated
net income for the period, the Company has resolved to attribute a
portion of the remaining balance to the acquisition of its own shares,
with comprehensive consideration of aspects such as the level ofcash held, operating performance, share price trend, and plan forlarge-scale investments.

Targets and Management Performance Indicators
The Group has adopted ROE (return on equity) as its key management performance indicator. Looking ahead, the Group will strive tocontinue to secure ROE of 10% or more by aiming to further expand
profits through execution of strategies under the Mid-term Plan,as well as by effectively utilizing stockholders’ equity.

Outlook for the Fiscal Year Ending March 31, 2014
Looking ahead, although there are some bright signs such as arecovery in Japan’s stock markets, the business environment is
expected to remain beset by uncertainties including individual
consumption trends and economic developments in North America
and Europe. Such factors are also expected to have an impact on
the entertainment industry, in which the Group is extensively involved,
resulting in ongoing uncertainty in this business environment.
Facing these circumstances, the Group started its three-year
Mid-term Plan in April 2012, and will steadily implement the strategies in this plan. Specific areas of focus include obtaining new IP,
developing products and services, and working to construct new
business models with the aim of medium- to long-term growth, in
addition to strengthening the business foundation further to stabilize
and improve profitability.
In the Toys and Hobby Business, our plan for the Japanese market
is to strengthen development through coordinated sales of productsin the variety of categories revolving around long-establishedcharacter toys, such as the KAMEN RIDER series, Power Rangers
series, and PRETTY CURE! series. We will also expand our character
lineup by such means as developing the new Aikatsu! characters forgirls through cross-functional efforts undertaken across all businesses
and launching new characters for boys. In tandem with this, we will
aim to be No. 1 in Japan by an overwhelming margin by introducing
new products and services such as card games, plastic models, andcollectable toys for adults targeting a variety of customers. Outside
Japan, in North America and Europe, where the market environment
continues to be harsh, the Group will strive to improve profitability bystrengthening the integrated brand management structure of North
America and Europe and developing product sales with a focus oncontent for boys such as the mainstay Power Rangers series. In Asianmarkets, the Group aims to achieve growth through developments inconjunction with Japan, focusing on plastic models, collectable toys
for adults, and card products that are popular in Japan.
In the Content Business, the Group will enhance its IP strategy foroffering products and services in a wide variety of categories with afocus on IP. To this end, the Group will supplement its existing IP
lineup by cultivating new IP mainly through various business operations centered around PAC-MAN and the Ghostly Adventures,a new animated series scheduled to be broadcast primarily in North
America and Europe. Furthermore, the Group will put in place andimprove the development environment from a medium- and longterm perspective, such as by implementing measures to respondswiftly to technological progress and changes in the environment.

Looking at approaches by business, in the network content area, theGroup will work to achieve stable deployment of social games andonline games through the launch of new games and timely upgradesof existing content. In the area of home video game software, theGroup will introduce popular series while also taking a more proactive
approach to new initiatives that make use of network functions suchas download-only titles. For arcade game machines, in addition todevelopment and sale of popular game machines, the Group will
work to diversify sales methods through approaches including asystem in which fees vary according to the amount of use. In thearea of visual and music content, the Group will work to supplement
sales of the Mobile Suit Gundam series by taking a proactive
approach to creating new IP like the Aikatsu! characters.
In the Amusement Facility Business, in Japan, the Group will planand operate facilities and services aimed at each target customer
through reinforcement of its marketing by customer segment. The
Group will also continue to promote the development of differentiatedfacilities that offer the experience of the Group’s distinctive worldview
of specific characters. In the summer of 2013, the Group will open
new facilities including an indoor theme park based on popular
creations from the comic book Weekly Shonen Jump. These various
facilities will be operated as promotional venues for the entire Group.
The Group will also strive to improve profitability by implementing
various efficiency measures in North America and Europe.
In light of the above considerations, the consolidated projectionsof the fiscal year ending March 31, 2014 are as follows: net salesof ¥480,000 million (year-on-year decrease of 1.5%), operating
income of ¥40,000 million (year-on-year decrease of 17.8%), andnet income of ¥26,000 million (year-on-year decrease of 19.7%).
Consolidated Plan for the Fiscal Year Ending March 31, 2014

Segments

Millions of yen
Net sales

Segment income

Toys and Hobby¥180,000¥13,000

Content

250,000

28,000

Amusement Facility

60,000

2,000

Other

24,0001,000

Adjustments(34,000)(4,000)Consolidated¥480,000¥40,000

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

35

Consolidated Balance Sheets
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2012 and 2013

Millions of yen

Thousands of
U.S. dollars (note 3)

2012

2013

2013

AssetsCurrent assets:
Cash and time deposits (notes 4 and 12)¥ 106,959¥ 119,133$ 1,266,699

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

2,074

4,380

46,571

Trade receivables (notes 6 and 12)

69,102

77,069819,447

Allowance for doubtful receivables

(678)

(485)

(5,157)37,04036,644

389,623

Deferred tax assets (note 13)

8,734

10,580112,493

Other current assets

17,68917,483

185,890

		 Total current assets

240,920

264,804

2,815,566

22,17725,405

270,122

Inventories (note 7)

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

6,427

8,399

89,304

Other investments and assets

21,664

21,180225,199

Allowance for doubtful receivables(1,711)(1,338)(14,226)

		 Total investments and other assets

48,55753,646570,399

Buildings and structures

25,25325,319269,208

Amusement facilities and machines

60,59360,999648,581Land

11,38911,538

122,679

Property, plant and equipment:

Other property, plant and equipment

74,87086,537920,117

172,105

184,393

1,960,585

Less accumulated depreciation(127,605)(137,137)(1,458,129)

		 Net property, plant and equipment

44,50047,256502,456

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

36

8,195

8,497

90,346¥ 342,172¥ 374,203$ 3,978,767

Millions of yen

Thousands of
U.S. dollars (note 3)

2012

2013

2013

Liabilities and net assets
Current liabilities:
Short-term borrowings (notes 9 and 12)¥  6,773¥  5,596$   59,500

Trade payables (notes 10 and 12)

48,742

46,472

494,120

Accrued expenses

32,86438,070404,785

Accrued income taxes (notes 12 and 13)

9,360

7,853

83,498Other current liabilities (notes 9 and 13)

10,207

10,400110,581

107,946

108,391

1,152,484

Long-term borrowings (notes 9 and 12)

12,8837,500

79,745

Accrued retirement and severance benefits (note 11)39,596

		 Total current liabilities
Long-term liabilities:

3,141

3,724

Deferred tax liabilities (note 13)

983

1,589

16,895

Other long-term liabilities (note 9)

4,093

4,229

44,965

		 Total long-term liabilities

21,10017,042

181,201

		Total liabilities

129,046

125,433

1,333,685

10,00010,000106,326

Net assets:
Shareholders’ equity
Common stock (note 19)
		 Authorized: 1,000,000,000 shares
		 Issued: 222,000,000 shares
Additional paid-in capital

52,24652,246555,513Retained earnings (note 17)

173,250

199,118

2,117,151

Treasury stock, at cost; 2,308,176 shares in 2012 and 2,309,342 shares in 2013 (note 19)
		Subtotal(2,383)(2,385)(25,359)

233,113258,979

2,753,631
55,417

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

2,868

5,212

Deferred gains or losses on hedges, net of tax

230

642

6,826

Revaluation reserve for land, net of tax (note 18)(6,409)(5,609)(59,638)(18,358)(12,193)(129,644)

		Subtotal

Foreign currency translation adjustments(21,669)(11,948)(127,039)

Minority interests

1,682

1,739

18,490		 Total net assets

213,126

248,770

2,645,082

		 Total liabilities and net assets¥342,172¥374,203$3,978,767

37

Consolidated Statements of Income andConsolidated Statements of Comprehensive Income
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2013

Consolidated Statements of Income
Millions of yen

Thousands of
U.S. dollars (note 3)

2012

2013

2013

Net sales¥454,211¥487,241$5,180,659

Cost of sales

286,708

304,1623,234,045

		Gross profit

167,503

183,079

1,946,614

Selling, general and administrative expenses (note 14)

132,896

134,436

1,429,410

		Operating income

34,607

48,643517,204

Other income (loss):
Interest and dividend income

450

457

4,859

Interest expense

(137)

(142)

(1,510)Gain (loss) on sales of investment securities, net
Loss on valuation of investment securities
Gain (loss) on sales and disposal of fixed assets, net

(3)

15

159

(1,406)

(21)

(223)

(925)

(234)

(2,488)Loss on impairment of fixed assets (note 8)(1,105)(506)(5,380)Other(1,073)

278

2,956

(4,199)(153)(1,627)

Income before income taxes and minority interests

30,40848,490515,577

Income taxes (note 13)

10,94916,038

170,526

Income before minority interests

19,45932,452

345,051

Minority interests

155

69

734

		Net income¥ 19,304¥ 32,383$   344,317

Yen

U.S. dollars (note 3)

2012

2013

2013

¥962.45¥1,124.45$11.9685.62

147.40

1.57

—

—

—

26.00

45.00

0.48

Millions of yen

Thousands of
U.S. dollars (note 3)

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

Consolidated Statements of Comprehensive Income

Income before minority interests

2012

2013

2013

¥19,459¥32,452$345,051

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

2,452

2,325

24,721

Deferred gains or losses on hedges, net of tax

226

412

4,381

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

83

—

—

(637)

6,283

66,805

(32)

33

350

2,092
¥21,551

9,053¥41,505

96,257$441,308¥21,452¥41,304$439,171

99

201

2,137

Foreign currency translation adjustments
Share of other comprehensive income (loss) of associates accounted forusing equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests
See accompanying Notes to Consolidated Financial Statements.

38

Consolidated Statements of Changes in Net Assets
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2013

Millions of yen

Thousands of
U.S. dollars (note 3)

2012

2013

2013

¥ 10,000¥ 10,000$   106,326

10,00010,000106,326

69,92452,246555,513

Shareholders’ equity
Common stock (note 19):
		 Balance at beginning of year
		 Balance at end of year
Additional paid-in capital:
		 Balance at beginning of year
		 Disposal of treasury stock

0

(0)

(0)

		 Retirement of treasury stock(17,678)——

		 Balance at end of year

52,24652,246555,513

		 Balance at beginning of year

159,492

173,250

1,842,105

		Net income

19,30432,383344,317—(800)(8,506)(5,546)(5,715)(60,765)

173,250

199,118

2,117,151

		 Balance at beginning of year

(3,496)(2,383)(25,338)

		 Net change during year

1,113

(2)

(21)

		 Balance at end of year

(2,383)(2,385)(25,359)¥233,113¥258,979$2,753,631

Retained earnings (note 17):

		 Reversal of revaluation reserve for land		Cash dividends
		 Balance at end of year
Treasury stock (note 19):

			Total shareholders’ equity
Accumulated other comprehensive income (loss)
Unrealized gains or losses on other securities, net of tax (note 5):
		 Balance at beginning of year

448

2,868

30,494

		 Net change during year

2,420

2,344

24,923

		 Balance at end of year

2,868

5,212

55,417

Deferred gains or losses on hedges, net of tax:
		 Balance at beginning of year

3

230

2,446

		 Net change during year

227

412

4,380

		 Balance at end of year

230

642

6,826

Revaluation reserve for land, net of tax (note 18):
		 Balance at beginning of year

(6,492)(6,409)(68,145)

		 Net change during year

83

800

8,507

		 Balance at end of year

(6,409)(5,609)(59,638)(195,194)

Foreign currency translation adjustments:
		 Balance at beginning of year

(17,776)(18,358)

		 Net change during year

(582)

6,165

65,550		 Balance at end of year

(18,358)(12,193)(129,644)¥ (21,669)¥ (11,948)$  (127,039)

1,590

1,682

17,884

92

57

606

			 Total accumulated other comprehensive income
Minority interests:
Balance at beginning of year
Net change during year
Balance at end of year
			 Total net assets at end of year

1,682

1,739

18,490¥213,126¥248,770$2,645,082

See accompanying Notes to Consolidated Financial Statements.

39

Consolidated Statements of Cash Flows
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2013

Millions of yen

Thousands of
U.S. dollars (note 3)

2012

2013

2013

Cash flows from operating activities:¥ 30,408¥ 48,490$   515,577

Depreciation and amortization

18,142

20,416217,076

Loss on impairment of fixed assets

1,105

506

5,380

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

925

234

2,488

Loss on disposal of amusement facilities and machines

435

407

4,327

Loss (gain) on sales of investment securities, net

(81)

(49)

(521)

Loss on valuation of investment securities

1,406

21

223

Decrease (increase) in trade receivables(12,667)(5,522)(58,713)

4,082(1,558)(16,566)

Acquisition of amusement facilities and machines(2,926)(3,516)(37,384)

Increase (decrease) in trade payables

12,634(4,264)(45,338)

Other

(870)

1,312

13,950		Subtotal

52,59356,477600,499

Income before income taxes and minority interests

Decrease (increase) in inventories

Interest and dividends received

469

461

4,902

Interest paid

(116)

(149)

(1,584)(13,834)(20,378)(216,672)

39,112

36,411

387,145

Income taxes paid
		 Net cash provided by operating activities
Cash flows from investing activities:
Decrease (increase) in time deposits, net(85)(2,352)(25,008)(9,883)(8,842)(94,014)

34

272

2,892

(4,647)(4,689)(49,856)

Purchases of investment securities

(239)

(102)

(1,085)

Sales of investment securities

337

101

1,074

Proceeds from redemption of investment securities

24

74

787

Purchases of investments in subsidiaries

—

(250)

(2,658)Purchases of property, plant and equipment
Sales of property, plant and equipment
Purchases of intangible assets

Payments for investments in capital of subsidiaries and affiliates
Payments of loans receivable(1,235)

—

—

(544)

(229)

(2,435)

Collection of loans receivable

435

676

7,188

Payments of guarantee money deposited

(393)

(610)

(6,486)

Collection of guarantee money deposited

900

1,175

12,493

Other

32

(85)

(904)

(15,264)(14,861)(158,012)

Increase (decrease) in short-term borrowings, net

1,383(1,317)(14,003)

Proceeds from long-term borrowings

20,050——

Repayment of long-term borrowings(5,167)(5,333)(56,704)(883)

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

Payment of lease obligations

(78)

(83)

Decrease (increase) in treasury stock, net(16,564)

(2)

(21)

Cash dividends paid

(5,546)(5,715)(60,765)

25——

Proceeds from capital paid by minority interests
Cash dividends paid to minority interests
		 Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

(50)

(532)

(12,500)(132,908)

81

2,665

28,33617,997

11,715124,561

Cash and cash equivalents at beginning of year

89,330107,327

1,141,170

Cash and cash equivalents at end of year (note 4)¥107,327¥119,042$1,265,731

See accompanying Notes to Consolidated Financial Statements.

40

(35)
(5,932)

Notes to Consolidated Financial Statements
NAMCO BANDAI Holdings Inc. and Consolidated Subsidiaries

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

GAAP and filed with the appropriate Local Finance Bureau of thesubsidiaries have prepared their financial statements in accordance

Ministry of Finance as required by the Financial Instruments andwith the provisions set forth in the Japanese Financial Instruments

Exchange Act.

and Exchange Act and its related accounting regulations, and inSome supplementary information included in the statutory

conformity with accounting principles generally accepted in Japan

Japanese-language consolidated financial statements that is not(Japanese GAAP), which are different in certain respects as torequired for fair presentation is not presented in the accompanying

application and disclo­sure requirements of International Financial

consolidated financial statements.

Reporting Standards (IFRSs).

In preparing the accompanying consolidated financial state­ments,

The accounts of foreign subsidiaries are based on their accounting

certain reclassifications have been made to the con­solidated finan-

records maintained in conformity with IFRSs or account­ing principles

cial statements issued in Japan in order to present them in a form

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

that is more useful to readers outside Japan.

The accompanying consolidated financial statements have been

Certain reclassifications have been made to the prior year

prepared and translated into English from the consolidated financial

con­solidated financial statements to conform to the presen­tation

statements of the Company prepared in accordance with Japanese

used for the fiscal year ended March 31, 2013.

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

generally excluded from the consolidated statements of income and

The accompanying consolidated financial statements include

are included in “Foreign currency translation adjustments” andthe accounts of the Company and its significant subsidiaries.

“Minority interests” in “Net assets” in the consolidated balance sheets.

Consolidation of the remaining subsidiaries would have had
no material effect on the accompanying consolidated financial(d) Accounting Standards for Income and Expenses

statements. Investments in significant affiliates are accounted forVideo Game Software Revenue Recognition:using the equity method.

Consolidated subsidiaries operating in the United States recognize

Investments in unconsolidated subsidiaries and certain affiliates

revenue in accordance with “Software Revenue Recognition” ofother than those accounted for using the equity method are stated

Financial Accounting Standards Board (FASB) Accounting Standards

at cost. If the equity method had been applied to the investments in

Codification No. 985-605, treating video game software with online

these companies, there would have been no material effect on thefunctions as software products with multiple-element arrangements.

accompanying consolidated financial statements.

Unless the vendor can objectively and reasonably identify the market

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

value of undelivered elements specified by the vendor, recording of
any revenue attributable to video game software is deferred until all
the elements are delivered.

(b) Cash and Cash Equivalents

Accounting for Video Game Software Production Expenses:

In reporting cash flows, the Company considers cash on hand,

A distinctive characteristic of video game software is the process

demand deposits, and all highly liquid investments with original

through which the software is highly integrated with content thatmaturities of three months or less to be cash and cash equivalents.

cannot be separated into identifiable components.

(c) Foreign Currency Translation

video game title, which includes the game content and visual/music

Foreign currency transactions are translated into yen at rates in effectdata. Once management makes a decision to go forward inat the dates they are transacted, and the gains or losses arising from

distributing a title, the Company records the software and content

the settlement of the related receivables or payables are included indevelopment costs as inventories.

The content is considered to be an important component of each

“Other income (loss)” in the consolidated statements of income.
Receivables and payables denominated in foreign currencies at

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

the balance sheet date are translated at the rates in effect as of thebalance sheet date and the unrealized gains or losses are included in(e) Short-Term Investments and Investment Securities“Other income (loss)” in the consolidated statements of income.

Other securities with market value are principally carried at market

The assets and liabilities of foreign consolidated subsidiaries andvalue. The difference, net of tax, between the acquisition cost andaffiliates are translated into yen at the rates of exchange in effectthe carrying amount of other securities with market value is recog-

at the balance sheet date. Revenue and expenses of foreign consoli-

nized in “Unrealized gains or losses on other securities, net of tax” indated subsidiaries and affiliates are translated into yen at the average“Net assets” in the consolidated balance sheets until realized. Other

rates of exchange during the fiscal year. Gains and losses, resulting

securities without market value are principally carried at cost. The

from the translation of foreign currency financial statements arecost of other securities sold is principally computed based on the41

Notes to Consolidated Financial Statements

moving average method. Investments in investment limited partner-

Foreign Consolidated Subsidiaries:

ships or similar associations (investments that are deemed to be

Depreciation of property, plant and equipment is principally

securities under the Financial Instruments and Exchange Act, Article

computed by the straight-line method based on estimated useful

2, Clause 2), are carried at the net amount proportionate to thelives. The estimated useful lives for Buildings and structures andCompany’s ownership interests, based on the most recent financial

Amusement facilities and machines are 5–50 years and 3–7 years,

statements available in accordance with the financial reporting daterespectively.

specified in the partnership agreement.
( j ) Intangible Assets( f ) Allowance for Doubtful Receivables

Amortization of intangible assets is computed by the straight-line

The allowance for doubtful receivables is provided for possible losses

method based on estimated useful lives. Software for internal use

on unrecoverable receivables. For ordinary receivables, the amountis amortized over 3–5 years.

of the allowance is based on the historical rate of loss. For receiv-

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

ables from debtors at risk of bankruptcy and receivables fromdebtors in bankruptcy or under reorganiza­tion, the amount of the(k) Leases

allowance is based on individually estimated unrecoverable amounts.

Depreciation of leased assets is computed by the straight-line
method over the period of the lease with a residual value of zero.

(g) Inventories

Finance lease transactions, other than those in which title to leased

Domestic Consolidated Subsidiaries:

assets are determined to be transferred to lessees, which started on

Inventories are stated at cost determined by the average costor before March 31, 2008, are stated by applying the accounting

method. The value stated on the balance sheet is calculated bytreatment applicable to ordinary operating lease transactions.

writing down the carrying amount based on declining profitability.
Foreign Consolidated Subsidiaries:(l ) Derivatives and Hedging Activities

Inventories are stated at the lower of cost, determined prin­cipally

The Company and its consolidated subsidiaries use derivative instru-

by the average cost method, or net realizable value.

ments, such as forward foreign exchange contracts and interest rate

Both domestic and foreign consolidated subsidiaries state gameswap contracts, to reduce market risks arising from fluctua­tions insoftware work in process by the specific-cost method. The value

foreign exchange rates and interest rates. The Company and its

stated on the consolidated balance sheets is calculated by writing

consolidated subsidiaries use these deriva­tive instru­ments solely fordown the carrying amount based on declining profitability.

the purpose of reducing the risks resulting from such fluctua­tions
to which they are exposed in the course of their ordinary business(h) Income Taxes

activi­ties. Accordingly, the Company and its consolidated subsidiaries

Current income taxes are accounted for based on income. Deferred

do not use derivative instru­ments or other financial instruments forincome taxes are accounted for under the asset and liability method.

speculative purposes.

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

The Company and its consolidated subsidiaries’ counterparties forquences attributable to dif­ferences between the financial statement

derivative instruments are all highly creditworthy financial institutions

carrying amounts of existing assets and liabilities and their respective

and, therefore, the Company believes that it is exposed to almost notax bases and operat­ing loss and tax credit carryforwards. Deferredcounterparty risk. Derivative transactions are conducted in accor-

tax assets and liabilities are measured using enacted tax rates expected

dance with internal rules that specify transaction authority and trans-

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

action amount limits.

differences are expected to be recovered or settled. The effect on

As a general rule, derivative instruments are stated at market

deferred tax assets and liabilities of a change in the tax rate is recog­

value. For derivative instruments that meet the criteria for hedge

nized in income in the period that includes the enactment date.

accounting, recognition of unrealized gains or losses is deferred.

From this consolidated fiscal year, the Company and some of its

In cases where forward foreign exchange contracts meet certain

domestic consolidated subsidiaries have applied the consolidated

hedging criteria, the hedged receivables and payables are translated

taxation system.

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

(i) Property, Plant and Equipment

The Company and its consolidated subsidiaries assess the effec-

The Company and Its Domestic Consolidated Subsidiaries:

tiveness of hedging transactions from the start of the transaction

Depreciation of property, plant and equipment is principallyto the point at which effectiveness is assessed by comparing thecomputed by the declining-balance method based on estimatedcumulative changes in the market value or the cumulative changes

useful lives. The straight-line method is used for buildings (except forin the cash flows of the hedged item with the cumulative changes inbuilding fixtures) acquired since April 1, 1998. The estimated useful

the market value or the cumulative changes in the cash flows of the

lives for Buildings and structures and Amusement facilities andhedging instrument. In the event that critical terms are the same formachines are 3–50 years and 3–15 years, respectively.

the hedging instrument and the hedged assets, liabilities, or scheduled transaction, it is assumed that the hedge is 100% effective,
so the assessment of effectiveness is not performed.

42

In the event that a hedge becomes ineffective, hedge accounting
is no longer applied and the recognition of the gains or losses on thehedge transaction is no longer deferred.

Summary of the accounting standard that has not yet been adopted
Under the new accounting standard, actuarial gains and losses
and past service costs that are yet to be recognized in profit or loss
would be recognized within the net assets section, after adjusting(m) Provision for Directors’ Bonuses

for tax effects, and the deficit or surplus of a defined benefit plan

Accrued bonuses for directors are provided for based on thewould be recognized as a liability or asset without any adjustments.

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

In regard to the method of attributing expected benefit to periods,
the Standard now allows the benefit formula basis to be used,(n) Accrued Retirement and Severance Benefits

in addition to the straight-line basis. The method for determination

The Company and certain domestic consolidated subsidiaries haveof the discount rate has also been amended.

established a defined benefit corporate pension plan and defined
benefit retirement lump-sum benefit system plan, and a defined(o) Provision for Losses from Business Restructuringcontribution pension plan. Other domestic consolidated subsidiaries

Provision for losses from business restructuring is provided based on(excluding domestic consolidated subsidiaries with no retirement

the estimated losses to be incurred on restructuring of operations.

benefit system) have established a defined benefit corporate pension
plan, a defined benefit retirement lump-sum benefit system, and(p) Provision for Sales Returns

defined benefit comprehensive employee pension funds. Certain

The Company and its consolidated subsidiaries provide for losses

consolidated subsidiaries have established a defined contribution

on returned goods after the end of the fiscal year based on historicpension plan and a defined contribution smaller corporate retirement

experience.

allowance mutual aid plan. Moreover, additional benefits may be paid
at retirement. Certain foreign consolidated subsidiaries have estab-(q) Appropriation of Retained Earnings

lished defined benefit pension plans, retirement lump-sum benefit

In Japan, retained earnings with respect to a given financial period

systems, and defined contribution pension plans.

are appropriated by resolution of the shareholders at a general meeting

Accrued retirement and severance benefits for employees
in respect of defined benefit plans is provided for based on theto be held subsequent to the close of such financial period. The
accounts for that period do not, therefore, reflect such appropriations.

estimated values of projected benefit obligations and pension plan
assets at the end of the fiscal year. Unrecognized actuarial gain or(r) Data per Common Shareloss is amortized, beginning from the fiscal year following the year

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

in which it is incurred, using the straight-line method over a periodof shares outstanding during each year has been used. Diluted netthat does not exceed the average remaining years of service ofincome per share assumes the dilution that could occur if securities

employees as of the end of the fiscal year in which it is incurred (9–19

or other contracts to issue common stock were exercised or converted

years). Certain domestic consolidated subsidiaries amortize priorinto common stock, or resulted in issuance of common stock.

service costs over a fixed period (10–11 years) that does not exceed
the aver­age remaining years of service of employees at the point

Cash dividends per common share are computed based on
dividends declared with respect to the income for the year.

when the costs are incurred. Provision for retirement benefits todirectors and corporate auditors of certain domestic consolidatedsub­sidiaries is provided based on the amount payable at the endof the fiscal year in accordance with internal regulations.
The Company plans to adopt the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and “Guidance(s) Change in Accounting Policies with Amendment of
Respective Law or Regulation that are Not Distinguishable
from Changes in Accounting Estimates
Changes in depreciation method for property, plant and equipment
From the fiscal year ended March 31, 2013, in accordance withon Accounting Standard for Retirement Benefits” (ASBJ Guidance

the amendment in corporate tax law, the Company and some of its

No. 25, May 17, 2012) for the fiscal year ending March 31, 2014.

domestic consolidated subsidiaries have changed their depreciation

Amendments related to determining the method of attributing

method for property, plant and equipment. Assets acquired on or

expected benefit to periods will be effective from the beginning of theafter April 1, 2012 are depreciated using the method prescribed infiscal year ending March 31, 2015. There are transitional measures forthe amended corporate tax law. Due to this change in depreciation

this accounting standard, and accordingly it will not be applied retroac-

method, operating income and income before income taxes havetively to the financial statements for previous fiscal years. The effect oneach increased by ¥382 million ($4,062 thousands) for the fiscal year

the consolidated financial statements of the application of thisended March 31, 2013.

standard is currently in the process of being determined.

43Notes to Consolidated Financial Statements

3 Financial Statement Translation
The consolidated financial statements are expressed in yen. However, solely for the convenience of the reader, the consolidated financial
statements as of and for the fiscal year ended March 31, 2013 have been translated into U.S. dollars at the rate of ¥94.05=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market on March 31, 2013.
This translation should not be construed as an indication that the amounts shown could be converted into U.S. dollars at such rate.

4 Cash and Cash Equivalents
Reconciliations of cash and cash equivalents as of March 31, 2012 and 2013 between the amounts shown in the consolidated balance sheets
and the consolidated statements of cash flows are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits

2012

2013

2013

¥106,959¥119,133$1,266,699

Short-term investments

2,074

4,380

46,571Time deposits with maturities in excess of three months(1,706)(4,471)(47,539)¥107,327¥119,042$1,265,731

Cash and cash equivalents

Cash and time deposits of ¥3 million is pledged as collateral for bank transaction guarantees as of March 31, 2012. No cash and cash equivalents
is pledged as collateral as of March 31, 2013.

5 Short-Term Investments and Investment Securities
Short-term investments and investment securities as of March 31, 2012 and 2013 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2013

2013

Other securities with market value¥13,842¥18,902$200,978

Other securities without market value

1,443

1,527

16,236

Investments in non-consolidated subsidiaries and affiliated companies

8,879

9,273

98,596

87

83

883

¥24,251¥29,785$316,693

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

The original cost, carrying amount (market value), and gross unrealized holding gain (loss) for other securities with market value as of March 31,
2012 and 2013 are summarized as follows:
Millions of yen

2012
Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(market value)

Equity securities¥7,745¥3,966¥(17)¥11,694

Other

2,147

1

—

2,148

		Total¥9,892¥3,967¥(17)¥13,842

Other securities with market value:

Millions of yen

2013
Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(market value)

Other securities with market value:
Equity securities44¥ 7,721¥6,804¥(3)¥14,522

Other

4,380

—

—

4,380

		Total¥12,101¥6,804¥(3)¥18,902

Thousands of U.S. dollars

2013
Original cost

Gross unrealized
holding gain

Gross unrealized
holding loss

Carrying amount(market value)$154,407

Other securities with market value:
Equity securities$ 82,095$72,344

$(32)

Other

46,571——

46,571

		Total$128,666$72,344$(32)$200,978The following is a summary of the carrying amount of other securities without market value as of March 31, 2012 and 2013:
Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Carrying amount

Carrying amount

Carrying amount¥1,443¥1,527$16,236¥1,443¥1,527$16,236

Other securities without market value:
Unlisted securities
		TotalProceeds and gross realized gains and losses from the sales of other securities in the fiscal years ended March 31, 2012 and 2013 are as follows:
Millions of yen

Equity securities

Thousands of
U.S. dollars

2012

2013

2013

¥133

¥55

$585

Other

100

10

106

Proceeds from the sales of other securities

¥233

¥65

$691

Gross realized gains from the sales of other securities

56

15

159

Gross realized losses from the sales of other securities

(59)

(0)

(0)

Millions of yen

Thousands of
U.S. dollars

6 Trade Receivables
Trade receivables as of March 31, 2012 and 2013 are summarized as follows:

2012

2013

2013

Notes receivable¥ 6,065¥ 2,569$ 27,315

Accounts receivable–trade62,97274,457

791,675

65

43

457

¥69,102¥77,069$819,447

Millions of yen

Thousands of
U.S. dollars

Lease receivables and investment assets
		Total

7 Inventories
Inventories as of March 31, 2012 and 2013 are summarized as follows:

2012

2013

2013

Finished goods and merchandise¥12,908¥10,916$116,066

Work in process

19,417

19,598208,379

Raw materials and supplies
		Total

4,715

6,130

65,178¥37,040¥36,644$389,623

45

Notes to Consolidated Financial Statements

8 Loss on Impairment of Fixed Assets
Evaluation of fixed asset impairment is performed by grouping assets according to management accounting classifications based on strategic
business units, excluding significant idle assets, assets scheduled for disposal, and leased assets. In the Amusement Facility Business, theindividual facility is the smallest unit used in management accounting and is the basic unit for evaluating impairment.
The carrying amounts of the following assets, which exclude reusable assets, were reduced to the recoverable amount. The amounts ofreduction recorded as an impairment loss in “Other income (loss)” for the fiscal years ended March 31, 2012 and 2013 are as follows:

Strategic business unit

Items

Toys and Hobby

Software for Internet content Intangible assets
businessSeoul, Korea (Note 2)

Assets scheduled for
disposal

Buildings and structures,and other assets

Kyoto City, Kyoto,
and others (Note 4)

Assets for business use

Assets scheduled for
disposal

Other property, plant andequipment
Intangible assets, and otherassetsIntangible assets, and otherassetsCergy-pontoise,France (Note 1)
Shinagawa-ku, Tokyo(Note 2)
Shinagawa-ku, Tokyo,
and others (Note 3)

Assets for rental use

Land

Ota-ku, Tokyo (Note 6)

Amusement facility

Amusement facilities andKoto-ku, Tokyo, and othersmachines, and other assets (Note 1)
Staffordshire, U.K., andothers (Note 2)
Norfolk, U.K., and others(Note 1)
Narashino City, Chiba(Note 4)
Buildings and structures,
Shinagawa-ku, Tokyoand other assets(Note 3)

Content

Amusement Facility

Other

Assets for business use

Assets scheduled for
disposal

Classification

Land, and other assets
Toys and Hobby

Seoul, Korea (Note 1)

Assets scheduled for
disposalTaito-ku, Tokyo (Note 3)

Buildings and structures,and other assets

Assets scheduled for
disposal

Other property, plant andequipment

Amusement Facility

Amusement facility

Amusement facilities andmachines

Total

Nagoya City, Aichi (Note 5)

Software for Internet content Intangible assets
business

Content

Corporate (Common)

Location

Assets scheduled for
disposal

Buildings and structures,and other assets

Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

¥   322¥   —$    —

31

—

—

27

—

—

256

—

—

228

—

—

98

—

—

66

—

—

—

—

—

91

967

—

71

755

27
27

6
14
3

Funabashi City, Chiba, andothers (Note 4)
Shinagawa-ku, Tokyo(Note 3)

—

17

181

—

12

127

Nagoya City, Aichi, andothers (Note 3)
Kobe City, Hyogo (Note 4)

—

186

1,978

—

44

468

Shinagawa-ku, Tokyo(Note 3)

—

85

904

¥1,105¥506$5,380Notes: 1. Impairment loss was recorded because it was forecasted that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. In addition,these assets were determined to have no market value.
2. Impairment loss was recorded because it was forecasted that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. The
recoverable amount was measured as the estimated value in use based on forecast future cash flows.
3. Impairment loss was recorded on these fixed assets, for which no future use is anticipated. In addition, these assets were determined to have no market value.
4. Impairment loss was recorded because it was judged that the recoverable amount of these fixed assets had decreased substantially due to the decision to close the facility. In addition,these assets were determined to have no market value.
5. Impairment loss was recorded because the decision was made to sell this real estate asset. The recoverable amount of the real estate was measured based on the estimated net selling
price, which was assessed based on real estate appraisals.
6. Impairment loss was recorded because it was judged that the recoverable amount of these fixed assets had decreased substantially due to the change in use from a rental building to arental parking lot. The recoverable amount was measured based on the estimated net selling price, which was assessed based on its roadside land price.

46

9 Borrowings and Lease Obligations
Borrowings and lease obligations as of March 31, 2012 and 2013 are summarized as follows:
Millions of yen

Short-term borrowings
Long-term borrowings due within one year

2012

2013

2013

Carrying Weighted averageamountinterest rate (%)

Carrying Weighted averageamountinterest rate (%)

Carrying
amount¥ 1,440

1.08¥   213

5,333

0.78

66

4.62

12,8832.63$  2,265

5,383

0.73

57,235

71

4.97

755

0.80

7,500

0.76

79,745

119

3.00

96

4.42

1,021

¥19,841—¥13,263—$141,021

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

Thousands of
U.S. dollars

Note: The terms of the Company’s major borrowings include the following restrictive financial covenants:(1)	The Company shall maintain the amount of net assets on the consolidated balance sheet as of the closing dates of the interim and end of each fiscal year (the “Interim or End of Fiscal
Year”) at 75% or above of whichever is greater: (i) the amount of net assets on the consolidated balance sheet as of the closing date of the immediately preceding Interim or End of Fiscal
Year, or (ii) the amount of the net assets on the consolidated balance sheet as of March 31, 2011.
(2)	With respect to the recurring income or loss on the consolidated statements of income for each fiscal year, the Company shall not record recurring losses for two consecutive fiscal years.
(3)	From the date of the loan agreement and until all obligations to the lender and its agents under the terms of the agreement have been fulfilled, the Company shall maintain the ownership
ratio (direct or indirect) at 100% with respect to Bandai Co., Ltd., NAMCO BANDAI Games Inc., and NAMCO LIMITED.

The aggregate annual maturities of long-term borrowings and lease obligations outstanding as of March 31, 2013 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2014¥ 5,454$ 57,990

2015

4,566

48,549

2016

2,030

21,584

2017

1,000

10,6332018——¥13,050$138,756

Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Notes payable¥ 8,624¥ 4,776$ 50,781

Accounts payable–trade40,11841,696443,339¥48,742¥46,472$494,120

Total

10 Trade Payables
Trade payables as of March 31, 2012 and 2013 are summarized as follows:

Total

47

Notes to Consolidated Financial Statements

11 Retirement and Severance Benefits
The plans’ funded status and amounts of accrued retirement and severance benefits as of March 31, 2012 and 2013 are as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Projected benefit obligations¥(15,891)¥(18,798)$(199,872)

Plan assets at market value

10,354

11,070117,703

Projected benefit obligation in excess of plan assets(5,537)(7,728)(82,169)

Unrecognized loss

2,668

4,231

44,987

Unrecognized prior service cost
Net retirement and severance benefits recognized on the consolidated balance sheets

(266)

(227)

(2,414)(3,135)(3,724)(39,596)

Prepaid pension cost
Total accrued retirement and severance benefits

6

—

—

¥ (3,141)¥ (3,724)$ (39,596)

Notes: 1.	In addition to the above plan assets, plan assets of ¥277 million and ¥148 million ($1,574 thousand) as of March 31, 2012 and 2013, respectively, are managed by a governmental
welfare pension benefit plan, which was jointly established by the Company and various third-party companies. The aforementioned plan assets are computed based on a pro-rata
allocation of contributions paid.
2.	Certain consolidated subsidiaries use a simplified method for calculating projected benefit obligations.

Net periodic cost of employee retirement and severance benefits for the fiscal years ended March 31, 2012 and 2013 consists of the following:
Millions of yen

Service cost for benefits earned, net of employee contributions

Thousands of
U.S. dollars

2012

2013

2013

¥1,597¥1,691$17,980

Interest cost on projected benefit obligations

266

280

2,977

Expected return on plan assets

(269)

(154)

(1,637)

Amortization of unrecognized actuarial gain or loss

368

356

3,785

Amortization of prior service cost

(42)

(28)

(298)

¥1,920¥2,145$22,807

Net periodic cost

Notes: 1. In addition to the net periodic cost of employee retirement and severance benefits, contributions to a governmental welfare pension benefit plan are charged to “Cost of sales” and“Selling, general and administrative expenses.” Contributions to the governmental welfare pension benefit plan of ¥15 million and ¥8 million ($85 thousand) were charged to “Cost of sales”
and “Selling, general and administrative expenses” in the fiscal years ended March 31, 2012 and 2013, respectively. Also, additional discretionary retirement allowances of ¥199 millionand ¥560 million ($5,954 thousand) were charged to “Selling, general and administrative expenses” in the fiscal years ended March 31, 2012 and 2013, respectively.
In addition, for certain consolidated subsidiaries, additional retirement allowances of ¥542 million and ¥51 million ($542 thousand) were recorded for the fiscal years ended March 31,
2012 and 2013, respectively.
2. The retirement benefit expense for the Company and certain consolidated subsidiaries that use a simplified calculation method is recorded as service cost.
3. The defined contribution expenses for the Company and certain consolidated subsidiaries that have established defined contribution retirement pension systems is recorded as a service cost.
4. The contributions of certain consolidated subsidiaries that simultaneously participate in the Smaller Enterprise Retirement Allowance Mutual Aid Scheme are recorded as service cost.

Actuarial assumptions and the basis for the calculation of retirement and severance benefits in 2012 and 2013 are as follows:
2012

Method of benefit attribution“Benefits/years-of-service” approach

Discount rate

1.25%~2.00%

0.60%~1.40%

Expected rate of return on plan assets

2.50%~3.02%

1.62%~2.50%

Period of amortization of unrecognized prior service cost

10~11 years

10~11 years

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

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

Period of amortization of unrecognized actuarial gain or loss

48

2013

“Benefits/years-of-service” approach12 Financial Instruments
1. Financial Instruments

Borrowings are used mainly to procure funds needed for capital(1) Policy for financial instruments

expenditures and for investment financing. Variable rate borrowings

The Company and its consolidated subsidiaries manage funds by

are exposed to the risk of fluctuations in interest rates. With consider-means of highly secure financial instruments only and procures funds

ation of market trends, the Company and its consolidated subsidiaries

through borrowing from banks and other methods, such as issuing

implement hedging as necessary through the use of interest rate

corporate bonds.

swaps or interest rate options.

The Company and its consolidated subsidiaries utilize derivatives

Trade payables, borrowings, and accrued income taxes are exposedto hedge the risks noted below and do not engage in speculative

to liquidity risk. The Company and its consolidated subsidiaries

transactions.

manage this risk through the formulation and revision of monthly
funding plans for the Company and its consolidated subsidiaries.

(2) Contents and risks of financial instruments

Derivative transactions are used for hedging purposes. With regards

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

to hedging methods and hedged items, hedging policies, andreceivables, the Company and its consolidated subsidiaries manage

methods of assessing the effectiveness of hedging transactions, forbalances by counterparty and due date, and credit information onwhich hedge accounting is applied, please refer to Note “2 Summary

major customers is updated at least once a year to minimize suchof Significant Accounting Policies—(l) Derivatives and Hedging

credit risk. The Company and its consolidated subsidiaries have a

Activities” in the Notes to Consolidated Financial Statements.

system for immediately sharing within the Company and its consoli-

Derivative transactions are executed and managed according todated subsidiaries adverse credit and other information regarding

internal rules that determine trading authority and limits on amounts

counterparties in the event that such information is received.

traded. Derivatives are used in ways that minimize credit risk, andAs of March 31, 2012 and 2013, designated large customers werecounterparties for 13.7% and 12.0% of trade receivables, respec-

thus transactions are carried out only with highly creditworthy
financial institutions.

tively. Receivables denominated in foreign currencies arising as aresult of the fact that the Company and its consolidated subsidiaries
conduct business on a global basis are subject to foreign exchange(3) Supplementary explanation on the market value offinancial instruments

rate fluctuation risk. The Company and its consolidated subsidiaries

The market value of financial instruments includes, in addition to the

manage balances by counterparty and currency, and in addition thevalue determined based on market prices, valuations calculated

Company and its consolidated subsidiaries track market trends and,on a reasonable basis if no market price is available. However, as

as necessary, utilize forward foreign exchange contracts for hedging.

certain variables are used for these calculations, the result of such

Short-term investments and investment securities are principallymoney market funds and the shares of companies with which thecalculations may vary if different assumptions are used.
The contract amounts of derivative transactions in Note “21Company has a business relationship. These investments are

Foreign Exchange Risk Management and Interest Rate Risk

exposed to the risk of fluctuations in market prices. The market priceManagement” in the Notes to Consolidated Financial Statements

is confirmed at least once per quarter, and the holdings are reevalu-

should not be considered indicative of the market risk associatedated once per year with consideration of market conditions andwith the derivative financial instruments.

relationships with counterparties.
Trade payables substantially all have due dates within one year.
Certain trade payables are denominated in foreign currencies and are
exposed to the risk of fluctuations in foreign exchange rates. In thesame manner as receivables, the Company and its consolidated
subsidiaries manage balances by counterparty and currency, and in
addition the Company and its consolidated subsidiaries track market
trends and, as necessary, utilize forward foreign exchange contracts
for hedging.

49

Notes to Consolidated Financial Statements

2. Market Value of Financial Instruments

The carrying amounts of financial instruments as stated in the consolidated balance sheets, their market values as of March 31, 2012
and 2013, and the differences between carrying amounts and market values are as stated below. This table does not include assets forwhich it was judged extremely difficult to assess the market value (Note 2 below).
Millions of yen

2012

Thousands of U.S. dollars

2013

2013

Carrying
amountMarket value

Difference

Carrying
amountMarket value

Difference

Carrying
amountMarket value

Difference(1) Cash and time deposits¥106,959¥106,959¥   —¥119,133¥119,133¥   —$1,266,699$1,266,699$     —

(2) Trade receivables(3) Short-term investments
and investment
securities

69,102

69,102—

77,06977,069—819,447

819,447—

21,18722,597

1,410

26,292

28,027

1,735

279,553

298,001

18,448

		Total assets¥197,248¥198,658¥1,410¥222,494¥224,229¥1,735$2,365,699$2,384,147$18,448(1) Trade payables

48,742

48,742—

46,472

46,472—

494,120494,120—(2) Short-term borrowings

6,773

6,773

—

5,596

5,596

—

59,50059,500—(3) Accrued income taxes

9,360

9,360

—

7,853

7,853

—

83,49883,498—(4) Long-term borrowings

12,883

12,883

—

7,500

7,500

—

79,74579,745—¥ 77,758¥ 77,758¥   —¥ 67,421¥ 67,421¥   —$  716,863$  716,863$     —

¥    270¥    270¥   —¥    964¥    964¥   —$   10,250$   10,250$     —

		Total liabilities
Derivative financial
instruments** Assets and Liabilities derived from derivative transactions are stated on a net basis. Items for which the total is a net liability are shown in parentheses.
Notes: 1. Method for calculating the market value of financial instruments and derivative transactions
		
Assets		 (1) Cash and time deposits, and (2) Trade receivables
			 Their market values are almost identical with the carrying amount, since these assets will be settled within a short period of time.
		 (3) Short-term investments and investment securities			The market value of these investments is stated at the quoted price on the stock exchange or the price as provided by counterparty financial institutions. In addition, with regard to
short-term investments and investment securities by holding purpose, please refer to Note “5 Short-Term Investments and Investment Securities” in the Notes to Consolidated
Financial Statements.
		Liabilities
		 (1) Trade payables, (2) Short-term borrowings, and (3) Accrued income taxes
			 Their market values are almost identical with the carrying amount, since these assets are readily convertible into cash.
		 (4) Long-term borrowings
			 The market value of long-term borrowings is calculated by discounting the total principle and interest by the current market interest rate for comparable debt.
		Derivative financial instruments
		 Please refer to Note “21 Foreign Exchange Risk Management and Interest Rate Risk Management” in the Notes to Consolidated Financial Statements.
2. Financial instruments for which market value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2012

2013

2013

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥1,443¥1,527$16,236

Stocks of affiliated companies (unlisted stocks)

1,534

1,883

20,021

87

83

883

Contributions to investment partnerships

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

2012

Cash and time deposits
Trade receivables
Total

50

Thousands of U.S. dollars

2013

2013

Withinone yearMore than
one year,within fiveyears

More than
five years,
within ten
years

More thanten years

Withinone yearMore than
one year,within fiveyears

More than
five years,
within ten
years

More thanten years

Withinone yearMore than
one year,within fiveyears

More than
five years,
within ten
years

More thanten years¥106,959
68,300¥175,259

¥  —
802
¥802

¥—
—
¥—

¥—
—
¥—

¥119,133
75,772¥194,905¥    —
1,297¥1,297

¥—
—
¥—

¥—
—
¥—

$1,266,699
805,656$2,072,355$    —
13,791$13,791

$—
—
$—

$—
—
$—

13 Income Taxes
The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on income
which, in the aggregate, resulted in a normal tax rate of approximately 40.6% and 38.0% for the fiscal years ended March 31, 2012 and 2013,
respectively.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2012 and 2013
consist of the following:
Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Income taxes–current¥15,583¥19,649$208,920

Income taxes–deferred(4,634)(3,611)(38,394)¥10,949¥16,038$170,526

		TotalReconciliation of the normal tax rate and the effective tax rate as a percentage of income before income taxes and minority interests for the
fiscal years ended March 31, 2012 and 2013 is as follows:
2012

2013

Normal tax rate

40.6%

38.0%

Entertainment expenses not deductible for tax purposes

1.0

0.7

Corporate inhabitant tax on per capita basis

0.8

0.4

Directors’ bonuses

1.9

1.2

Change in valuation allowance for deferred tax assets

(2.0)

(2.3)

Amortization of goodwill

0.5

0.2

Differences of tax rates of foreign consolidated subsidiaries

(0.8)

(0.3)

Reversal of revaluation reserve for land, net of tax

—

(0.6)

Tax credit for research and development expenses

(3.2)

(5.4)

Impact of adoption of consolidated tax payment system

(7.0)

—

Effect of changes in tax rates on net deferred tax assets

4.0

—

Other

0.2

1.2

Effective tax rate

36.0%

33.1%

51

Notes to Consolidated Financial Statements

Significant components of deferred tax assets and liabilities as of March 31, 2012 and 2013 are as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Deferred tax assets:
Losses carried forward¥ 15,790¥ 14,504$ 154,216

Inventory valuation losses

7,459

7,376

78,426

Excess depreciation of fixed assets

4,894

6,364

67,666

Accrued employee bonuses

3,957

4,167

44,306

Accrued retirement and severance benefits

1,098

1,300

13,822

Accrued enterprise taxes and others

885

1,256

13,355

Loss on valuation of advance payments

959

1,022

10,867

Loss on impairment of fixed assets

853

838

8,910

Research and development expenses

546

488

5,189

Allowance for doubtful receivables

453

456

4,848

2

—

—

2,662

2,377

25,274

Unrealized gains or losses on other securities
Revaluation reserve for land
Other

7,246

7,874

83,722

46,80448,022510,601

Valuation allowance(30,605)(27,994)(297,650)

Total deferred tax assets

16,19920,028

212,951

		 Total gross deferred tax assets

Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets

(96)

(91)

(968)

Retained earnings of foreign consolidated subsidiaries

(296)

(284)

(3,020)

Unrealized gains or losses on other securities(765)(1,463)(15,556)

Revaluation reserve for land

(591)

(591)

(6,284)

Other

(296)

(209)

(2,221)(2,044)(2,638)(28,049)¥ 14,155¥ 17,390$ 184,902

Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

¥ 8,734¥10,580$112,493

6,427

8,399

89,304Current liabilities–Other (deferred tax liabilities)

(23)

—

—

Long-term liabilities–Deferred tax liabilities(983)(1,589)(16,895)¥14,155¥17,390$184,902

Total deferred tax liabilities
Net deferred tax assets

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

Current assets–Deferred tax assets
Investments and other assets–Deferred tax assets

		Total52

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2012 and 2013 are as follows:

Advertising expenses

Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

¥ 33,385¥ 32,600$  346,624

Directors’ remuneration and employees’ wages

34,33736,160384,476

Employees’ retirement and severance benefits

1,593

2,159

22,956

Provision for directors’ bonuses

1,365

1,172

12,461

Research and development expenses

17,866

16,619176,704

Other

44,35045,726486,189¥132,896¥134,436$1,429,410

		Total

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2012 and 2013 is as follows:
Millions of yen

2012
Amounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effectUnrealized gains or losses
on other securities¥1,720¥1,330¥3,050¥(598)¥2,452

Deferred gains or losses onhedges

(138)

436

298

(72)

226

Revaluation reserve for land

—

—

—

83

83

Foreign currency translation
adjustments

(756)

119

(637)

—

(637)

Share of other comprehensive
income of associates
accounted for using equity
method		Total

(37)

5

(32)

—

(32)

¥   789¥1,890¥2,679¥(587)¥2,092Millions of yen

Thousands of U.S. dollars

2013

2013

Amounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effectAmounts Reclassification
adjustments
arising

Unrealized gains or losses
on other securities¥ 2,865¥   7¥2,872¥(547)¥2,325$30,463

Deferred gains or losses
on hedges

1,233

(744)

489

(77)

412

Revaluation reserve for land

—

—

—

—

Foreign currency translation
adjustments

6,237

46

6,283

—

Share of other comprehensive
income of associates
accounted for using equity
method		TotalBeforetax effectTax effect

Net oftax effect$    75$ 30,538$(5,817)$24,721

13,110(7,911)

5,199

(818)

4,381

—

—

—

—

—

—

6,283

66,315490

66,805—66,805

180

350

—

350

$(7,166) $102,892$(6,635)$96,257

16

17

33

—

33

170

¥10,351¥(674)¥9,677¥(624)¥9,053$110,058

53

Notes to Consolidated Financial Statements

16 Reconciliation of Differences between Basic and Diluted Net Income per Common Share
Diluted net income per common share is not presented for the fiscal years ended March 31, 2012 and 2013 because no diluted securities
were outstanding.

17 Retained Earnings and Dividends
In Japan, in the event a dividend distribution of surplus is made,¥1,645 million and ¥1,645 million ($17,491 thousand) at March 31,

the lesser of an amount equal to 10% of the dividend or the excess,2012 and 2013, respectively. Proposed appro­priations of retained

if any, of 25% of common stock over the total of additional paid-in

earnings have not been reflected in the consolidated financial

capital and legal earnings reserve must be set aside as a legal

statements at the end of the fiscal year. The Company’s approved

reserve until the aggregate amount of capital surplus and the legal

appropriations of retained earnings for the fiscal year ended Marchreserve equals 25% of stated capital.

31, 2013 were cash dividends of ¥7,254 million ($77,129 thousand).

Certain foreign consolidated subsidiaries are also required to

In addition, a mid-year dividend may be paid based on approval byappropriate their earnings to legal reserves under the laws of thethe Board of Directors, which is subject to limitations. The mid-year

respective countries.

dividend for the fiscal year ended March 31, 2013 was ¥2,638 million

The Company’s retained earnings includes legal reserves of($28,049 thousand).

18 Revaluation Reserve for Land
In accordance with the “Law Concerning Land Revaluation” (Lawforms the foundation for calculating taxable value for land value

No. 34, promulgated on March 31, 1998), the land used for businesstax prescribed in “Article 16 of Land Value Tax Law” (Law No. 69,

purposes was revalued and “Revaluation reserve for land, net of tax”

promulgated on May 2, 1991), as stipulated in “Article 2-4 of thewas reported in “Net assets” in the consolidated balance sheets.

Ordinance Implementing the Law Con­cerning Land Revaluation”(Cabinet Order No. 119, promulgated on March 31, 1998).

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

Reasonable adjustments are made to the official notice prices.
Unrealized losses for land of ¥1,122 million ($11,930 thousand)that are calculated by the method assessed and published by thewere recognized based on the difference between the land carrying

Commissioner of the National Tax Agency. The Com­missioner

amount, which was revalued as of March 31, 2002, and the market

assesses and publishes the method to calculate land value thatvalue of the land as of March 31, 2013.

19 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2012 and 2013 were as follows:
Common stock (number of shares)
Number of shares at beginning of year2013

222,000,000

Retirement of treasury stock(18,000,000)—

Number of shares at end of year

222,000,000

222,000,000

Treasury stock (number of shares)

2012

2013

3,497,884

2,308,176

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

16,806,264—

Retirement of treasury stock(18,000,000)

—

4,028

1,166

2,308,176

2,309,342

Number of shares at beginning of year

Other
Number of shares at end of year

54

2012

240,000,000

20 Leases
As lessee
The Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under operating lease arrangements.
Operating leases			
Future minimum payments required under operating leases as of March 31, 2012 and 2013 are as follows:
Thousands of
U.S. dollars

Millions of yen

Within one year

2012

2013

2013

¥1,158¥2,478$26,348

Over one year

5,044

6,246

66,411

		Total¥6,202¥8,724$92,759

21 Foreign Exchange Risk Management and Interest Rate Risk Management
Derivative financial instruments are comprised principally of forward foreign exchange contracts and interest rate swaps. These instruments areused to reduce the risks of changes in foreign exchange rates and interest rates, but are not used for speculation.
The Company is exposed to credit risk related to nonperformance by the counterparties to forward foreign exchange contracts and interest
rate swaps, but the Company does not expect any instances of nonperformance due to the high credit ratings of the counterparties.
Contract amounts, market values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2012
and 2013 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivative financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

2012
Contract
Estimatedamount market value

Unrealized
gain (loss)

Thousands of U.S. dollars

2013
Contract
Estimatedamount market value

Unrealized
gain (loss)

2013
Contract
Estimatedamount market value

Unrealized
gain (loss)

Forward foreign exchange contracts
Sold:
Yen

¥1,886

¥   1

¥   1

¥2,208¥156¥156$23,477$1,658$1,658

Euro

—

—

—

345

8

8

3,668

85

85

U.S. dollars

696

(34)

(34)

331

1

1

3,519

11

11

Purchased:
Yen

1

(0)

(0)

—

—

—

—

—

—

U.S. dollars

—

—

—

224

6

6

2,382

64

64

¥2,583

¥(33)

¥(33)

¥3,108¥171¥171$33,046$1,818$1,818

		TotalNotes: 1. Method of calculating market value
		 Calculated based on prices provided by counterparty financial institutions.
2. For certain of the above forward foreign exchange contracts, hedge accounting is applied for the transactions between consolidated subsidiaries in non-consolidated financial
statements, but these transactions have been eliminated in the consolidated financial statements, and as a result these transactions are not treated as effective hedges of the hedged
assets and/or liabilities in the consolidated financial statements.

55

Notes to Consolidated Financial Statements(2) Derivative transactions qualifying for hedge accounting
Millions of yen

2012
Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2013

2013

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value

Contract
amountEstimatedmarket value

Forward foreign exchange contracts
Sold:

DeferredYen

Accounts receivable–trade¥4,509¥ 76¥ 7,835¥586$ 83,307$6,232Polish zloty

Accounts receivable–trade

U.S. dollars

Accounts receivable–trade

23
7

(0)
(0)

—
—

—
—

—
—

—
—
2,307

Purchased:
U.S. dollars

Accounts payable–trade

3,482

210

6,249

217

66,443

H.K. dollars

Accounts payable–trade

89

7

60

2

638

21

Yen

Accounts payable–trade

70

3

61

(9)

649

(96)

Chinese yuan

Accrued expenses

1,011¥9,191

7
¥303

2,061
¥16,266(4)¥792

21,914$172,951(43)$8,421

		TotalForward foreign exchange contracts
Foreign exchange
Purchased:
allocation method
U.S. dollars
Accounts payable–trade		Total

230

12

199

28

2,116

298

¥   230¥ 12¥   199¥ 28$  2,116$  298

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

22 Commitments and Contingent Liabilities
Commitments as of March 31, 2012 and 2013 are summarized as follows:
Millions of yen

Guarantee of obligation resulting from rental contracts of unconsolidated subsidiary

Thousands of
U.S. dollars

2012

2013

2013

¥172

¥136

$1,44623 Segment Information
The reportable segments of the Company are components of the Group whose separate financial information is available and which areperiodically evaluated by the Board of Directors in deciding how to allocate management resources and in assessing performance.
The Group is made up of three strategic business units (“SBUs”), one for each business domain, namely the Toys and Hobby SBU, theContent SBU, and the Amusement Facility SBU, and the affiliated business companies that mainly serve a supporting role for these SBUs.
The major company of each SBU leads the planning and promotion of the business strategies of the SBU for Japan and overseas.
Accordingly, the Group has the following three reportable segments: Toys and Hobby Business, Content Business, and Amusement
Facility Business.
The Toys and Hobby Business conducts manufacturing and sales of toys, candy toys, and products for vending machines. The Content
Business distributes network content, manufactures and sells arcade game machines, and produces home video game software and videorelated products. The Amusement Facility Business conducts the operation of amusement facilities.
The methods for accounting for reportable segments are the same as those described in Note “2 Summary of Significant Accounting Policies”
in the Notes to Consolidated Financial Statements. Segment income in the segment information below is based on operating income, andsegment assets are based on total assets. Amounts of inter-segment transactions are based on the prevailing market price.

56

Change in depreciation method
In accordance with revision of the Corporation Tax Act, from the fiscal year ended March 31, 2013, the Company and its consolidated domestic
subsidiaries have changed their depreciation and amortization method based on the revised Corporation Tax Act for property, plant andequipment acquired on or after April 1, 2012.
As a result of this change, the effect on the segment income of respective reportable segments for the fiscal year ended March 31, 2013 is
as follows:
Millions of yen

2013
Reportable Segment

Segment income

Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other

Total

Adjustments(note)

Consolidated
total

¥249

¥132

¥1

¥382

¥19

¥401

¥(19)

¥382

Thousands of U.S. dollars

2013
Reportable Segment

Segment income

Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other

Total

Adjustments(note)

Consolidated
total$2,647$1,404$11$4,062$202$4,264$(202)$4,062

Note:	The adjustment to segment income of −¥19 million (−$202 thousand) includes elimination of inter-segment transactions of –¥45 million (−$478 thousand), and corporate expenses notallocated to reportable segments of ¥26 million ($276 thousand).

Change in calculation method for increase in property, plant and equipment and intangible assets
Until the previous fiscal year, transfers from inventories were not included in increase in property, plant and equipment and intangible assets.
However, from the fiscal year ended March 31, 2013, transfers from inventories are included in increase in property, plant and equipment andintangible assets.
Increase in property, plant and equipment and intangible assets for the previous fiscal year has been restated to reflect this change.
Millions of yen

2012
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)¥172,151¥211,569¥60,888¥444,608¥ 9,603¥454,211¥     —

¥454,211

Net sales
To external customers
Inter-segment sales and transfers
Total

5,843

13,935145

19,923

17,87937,802(37,802)—¥177,994¥225,504¥61,033¥464,531¥27,482¥492,013¥(37,802)¥454,211

Segment income

16,11317,0032,381

35,497

2,051

37,548(2,941)

34,607

Segment assets

95,180140,901

35,158271,239

20,360291,599

50,573342,172¥ 11,126¥  2,469¥ 5,545¥ 19,140¥   486¥ 19,626¥ (1,484)¥ 18,142

Other items:
Depreciation and amortization
	Amortization of goodwill

—

229

1

230

—

230

143

373

	Loss on impairment of fixed assets
	Investments in associates accounted
for using equity method	Increase in property, plant andequipment and intangible assets

379

311

398

1,088

17

1,105

—

1,105

492

—

126

618

7,512

8,130

—

8,130

12,406

3,675

5,444

21,525541

22,066

1,692

23,75857

Notes to Consolidated Financial Statements

Millions of yen

2013
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)¥165,957¥251,790¥60,113¥477,860¥ 9,381¥487,241¥     —

¥487,241

Net sales
To external customers
Inter-segment sales and transfers
Total

7,020

11,80673

18,89916,40735,306(35,306)—¥172,977¥263,596¥60,186¥496,759¥25,788¥522,547¥(35,306)¥487,241

Segment income

11,25536,4381,684

49,377

1,693

51,070(2,427)

48,643

Segment assets

103,784

152,130

34,745

290,659

21,348312,00762,196374,203¥ 12,289¥  2,539¥ 5,692¥ 20,520¥   482¥ 21,002¥   (586)¥ 20,416	Amortization of goodwill

—

151

—

151

—

151

142

293

	Loss on impairment of fixed assets
	Investments in associates accounted
for using equity method	Increase in property, plant andequipment and intangible assets

179

12

230

421

—

421

85

506

517

—

131

648

7,581

8,229

—

8,229

11,561

4,636

5,017

21,214489

21,703

2,133

23,836

Other items:
Depreciation and amortization

Thousands of U.S. dollars

2013
Reportable Segment
Toys and
Hobby

Content

Amusement
Facility

Subtotal

Other (note 1)

Total

Adjustments(note 2)

Consolidated
total (note 3)$1,764,562$2,677,192$639,160$5,080,914$ 99,745$5,180,659$      —

$5,180,659(375,396)—

Net sales
To external customers
Inter-segment sales and transfers
Total

74,641

125,529776

200,946

174,450

375,396$1,839,203$2,802,721$639,936$5,281,860$274,195$5,556,055$(375,396) $5,180,659

Segment income

119,670

387,433

17,905525,008

18,001

543,009(25,805)

517,204

Segment assets

1,103,498

1,617,544

369,4313,090,473

226,986

3,317,459

661,308

3,978,767$  130,665$   26,996$ 60,521$  218,182$  5,125$  223,307

Other items:
Depreciation and amortization
	Amortization of goodwill
	Loss on impairment of fixed assets
	Investments in associates accounted
for using equity method	Increase in property, plant andequipment and intangible assets$  (6,231) $  217,076

—

1,605

—

1,605

—

1,605

1,510

3,115

1,903

128

2,445

4,476

—

4,476

904

5,380

5,497

—

1,393

6,890

80,60687,496—87,496

122,925

49,29353,344

225,562

5,199

230,761

22,679253,440

Notes: 1. The “Other” business segment is not a reportable segment and includes logistics services and printing services for the Group’s SBUs.
2. Details of “Adjustments” are as follows:		 (1)	The adjustment to segment income of -¥2,941 million for the fiscal year ended March 31, 2012 includes elimination of inter-segment transactions of -¥149 million and corporate
expenses not allocated to reportable segments of -¥2,792 million. The adjustment to segment income of -¥2,427 million (-$25,805 thousand) for the fiscal year ended March 31,
2013 includes elimination of inter-segment transactions of ¥842 million ($8,953 thousand) and corporate expenses not allocated to reportable segments of -¥3,269 million(-$34,758 thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
		 (2)	The adjustment to segment assets of ¥50,573 million for the fiscal year ended March 31, 2012 includes elimination of inter-segment transactions of -¥11,715 million and corporate
assets not allocated to reportable segments of ¥62,288 million. The adjustment to segment assets of ¥62,196 million ($661,308 thousand) for the fiscal year ended March 31,
2013 includes elimination of inter-segment transactions of -¥19,159 million (-$203,711 thousand) and corporate assets not allocated to reportable segments of ¥81,355 million($865,019 thousand). Principal corporate assets are cash and deposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
		 (3)	The adjustment to depreciation and amortization expense of -¥1,484 million for the fiscal year ended March 31, 2012 includes elimination of inter-segment transactions of-¥1,697 million and depreciation and amortization expense not allocated to reportable segments of ¥213 million. The adjustment to depreciation and amortization expense of-¥586 million (-$6,231 thousand) for the fiscal year ended March 31, 2013 includes elimination of inter-segment transactions of -¥1,644 million (-$17,480 thousand) and depreciation
and amortization expense not allocated to reportable segments of ¥1,058 million ($11,249 thousand).
		 (4)	The adjustment to amortization of goodwill of ¥143 million and ¥142 million ($1,510 thousand) for the years ended March 31, 2012 and 2013, respectively, are related to goodwill
not allocated to reportable segments.
		 (5)	The adjustment to loss on impairment of fixed assets of ¥85 million ($904 thousand) for the fiscal year ended March 31, 2013 is related to corporate assets not allocated to reportablesegments.
		 (6)	The adjustment to property, plant and equipment and intangible assets of ¥1,692 million and ¥2,133 million ($22,679 thousand) for the fiscal years ended March 31, 2012 and 2013,
respectively, are related to corporate assets not allocated to reportable segments.
3. Segment income is reconciled to operating income on the consolidated statements of income.

58For the fiscal years ended March 31, 2012 and 2013, additional segment information is as follows:
1. Information by product and service
This information is included in the segment information above.
2. Information by geographic region
Net sales and property, plant and equipment
Millions of yen

2012

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total¥372,617¥26,542¥33,678¥21,374¥454,211

37,671

1,590

1,590

3,649

44,500Millions of yen

2013

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total¥399,261¥35,803¥28,569¥23,608¥487,241

39,157

2,039

1,877

4,183

47,256
Thousands of U.S. dollars

2013

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total$4,245,200$380,680$303,764$251,015$5,180,659

416,343

21,68019,95744,476502,456

3. Information by major customer
Fiscal year ended March 31, 2012

Fiscal year ended March 31, 2013

Name

Net sales

Name of related segment

Happinet Corporation¥47,522 million

Toys and Hobby, Content

Name

Net sales

Name of related segment

—

—

—

Note: There is no outside customer representing 10% or more of the net sales in the consolidated statement of income, for the fiscal year ended March 31, 2013.

59

Notes to Consolidated Financial Statements

4.	By reportable segment, information regarding the amount of amortization of goodwill and negative goodwill for the fiscal years ended
March 31, 2012 and 2013, and the unamortized balance of goodwill and negative goodwill as of March 31, 2012 and 2013, is as follows:
Millions of yen

2012
Other

Corporate andeliminations (note)

Amortization of goodwill

¥—

¥229

¥1

¥—

¥143

¥373

Unamortized balance of goodwill

—

155

—

—

199

354

Amortization of negative goodwill

—

3

—

—

—

3

Unamortized balance of negative goodwill

—

6

—

—

—

6

Toys and Hobby

Content Amusement Facility

Total

Millions of yen

2013
Other

Corporate andeliminations (note)

Amortization of goodwill

¥—

¥151

¥—

¥—

¥142

¥293

Unamortized balance of goodwill

—

4

—

—

57

61

Amortization of negative goodwill

—

3

—

—

—

3

Unamortized balance of negative goodwill

—

3

—

—

—

3

Toys and Hobby

Content Amusement Facility

Total

Thousands of U.S. dollars

2013
Toys and Hobby

Amortization of goodwill$—

Content Amusement Facility

Other

Corporate andeliminations (note)$1,605$—$1,510$3,115
649

$—

Total

Unamortized balance of goodwill

—

43

—

—

606

Amortization of negative goodwill

—

32

—

—

—

32

Unamortized balance of negative goodwill

—

32

—

—

—

32

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

24 Related Party Disclosures
Transactions with Related Parties
Fiscal year ended March 31, 2012
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type
Affiliatedcompany

Company
Happinet
Corporation

Address

Capital orcontribution tocapitalTaito-ku, Tokyo ¥2,751 million

Content of business

Relationship
Ratio of voting rights with relatedparty
ownership

Holding
Wholesaler of toys,
directly 26.3%
video games, andamusement products indirectly 0.3%

Sales agency

Content

Transaction
amountBalance asof March 31,
Account items 2012

Sales of
Accounts
products, and ¥47,522 million receivable–
others (note 2)
trade

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

60¥9,461 million

Fiscal year ended March 31, 2013
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Affiliatedcompany

Happinet
Corporation

Address
Taito-ku,Tokyo

Relationship
Ratio of voting rights with relatedparty
ownership

Capital orcontribution tocapitalContent of business¥2,751 million($29,250
thousand)Holding
Wholesaler of toys,
directly 26.3%
video games, andamusement products indirectly 0.3%

Sales agency

Content

Transaction
amountBalance asof March 31,
Account items 2013

¥46,086 million Accounts
Sales ofreceivable–
products, and ($490,016
trade
others (note 2) thousand)¥9,241 million($98,256
thousand)

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

(2) Transactions by consolidated subsidiaries of the Company with directors, Audit & Supervisory Board members and principal stockholders(limited to individual stockholders) of the Company

Type

Name

Audit &
Supervisory
Board
memberKouji Yanase

Address—

Capital orcontribution tocapital—Content of business

Relationship
Ratio of voting rights with relatedparty
ownership

Audit & Supervisory
Board Member
LawyerCorporate
lawyer of theCompany

Held directly 0.0%

Content

Legal fees

Transaction
amountBalance asof March 31,
Account items 2013¥11 million($117 thousand)Accruedexpenses¥1 million($11 thousand)Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2.	Transaction terms and policy for determining transaction terms.
		Attorney compensation is based on advisory agreements with the Company’s subsidiaries and is determined after deliberations with reference to the compensation standards of theJapan Federation of Bar Associations.

25 Business Combinations
Transactions conducted by commonly controlled entities, and others
1.	Names and business content of the companies involved in the
combination, the date of combination, legal form of the combination, name of the company after the combination, and outline of
the transaction, including its purpose.
(1)	Names and business content of the companies involved in the				NAMCO BANDAI Games Europe S.A.S. (a consolidated
subsidiary of the Company)(5) Outline of the transaction, including its purpose
		Based on the Mid-term Plan that went into effect in April 2012,
the marketing operations of NAMCO BANDAI Games Europe

combination

S.A.S. and the sales operations of NAMCO BANDAI Partners(i)	NAMCO BANDAI Games Europe S.A.S.

S.A.S. were integrated for more efficient operations, aimed(a consolidated subsidiary of the Company)
			 Sales and marketing of home video game software		(4) Name of the company after the combination(ii)	NAMCO BANDAI Partners S.A.S.
(a consolidated subsidiary of the Company)at recovering profitability in the Content Business in theEuropean region.
2. Overview of accounting	The accounting in the consolidated financial statements was			A holding company and a shared-service company of the

conducted as a transaction made by commonly controlled entities,

NAMCO BANDAI Partners group that carries out sales andin accordance with the provisions of the “Accounting Standard forother related services of home video game software

Business Combinations” (ASBJ Statement No. 21, December 26,(2) Date of combination
		

September 28, 2012

(3) Legal form of the combination2008) and “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures”(ASBJ Guidance No. 10, final revision issued on December 26, 2008).

		An absorption-type merger in which NAMCO BANDAI Games
Europe S.A.S. is the surviving company and NAMCO BANDAI
Partners S.A.S. was the company absorbed.

61

Notes to Consolidated Financial Statements

26 Significant Subsequent Events
A meeting of the Company’s Board of Directors convened on May
21, 2013, determined the conditions for offering stock acquisitionrights to four directors of the Company and seven directors of its(5)	Exercise period for the stock acquisition rights offered		

From June 5, 2013, to June 4, 2033

(6)	Matters concerning increase in capital or capital reserves

subsidiary NAMCO BANDAI Games Inc. and approved a resolution

when shares are issued upon the exercise of the stock acqui-

to offer the said stock acquisition rights to the said directors.

sition rights offered		i)	The increase in capital when shares are issued upon the

1. Reason for issue of stock acquisition rights as stock options

exercise of stock acquisition rights shall be half the limit for	With a view to enhancing the morale of directors and heightening

capital increases as calculated in accordance with Article

their motivation to improve the Company’s performance, the 7th

17, Paragraph 1, of the Corporate Accounting Rules.

General Meeting of Shareholders, held on June 18, 2012, introduced

Fractions of less than one yen resulting from thea new remuneration system that grants stock compensation-type
stock options on condition that the BANDAI NAMCO Groupcalculation shall be rounded up.
		ii)	The increase in capital reserves when shares are issued

achieves the targets of its Mid-term Plan. For the year ended

upon the exercise of stock acquisition rights shall be theMarch 31, 2013, the Company’s operating income surpassed

limit on capital increases stated in i) above less the capital

the Mid-term Plan’s ¥42.5 billion operating income target, thereby
meeting the condition for granting stock compensation-type stockincrease stated in i) above.
(7)	Restriction on the acquisition of stock acquisition rights

options. As a result, the Company shall issue stock compensationtype stock options to four directors of the Company and sevenoffered by transfer
		Approval of the Board of Directors of the Company shall bedirectors of its subsidiary NAMCO BANDAI Games Inc.

required for the acquisition of stock acquisition rights offeredby transfer.

2. Summary of issuance of stock acquisition rights
(1)
		
(2)
		

Name of the stock acquisition rights offered(8)

Conditions for acquiring the stock acquisition rights offered		When any of the following proposals i), ii), iii), iv), and v) are

NAMCO BANDAI Holdings Inc. 7th stock acquisition rights

approved by the Company’s general meeting of shareholders

Total number of the stock acquisition rights offered(if approval of the general meeting of shareholders is not

361 (100 shares per stock acquisition right)

required, then when the Board of Directors of the Company(3)	Class and number of shares to be delivered upon exercise

determines by resolution), the Company may acquire stockof the stock acquisition rights offeredacquisition rights for free on a date separately determined by

36,100 shares of the Company’s common stock		However, in the event that the Company carries out a

the Board of Directors.
		i)	A proposal for a merger agreement where the Company

		ii)	A proposal for a corporate divestiture agreement or corpo-

shall be dissolved;

share split (including allotments of shares of the Company’scommon stock without receipt of monetary consideration,with the same applying hereafter for stock split) or share

rate divestiture plan where the Company shall become aconsolidation, the number of shares to be delivered upon

split company;

exercise of stock acquisition rights shall be adjusted in accor-

		dance with the following formula; provided, however, thattransfer plan where the Company shall become a whollysuch adjustment shall only be carried out with respect tothe number of shares to be delivered upon exercise of stockiii)	A proposal for a stock exchange agreement or stock
owned subsidiary of another company;

		iv)	A proposal for an approval of amendments to the articles

acquisition rights that are not yet to be exercised at the timeof incorporation to establish new provisions by which anyof the share split or share consolidation, and any fraction oftransfer of any shares to be issued by the Company shallbe subject to the Company’s approval; andless than one share resulting from such adjustment shall be
rounded down.

		v)	A proposal for an approval of amendments to the articles
of incorporation to establish new provisions by which any

		Number of shares granted after adjustment = Number ofacquisition through transfer of the type of any shares to beshares granted before adjustment × Stock split or reverse

issued upon exercise of stock acquisition rights shall bestock split ratio

subject to the Company’s approval or the Company may
acquire all of the shares in the relevant type to be issued(4)	Value of assets contributed upon exercise of the stock acquisition rights offered		The value of assets contributed upon exercise of each stock

the general meeting of shareholders of the Company.
(9)	Policy for determining details of cancellation of the stockacquisition right offered shall be an amount equal to theacquisition rights offered in an organizational restructuring

amount to be paid of one yen per share to be delivered uponand granting of stock acquisition rights of a company subject

the exercise of the stock acquisition rights offered multiplied

to restructuring

by the number of shares to be granted.

62

upon exercise of stock acquisition rights by resolution of		If the Company conducts a merger (only if the Company is tobe dissolved as a result of the merger), an absorption-type		v)	Exercise period for stock acquisition rights

			The exercise period shall start at the beginning of thecorporate divestiture or an establishment-type corporate

period for exercising the stock acquisition rights offered as

divestiture (only if the Company is to become a split

stated in (5) above or the date on which the organizational

company), or a share exchange or share transfer (only if therestructuring takes effect, whichever is later, and end

Company is to become a wholly owned subsidiary) (theon the final day of the period for exercising the stock

above are hereinafter collectively referred to as “organizational
restructuring”), the Company shall grant stock acquisitionacquisition rights offered as stated in (5) above.
		vi)	Matters concerning increase in capital or capital reserves

rights of the Company listed in Article 236, Paragraph 1-8

when shares are issued upon the exercise of stockof the Companies Act of Japan (“the restructured company”),

acquisition rights

in each respective case, to stock acquisition rights holders

			with stock acquisition rights remaining (“remaining stock		vii)	Restriction on the acquisition of stock acquisition rights

acquisition rights”) immediately prior to the day the organiza-

by transfer

tional restructuring takes effect (the date the absorption-type

			Approval of the Board of Directors of the restructured

merger takes effect for an absorption-type merger, the datecompany shall be required for the acquisition of stockof establishment of the newly established company for an

acquisition rights by transfer.

establishment-type merger, the date the absorption-type		divestiture takes effect for an absorption-type corporate			divestiture, the date the establishment-type corporate divesti-		ture takes effect for an establishment-type corporate divesti-			ture, the date the share exchange takes effect for a shareparent company for a share transfer). However, this shallstock acquisition rights offeredsition rights holders who have exercised stock acquisitionrights of the restructured company in accordance with therights offered shall be rounded down.

absorption-type corporate divestiture agreement, establish-(11)	Other conditions for the exercise of stock acquisition rights
offered		i)	A stock acquisition rights holder may, within the period

ment-type corporate divestiture agreement, share exchangementioned in (5) above, exercise those stock acquisition

agreement, or share transfer plan.

rights between one and ten days after the date on whichi)	Number of stock acquisition rights of the restructured

that person loses his or her position as a director, auditor,

company to be granted

or employee of the Company or of a subsidiary of theCompany.

			The same number of stock acquisition rights as theremaining stock acquisition rights held by stock		acquisition rights holders			

Shares of common stock of the restructured companyiii)	Number of shares of the restructured company to be

the said stock acquisition rights offered.
(12) Amount to be paid for the stock acquisition rights offered		delivered upon exercise of stock acquisition rights

subscribers’ rights to compensation from the Company
against their payment obligations for the paid-in amount foron consideration of the terms of the organizationaliv)	Value of assets contributed upon the exercise of stockacquisition rights
			The value of assets contributed upon the exercise of eachstock acquisition right to be granted shall be the amountresulting from multiplying the paid-in amount after restruc-¥121,963 per stock acquisition right		Instead of cash payment, the Company shall offset

			This shall be decided pursuant to (3) above based
restructuring and other factors.

ii)	If a stock acquisition rights holder has renounced his or
her stock acquisition rights, he or she may not exerciseii)	Class of shares of the restructured company to bedelivered upon exercise of stock acquisition rights

		

These shall be decided pursuant to (11) below.

		Any fractional shares of shares to be granted to stock acqui-

agreement, establishment-type merger agreement,		This shall be decided pursuant to (8) above.

ix)	Other conditions for exercising stock acquisition rights

apply only to cases in which the granting of stock acquisition
items below is provided for in the absorption-type merger		viii) Conditions for acquiring stock acquisition rights(10)	Arrangement for fractional shares arising from the exercise of

exchange, or the date of establishment of the wholly owning		

These shall be decided pursuant to (6) above.

stock acquisition rights offered.
(13) Allotment date for the stock acquisition rights offered		June 5, 2013(14)	Due date for payment to be made in exchange for the stockacquisition rights offered		

The due date for payment shall be June 5, 2013.

turing, as specified below, by the number of shares of therestructured company subject to the said stock acquisitionrights, as decided pursuant to iii) above. The paid-in
amount after restructuring shall be one yen per share of
the restructured company issuable upon the exercise ofeach stock acquisition right granted.

63

Independent Auditors’ Report
To the Board of Directors of NAMCO BANDAI Holdings Inc.:

We have audited the accompanying consolidated financial statements of NAMCO BANDAI Holdings Inc. and its consolidated subsidiaries,
which comprise the consolidated balance sheets as at March 31, 2013 and 2012, and the consolidated statements of income, statementsof comprehensive income, statements of changes in net assets and statements of cash flows for the years then ended, and a summary ofsignificant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while theobjective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of NAMCO BANDAI Holdings Inc.
and its consolidated subsidiaries as at March 31, 2013 and 2012, and their financial performance and cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2013 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 3 to the consolidated financial statements.

August 8, 2013
Tokyo, Japan

64

CORPORATE DATA
As of March 31, 2013

Corporate Name:

NAMCO BANDAI Holdings Inc.

Head Office:

NAMCO BANDAI Mirai Kenkyusho
4-5-15, Higashi-Shinagawa, Shinagawa-ku, Tokyo 140-8590, Japan
URL: www.bandainamco.co.jp/

Capital:¥10 billion

Stock Exchange Listing: Tokyo Stock Exchange, First Section (Code number: 7832)
Main Business:

Planning and execution of medium- and long-term management
strategies for the BANDAI NAMCO Group;
provision of support for business strategy implementation by Group
companies and management of business activities

Stock Information:

Number of Shares Authorized:

1,000,000,000 shares

Number of Shares Issued:

222,000,000 shares

Number of Shareholders:

42,800

Number of Shares per Trading Unit:

100 shares

Major Shareholders:Ownership Breakdown:

Name% of Total

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

4.29%

Japan Trustee Services Bank, Ltd. (Trust Account)

3.34%

MAL Ltd.

3.16%

The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account

2.98%

XIL, LTD.

2.70%

Masaya Nakamura

2.68%

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

2.07%

State Street Bank and Trust Company 505225

1.77%

Nintendo Co., Ltd.

1.73%

Japan Trustee Services Bank, Ltd. (Trust Account 9)

1.66%

Individuals, etc.

16.93%

Financial institutions

23.78%

Brokerages

0.97%

Other corporate
entities

13.57%

Foreign corporate
entities and others

44.75%© 創通・サンライズ © 創通・サンライズ・MBS © 創通・サンライズ © 創通・サンライズ・MBS ©2012 石森プロ・テレビ朝日・ADK・東映 © 窪岡俊之 ©NBGI ©2012NBGI ©SUNRISE/BANDAI, DENTSU, TV TOKYO ©BANDAI 2012, 2013 © バードスタジオ／集英社・東映アニメーション © 尾田栄一郎／集英社・フジテレビ・東映アニメーション © 岸本斉史
スコット／集英社・テレビ東京・ぴえろ © 秋本治・アトリエびーだま／集英社・ADK © 島袋光年／集英社・フジテレビ・東映アニメーション © 加藤和恵／集英社・「青の祓魔師」製作委員会・MBS © 久保帯人／集英社・テレビ東京・dentsu・ぴえろ ©POT（冨樫義博）1998 年 -2011 年 ©VAP・日本テレビ・集英社・マッドハウス © 許斐 剛／集英社・NAS・新テニスの王子様プロ
ジェクト © 空知英秋／集英社・テレビ東京・電通・サンライズ・アニプレックス © 尾田栄一郎／集英社・フジテレビ・東映アニメーション © 岸本斉史 スコット／集英社・テレビ東京・ぴえろ © バードスタジオ／集英社・東映アニメーション ©2013 テレビ朝日・東映 AG・東映 TM&©2012 SCG Power Rangers LLC. ©NBGI © 尾田栄一郎／集英社・フジテレビ・東映アニメー
ション ©NBGI ©2012 NBGA ©2012 Ubisoft Entertainment. All Rights Reserved. Assassin s Creed, Ubisoft, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. © 士郎正宗・Production I.G ／講談社・「攻殻機動隊 ARISE」製作委員会 ©ABC・東映アニメーション ©NAMCO LTD.

65

OVERVIEW OF MAIN GROUP COMPANIESAs of April 1, 2013

NAMCO BANDAI Holdings Inc.

Planning and execution of medium- and long-term management strategies; provision of support forbusiness strategy implementation by Group companies (Tokyo Stock Exchange, First Section)

NAMCO BANDAI Holdings (USA) Inc.

Execution of North American regional strategy; management support for North American
operating companies

NAMCO Holdings UK LTD.

Execution of European regional strategy; management support for European operating companies

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

Planning, production, and sales of toys, plastic models, candy toys, vending machine products,
apparel, and sundries, etc.

Mega House

Corporation planning, development, production, and sales of toys, candy toys, figures, generalgames, and other products

CCP Co., Ltd.

Planning, development, manufacturing, and sales of toys; hobby commodities, andhome electric appliances

Plex Co., Ltd.

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

Seeds Co., Ltd.

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

People Co., Ltd.*

Planning, development, and sales of toys and bicycles for young children (JASDAQ)TSUBURAYA PRODUCTION CO., LTD.*

Development of visual products and management of copyrights

Sun-Star Stationery Co., Ltd.*

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

BANDAI AMERICA INCORPORATEDSales of toy-related products

BANDAI S.A.

Regional management functions in Europe; sales of toy-related products

BANDAI U.K. LTD.

Sales of toy-related products

BANDAI ESPAÑA S.A.

Sales of toy-related products

BANDAI POLSKA sp.zo.o

Sales of toy-related products

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

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

BANDAI KOREA CO., LTD.

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

BANDAI INDUSTRIAL CO., LTD.

Manufacturing of toy-related products

BANDAI (SHENZHEN) CO., LTD.

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

BANDAI PHILIPPINES INC.

Manufacturing of toy-related productsContent Strategic Business Unit
NAMCO BANDAI Games Inc.

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

NAMCO BANDAI Studios Inc.

Planning and development of games and other content

D3 PUBLISHER INC.

Planning, development, and sales of game software

B.B.STUDIO Co., Ltd.

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

VIBE Inc.

Development and provision of network content

NAMCO BANDAI Online Inc.

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

BNDeNA Inc.

Development and sales of smartphone content

Banpresto Co., Ltd.

Planning, development, and sales of amusement prizes

Banpresto Sales Co., Ltd.

Sales of arcade machines and prizes, etc.

* Companies accounted for by the equity method

66

BANDAI VISUAL CO., LTD.

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

Lantis Co., Ltd.

Planning, manufacturing, sales, and management of musical content

Sunrise Inc.

Planning and production of animation for TV and theatrical release; management andadministration of copyrights

SUNRISE MUSIC Publishing Co., Ltd.

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

Bandai Channel Co., Ltd.

On-demand delivery of content, such as animations

NAMCO BANDAI Live Creative Inc.

Planning and production of events and live performances, etc.

I WILL Co., Ltd.

Development and training of artist management

NAMCO BANDAI Games America Inc.

Sales and marketing of game software

NAMCO AMERICA INC.

Sales of arcade machines

NAMCO BANDAI Games Europe S.A.S.

Sales and marketing of game software

NAMCO EUROPE LTD.

Sales of arcade machines

BANPRESTO (H.K.) LTD.

Manufacturing and production management of arcade machines and prizes

Amusement Facility Strategic Business Unit
NAMCO LIMITED

Planning and operation of amusement facilities

Pleasure Cast Co., Ltd.

Planning and operation of amusement facilities

Hanayashiki Co., Ltd.

Planning and operation of Asakusa Hanayashiki amusement park

NAMCO ENTERTAINMENT INC.

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

NAMCO OPERATIONS EUROPE LTD.

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

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of amusement facilities in Hong Kong

SHANGHAI NAMCO LTD.*

Planning and operation of amusement facilities in China

Affiliated Business Companies
BANDAI LOGIPAL INC.

Cargo trucking operations, logistics management, etc.

LOGIPAL EXPRESS INC.

Transportation, distribution, warehousing, etc.

NAMCO BANDAI Business Arc Inc.

Support of Group operations and administration, etc.

Artpresto Co., Ltd.

Planning and designing of various printed materials

Happinet Corporation*

Based on an optimal distribution system, Happinet distributes toys, visual and music software,video games and amusement products all over Japan

Sotsu Co., Ltd.*

Planning and development of advertising and copyright business

Italian Tomato Ltd.*Management of directly operated restaurants; franchise operations* Companies accounted for by the equity method

67

BANDAI NAMCO Group ANNUAL REPORT 2013

p

o

.j
o
.c

in

c
m
a

a
nd

ba
.
ww

w

Printed in Japan